Exhibit 10.10

 

 

 

 

 

 

WPS RESOURCES CORPORATION

DEFERRED COMPENSATION PLAN

As Amended and Restated Effective January 1, 2004

 

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WPS RESOURCES CORPORATION

DEFERRED COMPENSATION PLAN

    The WPS Resources Corporation Deferred Compensation Plan (the"Plan") has been adopted to promote the best interests of WPSResources Corporation (the "Company") and the stockholders of theCompany by attracting and retaining key management employees and non-employeedirectors possessing a strong interest in the successful operation of theCompany and its subsidiaries or affiliates and encouraging their continuedloyalty, service and counsel to the Company and its subsidiaries or affiliates.The Plan is amended and restated effective January 1, 2004 as set forth hereinto reflect the merger of the WPS Resources Corporation Non-Employee DirectorDeferred Compensation and Deferred Stock Unit Plan with and into this Plan.

    Except as expressly provided herein, the Plan, as herein amended and restatedeffective January 1, 2004, applies to (i) those employees who are activelyemployed by the Company or a Participating Employer on January 1, 2004, and whohave been designated for participation by the Committee, and (ii) non-employeedirectors of the Company and designated subsidiaries and affiliates. Except asexpressly provided herein, distribution of benefits to an employee who retiredfrom or terminated employment with the Company prior to January 1, 2004, or adirector who terminated from service with the Company prior to January 1, 2004,shall be governed by the terms of the Plan (or predecessor plan) as in effect onthe date of the employee's or director's retirement or termination of employmentor service.

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ARTICLE I. DEFINITIONS AND CONSTRUCTION

    Section 1.01. Definitions.

    The following terms have the meanings indicated below unless the context inwhich the term is used clearly indicates otherwise:

    (a) Account: The record keeping account or accounts maintained torecord the interest of each Participant under the Plan. An Account isestablished for record keeping purposes only and not to reflect the physicalsegregation of assets on the Participant's behalf, and may consist of suchsubaccounts or balances as the Committee may determine to be necessary orappropriate.

    (b) Act: The Securities Act of 1933, as interpreted by regulations andrules issued pursuant thereto, all as amended and in effect from time to time.Any reference to a specific provision of the Act shall be deemed to includereference to any successor provision thereto.

    (c) Annual Bonus Deferral: See Section 1.01(l)(iii).

    (d) Available Investment Option: See Section 6.01(a).

    (e) Base Compensation: The base salary or wage payable by aParticipating Employer to an Eligible Employee for services performed prior toreduction for contributions by the Eligible Employee to this Plan or pre-tax orafter-tax contributions by the Eligible Employee to any other employee benefitplan maintained by a Participating Employer, but exclusive of extraordinarypayments such as overtime, bonuses, meal allowances, reimbursed expenses,termination pay, moving pay, commuting expenses, severance pay, non-electivedeferred compensation payments or accruals, stock options, the value ofemployer-provided fringe benefits or coverage, all as determined in accordancewith such uniform rules, regulations or standards as may be prescribed by theCommittee.

    (f) Base Compensation Deferral: See Section1.01(l)(i).

 

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    (g) Beneficiary: The person or entity designated by a Participant tobe his beneficiary for purposes of this Plan. If a Participant designates hisspouse as a beneficiary, such beneficiary designation automatically shall becomenull and void on the date of the Participant's divorce or legal separation fromsuch spouse. If a valid designation of Beneficiary is not in effect at time ofthe Participant's death, the estate of the Participant is deemed to be the soleBeneficiary. If a Beneficiary dies while entitled to receive distributions fromthe Plan, any remaining payments shall be paid to the estate of the Beneficiary.Beneficiary designations shall be in writing, filed with the Committee, and insuch form as the Committee may prescribe for this purpose.

    (h) Board: The Board of Directors of the Company.

    (i) Code: The Internal Revenue Code of 1986, as interpreted byregulations and rulings issued pursuant thereto, all as amended and in effectfrom time to time. Any reference to a specific provision of the Code shall bedeemed to include reference to any successor provision thereto.

    (j) Committee: The Compensation Committee of the Board.

    (k) Company: WPS Resources Corporation, or any successor corporation.

    (l) Deferral: An amount credited, in accordance with a Participant'selection, to the Participant's Account under the Plan in lieu of the currentpayment of an equal amount of cash compensation to the Participant. Deferralsmade after June 30, 2001 include the following:

(i) Base Compensation Deferral: A Deferral of all or a            portion of an Eligible Employee's Base Compensation in accordance            with Section 3.02.

(ii) Director Deferral. A Deferral by a Director of all or            a portion of his or her Director Fees in accordance with Section            4.02.

(iii) Annual Bonus Deferral: A Deferral of all or a            portion of a Participant's annual bonus award in accordance with            Section 3.03.

 

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(iv) LTIP Deferral: A Deferral of all or a portion of a            Participant's performance share award under the WPS Resources            Corporation 2001 Omnibus Incentive Compensation Plan, or any            successor plan, in accordance with Section 3.04.

    (m) Director. A non-employee member of the Board, a non-employeemember of the board of directors of a subsidiary or affiliate of the Company whois designated for participation by the Board, and where the context so requires,a former director entitled to receive a benefit hereunder

    (n) Director Deferral. See Section 1.01(l)(ii).

    (o) Director Fees. Those fees, other than fees designated for theDeferred Stock Unit Account, payable to a Director for services rendered on theBoard (including attendance fees and fees for serving as a committee chair) orfor service on the board of directors of a subsidiary or affiliate of theCompany.

    (p) Eligible Employee. Subject to Section 2.02, a common law employeeof a Participating Employer who has been designated by the Committee as beingeligible to participate in this Plan and, where the context so requires, aformer employee entitled to receive a benefit hereunder.

    (q) ERISA: The Employee Retirement Income Security Act of 1974, asinterpreted by regulations and rulings issued pursuant thereto, all as amendedand in effect from time to time. Any reference to a specific provision of ERISAshall be deemed to include reference to any successor provision thereto.

    (r) Exchange Act: The Securities Exchange Act of 1934, as interpretedby regulations and rules issued pursuant thereto, all as amended and in effectfrom time to time. Any reference to a specific provision of the Exchange Actshall be deemed to include reference to any successor provision thereto.

 

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    (s) Investment Options: The hypothetical investment accounts describedin Article V and such other investment options as the Committee may from time totime determine (which may, but need not, be based upon one or more of theinvestment options available under the Wisconsin Public Service CorporationAdministrative Employees Savings Plan).

    (t) LTIP Deferral: See Section 1.01(l)(iv).

    (u) Participant: A Director and/or an Eligible Employee, as requiredby the context.

    (v) Participating Employer: The Company and any direct or indirectsubsidiary of the Company that, with the consent of the Committee, participatesin the Plan for the benefit of one or more Participants.

    (w) Stock Unit Accounts: The Incentive Stock Unit Account described inSection 5.03, the Deferred Stock Unit Account described in Section 5.04, theBase Stock Unit Account described in Section 5.05, and the Prior Plan WPS StockUnit Account described in Section 5.06.

    (x) Trust: The WPS Resources Corporation Deferred Compensation Trustor other funding vehicle which may from time to time be established, as amendedand in effect from time to time.

    (y) Valuation Date: See Section 6.01(e).

    (z) WPS Resources Stock: The common stock, $1.00 par value, of theCompany.

    (aa) WPS Resources Stock Units: The hypothetical shares of WPSResources Stock that are credited to the Stock Unit Accounts in accordance withSections 5.03, 5.04, 5.05 and 5.06.

   Section 1.02. Constructionand Applicable Law.

    (a) Wherever any words are used in the masculine, they shall beconstrued as though they were used in the feminine in all cases where they wouldso apply; and wherever any words are use in the singular or the plural, theyshall be construed as though they were used in the plural or the singular, asthe case may be, in all cases where they would so apply. Titles of 

 

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 articles andsections are for general information only, and the Plan is not to be construedby reference to such items.

    (b) This Plan is intended to be a plan of deferred compensationmaintained for a select group of management or highly compensated employees asthat term is used in ERISA, and shall be interpreted so as to comply with theapplicable requirements thereof. In all other respects, the Plan is to beconstrued and its validity determined according to the laws of the State ofWisconsin to the extent such laws are not preempted by federal law. In case anyprovision of the Plan is held illegal or invalid for any reason, the illegalityor invalidity will not affect the remaining parts of the Plan, but the Planshall, to the extent possible, be construed and enforced as if the illegal orinvalid provision had never been inserted.

 

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ARTICLE II. PARTICIPATION

    Section 2.01. Eligibility.

    (a) A Director shall be eligible to participate in the Plan.

    (b) An employee shall be eligible to participate in the Plan only ifthe employee is employed by a Participating Employer and if the employee hasbeen designated for participation by the Committee. When designating an employeefor participation in the Plan, the Committee, in its sole discretion, maydesignate the employee for participation in the entire Plan or any part thereof.

   Section 2.02. CertainTransfers of Employment.

    If directed by the Committee, a Participant whose employment is transferredto a corporation or other entity (the "Transferee Employer") that isnot a Participating Employer, but in which the Company or an affiliate of theCompany holds an ownership interest, then until the earliest to occur of (a) thedate on which the Participant ceases to be employed by such Transferee Employer,(b) the date on which the Company or an affiliate of the Company no longer holdsan ownership interest in the Transferee Employer, or (c) such other datedetermined by the Committee, the Participant shall be treated as if he or shewere still actively employed by a Participating Employer. The foregoing ruleshall apply only for the purpose of determining whether the Participant hasterminated employment for purposes of the distribution provisions of ArticleVII; it shall not apply, and the Participant shall not be entitled to makeadditional Deferrals, with respect to remuneration attributable to servicesrendered with the Transferee Employer. The Committee may promulgate suchadditional rules as may be necessary or desirable in connection with any suchtransfer of employment.

 

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ARTICLE III. EMPLOYEE DEFERRED COMPENSATION

    Section 3.01. Application.This Article III applies to Participants other than Directors.

   Section 3.02. DeferralsOf Base Compensation.

    (a) Initial Deferral Election. A Participant may elect, in suchform and manner as the Committee may prescribe, to defer payment of a portion ofthe Base Compensation that would otherwise be paid to the Participant. AParticipant's election shall specify the percentage (in increments of 1% to amaximum of 75% or such lesser or greater amount or percentage as may beestablished by the Committee, or as may be necessary in order to comply withapplicable withholding obligations, whether attributable to withholdingsrequired under applicable law or other authorized withholdings) of theParticipant's Base Compensation that the Participant wishes to defer. A validlyexecuted election shall become effective with respect to Base Compensationearned by the Participant in the first payroll period that commences on or afterthe date on which the Participant's deferral election is received and acceptedby the Committee, or as soon thereafter as practicable. A Participant's deferralelection, once effective, shall remain in effect until modified by theParticipant in accordance with subsection (b) below or otherwise revoked inaccordance with Plan rules.

    (b) Revised Deferral Election. A Participant may modify histhen current deferral election by filing a revised election form, properlycompleted and signed, with the Committee. A validly executed revised electionwill be effective with respect to Base Compensation earned by the Participantwith the first payroll period commencing on or after the date on which theParticipant's revised deferral election is received and accepted by theCommittee, or as soon thereafter as practicable. A Participant's reviseddeferral election, once effective, shall remain in effect until again modifiedby the Participant under this subsection (b) or otherwise revoked in accordancewith Plan rules.

   Section 3.03. Deferralsof Annual Bonus Awards.

    A Participant may irrevocably elect, in such form and manner as the Committeemay prescribe, to defer payment of a portion of the annual cash bonus that isawarded and that would 

 

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 otherwise be paid to the Participant with respect to anyyear. A Participant's election shall specify the percentage (in increments of 1%to a maximum of 100% or such lesser amount or percentage as may be establishedby the Committee, or as may be necessary in order to comply with applicablewithholding obligations, whether attributable to withholdings required underapplicable law or other authorized withholdings) of the Participant's annualcash bonus that the Participant wishes to defer. A validly executed electionshall become effective with respect to the annual bonus that may be awarded tothe Participant with respect to a calendar year if the Participant's deferralelection is received and accepted by the Committee on or before April 1 of thatcalendar year or within such other period as the Committee may establish. AParticipant's election to defer an annual bonus award shall be effective onlyfor the year to which the election relates, and shall not carry over from yearto year. Notwithstanding the foregoing, a Participant's election to defer all ora portion of a bonus award shall not be effective with respect to a bonus paidafter the Participant's termination of employment if distribution to theParticipant in accordance with Article VII has commenced.

   Section 3.04. Deferralof LTIP Performance Share Awards.

    A Participant may irrevocably elect, in such form and manner as the Committeemay prescribe, to defer payment of a portion of any performance shares awardedto the Participant under the WPS Resources Corporation 2001 Omnibus IncentiveCompensation Plan or any successor plan. A Participant's election shall specifythe whole number of performance shares (up to 100% of such shares or such lessernumber or percentage as may be established by the Committee, or as may benecessary in order to comply with applicable withholding obligations, whetherattributable to withholdings required under applicable law or other authorizedwithholdings) of the Participant's award that the Participant wishes to defer. Avalidly executed election shall become effective with respect to performanceshares to be earned by the Participant with respect to any performance periodunder the WPS Resources Corporation 2001 Omnibus Incentive Compensation Plan (orany successor plan) if the Participant's deferral election is received andaccepted by the Committee on or before April 1 of the calendar year in which theperformance period begins, or within such other period as the Committee mayestablish. A Participant's election to defer a performance share award shall beeffective only for the performance period to which the election relates, and aParticipant's election does not carry 

 

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 over from performance period toperformance period. A Participant's LTIP Deferral will be automatically creditedto the Participant's Incentive Stock Unit Account. Notwithstanding theforegoing, a Participant's election to defer all or a portion of a bonus awardshall not be effective with respect to a bonus paid after the Participant'stermination of employment if distribution to the Participant in accordance withArticle VII has commenced.

   Section 3.05. MatchingContribution Credits.

    (a) Allocation of Credits. A Participant who is a participantin the Wisconsin Public Service Corporation Administrative Employees' SavingsPlan ("Savings Plan") and who makes Base Compensation Deferrals and/orAnnual Bonus Deferrals under this Plan shall be entitled to a matchingcontribution credit, determined as of December 31 of each year, equal to thedifference (if any) between:

(i) The value of the matching contribution that the            Participant would have received under the Savings Plan, if Base            Compensation Deferrals and Annual Bonus Deferrals made by the            Participant under this Plan were instead treated as            "compensation" under the Savings Plan for purposes of            applying the Participant's deferral election under the Savings Plan;            provided that all limits and restrictions otherwise imposed under            the Savings Plan, including the maximum compensation limit under            Section 401(a)(17) of the Code, shall continue to apply; and

(ii) The value of the matching contribution actually            received by the Participant for that year under the Savings Plan.

    (b) Investment of Credits. A Participant's matchingcontribution credit will be automatically credited to the Participant'sIncentive Stock Unit Account.

 

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   Section 3.06. InvoluntaryTermination of Deferral Elections.

    A Participant's deferral elections shall be automatically revoked upon theParticipant's termination of employment from the Participating Employers, unlessthe Committee determines otherwise. In addition, a Participant's deferralelection will terminate if the Committee determines that the Participant is nolonger eligible to participate in the Plan or that revocation of a Participant'seligibility is necessary or desirable in order for the Plan to qualify underERISA as a plan of deferred compensation for a select group of management orhighly compensated employees.

 

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ARTICLE IV. DIRECTOR DEFERRED COMPENSATION

    Section 4.01. Application.This Article IV applies only to Directors.

   Section4.02. DeferralsOf Director Fees.
    (a) Initial Deferral Election. A Director may elect, in suchform and manner as the Committee may prescribe, to defer payment of all or aportion of the Director Fees that would otherwise be paid to the Director. ADirector's election shall specify the percentage (in increments of 1% to amaximum of 100% or such lesser amount or percentage as may be established by theCommittee, or as may be necessary in order to comply with applicable withholdingobligations, whether attributable to withholdings required under applicable lawor other authorized withholdings) of the Director Fees that the Director wishesto defer. A validly executed election shall become effective with respect toDirector Fees earned by the Director on and after the date on which theDirector's deferral election is received and accepted by the Committee, or assoon thereafter as practicable. A Director's deferral election, once effective,shall remain in effect until modified by the Director in accordance withsubsection (b) below or otherwise revoked in accordance with Plan rules.

    (b) Revised Deferral Election. A Director may modify his thencurrent deferral election by filing a revised election form, properly completedand signed, with the Committee. A validly executed revised election will beeffective with respect to Director Fees earned by the Director on and after thedate on which the Director's revised deferral election is received and acceptedby the Committee, or as soon thereafter as practicable. A Director's reviseddeferral election, once effective, shall remain in effect until again modifiedby the Director in accordance with this subsection (b) or otherwise revoked inaccordance with Plan rules.

   Section4.03. DeferredStock Units.
    The Board may from time to time direct that a portion of the remuneration tobe earned by a Director for service on the Board shall be credited under thisPlan in the form of Deferred Stock Units. Any such direction shall be effectivewith respect to remuneration to be earned by the Director on and after theeffective date of such direction, and shall continue in effect until modified orrevoked by a subsequent direction of the Board. The Board's direction mayprovide 

 

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 either for the direct credit of Deferred Stock Units or for themandatory deferral of a prescribed amount of cash remuneration that will beconverted into WPS Stock Units in accordance with Section 5.04(b) below.

   Section 4.04. InvoluntaryTermination of Deferral Elections.

    A Director's deferral elections shall be automatically revoked upon theDirector's termination of service with the Participating Employers, unless theCommittee determines otherwise. In addition, a Director's deferral election willterminate if the Committee determines that the Director is no longer eligible toparticipate in the Plan.

 

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ARTICLE V. HYPOTHETICAL INVESTMENT OPTIONS

    Section 5.01. ReserveAccount A.

    (a) Limited Purpose Account. Reserve Account A is limited tocompensation or director fees deferred by a Participant prior to January 1,1996, together with attributed earnings on such deferrals. Except for attributedearnings as described below, no further deferrals, contributions or credits ofany kind will be made to this account on behalf of a Participant.

    (b) Crediting of Interest Equivalent. Reserve Account A will becredited with an interest equivalent on the balance in the account from time totime during the year. Unless the Committee prescribes an alternate method, theannual interest equivalent rate (on a non-compounded basis) will be the greaterof:

(i) six percent (6.0%); or

(ii) a rate equal to the consolidated return on common            shareholders' equity of the Company and all consolidated            subsidiaries (ROE); provided, however, that unless the Committee            determines otherwise, this Paragraph (ii) will not apply to an            Eligible Employee following termination of employment if the            Eligible Employee's termination of employment with the Participating            Employers occurs prior to attainment of age 55 and prior to the            occurrence of a Change in Control (as defined in Section 9.01). For            the months of April through September, ROE means the consolidated            return on equity of the Company and all consolidated subsidiaries            for the twelve (12) months ended on the preceding February 28 (or            29) as calculated pursuant to the Company's standard accounting            procedure for financial reporting to shareholders. For the months            October through March, ROE means return on equity as 

 

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 described above            for the twelve (12) months ended on the preceding August 31.

    (c) Revised Rate. Subject to Article IX, the Committee mayrevise the interest equivalent rate or the manner in which it is calculated, butin no event shall the rate be less than six percent (6%) per annum. Any suchrevised rate shall be effective with the calendar month following such action bythe Committee.

   Section 5.02. ReserveAccount B.

    (a) Availability. Reserve Account B is an Available InvestmentOption with respect to the deemed investment of Base Compensation Deferrals,Director Deferrals and Annual Bonus Deferrals. It is credited with earningsequivalent based upon a percentage of the Company's return on equity for theyear. Separate subaccounts will be maintained for (i) the portion of theParticipant's balance in Reserve Account B that is attributable to Deferralsthrough June 30, 2001, together with subsequent credits of interest equivalenton such Deferrals ("Pre-July 1, 2001 Reserve Account B"), and (ii) theportion of a Participant's balance in Reserve Account B that is attributable toDeferrals made after June 30, 2001, and subsequent credits of interestequivalent on such Deferrals ("Post-June 30, 2001 Deferrals").

    (b) Crediting of Interest Equivalent. Reserve Account B will becredited with an interest equivalent on the balance in the account from time totime during the year. Unless the Committee prescribes an alternate method, theannual interest equivalent rate (on a non-compounded basis) will be the greaterof:

(i) six percent (6.0%); or

(ii) a rate equal to seventy percent (70%) of the            consolidated return on common shareholders equity of the Company and            all consolidated subsidiaries (ROE); provided, however, that unless            the Committee determines otherwise, this Paragraph (ii) will not            apply to an Eligible Employee following termination of employment if            the Eligible Employee's termination of employment with the

 

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 Participating Employers occurs prior to attainment of age 55 and            prior to the occurrence of a Change in Control (as defined in            Section 9.01). For the months of April through September, ROE            means the consolidated return on equity of the Company and all            consolidated subsidiaries for the twelve (12) months ended on the            preceding February 28 (or 29) as calculated pursuant to the            Company's standard accounting procedure for financial reporting to            shareholders. For the months October through March, ROE means return            on equity as described above for the twelve (12) months ended on the            preceding August 31.

    (c) Revised Rate. Subject to Article IX, the Committee mayrevise the interest equivalent rate or the manner in which it is calculated, butin no event shall the rate be less than six percent (6%) per annum. Any suchrevised rate shall be effective with the calendar month following such action bythe Committee.

    Section 5.03. IncentiveStock Unit Account.

    (a) Limited Purpose "Buy Only" Account. The IncentiveStock Unit Account is a "buy only" account limited to (i) Annual BonusDeferrals that are made after June 30, 2001 pursuant to Section 3.03 and thatthe Eligible Employee elects to be credited to the Incentive Stock Unit Accountin accordance with Section 6.01(c), (ii) LTIP Deferrals made after June 30, 2001pursuant to Section 3.04, and (iii) matching contribution credits made afterJune 30, 2001 pursuant to Section 3.05.

    (b) Conversion to WPS Stock Units. All eligible Deferrals madeby or on behalf of a Participant and allocated to the Incentive Stock UnitAccount and all of a Participant's matching contribution credits under Section3.05 (the "Incentive Stock Unit Convertible Amount") are converted,for record keeping purposes, into whole and fractional WPS Resources StockUnits, with fractional units calculated to four decimal places. The conversionshall be accomplished by dividing each Participant's Incentive Stock UnitConvertible Amount by the closing price of a share of WPS Resources Stock on thedate on which the Deferral or credit would otherwise have 

 

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 been paid to theParticipant, as reported in the Wall Street Journal's New York Stock ExchangeComposite Transaction listing. Likewise, any dividends that would have beenpayable on the WPS Resources Stock Units credited to a Participant's IncentiveStock Unit Account had such Units been actual shares of WPS Resources Stockshall be converted, for record keeping purposes, into whole and fractional WPSResources Stock Units based on the closing price of a share of WPS ResourcesStock on the dividend date.

    Section5.04. DeferredStock Unit Account.
    (a) Limited Purpose "Buy Only" Account. A Director'sDeferred Stock Unit Account is a "buy only" account limited toDeferred Stock Units allocated to the Director in accordance with Section 3.01above. The Director is not able to exercise investment discretion with respectto his Deferred Stock Unit Account.

    (b) Conversion to WPS Stock Units. All amounts directed by theBoard in accordance with Section 4.03 above shall be credited to the Director'sDeferred Stock Unit Account. If the Board directs that a Director be creditedwith a prescribed number of WPS Resources Stock Units, the number of units soprescribed shall be credited to the Director's Deferred Stock Unit Account. Ifthe Board directs that a Director be credited with WPS Resources Stock Unitswith a prescribed value, the value to be credited (the "Deferred Stock UnitConvertible Amount") will be converted, for record keeping purposes, intowhole and fractional WPS Resources Stock Units, with fractional units calculatedto four decimal places. The conversion shall be accomplished by dividing eachDirector's Deferred Stock Unit Convertible Amount by the closing price of ashare of WPS Resources Stock on the effective date of the grant, as reported inthe Wall Street Journal's New York Stock Exchange Composite Transactionslisting. Any dividends that would have been payable on the WPS Resources StockUnits credited to a Director's Deferred Stock Unit Account had such Units beenactual shares of WPS Resources Stock shall be converted, for record keepingpurposes, into whole and fractional WPS Resources Stock Units based on thepurchase price at which shares of WPS Resources Stock were purchased under theWPS Resources Corporation Stock Investment Plan on the purchase date that iscoincident with or closest to the dividend date.

 

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    Section 5.05. BaseStock Unit Account.

    (a) Availability. The Base Stock Unit Account is an AvailableInvestment Option with respect to the deemed investment of Base CompensationDeferrals, Director Deferrals and Annual Bonus Deferrals that are made afterJune 30, 2001 and that the Participant elects to have credited to the Base StockUnit Account in accordance with Section 6.01(b) and (c).

    (b) Conversion to WPS Stock Units. All eligible Deferrals madeby or on behalf of a Participant and allocated to the Base Stock Unit Account(the "Base Stock Unit Convertible Amount") are converted, for recordkeeping purposes, into whole and fractional WPS Resources Stock Units, withfractional units calculated to four decimal places. The conversion shall beaccomplished by dividing each Participant's Base Stock Unit Convertible Amountby the closing price of a share of WPS Resources Stock on the date on which theDeferral would otherwise have been paid to the Participant, as reported in theWall Street Journal's New York Stock Exchange Composite Transaction listing.Likewise, any dividends that would have been payable on the WPS Resources StockUnits credited to a Participant's Incentive Stock Unit Account had such Unitsbeen actual shares of WPS Resources Stock shall be converted, for record keepingpurposes, into whole and fractional WPS Resources Stock Units based on theclosing price of a share of WPS Resources Stock on the dividend date.

    (c) Conversion from WPS Stock Units. If a Participant electsunder Section 6.01(f) to reallocate all or any portion of his Base Stock UnitAccount among the other Available Investment Options, the WPS Resources StockUnits to which such election relates shall be converted, for record keepingpurposes, into an amount equal to the product of such units and the closingprice of a share of WPS Resources Stock, on the effective date of suchreallocation, as reported in the Wall Street Journal's New York Stock ExchangeComposite Transaction listing.

    (d) Securities Law Restrictions. Notwithstanding anything tothe contrary herein, all elections under Section 6.01(f) by a Participant who issubject to Section 16 of the Exchange Act are subject to review by the Committeeprior to implementation. Further, the following reallocation transactions underSection 6.01(f) by a Participant who is subject to Section 16 of the ExchangeAct are prohibited: (i) elections to reallocate the deemed investment of theaffected Participant's Account into WPS Resources Stock Units within six (6)months of an election to 

 

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 reallocate deemed investments out of WPS ResourcesStock Units; and (ii) elections to reallocate the deemed investment of theaffected Participant's Account out of WPS Resources Stock Units within six (6)months of an election to reallocate deemed investments into WPS Resources StockUnits (collectively, "Prohibited Transactions"). All ProhibitedTransactions are void. In accordance with Section 10.02, the Committee mayrestrict additional transactions, or impose other rules and procedures, to theextent deemed desirable by the Committee in order to comply with the ExchangeAct, including, without limitation, application of the review and approvalprovisions of this Section 5.05(d) to Participants who are not subject toSection 16 of the Exchange Act.

   Section 5.06. PriorPlan WPS Stock Unit Account.

    (a) Limited Purpose Account. The Prior Plan WPS Stock UnitAccount is limited to WPS Resources Stock Units credited to a Participant underthe Plan (or a predecessor plan) through June 30, 2001, together with suchadditional WPS Resources Stock Units as are credited in accordance withsubsection (b) below based on deemed dividends on such WPS Resources StockUnits.

    (b) Dividend Credits. Any dividends that would have beenpayable on the WPS Resources Stock Units credited to a Participant's Prior PlanWPS Stock Unit Account had such Units been actual shares of WPS Resources Stockshall be converted, for record keeping purposes, into whole and fractional WPSResources Stock Units, and shall be credited to the Prior Plan WPS Stock UnitAccount, based on the closing price of a share of WPS Resources Stock on thedividend date.

 

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ARTICLE VI. ACCOUNTING AND HYPOTHETICAL INVESTMENTELECTIONS

    Section 6.01. HypotheticalInvestment of Participant Accounts.

    (a) Available Investment Options.

(i) For purposes of directing the deemed investment of            Base Compensation Deferrals and Director Deferrals under subsection            (b) below and for purposes of reallocating the deemed investment of            the Participant's Account under subsection (f) below, the Available            Investment Options shall be all of the Investment Options other than            Reserve Account A, the Prior Plan WPS Stock Unit Account, the            Incentive Stock Unit Account and the Deferred Stock Unit Account.

(ii) For purposes of directing the deemed investment of            Annual Bonus Deferrals under subsection (c) below, the Available            Investment Options shall be all of the Investment Options other than            Reserve Account A, the Prior Plan WPS Stock Unit Account and the            Deferred Stock Unit Account.

    (b) Deemed Investment of Base Compensation Deferrals and DirectorDeferrals. In accordance with uniform rules prescribed by the Committee,each Participant shall designate, in writing or in such other manner as theCommittee may prescribe, how Base Compensation Deferrals or Director Deferralsmade while the designation is in effect are credited among the AvailableInvestment Options. When selecting more than one Available Investment Option,the Participant shall designate, in whole multiples of 1% or such otherpercentage determined by the Committee, the percentage of his or her BaseCompensation Deferrals or Director Deferrals to be credited to each AvailableInvestment Option. If the Participant fails to make a timely and completeinvestment designation, he or she shall be deemed to have elected that 100% ofhis or her Base Compensation Deferrals be credited to Reserve Account B or suchother of the Available Investment Options specified by the Committee for thispurpose. A Participant's 

 

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 election or deemed election shall become effectivebeginning with the first payroll period commencing or payment date occurring onor after the date on which the election is received and accepted by theCommittee, or such other date established by the Committee for this purpose, andshall remain in effect unless and until modified by a subsequent election thatbecomes effective in accordance with the rules of this subsection.

    (c) Deemed Investment of Annual Bonus Deferrals. In accordancewith uniform rules prescribed by the Committee, each Participant shalldesignate, in writing or in such other manner as the Committee may prescribe,how Annual Bonus Deferrals made while the designation is in effect are creditedamong the Available Investment Options. When selecting more than one AvailableInvestment Option, the Participant shall designate, in whole multiples of 1% orsuch other percentage determined by the Committee, the percentage of his or herAnnual Bonus Deferrals to be credited to each Available Investment Option;provided, that with respect to any portion of the Annual Bonus Deferral that theParticipant allocates to the Incentive Stock Unit Account, the amount allocatedto such account will be 105% of the amount designated by the Participant fordeferral into the Incentive Stock Unit Account. If the Participant fails to makea timely and complete investment designation, he or she shall be deemed to haveelected that 100% of his or her Annual Bonus Deferral be credited to ReserveAccount B or such other Investment Option specified by the Committee for thispurpose. Except as provided in Section 3.03, a Participant's election or deemedelection shall become effective with respect to annual bonus amounts awarded onor after the date on which the election is received and accepted by theCommittee, and shall remain in effect unless and until modified by a subsequentelection that becomes effective in accordance with the rules of this subsection.

    (d) Deemed Investment of LTIP Deferrals. LTIP Deferrals underSection 3.04 and matching contribution credits under Section 3.05 are creditedto the Incentive Stock Unit Account. The Participant is not permitted to make aninvestment election with respect to LTIP Deferrals and matching contributioncredits.

    (e) Allocation of Deemed Investment Gain or Loss. On each daythat the New York Stock Exchange is open for business, or at such other times asthe Committee may prescribe (the "Valuation Date"), the Account ofeach Participant will be credited (or charged) based upon the 

 

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 investment gain(or loss) that the Participant would have realized with respect to his or herAccount since the immediately preceding Valuation Date had the Account beeninvested in accordance with the terms of the Plan and where applicable, theParticipant's election. Subject to the special rules set forth in Article V withrespect to Reserve Account A, Reserve Account B, the Incentive Stock UnitAccount, the Deferred Stock Unit Account, the Base Stock Unit Account and thePrior Plan WPS Stock Unit Account, the credit (or charge) shall be the sum,separately calculated for each of the Investment Options, of the productobtained by multiplying (i) the portion (if any) of the Participant's Account asof the immediately prior Valuation Date that is deemed to have been invested ineach Investment Option, and (ii) the rate of return experienced by thatInvestment Option since the immediately preceding Valuation Date. The Committee,in its discretion, may prescribe alternate rules for the valuation ofParticipant Accounts, including, without limitation, the application of unitaccounting principles.

    (f) Reallocation of Account. Subject to Section 5.05(d), and inaccordance with rules prescribed by the Committee (which may include limitationson the timing or frequency of reallocation transactions initiated by some or allParticipants), each Participant may elect to reallocate his or her Account(other than the portion deemed to be invested in Reserve Account A, Pre-July 1,2001 Reserve Account B, the Prior Plan WPS Stock Unit Account, the IncentiveStock Unit Account and the Deferred Stock Unit Account) among the AvailableInvestment Options. When selecting more than one Investment Option, theParticipant shall designate, in whole multiples of 1% or such other percentagedetermined by the Committee, the percentage of his or her Account (other thanthe portion that is deemed to be invested in Reserve Account A , the IncentiveStock Unit Account or the Deferred Stock Unit Account) that is deemed to beinvested in each Available Investment Option after the investment reallocationis given effect. Once effective, a Participant's reallocation shall remain ineffect unless and until modified by a subsequent election that becomes effectivein accordance with the rules prescribed by the Committee. Other than areallocation of a Participant's Account pursuant to a revised investmentelection submitted by the Participant, the deemed investment allocation of aParticipant will not be adjusted to reflect differences in the relativeinvestment return realized by the various hypothetical Investment Options thatthe Participant has designated.

 

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   Section 6.02. Accountsare For Record Keeping Purposes Only.

    Plan Accounts and the record keeping procedures described herein serve solelyas a device for determining the amount of benefits accumulated by a Participantunder the Plan, and shall not constitute or imply an obligation on the part of aParticipating Employer to fund such benefits. In any event, a ParticipatingEmployer may, in its discretion, set aside assets equal to part or all of suchaccount balances and invest such assets in Company stock, life insurance or anyother investment deemed appropriate. Any such assets, including WPS ResourcesStock and any other assets held under the Trust, shall be and remain the soleproperty of the Company and except to the extent that the Trust authorizes aParticipant to direct the trustee with respect to the voting of WPS ResourcesStock held in the Trust, a Participant shall have no proprietary rights of anynature whatsoever with respect to such assets.

 

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** 

ARTICLE VII. DISTRIBUTION OF ACCOUNTS

     Section 7.01. DistributionElection.

    (a) Election. A Participant, at the time he commencesparticipation in the Plan, shall make a distribution election with respect tohis Account. The election shall be in such form as the Committee may prescribe,and shall specify the distribution commencement date, the distribution period,and the distribution method applicable following the Participant's death. Anysuch election shall be consistent with the following rules (or where theParticipant fails to make a selection, in accordance with the default rules setforth below):

(i) Distribution Commencement Date. Unless the            Participant has selected a later commencement date (which in no            event shall be later than the first distribution period following            the Participant's attainment of age 72), distribution of a            Participant's Accounts will commence within 60 days following the            end of the calendar year in which the Participant terminates            employment or service from all Participating Employers. For purposes            of this Plan, an Eligible Employee who is disabled shall be deemed            to have retired or terminated at the conclusion of benefits under            all disability income plans sponsored by a Participating Employer or            to which a Participating Employer contributes, unless otherwise            determined by the Committee. Further, an Eligible Employee who            ceases employment with a Participating Employer in connection with            an early retirement (reduction in force) program sponsored by the            Participating Employer shall, if a participant in the Wisconsin            Public Service Administrative Employees Retirement Plan, be deemed            to have retired upon commencement of retirement benefits under such            plan.

 

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(ii) Distribution Period. Distributions will be            made in 1 to 15 annual installments, as elected by the Participant.

(iii) Distribution of Remaining Account Following            Participant's Death. In the event of the Participant's death,            the Participant's remaining undistributed interest will be            distributed to the Participant's Beneficiary in accordance with the            distribution election (single sum payment or installments) elected            by the Participant. If the Participant had elected a single sum, the            payment shall be made on or about March 1 following the calendar            year in which occurs the Participant's death. If the Participant had            elected an installment distribution, (A) any installments previously            commenced to the Participant shall continue to the Beneficiary and            (B) if installment distributions had not commenced as of the date of            the Participant's death, payments over the installment period            elected by the Participant shall commence to the Beneficiary on or            about March 1 following the calendar year in which occurs the            Participant's death.

    (b) Effectiveness of Election. A distribution election shall bedeemed made only when it is received and accepted as complete by the Committee,and shall remain in effect until modified by the Participant in accordance withSection 7.02 below or otherwise revoked in accordance with Plan rules.

    Section 7.02. ModifiedDistribution Election.

    A Participant may from time to time modify his distribution election byfiling a revised distribution election, properly completed and signed, with theCommittee. However, a revised distribution election will be given effect only ifthe Participant remains employed by a Participating Employer for twelve (12)consecutive months following the date that the revised election is received andaccepted as complete by the Committee.

 

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    Section 7.03. Calculationof Annual Distribution Amount.

    (a) Pre-2001 Retirees. For any Participant who retired orterminated employment or service prior to January 1, 2001, distribution of theParticipant's Account will be calculated and made under the distributionprovisions of the Plan applicable to the Participant on the date of theParticipant's retirement or termination of employment or service.

    (b) Post-2000 Retirees. For a Participant who retires orterminates employment or service after December 31, 2000, the annualdistribution amount, unless the Committee specifies a different or alternatemethod, shall be calculated as follows:

(i) The annual distribution amount for the Participant's            Account, other than the portion of the Account that is deemed to be            invested in the Stock Unit Accounts (the "Distributable            Account"), shall be determined by dividing (A) the aggregate            balance in the Distributable Account as of January 1 of the year for            which the distribution is being made, by (B) the number of            installment payments remaining to be made under the distribution            period selected by the Participant. Distributions shall be made in            cash. The amount of any distribution under this Paragraph (i) will            be charged pro-rata against the Participant's interest in each            Investment Option comprising the Distributable Account.            Notwithstanding the foregoing, the last installment payment of the            Distributable Account shall be adjusted to take into account deemed            investment gains or losses for the period between the January 1            valuation date and the date of actual payment according to such            methods and procedures adopted by the Committee.

(ii) The annual distribution amount for each of the Stock            Unit Accounts shall be determined on a share basis by dividing (A)            the number of WPS Resources Stock Units credited to 

 

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 the relevant            Stock Unit Account as of January 1 of the year for which the            distribution is being made (subject to subsequent adjustment under            Section 8.01), by (B) the number of installment payments            remaining to be made under the distribution period selected by the            Participant. The Participant will receive shares of WPS Resources            Stock equal to the annual distribution amount, subject only to the            distribution of cash in lieu of any fractional WPS Resources Stock            Unit. The cash payment for any fractional WPS Resources Stock Unit            shall be determined based upon the closing price of a share of WPS            Resources Stock on January 21 of the year in which the distribution            is being made, as such share price is reported in the Wall Street            Journal's New York Stock Exchange Composite Transactions listing. If            January 21 falls on a Saturday, Sunday or holiday, the calculation            of the cash portion of the distribution will be made based upon the            closing price as reported for the immediately preceding business            day.

    Section 7.04. Timeof Distribution.

    Subject to the provisions of Sections 8.01 and 9.02, each distributionof WPS Resources Stock made to a Participant (or Beneficiary) shall bedistributed on January 22 (or if January 22 falls on a Saturday, Sunday orholiday, the immediately following business day). For distribution and taxreporting purposes, the value of WPS Resources Stock distributed shall equal thenumber of shares distributed multiplied by the closing price of WPS ResourcesStock on January 21 (or if January 21 falls on a Saturday, Sunday or holiday,the immediately preceding business day) of the year in which the distribution isbeing made as reported in the Wall Street Journal's New York Stock ExchangeComposite Transaction listing. The cash portion of any distribution will be madeno later than March 1 of the year for which the distribution is being made.

 

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   Section 7.05. OtherDistribution Rules.

    (a) Limit on Shares. Subject to adjustment as provided insubsection (c) below, the total number of authorized but previously unissuedshares of WPS Resources Stock which may be distributed to Participants orBeneficiaries pursuant to the Plan shall be two hundred fifty thousand(250,000), which number shall not be reduced by or as a result of (i) any cashdistributions pursuant to the Plan or (ii) the distribution to Participants orBeneficiaries pursuant to the Plan of any outstanding shares of WPS ResourcesStock purchased by or on behalf of the Trust.

    (b) Tax Withholding. The amount actually distributed to theParticipant will be reduced by applicable income tax withholding (if any).Unless the Participant has made a contrary election, income tax on the entireannual distribution amount will be withheld from the cash portion of thedistribution, and WPS Resources Stock will be used to satisfy withholdingobligations only to the extent that the cash portion of the distribution isinsufficient for this purpose.

    (c) Single Sum Distribution at the Committee's Option.

(i) In the case of an Eligible Employee whose employment            with a Participating Employer is involuntarily terminated by the            Participating Employer, or whose employment with a Participating            Employer is mutually terminated in accordance with a separation            agreement and release between the Participating Employer and such            Participant, the Committee may (but need not) direct that the            Eligible Employee's Account be distributed in the form of a single            sum payment in lieu of distribution over any installment            distribution period that would otherwise apply. If so directed by            the Committee, the single sum distribution shall be made in cash            and/or shares of WPS Resources Stock (as determined in accordance            with Section 7.03) and shall be made at the time specified in            Section 7.04.

 

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(ii) In the case of any other Participant or Beneficiary            whose Account has a value of $100,000 or less as of the valuation            date that immediately precedes the date on which distribution would            first be made to the Participant or Beneficiary, the Committee may            (but need not) direct that the Participant's Account be distributed            in the form of a single sum payment in lieu of any installment            distribution period that would otherwise apply. If so directed by            the Committee, the single sum distribution shall be made in cash            and/or shares of WPS Resources Stock (as determined in accordance            with Section 7.03) and shall be made at the time specified in            Section 7.04.

 

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** 

ARTICLE VIII. RULES WITH RESPECT TO WPS RESOURCES  STOCK  AND WPS RESOURCES STOCK UNITS

    Section 8.01. TransactionsAffecting WPS Resources Stock.

    In the event of any merger, share exchange, reorganization, consolidation,recapitalization, stock dividend, stock split or other change in corporatestructure of the Company or a Participating Employer affecting WPS ResourcesStock, the Committee may make appropriate equitable adjustments with respect tothe WPS Resources Stock Units (if any) credited to the Stock Unit Accounts ofeach Participant, including without limitation, adjusting the date as of whichsuch units are valued and/or distributed, as the Committee determines isnecessary or desirable to prevent the dilution or enlargement of the benefitsintended to be provided under the Plan.

   Section 8.02. NoShareholder Rights With Respect to WPS Resources Stock Units.

    Participants shall have no rights as a stockholder pertaining to WPSResources Stock Units credited to their Accounts. No WPS Resources Stock Unitnor any right or interest of a Participant under the Plan in any WPS ResourcesStock Unit may be assigned, encumbered, or transferred, except by will or thelaws of descent and distribution. The rights of a Participant hereunder withrespect to any WPS Resources Stock Unit are exercisable during the Participant'slifetime only by him or his guardian or legal representative.

 

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** 

ARTICLE IX. SPECIAL RULES APPLICABLE IN THE EVENT OF ACHANGE IN  CONTROL OF THE COMPANY

     Section 9.01. Definitions.

    For purposes of this Article VIII, the following terms shall have thefollowing respective meanings:

    (a) An "Affiliate" of, or a person "affiliated"with, a specified person is a person that directly, or indirectly through one ormore intermediaries, controls, or is controlled by, or is under common controlwith, the person specified and the term "Associate" used to indicate arelationship with any person, means (i) any corporation or organization (otherthan the registrant or a majority-owned subsidiary of the registrant) of whichsuch person is an officer or partner or is, directly or indirectly, thebeneficial owner of 10 percent or more of any class of equity securities, (ii)any trust or other estate in which such person has a substantial beneficialinterest or as to which such person serves as trustee or in a similar fiduciarycapacity, and (iii) any relative or spouse of such person, or any relative ofsuch spouse, who has the same home as such person or who is a director orofficer of the registrant or any of its parents or subsidiaries.

    (b) A person shall be deemed to be the "Beneficial Owner" ofany securities:

(i) which such Person or any of such Person's Affiliates            or Associates has the right to acquire (whether such right is            exercisable immediately or only after the passage of time) pursuant            to any agreement, arrangement, or under-standing, or upon the            exercise of conversion rights, exchange rights, or other rights,            warrants or options, or otherwise; provided, however,            that a Person shall not be deemed the Beneficial Owner of, or to            beneficially own, (A) securities tendered pursuant to a tender or            exchange offer made by or on behalf of such Person or any of such            Person's Affiliates or Associates until such tendered securities are            accepted for purchase or (B) securities issuable upon exercise of            Rights 

 

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 pursuant to the terms of the Company's Rights Agreement with            Firstar Trust Company (now US Bank), dated as of December 12, 1996,            as amended from time to time (or any successor to such Rights            Agreement) at any time before the issuance of such securities;

(ii) which such Person or any of such Person's Affiliates            or Associates, directly or indirectly, has the right to vote or            dispose of or has "beneficial ownership" of (as determined            pursuant to Rule 13d-3 of the General Rules and Regulations under            the Act), including pursuant to any agreement, arrangement or            understanding; provided, however, that a Person shall            not be deemed the Beneficial Owner of, or to beneficially own, any            security under this subparagraph (ii) as a result of an agreement,            arrangement or understanding to vote such security if the agreement,            arrangement or understanding: (A) arises solely from a revocable            proxy or consent given to such Person in response to a public proxy            or consent solicitation made pursuant to, and in accordance with,            the applicable rules and regulations under the Act and (B) is not            also then reportable on a Schedule 13D under the Act (or any            comparable or successor report); or

(iii) which are beneficially owned, directly or            indirectly, by any other Person with which such Person or any of            such Person's Affiliates or Associates has any agreement,            arrangement or understanding for the purpose of acquiring, holding,            voting (except pursuant to a revocable proxy as described in            Paragraph (ii) above) or disposing of any voting securities of the            Company.

 

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    (c) A "Change in Control" shall be deemed to have occurredif:

(i) any Person (other than any employee benefit plan of            the Company or of any subsidiary of the Company, any Person            organized, appointed or established pursuant to the terms of any            such benefit plan or any trustee, administrator or fiduciary of such            a plan) is or becomes the Beneficial Owner of securities of the            Company representing at least 30% of the combined voting power of            the Company's then outstanding securities;

(ii) one-half or more of the members of the Board are not            Continuing Directors;

(iii) there shall be consummated any merger,            consolidation, or reorganization of the Company with any other            corporation as a result of which less than 50% of the outstanding            voting securities of the surviving or resulting entity are owned by            the former shareholders of the Company other than a shareholder who            is an Affiliate or Associate of any party to such consolidation or            merger;

(iv) there shall be consummated any merger of the Company            or share exchange involving the Company in which the Company is not            the continuing or surviving corporation other than a merger of the            Company in which each of the holders of the Company's Common Stock            immediately prior to the merger have the same proportionate            ownership of common stock of the surviving corporation immediately            after the merger;

(v) there shall be consummated any sale, lease, exchange            or other transfer (in one transaction or a series of related 

 

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            transactions) of all, or substantially all, of the assets of the            Company to a Person which is not a wholly owned subsidiary of the            Company; or

(vi) the shareholders of the Company approve any plan or            proposal for the liquidation or dissolution of the Company.

    (d) "Continuing Directors" means (i) any member of theBoard of Directors of the Company who was a member of such Board on May 1,1997, (ii) any successor of a Continuing Director who is recommended tosucceed a Continuing Director by a majority of the Continuing Directors then onsuch Board, and (iii) additional directors elected by a majority of theContinuing Directors then on such Board.

    (e) "Person" means any individual, firm, partnership,corporation or other entity, including any successor (by merger or otherwise) ofsuch entity, or a group of any of the foregoing acting in concert.

   Section 9.02. Amendmentsin Connection with a Change in Control.

    (a) Board Authority to Amend or Terminate Plan. Prior to theoccurrence of a Change in Control, the Board may exercise its authority underSection 10.06, including, to the extent deemed necessary or desirable by theBoard in anticipation of a Change in Control, any of the following actions:

(i) The Board may amend the Plan to eliminate WPS            Resources Stock Units and cause the value of such units as of the            Amendment Date (such value to be determined under            Section 5.05(c)) to be reallocated to Reserve Account B. The            term "Amendment Date" means the date on which an amendment            to the Plan is validly adopted or the date on which the amendment is            or purports to be effective, whichever is later.

 

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(ii) The Board may terminate the Plan and require that all            benefits accrued to the date of termination (or such later date as            the Board specifies) be distributed to Participants (or            Beneficiaries), in a single sum regardless of a Participant's prior            election as to the form and timing of benefit payments.

    (b) Automatic Amendments. Unless terminated by the Boardpursuant to subsection (a)(ii), the Plan shall automatically be amendedupon a Change in Control to provide that:

(i) the rate of interest equivalent to be credited with            respect to Reserve Account A for each month following the Change in            Control shall be the greater of (A) the rate of interest equivalent            otherwise applicable with respect to Reserve Account A if such            amount were calculated based upon the consolidated return on common            shareholders equity of the Company (including for this purpose any            successor corporation that is the survivor of a merger with the            Company or any successor to that corporation) and all subsidiaries,            and (B) a rate equal to two (2) percentage points above the prime            lending rate at US Bank Milwaukee, Milwaukee, Wisconsin (or any            successor thereto) as of the last business day of that month; and

(ii) the rate of interest equivalent to be credited with            respect to Reserve Account B for each month following the Change in            Control shall be the greater of (A) the rate of interest equivalent            otherwise applicable with respect to Reserve Account B if such            amount were calculated based upon the consolidated return on common            shareholders equity of the Company (including for this purpose any            successor 

 

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 corporation that is the survivor of a merger with the            Company or any successor to that corporation) and all subsidiaries,            and (B) a rate equal to two (2) percentage points above the prime            lending rate at US Bank Milwaukee, Milwaukee, Wisconsin (or any            successor thereto) as of the last business day of that month. The            minimum rate of interest equivalent under clause (B) shall cease to            apply on the third anniversary of the Change in Control in the event            that the Participant is actively employed by the Company (or any            subsidiary or affiliate of the Company) on such date.

    (c) Prohibition on Certain Amendments. Notwithstanding theforegoing, on or after the effective date of a Change in Control, the Board orCompany may not, without the written consent of the affected Participant (or inthe case of a deceased Participant, the Participant's Beneficiary) amend thePlan or take an action to terminate the Plan that would:

(i) Result in a decrease in the number of, or a change in            the type of, Available Investment Options that were made available            under the Plan immediately prior to the Change of Control; or

(ii) Cause the Accounts to be valued under Section 6.01(e)            less frequently than quarterly; or

(iii) Impair or otherwise limit a Participant's rights to            reallocate his Accounts under Section 6.01(f) as in effect on the            date immediately prior to the Change in Control; or

(iv) Decrease the interest rate credited under Reserve            Account A or Reserve Account B as determined pursuant to subsection            (b) above, except as specifically provided therein; or

 

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(v) Eliminate the distribution options made available            under Section 7.02 or otherwise terminate any distribution elections            then in effect.

   Section 9.03. MaximumPayment Limitation.

    (a) Limit on Payments. Except as provided in subsection (b)below, if any portion of the payments or benefits described in this Plan orunder any other agreement with or plan of the Company (in the aggregate,"Total Payments"), would constitute an "excess parachutepayment", then the Total Payments to be made to the Participant shall bereduced such that the value of the aggregate Total Payments that the Participantis entitled to receive shall be one dollar ($1) less than the maximum amountwhich the Participant may receive without becoming subject to the tax imposed bySection 4999 of the Code or which the Company may pay without loss of deductionunder Section 280G(a) of the Code; provided that this Section shall not apply inthe case of a Participant who has in effect a valid employment contractproviding that the Total Payments to the Participant shall be determined withoutregard to the maximum amount allowable under Section 280G of the Code. The terms"excess parachute payment" and "parachute payment" shallhave the meanings assigned to them in Section 280G of the Code, and such"parachute payments" shall be valued as provided therein. Presentvalue shall be calculated in accordance with Section 280G(d)(4) of the Code.Within forty (40) days following delivery of notice by the Company to theParticipant of its belief that there is a payment or benefit due the Participantwhich will result in an excess parachute payment as defined in Section 280G ofthe Code, the Participant and the Company, at the Company's expense, shallobtain the opinion (which need not be unqualified) of nationally recognized taxcounsel selected by the Company's independent auditors and acceptable to theParticipant in his sole discretion (which may be regular outside counsel to theCompany), which opinion sets forth (A) the amount of the Base Period Income, (B)the amount and present value of Total Payments and (C) the amount and presentvalue of any excess parachute payments determined without regard to thelimitations of this Section. As used in this Section, the term "Base PeriodIncome" means an amount equal to the Participant's "annualizedincludible compensation for the base period" as defined in Section280G(d)(1) of the Code. For purposes of such opinion, the value of any noncashbenefits or any deferred payment or benefit shall be determined by the Company'sindependent auditors in 

 

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 accordance with the principles of Sections 280G(d)(3)and (4) of the Code, which determination shall be evidenced in a certificate ofsuch auditors addressed to the Company and the Participant. Such opinion shallbe addressed to the Company and the Participant and shall be binding upon theCompany and the Participant. If such opinion determines that there would be anexcess parachute payment, the payments hereunder that are includible in TotalPayments or any other payment or benefit determined by such counsel to beincludible in Total Payments shall be reduced or eliminated as specified by theParticipant in writing delivered to the Company within thirty days of hisreceipt of such opinion or, if the Participant fails to so notify the Company,then as the Company shall reasonably determine, so that under the bases ofcalculations set forth in such opinion there will be no excess parachutepayment. If such legal counsel so requests in connection with the opinionrequired by this Section, the Participant and the Company shall obtain, at theCompany's expense, and the legal counsel may rely on in providing the opinion,the advice of a firm of recognized executive compensation consultants as to thereasonableness of any item of compensation to be received by the Participant. Ifthe provisions of Sections 280G and 4999 of the Code (or any successorprovisions) are repealed without succession, then this Section shall be of nofurther force or effect.

    (b) Employment Contract Governs. The provisions of subsection(a) above shall not apply to a Participant whose employment is governed by anemployment contract that provides for Total Payments in excess of the limitationdescribed in subsection (a) above.

    Section 9.04. Resolutionof Disputes.

    If, after a Change in Control, (a) a dispute arises with respect to theenforcement of the Participant's rights under the Plan, or (b) any legalproceeding shall be brought to enforce or interpret any provision contained inthe Plan or to recover damages for breach of the Plan, in either case so long asthe Participant is not acting in bad faith or otherwise pursuing a course ofaction that a reasonable person would determine to be frivolous, the Participantshall recover from the Company any reasonable attorneys' fees and necessarycosts and disbursements incurred as a result of such dispute or legal proceeding("Expenses"), and prejudgment interest on any money judgment obtainedby the Participant calculated at the rate of interest announced by US BankMilwaukee, Milwaukee, Wisconsin (or any successor thereto), from time to time as 

 

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its prime or base lending rate from the date that payments to the Participantshould have been made under this Plan. Within ten (10) days after theParticipant's written request therefor, the Company shall pay to theParticipant, or such other person or entity as the Participant may designate inwriting to the Company, the Participant's Expenses in advance of the finaldisposition or conclusion of any such dispute or legal proceeding. In the caseof a deceased Participant, this Section shall apply with respect to theParticipant's Beneficiary or estate.

 

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** 

ARTICLE X. GENERAL PROVISIONS

    Section 10.01.Administration.

    The Committee shall administer and interpret the Plan and supervisepreparation of Participant elections, forms, and any amendments thereto. To theextent necessary to comply with applicable conditions of Rule 16b-3, theCommittee shall consist of not less than two members of the Board, each of whomis also a director of the Company and qualifies as a "non-employeedirector" for purposes of Rule 16b-3. If at any time the Committee shallnot be in existence or not be composed of members of the Board who qualify as"non-employee directors", then all determinations affectingParticipants who are subject to Section 16 of the Exchange Act shall be made bythe full Board, and all determinations affecting other Participants shall bemade by the Board or an officer of the Board. The Committee may, in itsdiscretion, delegate any or all of its authority and responsibility; providedthat the Committee shall not delegate authority and responsibility with respectto non-ministerial functions that relate to the participation by Participantswho are subject to Section 16 of the Exchange Act at the time any such delegatedauthority or responsibility is exercised. To the extent of any such delegation,any references herein to the Committee shall be deemed references to suchdelegee. Interpretation of the Plan shall be within the sole discretion of theCommittee and shall be final and binding upon each Participant and Beneficiary.The Committee may adopt and modify rules and regulations relating to the Plan asit deems necessary or advisable for the administration of the Plan. If anydelegee of the Committee shall also be a Participant or Beneficiary, anydeterminations affecting the delegee's participation in the Plan shall be madeby the Committee.

   Section 10.02.Restrictions to Comply with Applicable Law.

    (a) General Restrictions. Notwithstanding any other provisionof the Plan, the Company shall have no liability to deliver any shares of WPSResources Stock under the Plan or make any payment unless such delivery orpayment would comply with all applicable laws and the applicable requirements ofany securities exchange or similar entity. In addition, transactions under thePlan are intended to comply with all applicable conditions of Rule 16b-3 underthe Exchange Act. The Committee shall administer the Plan so that transactionsunder the Plan will be exempt from Section 16 of the Exchange Act, and shallhave the right to restrict any 

 

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 transaction, or impose other rules andrequirements, to the extent it deems necessary or desirable for such exemptionto be met.

    (b) Restriction on Transfer. Shares of WPS Resources Stockissued under the Plan may not be sold or otherwise disposed of except (i)pursuant to an effective registration statement under the Act, or in atransaction which, in the opinion of counsel for the Company, is exempt fromregistration under the Act; and (ii) in compliance with state securities laws.Further, as a condition to issuance of shares of WPS Resources Stock under thePlan, the Participant, his Beneficiary or his heirs, legatees or legalrepresentatives, as the case may be, shall execute and deliver to the Company arestrictive stock transfer agreement in such form, and subject to such terms andconditions, as shall be reasonably determined or approved by the Committee,which agreement, among other things, may impose certain restrictions on the saleor other disposition of any shares of stock acquired under the Plan. TheCommittee may waive the foregoing restrictions, in whole or in part, in anyparticular case or cases or may terminate such restrictions whenever theCommittee determines that such restrictions afford no substantial benefit to theCompany.

    (c) Additional Restrictions; Legends. All shares of WPSResources Stock delivered under the Plan shall be subject to such stock transferorders and other restrictions as the Committee may deem advisable under the Planand any applicable federal or state securities laws, and the Committee may causea legend or legends to be put on any certificates to make appropriate referencesto such restrictions.

   Section 10.03.Claims Procedures.

    (a) If a Participant, or Beneficiary (the "claimant")believes that he is entitled to a benefit under the Plan that is not provided,the claimant or his legal representative shall file a written claim for suchbenefit with the Committee. The Committee shall review the claim within 90 daysfollowing the date of receipt of the claim; provided that the Committee maydetermine that an additional 90-day extension is necessary due to circumstancesbeyond the Committee's control, in which event the Committee shall notify theclaimant prior to the end of the initial period that an extension is needed, thereason therefor and the date by which the Committee expects to render adecision. If the claimant's claim is denied in whole or part, the Committee 

 

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shall provide written notice to the claimant of such denial. The written noticeshall include the specific reason(s) for the denial; reference to specific Planprovisions upon which the denial is based; a description of any additionalmaterial or information necessary for the claimant to perfect the claim and anexplanation of why such material or information is necessary; and a descriptionof the Plan's review procedures (as set forth in subsection (b)) and the timelimits applicable to such procedures, including a statement of the claimant'sright to bring a civil action under section 502(a) of ERISA following an adversedetermination upon review.

    (b) The claimant has the right to appeal the Committee's decision byfiling a written appeal to the Committee within 60 days after claimant's receiptof the decision or deemed denial. The claimant will have the opportunity, uponrequest and free of charge, to have reasonable access to and copies of alldocuments, records and other information relevant to the claimant's appeal. Theclaimant may submit written comments, documents, records and other informationrelating to his claim with the appeal. The Committee will review all comments,documents, records and other information submitted by the claimant relating tothe claim, regardless of whether such information was submitted or considered inthe initial claim determination. The Committee shall make a determination on theappeal within 60 days after receiving the claimant's written appeal; providedthat the Committee may determine that an additional 60-day extension isnecessary due to circumstances beyond the Committee's control, in which eventthe Committee shall notify the claimant prior to the end of the initial periodthat an extension is needed, the reason therefor and the date by which theCommittee expects to render a decision. If the claimant's appeal is denied inwhole or part, the Committee shall provide written notice to the claimant ofsuch denial. The written notice shall include the specific reason(s) for thedenial; reference to specific Plan provisions upon which the denial is based; astatement that the claimant is entitled to receive, upon request and free ofcharge, reasonable access to and copies of all documents, records, and otherinformation relevant to the claimant's claim; and a statement of the claimant'sright to bring a civil action under section 502(a) of ERISA.

 

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   Section 10.04.Participant Rights Unsecured.

    (a) Unsecured Claim. The right of a Participant or hisBeneficiary to receive a distribution hereunder shall be an unsecured claim, andneither the Participant nor any Beneficiary shall have any rights in or againstany amount credited to his Account or any other specific assets of aParticipating Employer. The right of a Participant or Beneficiary to the paymentof benefits under this Plan shall not be assigned, encumbered, or transferred,except by will or the laws of descent and distribution. The rights of aParticipant hereunder are exercisable during the Participant's lifetime only byhim or his guardian or legal representative.

    (b) Contractual Obligation. The Company may authorize thecreation of a trust or other arrangements to assist it in meeting theobligations created under the Plan. However, any liability to any person withrespect to the Plan shall be based solely upon any contractual obligations thatmay be created pursuant to the Plan. No obligation of a Participating Employershall be deemed to be secured by any pledge of, or other encumbrance on, anyproperty of a Participating Employer. Nothing contained in this Plan and noaction taken pursuant to its terms shall create or be construed to create atrust of any kind, or a fiduciary relationship between a Participating Employerand any Participant or Beneficiary, or any other person.

   Section 10.05.Income Tax Withholding.

    No later than the date as of which an amount first becomes includible in thegross income of the Participant for Federal income tax purposes, the Participantshall pay or make arrangements satisfactory to the Committee regarding thepayment of, any Federal, state, local or foreign taxes of any kind required bylaw to be withheld with respect to such amount.

   Section 10.06.Amendment or Termination of Plan.

    There shall be no time limit on the duration of the Plan. Except as otherwiselimited pursuant to Section 9.02, the Board (or where specified herein, theCommittee) may at any time amend or terminate the Plan, including but notlimited to modifying the terms and conditions applicable to (or otherwiseeliminating) Deferrals to be made on or after the amendment or termination date;provided, however, that no amendment or termination may reduce or eliminate 

 

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 anyAccount balance accrued to the date of such amendment or termination (except assuch Account balance may be reduced as a result of investment losses allocableto such Account).

   Section 10.07.Administrative Expenses.

    Costs of establishing and administering the Plan will be paid by theParticipating Employers.

   Section 10.08.Effect on Other Employee Benefit Plans.

    Deferrals credited to a Participant's Account under this Plan shall not beconsidered "compensation" for the purpose of computing benefits underany qualified retirement plan maintained by a Participating Employer, but shallbe considered compensation for welfare benefit plans, such as life anddisability insurance programs sponsored by a Participating Employer, unlessotherwise specifically provided by the terms of such plan.

   Section 10.09.Successors and Assigns.

    This Plan shall be binding upon and inure to the benefit of the ParticipatingEmployers, their successors and assigns and the Participants and their heirs,executors, administrators, and legal representatives.

   Section 10.10.Right of Offset.

    The Company shall have the right to offset from the benefits payablehereunder any amount that the Participant owes to the Company, or a subsidiaryor affiliate of the Company. The Company may effectuate the offset without theconsent of the Participant (or the Participant's spouse or Beneficiary, in theevent of the Participant's death).

 

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