Form of WPS Resources Corp Nonqualified Stock Option Agreement


    Exhibit
      10.1

    
 

    WPS
      RESOURCES CORPORATION

    NONQUALIFIED
      STOCK OPTION AGREEMENT

    


    THIS
      AGREEMENT is
      entered into on December 7, 2005 (the “Grant Date”), by and between WPS
      RESOURCES CORPORATION (the “Company”), and __________________
      ____________________ (the “Optionee”). This Agreement sets forth the terms,
      rights and obligations of the parties with respect to the grant of an option
      to
      the Optionee. This option shall not become effective until the Optionee signs
      and returns the “Acknowledgement Form” attached hereto.

     

    The
      option is
      granted under, and is subject to, the terms of the WPS Resources Corporation
      2005 Omnibus Incentive Compensation Plan (the “Plan”), which are specifically
      incorporated by reference in this Agreement. Any terms used in this Agreement
      which are not defined shall have the meaning set forth in the Plan.

     

    The
      parties to this
      Agreement covenant and agree as follows:

     

    1.  Grant
      of
      Option.
      Subject to the
      terms of this Agreement, the Company grants to the Optionee the right and option
      (the “Option”) to purchase ______ shares of Common Stock of the Company, par
      value $1.00 (the “Optioned Shares”) from the Company, at an option price per
      share equal to $54.85 (the closing sales price of a share of Common Stock of
      the
      Company as reported on the New York Stock Exchange Composite Transaction
      reporting system on December 7, 2005). 

     

    In
      the event of
      certain corporate transactions described in Section 12 of the Plan, the number
      of Optioned Shares and the per share option price may be adjusted by the
      Compensation and Nominating Committee of the Board of Directors of the Company
      (the “Committee”). The Committee’s determination as to any adjustment shall be
      final.

     

    2.  Vesting
      of
      Option.
      The Optioned
      Shares will vest in accordance with the following schedule:

     

    
      
        	
                Percentage
                  of Optioned Shares Vested

              	
                Date
                  of
                  Vesting

              
	 	 
	
                25%

              	
                1st
                  anniversary of Grant Date

              
	
                An
                  additional
                  25%

              	
                2nd
                  anniversary of Grant Date

              
	
                An
                  additional
                  25%

              	
                3rd
                  anniversary of Grant Date

              
	
                The
                  final
                  25%

              	
                4th
                  anniversary of Grant Date

              


      

    

    
       

      provided,
        however, that,
        in the event of
        the Optionee’s termination of employment from the Company and its Affiliates for
        any reason other than retirement on or after age fifty-five, death or disability
        (as defined in the Company’s long-term disability plan), any Optioned Shares not
        vested as of the date of such termination will be cancelled.

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Notwithstanding
      the
      vesting schedule described above, the Committee may extend the date(s) of
      vesting to a later date to take into account any period of the Optionee’s leave
      of absence, unless prohibited by law.

     

    3.  Exercise
      of
      Option.
      The Option, to
      the extent vested in accordance with Paragraph 2, may be exercised during the
      period beginning December 7, 2006, and ending: 

     

    
      	a.  	
              on
                the first
                anniversary of the date the Optionee’s employment with the Company and its
                Affiliates terminates for any reason other than retirement on or
                after age
                fifty-five, death or disability (as defined in the Company’s long-term
                disability plan); or

            


    

     

    
      	b.  	
              in
                any other
                case, December 7, 2015.

            


    

     

    During
      the life of
      the Optionee, this Option may be exercised only by the Optionee (or if the
      Optionee is incapacitated, by the Optionee’s legal representative). If the
      Optionee dies before exercising all of the vested Option, the executor of the
      Optionee’s estate (or by such person as the executor of the estate certifies as
      inheriting the Option as a result of the operation of the Optionee’s last will
      and testament or as a result of the laws of interstate succession) may exercise
      all or any portion of the vested Option that has not been exercised, during
      the
      exercise periods described above. 

     

    4.  Change
      in
      Control.
      Upon the
      occurrence of a Change of Control (as defined in the Plan), the Option, to
      the
      extent then outstanding and unexercised, will become fully vested (if not
      previously vested) but shall otherwise be subject to the terms of the Plan
      with
      respect to such Change in Control.

     

    5.  Manner
      of
      Exercise and Payment.
      In order to
      exercise this Option, the Optionee (or such other person entitled to exercise
      the Option as provided in Paragraph 3) must provide a written notice to the
      Company stating that the Optionee would like to exercise all or a portion of
      the
      Option and specifying the number of vested Optioned Shares which are being
      purchased. The exercise notice must be delivered (in person or by mail) to
      the
      Secretary of the Company.

     

    The
      written notice
      must be, in the case of clauses (a), (b) and (c) below, accompanied by payment
      equal to the number of Optioned Shares being purchased multiplied by the option
      price or, in the case of clause (d) below, accompanied by the documents
      specified in such clause (d), which will result in payment to the Company on
      the
      settlement date (i.e., T+3) equal to the number of Optioned Shares being
      purchased multiplied by the option price. Subject to such rules and restrictions
      as the Committee may prescribe, payment may be made, at the Optionee’s election:
      (a) in cash or by certified check payable to the Company; (b) by delivering
      previously acquired shares of Common Stock, duly endorsed in blank or
      accompanied by stock powers duly endorsed in blank, with a fair market value
      at
      the time of exercise, as determined by the Committee, equal to the required
      payment amount; (c) by any combination of (a) and (b); or (d) by delivering
      to
      the Company or its designated agent an executed irrevocable option exercise
      

     

    
      
        -2-

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    form
      together with
      irrevocable instructions to a broker-dealer to sell or margin a sufficient
      portion of the Optioned Shares to be exercised and to deliver the sale or margin
      proceeds directly to the Company to pay the option price.

     

    Option
      exercise
      notices postmarked (if mailed) or received by the Secretary of the Company
      (if
      by facsimile or hand-delivery) prior to 11:59 p.m. (central time) of the date
      specified in Paragraph 3 shall be given effect. Any notice postmarked or
      received after such time shall be null and void.

     

    6.  Tax
      Withholding.
      Upon exercise of
      all or any part of the Option, the Company may satisfy its withholding
      obligations in any manner determined by the Committee, including by withholding
      a portion of the Optionee’s compensation or, in the case of a “cashless”
exercise, by withholding a number of the Optioned Shares being purchased that
      have a fair market value, as determined by the Committee, equal to the amount
      required to be withheld. The fair market value of fractional shares of Stock
      remaining after the withholding requirements are satisfied will be paid to
      the
      Optionee in cash. The Company may also require the Optionee to deliver a check
      for the Company’s withholding tax obligation prior to effecting the exercise of
      the option or delivering the shares issuable upon exercise.

     

    7.  Miscellaneous.

     

    (a)  The
      Optionee (or
      his legal representative) shall not be deemed to be a shareholder of the Company
      with respect to any of the Optioned Shares being purchased until such shares
      are
      paid for in full, and the Company’s withholding tax liability is satisfied, to
      the Committee’s satisfaction.

     

    (b)  The
      Option shall
      not be transferable by the Optionee; provided that, following the Optionee’s
      death, the Option, to the extent exercisable in accordance with the terms of
      the
      Plan and this Agreement, may be exercised by the executor of the Optionee’s
      estate (or by such person as the executor of the estate certifies as inheriting
      the Option as a result of the operation of the Optionee’s last will and
      testament or as a result of the laws of intestate succession). 

     

    (c)  It
      is fully
      understood that nothing contained in this Agreement or the Plan shall interfere
      with or limit in any way the right of the Company or any Affiliate to terminate
      the Optionee’s employment at any time nor confer upon the Optionee any right to
      continue in the employ of the Company or any Affiliate.

     

    (d)  As
      a condition of
      the granting of this Option, the Optionee agrees, for himself, his legal
      representatives, the executor of his estate, and his heirs, that the Plan and
      this Agreement shall be subject to discretionary interpretation by the Committee
      and that any interpretation by the Committee of the terms of the Plan and this
      Agreement shall be final, binding and conclusive on the Optionee, his legal
      representatives, the executor of his estate and 

     

    
      
        -3-

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    his
      heirs. The
      Optionee, his legal representatives, the executor of his estate and his heirs
      shall not challenge or dispute the Committee’s decisions.

     

    (e)  The
      Committee may
      modify, extend or renew this Option at any time. However, no modification,
      extension or renewal shall (i) confer on the Optionee any right or benefit
      which
      he would not be entitled to if a new option was granted under the Plan at such
      time or (ii) alter, impair or adversely affect this Option or Agreement without
      the written consent of the Optionee.

     

    (f)  No
      individual may
      exercise the Option and no shares will be issued under this Agreement unless
      and
      until the Company has determined to its satisfaction that such exercise and
      issuance comply with all relevant provisions of applicable law, including the
      requirements of any stock exchange on which the shares may then be
      traded.

     

    8.  Governing
      Law.
      This Agreement
      shall be governed by the internal laws of the State of Wisconsin as to all
      matters, including, but not limited to, matters of validity, construction,
      effect, performance and remedies. No legal action or proceeding may be brought
      with respect to this Agreement more than one year after the later of (a) the
      last date on which the act or omission giving rise to the legal action or
      proceeding occurred; or (b) the date on which the individual bringing such
      legal
      action or proceeding had knowledge of such act or omission. Any such action
      or
      proceeding must be commenced and prosecuted in its entirety in the federal
      or
      state court having jurisdiction over Brown County, Wisconsin, and each
      individual with any interest hereunder agrees to submit to the personal
      jurisdiction thereof, and agrees not to raise the objection that such courts
      are
      not a convenient forum. At the Company’s election, such action or other legal
      proceeding shall be heard pursuant to a bench trial and, if so elected, the
      parties to such proceeding shall waive their rights to a trial by
      jury.

     

    9.  Severability.
      In the event any
      provision of the Agreement is held illegal or invalid for any reason, the
      illegality or invalidity will not affect the remaining provisions of the
      Agreement, and the Agreement shall be construed and enforced as if the illegal
      or invalid provision had not been included.

     

    10.  Terms
      of Plan
      Govern.
      All parties
      acknowledge that this option is granted under and pursuant to the Plan, which
      shall govern all rights, interests, obligations and undertakings of both the
      Company and the Participant.

     

    WPS
      RESOURCES
      CORPORATION

    


    


    By:_____________________________

    Title:
      Senior VP -
      Human Resources

    


    


    
      
        -4-

      

      
        
        

        
          

        

      

      
        
        

      

    


    ACKNOWLEDGEMENT
      FORM

    


    


    I
      have read the
      terms of the WPS Resources Corporation Nonqualified Stock Option Agreement,
      dated December 7, 2005, and I hereby declare that I understand and agree to
      be
      bound by the terms and conditions of the Agreement.

     

    


     

    Optionee 
      ________________________________________

    


    Print
      name: 
______________________________________

    


    


    PLEASE
      DETACH THIS
      ACKNOWLEDGEMENT FORM FROM THE OPTION AGREEMENT AND RETURN IT TO CARMINE NELL
      IN
      HUMAN RESOURCES. YOUR OPTION WILL NOT BECOME EFFECTIVE UNTIL THE COMPANY
      RECEIVES THIS ACKNOWLEDGMENT FORM.