WPS RESOURCES CORPORATION

NON-EMPLOYEE DIRECTOR

DEFERRED COMPENSATION AND DEFERRED STOCK UNIT PLAN

As Amended and Restated Effective January 1, 2001

 

 

 

 

WPS RESOURCES CORPORATION

NON-EMPLOYEE DIRECTOR

DEFERRED COMPENSATION AND DEFERRED STOCK UNIT PLAN

        The WPS Resources Corporation Non-Employee Director Deferred Compensation andDeferred Stock Unit Plan (the "Plan") has been adopted to promote thebest interests of WPS Resources Corporation (the "Company") and thestockholders of the Company by attracting and retaining well-qualified personsfor service as non-employee directors of the Company and designated subsidiariesand affiliates. The Plan constitutes an amendment and restatement of the portionof the WPS Resources Corporation Deferred Compensation Plan that was applicableto non-employee directors.

        The Plan, as hereby adopted, is subject to shareholder approval at the 2001annual meeting of shareholders of the Company. In the event that shareholderapproval is not obtained, the portion of the WPS Resources Corporation DeferredCompensation Plan applicable to non-employee directors, as in effect on December31, 2000, shall continue.

 

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 to record theinterest of each Director under the Plan. An Account is established for recordkeeping purposes only and not to reflect the physical segregation of assets onthe Director's behalf, and may consist of such subaccounts or balances as theCommittee may determine to be necessary or appropriate.

(i) Deferral Account: The portion of a Director's Account to            which is credited the Director's Deferrals and deemed investment            gain or loss in accordance with Article II hereof (including,            without limitation, the Director's interest in Reserve Account A,            Reserve Account B and the WPS Stock Account).

(ii) Deferred Stock Unit Account: The portion of a Director's            Account to which is credited the Director's interest in the Deferred            Stock Unit feature of the Plan described in Article III hereof.

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

        (c) Available Investment Option: See Section 2.05(a).

        (d) Beneficiary: The person or entity designated by a Director to be hisbeneficiary for purposes of this Plan. If a Director designates his spouse as abeneficiary, such beneficiary designation automatically shall become null andvoid on the date of the Director's divorce or legal separation from such spouse.If a valid designation of Beneficiary is not in effect at time of the Director'sdeath, the estate of the Director is deemed to be the sole Beneficiary. If aBeneficiary dies while entitled to receive distributions from the Plan, anyremaining payments shall be paid to the estate of the Beneficiary. Beneficiarydesignations shall be in writing, filed with the Committee, and in such form asthe Committee may prescribe for this purpose.

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

        (f) Code: The Internal Revenue Code of 1986, as interpreted by regulationsand rulings issued pursuant thereto, all as amended and in effect from time totime. Any reference to a specific provision of the Code shall be deemed toinclude reference to any successor provision thereto.

        (g) Committee: The Compensation and Nominating Committee of the Board.

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

        (i) Deferral: An amount credited, in accordance with a Director's election,to the Director's Deferral Account under the Plan in lieu of the current paymentof an equal amount of the Director Fees as cash compensation to the Director.

        (j) Director: A non-employee member of the Board or a non-employee member ofthe board of directors of a subsidiary or affiliate of the Company who isdesignated for participation by the Board.

        (k) Director Fees: Those fees, other than fees designated for the DeferredStock Unit feature of the Plan, payable to a Director for services rendered onthe Board (including attendance fees and fees for serving as a committee chair)or for service on the board of directors of a subsidiary or affiliate of theCompany.

        (l) 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.

        (m) Exchange Act: The Securities Exchange Act of 1934, as interpreted byregulations and rules issued pursuant thereto, all as amended and in effect fromtime to time. Any reference to a specific provision of the Exchange Act shall bedeemed to include reference to any successor provision thereto.

        (n) Investment Period: See Section 2.05(c).

        (o) Investment Options: The hypothetical investment accounts described inArticle II 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).

        (p) Stock Unit Accounts: The WPS Stock Account described in Section 2.04 andthe Deferred Stock Unit Account described in Section 3.02.

        (q) Trust: The WPS Resources Corporation Deferred Compensation Trust or otherfunding vehicle which may from time to time be established, as amended and ineffect from time to time.

        (r) WPS Resources Stock: The common stock, $1.00 par value, of the Company.

        (s) WPS Resources Stock Units: The hypothetical shares of WPS ResourcesStock, that are credited to the WPS Stock Account and the Deferred Stock UnitAccount in accordance with Sections 2.04 and 3.02, respectively.

    Section 1.02.Construction and Applicable Law.
        (a) Wherever any words are used in the masculine, they shall be construed asthough they were used in the feminine in all cases where they would so apply;and wherever any words are use in the singular or the plural, they shall beconstrued as though they were used in the plural or the singular, as the casemay be, in all cases where they would so apply. Titles of articles and sectionsare for general information only, and the Plan is not to be construed byreference to such items.

        (b) The Plan is to be construed and its validity determined according to thelaws of the State of Wisconsin to the extent such laws are not preempted byfederal law. In case any provision of the Plan is held illegal or invalid forany reason, the illegality or invalidity will not affect the remaining parts ofthe Plan, but the Plan shall, to the extent possible, be construed and enforcedas if the illegal or invalid provision had never been inserted.
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ARTICLE II. DEFERRAL OF DIRECTOR FEES**
     Section 2.01.Deferrals Of Director Fees.
        (a) Initial Deferral Election. A Director may elect, in such form andmanner as the Committee may prescribe, to defer payment of all or a portion ofthe Director Fees that would otherwise be paid to the Director. A Director'selection shall specify the percentage (in increments of 1% to a maximum of 100%or such lesser amount or percentage as may be established by the Committee) ofthe Director Fees that the Director wishes to defer. A validly executed electionshall become effective with respect to Director Fees earned by the Director onand after the date on which the Director's deferral election is received andaccepted by the Committee, or as soon thereafter as practicable. A Director'sdeferral election, once effective, shall remain in effect until modified by theDirector in accordance with subsection (b) below or otherwise revoked inaccordance with Plan rules.

        (b) Revised Deferral Election. A Director may modify his then currentdeferral election by filing a revised election form, properly completed andsigned, 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.

    Section 2.02.Reserve Account A.
        (a) Limited Purpose Account. Reserve Account A is limited compensationdeferred by a Director prior to January 1, 1996, together with attributedearnings on such deferrals through December 31, 2000. Except for attributedearnings as described below, no further deferrals, contributions or credits ofany kind will be made to this account on behalf of a Director.

        (b) Crediting of Interest Equivalent. As of the end of each Plan Year,Reserve Account A will be credited with an interest equivalent on the balance inthe account from time to time during the year. The annual interest equivalentwill be the sum (on a non-compounded basis) of the attributed earnings for eachmonth during the year based on the account balance as of the last day of themonth. Unless modified by the Committee, the interest equivalent rate for anymonth will be the greater of:

(i) one-half of one percent (0.5%); or

(ii) one-twelfth (1/12) of the consolidated return on common            shareholders' equity of the Company and all consolidated            subsidiaries (ROE). 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 March 31 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            September 30.

        (c) Revised Rate. Subject to Article VI, the Committee may revise theinterest equivalent rate or the manner in which it is calculated, but in noevent shall the rate be less than six percent (6%) per annum. Any such revisedrate shall be effective with the calendar month following such action by theCommittee.

    Section 2.03.Reserve Account B.
        (a) Availability. Reserve Account B is an Available Investment Optionwith respect to the deemed investment of a Director's Deferrals. It is creditedwith earnings equivalent based upon a percentage of the Company's return onequity for the year.

        (b) Crediting of Interest Equivalent. As of the end of each calendarquarter, the account will be credited with an interest equivalent on the balancein the account from time to time during the year. The quarterly interestequivalent will be the sum (on a non-compounded basis) of the attributedearnings for each month during the quarter based on the account balance as ofthe last day of each month. Unless modified by the Committee, the interestequivalent rate for any month will be the greater of:

(i) one-half of one percent (0.5%); or

(ii) seventy percent (70%) of one-twelfth (1/12) of the            consolidated return on common shareholders equity of the Company and            all consolidated subsidiaries (ROE). 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 March 31 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 September 30.

        (c) Revised Rate. Subject to Article VI, the Committee may revise theinterest equivalent rate or the manner in which it is calculated, but in noevent shall the rate be less than six percent (6%) per annum. Any such revisedrate shall be effective with the calendar month following such action by theCommittee.

    Section 2.04.WPS Stock Account.
        (a) Availability. The WPS Stock Account is an Available InvestmentOption with respect to the deemed investment of a Director's Deferrals.

        (b) Conversion to WPS Stock Units. As of the end of each month, allDeferrals made by or on behalf of a Director during that month and allocated tothe WPS Stock Account (the "Convertible Amount") are converted, forrecord keeping purposes, into whole and fractional WPS Resources Stock Units,with fractional units calculated to four decimal places. The conversion shall beaccomplished by dividing each Director's Convertible Amount by the averagepurchase price of all shares of WPS Resources Stock purchased during that monthby or on behalf of the Trust and the WPS Resources Corporation Stock InvestmentPlan. Likewise, any dividends that would have been payable on the WPS ResourcesStock Units credited to a Director's WPS Stock 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 theaverage purchase price of all shares of WPS Resources Stock purchased by or onbehalf of the Trust and the WPS Resources Corporation Stock Investment Planduring the month in which the dividend is paid. Notwithstanding the foregoing,if for any month there are no open-market purchases by or on behalf of the Trustand the WPS Resources Corporation Stock Investment Plan, the conversion shall beaccomplished based upon the closing price of a share of WPS Resources Stock onthe last date on the applicable month on which a share of WPS Resources Stockwas traded, as reported in the Wall Street Journal's New York Stock ExchangeComposite Transaction listing.

        (c) Conversion from WPS Stock Units. If a Director elects underSection 2.05(d) to reallocate all or any portion of his WPS Stock Accountamong the other Available Investment Options, the WPS Resources Stock Units towhich such election relates shall be converted, for record keeping purposes,into an amount equal to the product of such units and the closing price of ashare of WPS Resources Stock on the most recent date prior to the effective dateof such reallocation on which a share of WPS Resources Stock was traded, asreported in the Wall Street Journal's New York Stock Exchange CompositeTransaction listing.

    Section 2.05.Hypothetical Investment of Director Deferrals.
        (a) Available Investment Options. For purposes of directing the deemedinvestment of a Director's Deferrals under subsection (b) below and for purposesof reallocating the deemed investment of the Director's Deferral Account undersubsection (d) below, the Available Investment Options shall be all of theInvestment Options other than Reserve Account A.

        (b) Deemed Investment of Director Deferrals. In accordance withuniform rules prescribed by the Committee, each Director shall designate, inwriting or in such other manner as the Committee may prescribe, how Deferralsmade while the designation is in effect are credited among the AvailableInvestment Options. When selecting more than one Available Investment Option,the Director shall designate, in whole multiples of 10% or such other percentagedetermined by the Committee, the percentage of his or her Deferrals to becredited to each Available Investment Option. If the Director fails to make atimely and complete investment designation, he or she shall be deemed to haveelected that 100% of his or her Deferrals be credited to Reserve Account B orsuch other of the Available Investment Options specified by the Committee forthis purpose. A Director's election or deemed election shall become effectivewith respect to Deferrals credited to the Director's Deferral Account on andafter the date on which the Director's 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.

        (c) Allocation of Deemed Investment Gain or Loss. On a quarterly basisor such other basis as the Committee may prescribe (the "InvestmentPeriod"), the Deferral Account of each Director will be credited (orcharged) based upon the investment gain (or loss) that the Director would haverealized with respect to his or her Deferral Account had the Account beeninvested in accordance with the terms of the Plan and where applicable, theDirector's written election. Subject to the special rules set forth in thisArticle II with respect to Reserve Account A, Reserve Account B and the WPSStock Account, the credit (or charge) shall be the sum, separately calculatedfor each of the Investment Options, of the product obtained by multiplying (i)the portion (if any) of the Director's Deferral Account as of the first day ofthe Investment Period that is deemed to have been invested in each InvestmentOption, and (ii) the rate of return experienced by that Investment Option duringthe Investment Period. The Committee, in its discretion, may prescribe alternaterules for the valuation of Participant Accounts, including, without limitation,the application of unit accounting principles.

        (d) Reallocation of Account. Subject to subsection (e) below, and inaccordance with rules prescribed by the Committee, each Director may elect toreallocate his or her Deferral Account (other than the portion deemed to beinvested in Reserve Account A) among the Available Investment Options. Whenselecting more than one Investment Option, the Director shall designate, inwhole multiples of 10% or such other percentage determined by the Committee, thepercentage of his or her Deferral Account (other than the portion deemed to beinvested in Reserve Account A) that is deemed to be invested in each AvailableInvestment Option after the investment reallocation is given effect. ADirector's reallocation election made in any Investment Period shall becomeeffective on the first day of the next Investment Period, or as soon thereafteras is practicable, and shall remain in effect unless and until modified by asubsequent election that becomes effective in accordance with the rules of thissubsection. Other than a reallocation of a Director's Deferral Account pursuantto a revised investment election submitted by the Director, the deemedinvestment allocation of a Director will not be adjusted to reflect differencesin the relative investment return realized by the various hypotheticalInvestment Options that the Director has designated.

        (e) Securities Law Restrictions. Notwithstanding anything to thecontrary herein, all elections under subsection (d) above by a Director who issubject to Section 16 of the Exchange Act are subject to review by the Committeeprior to implementation. Further, the following reallocation transactions undersubsection (d) above by a Director who is subject to Section 16 of the ExchangeAct are prohibited: (i) elections to reallocate the deemed investment of theaffected Director's Account into WPS Resources Stock Units within six (6) monthsof an election to reallocate deemed investments out of WPS Resources StockUnits; and (ii) elections to reallocate the deemed investment of the affectedDirector's Account out of WPS Resources Stock Units within six (6) months of anelection to reallocate deemed investments into WPS Resources Stock Units(collectively, "Prohibited Transactions"). All Prohibited Transactionsare void. In accordance with Section 7.02, the Committee may restrict additionaltransactions, or impose other rules and procedures, to the extent deemeddesirable by the Committee in order to comply with the Exchange Act.

        (f) The foregoing provisions of this Section shall be effective on the firstday of the month coincident with or next following the date on whichshareholders of the Company approve the Plan as hereby amended and restated, oras soon thereafter as is practicable. Prior to implementation of the terms andconditions of this Section, a Participant's Account shall be credited withhypothetical investment gain or loss in accordance with the terms of the Plan asin effect on December 31, 2000.

    Section 2.06.Accounts are 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 Directorunder the Plan, and shall not constitute or imply an obligation on the part ofthe Company to fund such benefits. In any event, the Company may, in itsdiscretion, set aside assets equal to part or all of such Account balances andinvest such assets in WPS Resources Stock, life insurance or any otherinvestment deemed appropriate. Any such assets, including WPS Resources Stockand any other assets held under the Trust, shall be and remain the sole propertyof the Company and except to the extent that the Trust authorizes a Director todirect the trustee with respect to the voting of WPS Resources Stock held in theTrust, a Director shall have no proprietary rights of any nature whatsoever withrespect to such assets.
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ARTICLE III. DEFERRED STOCK UNITS**
     Section 3.01.Deferred Stock 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 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 3.02(b) below.

    Section 3.02.Deferred Stock 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. As of the end of each month, alldeferrals directed by the Board during that month in accordance with Section3.01 above shall be credited to the Director's Deferred Stock Unit Account. Ifthe Board directs that a Director be credited with a prescribed number of WPSResources Stock Units, the number of units so prescribed shall be credited tothe Director's Deferred Stock Unit Account. If the Board directs that a Directorbe credited with WPS Resources Stock Units with a prescribed value, the value tobe credited (the "Deferred Stock Unit Convertible Amount") will beconverted, for record keeping purposes, into whole and fractional WPS ResourcesStock Units, with fractional units calculated to four decimal places. Theconversion shall be accomplished by dividing each Director's Deferred Stock UnitConvertible Amount by the average purchase price of all shares of WPS ResourcesStock purchased during that month by or on behalf of the Trust and the WPSResources Corporation Stock Investment Plan. Any dividends that would have beenpayable on the WPS Resources Stock Units credited to a Director's Deferred StockUnit Account had such Units been actual shares of WPS Resources Stock shall beconverted, for record keeping purposes, into whole and fractional WPS ResourcesStock Units based on the average purchase price of all shares of WPS ResourcesStock purchased by or on behalf of the Trust and the WPS Resources CorporationStock Investment Plan during the month in which the dividend is paid.
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ARTICLE IV. DISTRIBUTION OF ACCOUNTS**
     Section 4.01.Distribution Election.
        (a) Election. A Director, at the time he commences participation inthe Plan, shall make a distribution election with respect to his Account. Theelection shall be in such form as the Committee may prescribe, and shall specifythe distribution commencement date, the distribution period, and thedistribution method applicable following the Director's death. Any such electionshall be consistent with the following rules (or where the Director fails tomake a selection, in accordance with the default rules set forth below):

(i) Distribution Commencement Date. Unless the Director            has selected a later commencement date (which in no event shall be            later than the first distribution period following the Director's            attainment of age 72), distribution of a Director's Account will            commence within 60 days following the end of the calendar year in            which occurs the Director's termination of service on the Board or,            where applicable, termination of service on the board of a            subsidiary or affiliate of the Company.

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

(iii) Distribution of Remaining Account Following Director's            Death. In the event of the Director's death, the Director's            remaining undistributed interest will be distributed to the            Beneficiary designated by the Director in either a single sum            payment or in installments, as elected by the Director. If the            Director has elected that death benefits be paid in a single sum,            the payment shall be made no later than March 1 following the            calendar year in which occurs the Director's death. If the Director            has elected that death benefits be paid in installments, (A) any            installments previously commenced to the Director shall continue to            the Beneficiary and (B) if installment distributions had not            commenced as of the date of the Director's death, payments over the            installment period elected by the Director shall commence to the            Beneficiary no later than March 1 following the calendar year in            which occurs the Director's death.

        (b) Effectiveness of Election. A distribution election shall be deemedmade only when it is received and accepted as complete by the Committee, andshall remain in effect until modified by the Director in accordance with Section4.02 below or otherwise revoked in accordance with Plan rules.

    Section 4.02.Modified Distribution Election.
        A Director may from time to time modify his distribution election by filing arevised distribution election, properly completed and signed, with theCommittee. However, a revised distribution election will be given effect only ifthe Director remains an active member of the Board for twelve (12) consecutivemonths following the date that the revised election is received and accepted ascomplete by the Committee.

    Section 4.03.Calculation of Annual Distribution Amount.
        (a) Pre-2001 Retirees. For any Director whose retirement date is orwho terminates service prior to January 1, 2001, distribution of the Director'sAccount will be calculated and made under the distribution provisions of the WPSResources Corporation Deferred Compensation Plan applicable to the Director onthe date of the Director's retirement or termination of service.

        (b) Post-2000 Retirees. For a Director who retires or terminatesservice after December 31, 2000, the annual distribution amount, unless theCommittee specifies a different or alternate method, shall be calculated asfollows:

(i) The annual distribution amount for the Director'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 Director. Distributions shall be made in cash. The amount of            any distribution under this Paragraph (i) will be charged pro-rata            against the Director'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 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 5.01),            by (B) the number of installment payments remaining to be made under            the distribution period selected by the Director, and then rounding            the quotient obtained for all but the final installment to the next            lowest whole number of WPS Resources Stock Units. The Committee will            then direct that the Director receive shares of WPS Resources Stock            and/or cash equal to the annual distribution amount. For any portion            of the distribution that the Committee directs be satisfied by            making a cash payment to the Director, the cash payment shall be            determined by multiplying the annual distribution amount (or the            portion of the annual distribution amount being satisfied in cash)            by the closing price 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            distributions will be made based upon the closing price as reported            for the immediately preceding business day. The amount of any            distribution under this Paragraph (ii) will be charged pro-rata            against the Participant's interest in the WPS Stock Account and the            Deferred Stock Unit Account.

    Section 4.04.Time of Distribution.
        Subject to the provisions of Sections 5.01 and 6.02, WPS Resources Stockdistributed to a Director shall be distributed on January 22 (or if January22 falls on a Saturday, Sunday or holiday, the immediately following businessday). For distribution and tax reporting purposes, the value of WPS ResourcesStock distributed shall equal the number of shares distributed multiplied by theclosing price of WPS Resources Stock on January 21 (or if January 21 falls on aSaturday, Sunday or holiday, the immediately preceding business day) of the yearin which the distribution is being made as reported in the Wall Street Journal'sNew York Stock Exchange Composite Transaction listing. The cash portion of anydistribution will be made no later than March 1 of the year for which thedistribution is being made.

    Section 4.05.Other Distribution Rules.
        (a) Limit on Shares. Subject to adjustment as provided in subsection(b) below, the total number of authorized but previously unissued shares of WPSResources Stock which may be distributed to Directors pursuant to the Plan shallbe one hundred thousand (100,000), which number shall not be reduced by or as aresult of (i) any cash distributions pursuant to the Plan or (ii) thedistribution to Directors pursuant to the Plan of any outstanding shares of WPSResources Stock purchased by or on behalf of the Trust.

        (b) Adjustments to Stock. In the event of any merger, reorganization,consolidation, recapitalization, separation, liquidation, stock dividend,split-up, share combination or other change in the corporate structure affectingWPS Resources Stock, such adjustment shall be made in the number and class ofshares which may be distributed pursuant to the Plan as may be determined to beappropriate and equitable by the Committee in its sole discretion.
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ARTICLE V. RULES WITH RESPECT TO WPS RESOURCES STOCKAND WPS RESOURCES STOCK UNITS**
     Section 5.01.Transactions Affecting WPS Resources Stock.
        In the event of any merger, share exchange, reorganization, consolidation,recapitalization, stock dividend, stock split or other change in corporatestructure affecting WPS Resources Stock, the Committee may make appropriateequitable adjustments with respect to the WPS Resources Stock Units (if any)credited to the Account of each Director, including without limitation,adjusting the date as of which such units are valued and/or distributed, as theCommittee determines is necessary or desirable to prevent the dilution orenlargement of the benefits intended to be provided under the Plan.

    Section 5.02.No Shareholder Rights With Respect to WPS Resources Stock Units.
        Directors shall have no rights as a stockholder pertaining to WPS ResourcesStock Units credited to their Stock Account. No WPS Resources Stock Unit nor anyright or interest of a Director under the Plan in any WPS Resources Stock Unitmay be assigned, encumbered, or transferred, except by will or the laws ofdescent and distribution. The rights of a Director hereunder with respect to anyWPS Resources Stock Unit are exercisable during the Director's lifetime only byhim or his guardian or legal representative.
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ARTICLE VI. SPECIAL RULES APPLICABLE IN THE EVENT OF A CHANGEIN CONTROL OF THE COMPANY**
     Section 6.01.Definitions.
        For purposes of this Article VI, the following terms shall have the followingrespective meanings:

        (a) An "Affiliate" of, or a person "affiliated" with, aspecified person is a person that directly, or indirectly through one or moreintermediaries, controls, or is controlled by, or is under common control with,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" of anysecurities:

(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 understanding, 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 pursuant to the terms of the Company's Rights Agreement with            Firstar Trust Company, 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 subsection (b)(ii)            above) or disposing of any voting securities of the Company.

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

(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 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 Director" means (i) any member of the Board ofDirectors of the Company who was a member of such Board on May 1, 1997,(ii) any successor of a Continuing Director who is recommended to succeed aContinuing Director by a majority of the Continuing Directors then on such Boardand (iii) additional directors elected by a majority of the ContinuingDirectors then on such Board.

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

    Section 6.02.Amendments in 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 7.04, 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 2.04(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.

(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 Board pursuant tosubsection (a)(ii), the Plan shall automatically be amended upon a Change inControl 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            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            Firstar Bank, N.A. (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 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 Firstar Bank, N.A. (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 Director            is actively serving on the Board of the Company (or any subsidiary            or affiliate of the Company) on such date.

        (c) Prohibition on Certain Amendments. Notwithstanding the foregoing,on or after the effective date of a Change in Control, the Board or company maynot, without the written consent of the affected Director (or in the case of adeceased Director, the Director's beneficiary) amend the Plan or take an actionto 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 2.05(c) less            frequently than quarterly; or

(iii) Impair or otherwise limit a Participant's rights to            reallocate his Accounts under Section 2.05(d) 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

(v) Eliminate the distribution options made available under            Section 4.01 or otherwise terminate any distribution elections then            in effect.

    Section 6.03.Resolution of Disputes.
        If, after a Change in Control, (a) a dispute arises with respect to theenforcement of the Director's rights under the Plan, or (b) any legal proceedingshall be brought to enforce or interpret any provision contained in the Plan orto recover damages for breach of the Plan, in either case so long as theDirector is not acting in bad faith or otherwise pursuing a course of actionthat a reasonable person would determine to be frivolous, the Director shallrecover from the Company any reasonable attorneys' fees and necessary costs anddisbursements incurred as a result of such dispute or legal proceeding("Expenses"), and prejudgment interest on any money judgment obtainedby the Director calculated at the rate of interest announced by Firstar BankMilwaukee, Milwaukee, Wisconsin (or any successor thereto), from time to time asits prime or base lending rate from the date that payments to the Directorshould have been made under this Plan. Within ten (10) days after the Director'swritten request therefor, the Company shall pay to the Director, or such otherperson or entity as the Director may designate in writing to the Company, theDirector's Expenses in advance of the final disposition or conclusion of anysuch dispute or legal proceeding. In the case of a deceased Director, thisSection shall apply with respect to the Director's Beneficiary or estate.
** 

ARTICLE VII. GENERAL PROVISIONS**
     Section 7.01.Administration.
        The Committee shall administer and interpret the Plan and supervisepreparation of Director 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", then all determinations affecting Directors who aresubject to Section 16 of the Exchange Act shall be made by the full Board. TheCommittee may, in its discretion, delegate any or all of its authority andresponsibility; to the extent of any such delegation, any references herein tothe Committee shall be deemed references to such delegee. Interpretation of thePlan shall be within the sole discretion of the Committee and shall be final andbinding upon each Director and Beneficiary. The Committee may adopt and modifyrules and regulations relating to the Plan as it deems necessary or advisablefor the administration of the Plan. If any delegee of the Committee shall alsobe a Director or Beneficiary, any determinations affecting the delegee'sparticipation in the Plan shall be made by the Committee.

    Section 7.02.Restrictions to Comply With Applicable Law.
        (a) General Restrictions. Notwithstanding any other provision of thePlan, the Company shall have no liability to deliver any shares of WPS ResourcesStock under the Plan or make any payment unless such delivery or payment wouldcomply with all applicable laws and the applicable requirements of anysecurities exchange or similar entity. In addition, transactions under the Planare intended to comply with all applicable conditions of Rule 16b-3 under theExchange Act. The Committee shall administer the Plan so that transactions underthe Plan will be exempt from Section 16 of the Exchange Act, and shall have theright to restrict any transaction, or impose other rules and requirements, tothe extent it deems necessary or desirable for such exemption to be met.

        (b) Restriction on Transfer. Shares of WPS Resources Stock issuedunder the Plan may not be sold or otherwise disposed of except (i) pursuant toan effective registration statement under the Act, or in a transaction which, inthe opinion of counsel for the Company, is exempt from registration under theAct; and (ii) in compliance with state securities laws. Further, as a conditionto issuance of shares of WPS Resources Stock under the Plan, the Director, hisBeneficiary or his heirs, legatees or legal representatives, as the case may be,shall execute and deliver to the Company a restrictive stock transfer agreementin such form, and subject to such terms and conditions, as shall be reasonablydetermined or approved by the Committee, which agreement, among other things,may impose certain restrictions on the sale or other disposition of any sharesof stock acquired under the Plan. The Committee may waive the foregoingrestrictions, in whole or in part, in any particular case or cases or mayterminate such restrictions whenever the Committee determines that suchrestrictions afford no substantial benefit to the Company.

        (c) Additional Restrictions; Legends. All shares of WPS ResourcesStock delivered under the Plan shall be subject to such stock transfer ordersand other restrictions as the Committee may deem advisable under the Plan andany applicable federal or state securities laws, and the Committee may cause alegend or legends to be put on any certificates to make appropriate referencesto such restrictions.

    Section 7.03.Director Rights Unsecured.
        (a) Unsecured Claim. The right of a Director or his Beneficiary toreceive a distribution hereunder shall be an unsecured claim, and neither theDirector nor any Beneficiary shall have any rights in or against any amountcredited to his Account or any other specific assets of the Company or anyaffiliate of the Company. The right of a Director 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 a Directorhereunder are exercisable during the Director's lifetime only by him or hisguardian or legal representative.

        (b) Contractual Obligations. The Company may authorize the creation ofa trust or other arrangements to assist it in meeting the obligations createdunder the Plan. However, any liability to any person with respect to the Planshall be based solely upon any contractual obligations that may be createdpursuant to the Plan. No obligation of the Company shall be deemed to be securedby any pledge of, or other encumbrance on, any property of the Company or anyaffiliate of the Company. Nothing contained in this Plan and no action takenpursuant to its terms shall create or be construed to create a trust of anykind, or a fiduciary relationship between the Company and any Director orBeneficiary, or any other person.

    Section 7.04.Amendment or Termination of Plan.
        There shall be no time limit on the duration of the Plan. Except as otherwiselimited pursuant to Section 6.02, 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 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 Accounts).

    Section 7.05.Administrative Expenses.
        Costs of establishing and administering the Plan will be paid by the Company.

    Section 7.06.Successors and Assigns.
        This Plan shall be binding upon and inure to the benefit of the Company, itssuccessors and assigns and the Directors and their heirs, executors,administrators, and legal representatives.