Exhibit 10.10

 

WPS RESOURCES CORPORATION

DEFERRED COMPENSATION PLAN

As Amended and Restated Effective January 1, 2005

 

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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, 2005 as set forth hereinto reflect, among other things, the requirements of the American Jobs CreationAct of 2004 and for the purpose of presenting the Plan to the Company'sshareholders for approval with respect to the number of shares of WPS ResourcesStock authorized for issuance under the Plan.

    Except as expressly provided herein, the Plan, as herein amended and restatedeffective January 1, 2005, applies to (i) those employees who are activelyemployed by the Company or a Participating Employer on January 1, 2005, 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, 2005, or adirector who terminated from service with the Company prior to January 1, 2005,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 ofemployment or 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. To the extent relevant withrespect to any Participant, the Participant's overall Account shall includethe subaccounts and balances identified in Section 5.01, and may consist of suchother subaccounts 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) Affiliate: A corporation, trade or business that, with theCompany, forms part of a controlled group of corporations, group of trades orbusinesses under common control, or affiliated service group within the meaningof Code Section 414(b), (c) or (m).

    (d) Annual Bonus Deferral: See Section 1.01(m)(iii).

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

    (f) 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, or the value ofemployer-provided fringe 

 

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 benefits or coverage, all as determined in accordancewith such uniform rules, regulations or standards as may be prescribed by theCommittee.

    (g) Base Compensation Deferral: See Section 1.01(m)(i).

    (h) Beneficiary: The person or entity designated by a Participant tobe his or her beneficiary for purposes of this Plan. If a Participant designateshis or her spouse as a beneficiary, such beneficiary designation automaticallyshall become null and void on the date of the Participant's divorce or legalseparation from such spouse. If a valid designation of beneficiary is not ineffect at time of the Participant's death, the estate of the Participant isdeemed to be the sole beneficiary. If a beneficiary dies while entitled toreceive distributions from the Plan, any remaining payments shall be paid to theestate of that beneficiary. Beneficiary designations shall be in writing, filedwith the Committee, and in such form as the Committee may prescribe for thispurpose.

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

    (j) 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.

    (k) Committee: The Compensation Committee of the Board (with respectto Eligible Employee participation) or the Governance Committee of the Board(with respect to Director participation).

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

    (m) 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.

 

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(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 an Eligible Employee's annual bonus award in accordance            with Section 3.03.

(iv) LTIP Deferral: A Deferral of all or a portion of the            performance shares or other stock-based compensation awarded to an            Eligible Employee under the Omnibus Plan, in accordance with Section            3.04.

    (n) Director: A non-employee member of the Board, a non-employeemember of the board of directors of an Affiliate who is designated forparticipation by the Board, and where the context so requires, a former directorentitled to receive a benefit hereunder

    (o) Director Deferral: See Section 1.01(m)(ii).

    (p) 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 an Affiliate.

    (q) Disability: The inability of a Participant to engage in anysubstantial gainful activity by reason of a medically determinable physical ormental impairment which can be expected to result in death or can be expected tolast for a continuous period of not less than 12 months, as determined by theCommittee.

    (r) 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.

    (s) 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 

 

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 time. Any reference to a specific provision of ERISAshall be deemed to include reference to any successor provision thereto.

    (t) 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.

    (u) 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).

    (v) LTIP Deferral: See Section 1.01(m)(iv).

    (w) Omnibus Plan: The WPS Resources Corporation 2001 Omnibus IncentiveCompensation Plan or the WPS Resources Corporation 2005 Omnibus IncentiveCompensation Plan, as required by the context.

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

    (y) Participating Employer: The Company and each Affiliate that, withthe consent of the Committee, participates in the Plan for the benefit of one ormore Participants.

    (z) "Pre-2005 Account: See Section 5.01(a).

    (aa) "Post-2004 Account: See Section 5.01(b).

    (bb) Stock Unit Accounts: The Incentive Stock Unit Account describedin Section 5.04, the Deferred Stock Unit Account described in Section 5.05, theBase Stock Unit Account described in Section 5.06, and the Prior Plan WPS StockUnit Account described in Section 5.07.

    (cc) 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.

 

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

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

    (ff) WPS Resources Stock Units: The hypothetical shares of WPSResources Stock that are credited to the Stock Unit Accounts in accordance withSections 5.04, 5.05, 5.06 and 5.07.

   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 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 as an Eligible Employee by the Committee. When designating anemployee as an Eligible Employee, 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 determined by the Committee to be consistent with the requirements of CodeSection 409A and if directed by the Committee, a Participant whose employment istransferred to a corporation or other entity (the "TransfereeEmployer") that is not a Participating Employer, but in which the Companyor an Affiliate holds an ownership interest, then until the earliest to occur of(a) the date on which the Participant ceases to be employed by such TransfereeEmployer, (b) the date on which the Company or an affiliate of the Company nolonger holds an ownership interest in the Transferee Employer, or (c) such otherdate determined by the Committee, the Participant shall be treated as if he orshe were 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 ArticlesVII and VIII; it shall not apply, and the Participant shall not be entitled tomake additional 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) Amount. A Participant may elect, in such form and manner asthe Committee may prescribe, to defer payment of a portion of the BaseCompensation that would otherwise be paid to the Participant. A Participant'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, oras may be necessary in order to comply with applicable withholding obligations,whether attributable to withholdings required under applicable law or otherauthorized withholdings) of the Participant's Base Compensation that theParticipant wishes to defer.

    (b) Initial Deferral Election. In the case of a Participant whohas been designated for participation for the first time and who completes aDeferral election within 30 days of becoming eligible to participate in thePlan, the Participant's validly executed Deferral election shall becomeeffective with respect to services to be performed subsequent to the election oron such later date as determined by the Committee for reasons of administrativeconvenience. If the Participant does not submit a Deferral election during theinitial 30 day election period, the Participant may thereafter elect to deferpayment of Base Compensation by submitting a validly executed Deferral electionto the Committee, but the election shall become effective and shall apply onlyto Base Compensation for services performed on or after January 1 of thecalendar year following the calendar year during which the election is receivedand accepted by the Committee, or as soon thereafter as practicable. AParticipant's Deferral election, once effective, shall remain in effect untilmodified by the Participant in accordance with subsection (c) below or otherwiserevoked in accordance with Plan rules.

    (c) Revised Deferral Election. Except to the extent that theCommittee is permitted to give earlier effect to a Participants revocation orrevision to his or her Deferral election in accordance with regulationspromulgated by the Secretary of the Treasury under Code Section 409A, aParticipant's Deferral election, once effective with respect to a calendaryear, may not be revoked or modified with respect to Base Compensation forservices performed in that calendar 

 

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 year. A Participant may modify his or herthen current Deferral election by filing a revised Deferral election form,properly completed and signed, with the Committee. However, except to the extentthat the Committee is permitted to give earlier effect to a Participant'srevised election in accordance with regulations promulgated by the Secretary ofthe Treasury under Code Section 409A, the revised election will be effectiveonly with respect to Base Compensation for services performed on or afterJanuary 1 of the calendar year following the calendar year during which therevised election is received and accepted by the Committee, or as soonthereafter as practicable. A Participant's revised Deferral election, onceeffective, shall remain in effect until again modified by the Participant underthis subsection (c) or otherwise revoked in accordance with 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 otherwise be paid to the Participant with respect to anyyear. A Participant's election shall specify the percentage (in increments of1% to a maximum of 100% or such lesser 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 annual cash bonus that the Participant wishes to defer. In thecase of any award that is not performance-based compensation for purposes ofCode Section 409A, a validly executed Deferral election shall be effective onlyif the Deferral election is received and accepted by the Committee prior to thelast day of the calendar year preceding the calendar year for which the annualbonus is paid, or by such other time as provided in regulations promulgated bythe Secretary of the Treasury. In the case of any award that isperformance-based compensation for purposes of Code Section 409A, a validlyexecuted Deferral election shall become effective with respect to the annualbonus that may be awarded to the Participant with respect to a calendar year ifthe Participant's Deferral election is received and accepted by the Committeeat least 6 months prior to the end of the (calendar year) performance period forthe bonus, or by such earlier (but not later) date as the Committee mayestablish. A Participant's election to defer an annual bonus award shall beeffective only for the year to which the election relates, and shall not carryover from year to 

 

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 year. Notwithstanding the foregoing, a Participant'selection to defer all or a portion of an award shall not be effective withrespect to an award paid after the Participant's termination of employment ifdistribution to the Participant in accordance with Article VII or Article VIIIhas commenced.

   Section 3.04. Deferralof LTIP 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 share or otherstock-based compensation awarded to the Participant under the Omnibus Plan. AParticipant's election shall specify the whole number of shares (up to 100% ofsuch shares or such lesser number 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 Participant's award that theParticipant wishes to defer. In the case of any award that is notperformance-based compensation for purposes of Code Section 409A, a validlyexecuted Deferral election shall be effective only if the Deferral election isreceived and accepted by the Committee prior to the last day of the Participant'stax year preceding the year during which the service period for the awardbegins, or by such other time as provided in regulations promulgated by theSecretary of the Treasury. In the case of any award that is performance-basedcompensation for purposes of Code Section 409A, a validly executed Deferralelection shall become effective with respect to shares to be earned by theParticipant with respect to any Omnibus Plan performance period if theParticipant's Deferral election is received and accepted by the Committee atleast 6 months prior to the end of such performance period or by such earlier(but not later) date as the Committee may establish. A Participant's electionto defer an award shall be effective only for the Omnibus Plan service period orperformance period to which the election relates, and a Participant's electiondoes not carry over from performance period to performance period or fromservice period to service period. A Participant's LTIP Deferral will beautomatically credited to the Participant's Incentive Stock Unit Account.Notwithstanding the foregoing, (a) a Participant's election to defer all or aportion of an award shall not be effective with respect to an award paid afterthe Participant's termination of employment if distribution to the Participantin accordance with Article VII or Article VIII has commenced, and (b) aParticipant may defer the receipt of 

 

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 shares upon exercise of a stock option orstock appreciation right only if and to the extent authorized by the Committeeand in accordance with procedures designated by the Committee for purposes ofcomplying with the requirements of Code Section 409A.

   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.

   Section 3.06. OtherDeferrals and Credits. The Committee, in its discretion, may, with respectto any Participant, determine that the Participant is eligible to make Deferralswith respect to additional components of the Participant's remuneration orreceive employer contribution credits in addition to the credits describedherein. In no event, however, shall the Committee authorize such additionalDeferrals or credits unless the Committee has first 

 

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 determined that theDeferrals or credits have been elected or authorized in a manner that will notresult in the imposition of tax under Code Section 409A.

   Section 3.07. InvoluntaryTermination of Deferral Elections.

    A Participant's Deferral elections shall be automatically revoked upon theParticipant's termination of employment from the Participating Employers,unless the Committee determines otherwise in accordance with the requirements ofCode Section 409A. In addition, and subject to Code Section 409A, a Participant'sDeferral election will terminate if the Committee determines that theParticipant is no longer eligible to participate in the Plan or that revocationof a Participant's eligibility is necessary or desirable in order for the Planto qualify under ERISA as a plan of deferred compensation for a select group ofmanagement or highly compensated employees.

   Section 3.08. 2005Transitional Rules. Notwithstanding the rules otherwise set forth in thisArticle III regarding the timing of Deferral elections, and in accordance withInternal Revenue Service Notice 2005-1:

    (a) A Participant, no later than March 1, 2005 (or such earlier dateas the Committee may prescribe), may prospectively revise (upward or downward)his or her prior Deferral election with respect to 2005 Base Compensation thathas not been paid or become payable at the time of the revised election. Thisincludes the revision of a prior Deferral election (or deemed Deferral election)in which the Participant elected not to defer any amount.

    (b) A Participant, no later than March 1, 2005 (or such earlier dateas the Committee may prescribe), may revise (upward or downward) his or herprior Deferral election with respect to (i) the 2004 annual bonus (theParticipant's right to and amount of which is determined, and absent aDeferral election would be payable, in 2005), (ii) the 2005 annual bonus (theParticipant's right to and amount of which is determined, and absent aDeferral election would payable, in 2006), (iii) the 2002-2004 Omnibus Planbonus (the Participant's right to and the amount of which is determined, andabsent a Deferral election would be payable, in 2005), and (iv) the 2003-2005Omnibus Plan bonus (the Participant's right to and the amount of which isdetermined, and absent a Deferral election would be payable, in 2006). Each ofthe foregoing 

 

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 incentive bonus amounts (if awarded) is subject to therequirements of Code Section 409A and, absent a Deferral election, would bepayable after the latest election date established for that bonus award. Theright to revise a prior Deferral election includes the revision of a priorDeferral election (or deemed Deferral election) in which the Participant electednot to defer any amount.

    (c) On or before December 31, 2005, the Committee may (but need not)permit a Participant who has made a Deferral election with respect to one ormore of the compensation categories described in subsections (a) and (b) above,to cancel any such Deferral election, in whole or in part, in accordance withCode Section 409A.

 

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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) Amount. A Director may elect, in such form and manner asthe Committee may prescribe, to defer payment of all or a portion of theDirector 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, oras may be necessary in order to comply with applicable withholding obligations,whether attributable to withholdings required under applicable law or otherauthorized withholdings) of the Director Fees that the Director wishes to defer.

    (b) Initial Deferral Election. In the case of a Director whohas become eligible for participation for the first time, and who completes aDeferral election within 30 days of becoming eligible to participate in thePlan, the Director's validity executed Deferral election shall becomeeffective with respect to services to be performed subsequent to the election oron such later date as determined by the Committee for reasons of administrativeconvenience. If the Director does not submit an initial Deferral election duringthe initial 30 day election period, the Director may thereafter elect to deferthe payment of Director Fees by submitting a validly executed Deferral electionto the Committee, but the election shall become effective and shall apply onlyto Directors Fees for services performed on or after January 1 of the calendaryear following the calendar year in which the election is received and acceptedby the Committee, or as soon thereafter as practicable. A Director's Deferralelection, once effective, shall remain in effect until modified by the Directorin accordance with subsection (c) below or otherwise revoked in accordance withPlan rules.

    (c) Revised Deferral Election. Except to the extent that theCommittee is permitted to give earlier effect to a Director's revocation orrevision to his or her Deferral election in accordance with regulationspromulgated by the Secretary of the Treasury under Code Section 409A, a Director'sDeferral election, once effective with respect to a calendar year, may not bemodified or revoked with respect to Director Fees for services performed in thatcalendar year. A Director may modify his or her then current Deferral electionby filing a revised Deferral 

 

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 election form, properly completed and signed, withthe Committee. However, except to the extent that the Committee is permitted togive earlier effect to a Participants revision to his or her Deferral electionin accordance with regulations promulgated by the Secretary of the Treasuryunder Code Section 409A, the revised election will be effective with respect toDirector Fees for services performed on or after January 1 of the calendar yearfollowing the calendar year during which the revised election is received andaccepted by the Committee, or as soon thereafter as practicable. A Director'srevised Deferral election, once effective, shall remain in effect until againmodified by the Director in accordance with this subsection (c) or otherwiserevoked in accordance 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. Except to the extent that theCommittee is permitted to give earlier effect to a direction in accordance withregulations promulgated by the Secretary of the Treasury under Code Section409A, any such direction shall be effective with respect to remuneration to beearned by the Director on and after January 1 of the calendar year following thedate of such direction, and shall continue in effect through December 31 of thecalendar year in which modified or revoked by a subsequent direction of theBoard. The Board's direction may provide either for the direct credit ofDeferred Stock Units or for the mandatory deferral of a prescribed amount ofcash remuneration that will be converted into WPS Stock Units in accordance withSection 5.05(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 accordance with Code Section 409A. Inaddition, and subject to Code Section 409A, a Director's Deferral electionwill terminate if the Committee determines that the Director is no longereligible to participate in the Plan.

 

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    Section 4.05. 2005Transitional Rules. Notwithstanding the rules otherwise set forth in thisArticle IV regarding the timing of Deferral elections, and in accordance withInternal Revenue Service Notice 2005-1:

    (a) A Director, no later than March 1, 2005 (or such earlier date asthe Committee may prescribe), may prospectively revise (upward or downward) hisor her prior Deferral election with respect to 2005 Director Fees that has notbeen paid or become payable at the time of the revised election. This includesthe revision of a prior Deferral election (or deemed Deferral election) in whichthe Director elected not to defer any amount.

    (b) On or before December 31, 2005, the Committee may (but need not)permit a Director who has made a Deferral election with respect to 2005 DirectorFees, to cancel such Deferral election, in whole or in part.

 

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ARTICLE V. ACCOUNTS AND HYPOTHETICAL INVESTMENT OPTIONS

    Section 5.01. ParticipantAccounts.

    To the extent relevant, a Participant's Account shall consist of thefollowing subaccounts or balances:

    (a) The "Pre-2005 Account", to record the Participant'sinterest with respect to Deferrals or contribution credits made prior to January1, 2005, together with any earnings or loss thereon through the date ofdistribution from the Plan, and which shall consist of the following:

(i) "Reserve Account A", reflecting the            Participant's entire interest in Reserve Account A;

(ii) "Pre-July 1, 2001 Reserve Account B",            reflecting the portion of the Participant's balance in Reserve            Account B that is attributable to Deferrals made through June 30,            2001, together with all credits of interest equivalent on such            Deferrals through the date of distribution from the Plan;

(iii) "July 1, 2001 Through December 31, 2004 Reserve            Account B", reflecting the portion of the Participant's            balance in Reserve Account B that is attributable to Deferrals made            after June 30, 2001 and through December 31, 2004, together with all            credits of interest equivalent on such Deferrals through the date of            distribution from the Plan;

(iv) "Pre-2005 Incentive Stock Unit Account",            reflecting the portion of the Participant's balance in the            Incentive Stock Unit Account that is attributable to Annual Bonus            Deferrals, LTIP Deferrals and matching contribution credits made            after June 30, 2001 and through December 31, 

 

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 2004, together with            earnings or loss thereon through the date of distribution from the            Plan;

(v) "Pre-2005 Deferred Stock Unit Account",            reflecting the portion of the Participant's Deferred Stock Unit            Account that is attributable to Deferred Stock Units allocated to a            Director through December 31, 2004, and any earnings or loss thereon            through the date of distribution from the Plan;

(vi) "Pre-2005 Base Stock Unit Account",            reflecting the portion of the Participant's balance in the Base            Stock Unit Account that is attributable to Deferrals made after June            30, 2001 and through December 31, 2004, and any earnings or loss            thereon through the date of distribution from the Plan;

(vii) "Prior Plan WPS Stock Unit Account",            reflecting the Participant's entire interest in the Prior Plan WPS            Stock Unit Account; and

(viii) Pre-2005 Other Investments Account",            reflecting the Participant's balance in any other Investment            Option that is attributable to Deferrals made after June 30, 2001            and through December 31, 2004, and any earnings or loss thereon            through the date of distribution from the Plan.

    (b) The "Post-2004 Account", to record the Participant'sinterest with respect to Deferrals or contribution credits made after December31, 2004, together with any earnings or loss thereon through the date ofdistribution from the Plan, and which shall consist of the following:

(i) "Post-2004 Reserve Account B", reflecting            the portion of the Participant's balance in Reserve Account B that            is attributable to Deferrals made after December 31, 2004, 

 

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 together            with all credits of interest equivalent on such Deferrals through            the date of distribution from the Plan;

(ii) "Post-2004 Incentive Stock Unit Account",            reflecting the portion of the Participant's balance in the            Incentive Stock Unit Account that is attributable to Annual Bonus            Deferrals, LTIP Deferrals and matching contribution credits made            after December 31, 2004, and any earnings or loss thereon through            the date of distribution from the Plan;

(iii) "Post-2004 Deferred Stock Unit Account",            reflecting the portion of the Participant's Deferred Stock Unit            Account that is attributable to Deferred Stock Units allocated to a            Director after December 31, 2004, and any earnings or loss thereon            through the date of distribution from the Plan;

(iv) "Post-2004 Base Stock Unit Account",            reflecting the portion of the Participant's balance in the Base            Stock Unit Account that is attributable to Deferrals made after            December 31, 2004, and any earnings or loss thereon through the date            of distribution from the Plan; and

(v) "Post-2004 Other Investments Account",            reflecting the Participant's balance in any other Investment            Option that is attributable to Deferrals made after December 31,            2004, and any earnings or loss thereon through the date of            distribution from the Plan.

   Section 5.02. 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.

 

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    (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 a            Participant following termination of employment if the Participant's            termination of employment with the Company and its Affiliates occurs            prior to attainment of age 55 and prior to the occurrence of a            Change in Control (as defined in Section 10.01). 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 X, 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.

 

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    Section 5.03. 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. The Account is credited withearnings equivalent based upon a percentage of the Company's return on equityfor the year.

    (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 a Participant following termination of employment if the            Participant's termination of employment with the Company and its            Affiliates occurs prior to attainment of age 55 and prior to the            occurrence of a Change in Control (as defined in            Section 10.01). 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.

 

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    (c) Revised Rate. Subject to Article X, 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 5.04. 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 Participant elects to be credited to the Incentive Stock Unit Account inaccordance 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 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.

   Section5.05. 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 

 

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 accordance with Section 4.03.The Director is not able to exercise investment discretion with respect to hisor her Deferred Stock Unit Account.

    (b) Conversion to WPS Stock Units. All Deferred Stock Unitamounts directed by the Board in accordance with Section 4.03 shall be creditedto the Director's Deferred Stock Unit Account. If the Board directs that aDirector be credited with a prescribed number of WPS Resources Stock Units, thenumber of units so prescribed shall be credited to the Director's DeferredStock Unit Account. If the Board directs that a Director be credited with WPSResources Stock Units with a prescribed value, the value to be credited (the"Deferred Stock Unit Convertible Amount") will be 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 Deferred Stock Unit ConvertibleAmount by the closing price of a share of WPS Resources Stock on the effectivedate of the grant, as reported in the Wall Street Journal's New York StockExchange Composite Transactions listing. Any dividends that would have beenpayable on the WPS Resources Stock Units credited to a Director's DeferredStock 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 purchase price at which shares of WPSResources Stock were purchased under the WPS Resources Corporation StockInvestment Plan on the purchase date that is coincident with or closest to thedividend date.

   Section 5.06. 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 

 

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 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 Base 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 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 or her Base StockUnit Account among the other Available Investment Options, the WPS ResourcesStock Units to which such election relates shall be converted, for recordkeeping purposes, into an amount equal to the product of such units and theclosing price 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 reallocation elections under Section 6.01(f) by aParticipant who is subject to Section 16 of the Exchange Act are subject toreview by the Committee prior to implementation. Further, the followingreallocation transactions under Section 6.01(f) by a Participant who is subjectto Section 16 of the Exchange Act are prohibited: (i) elections to reallocatethe deemed investment of the affected Participant's Account into WPS ResourcesStock Units within six (6) months of an election to reallocate deemedinvestments out of WPS Resources Stock Units; and (ii) elections to reallocatethe deemed investment of the affected Participant's Account out of WPSResources Stock Units within six (6) months of an election to reallocate deemedinvestments into WPS Resources Stock Units (collectively, "ProhibitedTransactions"). All Prohibited Transactions are void. In accordance withSection 11.02, the Committee may restrict additional transactions, or imposeother rules and procedures, to the extent deemed desirable by the Committee inorder to comply with the Exchange Act, including, without limitation,application of the review and approval provisions of this Section 5.06(d) toParticipants who are not subject to Section 16 of the Exchange Act.

 

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   Section 5.07. 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 PriorPlan WPS Stock Unit Account had such Units been actual shares of WPS ResourcesStock shall be converted, for record keeping purposes, into whole and fractionalWPS Resources Stock Units, and shall be credited to the Prior Plan WPS StockUnit Account, based on the closing price of a share of WPS Resources Stock onthe dividend 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 or Director Deferrals be credited toReserve Account B or such other of the Available Investment Options specified bythe Committee for this purpose. A 

 

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 Participant's investment election or deemedinvestment election shall become effective beginning with the first payrollperiod commencing or payment date occurring on or after the date on which theelection is received and accepted by the Committee, or such other dateestablished by the Committee for this purpose, and shall remain in effect unlessand until modified by a subsequent election that becomes effective in accordancewith 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. A Participant's investment election or deemed investment electionshall become effective with respect to annual bonus amounts awarded on or afterthe date on which the election is received and accepted by the Committee, andshall remain in effect unless and until modified by a subsequent election thatbecomes 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 

 

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 "Valuation Date"), the Account ofeach Participant will be credited (or charged) based upon the 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 Vwith respect 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 Accountas of the immediately prior Valuation Date that is deemed to have been investedin each 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 5.06(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, the Pre-July1, 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 available Account thatis deemed to be invested in each Available Investment Option after theinvestment reallocation is given effect. Once effective, a Participant'sreallocation shall remain in effect unless and until modified by a subsequentelection that becomes effective in accordance with the rules prescribed by theCommittee. Other than a reallocation of a Participant's Account pursuant to arevised investment election submitted by the Participant, the deemed investmentallocation of a Participant will not be adjusted to reflect differences in therelative investment return realized by the various hypothetical InvestmentOptions that the 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 and/or contribute to the Trustassets equal to part or all of such account balances and invest such assets inCompany stock, life insurance or any other investment deemed appropriate. Anysuch assets held by the Company or the Trust shall be and remain the soleproperty of the Company or the Trust, as applicable, and except to the extentthat the Trust authorizes a Participant to direct the trustee with respect tothe voting of WPS Resources Stock held in the Trust, a Participant shall have noproprietary rights of any nature whatsoever with respect to such assets.

 

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** 

ARTICLE VII. DISTRIBUTION OF PRE-2005 ACCOUNT

    Section 7.01. DistributionElection.

    (a) Election. A Participant, at the time he or she commencedparticipation in the Plan, made a distribution election with respect to his orher Pre-2005 Account. The election specified the distribution commencement date,the distribution period, and the distribution method applicable following theParticipant's death. Any such election was required to be consistent with thefollowing rules (or if the Participant failed to make a selection with respectto a particular item, in accordance with the default rules set forth 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 Pre-2005 Account will commence either (A) within 60            days following the end of the calendar year in which the Participant            terminates employment or service from the Company and all            Affiliates, or (B) if determined by the Committee to be consistent            with the "grand-father" rules of Code Section 409A and if            directed by the Committee for purposes of creating administratively            consistency between the distribution provisions of Articles VII and            VIII, within 60 days following the end of the calendar year in which            occurs the 6 month anniversary of the date on which the Participant            terminates employment or service from the Company and all            Affiliates. For purposes of this Plan, a Participant 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 

 

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 Employer            contributes, unless otherwise determined by the Committee.

(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 no later than 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 no later than 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 or her distribution electionby filing a revised distribution election, properly completed and signed, withthe Committee. However, a 

 

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 revised distribution election will be given effectonly if the Participant remains employed by a Participating Employer for twelve(12) consecutive months following the date that the revised election is receivedand accepted as complete by the Committee.

   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 for the Pre-2005 Account, unless the Committee specifies adifferent or alternate method and such different or alternate method does notresult in the imposition of tax under Code Section 409A, shall be calculated asfollows:

(i) The annual distribution amount for the Participant's            Pre-2005 Account, other than the portion of the Pre-2005 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 

 

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 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 the portion of the            Participant's Pre-2005 Account that is credited to 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 9.02), 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 9.02 and 10.02, each distributionof WPS Resources Stock made to a Participant (or Beneficiary) shall bedistributed on January 22 (or if January 22 

 

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 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.

    Section7.05. SingleSum Distribution at the Committee's Option.
    (a) In the case of a Participant whose employment with the Company andits Affiliates is involuntarily terminated by the Company or an Affiliate, orwhose employment with the Company and its Affiliates is mutually terminated inaccordance with a separation agreement and release between the Company or anAffiliate and such Participant, the Committee may (but need not) direct that theParticipant's Pre-2005 Account be distributed in the form of a single sumpayment in lieu of distribution over any installment distribution period thatwould otherwise apply. If so directed by the Committee, the single sumdistribution shall be made in cash and/or shares of WPS Resources Stock (asdetermined in accordance with Section 7.03) and shall be made at the timespecified in Section 7.04.

    (b) In the case of any other Participant or Beneficiary whose Pre-2005Account and Post-2005 Account, in the aggregate, has a value of $100,000 or lessas of the valuation date that immediately precedes the date on whichdistribution would first be made to the Participant or Beneficiary, theCommittee may (but need not) direct that the Participant's Pre-2005 Account bedistributed in the form of a single sum payment in lieu of any installmentdistribution 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 ResourcesStock (as determined in accordance with Section 7.03) and shall be made at thetime specified in Section 7.04.

 

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** ARTICLE VIII. DISTRIBUTION OF POST-2004 ACCOUNT**
    Section 8.01. DistributionElection.

    (a) Election. A Participant, on or before December 31, 2005 orif later, at the time he or she commences participation in the Plan, shall makea distribution election with respect to his or her Post-2004 Account. Theelection shall be in such form as the Committee shall prescribe, and shallspecify the distribution commencement date, the distribution period, and thedistribution method applicable following the Participant's death. Any suchelection shall be consistent with the following rules (or if the Participantfails to make a selection with respect to a particular item, in accordance withthe default rules set forth below):

(i) Distribution Commencement Date. Unless the            Participant has selected a later commencement date, distribution of            a Participant's Post-2004 Account will commence within 60 days            following the end of the calendar year in which occurs the 6 month            anniversary of the date on which the Participant terminates            employment or service from the Company and all Affiliates. For            purposes of this Plan, a Participant who is Disabled shall be deemed            to have retired or terminated at the conclusion of benefits under            all disability income plans sponsored by the Company or an Affiliate            or to which the Company or an Affiliate contributes.

(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 in his            or her Post-2004 Account will be distributed to the Participant's            Beneficiary in accordance with the distribution election 

 

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 (single sum            payment or installments) elected by the Participant. If the            Participant had elected a single sum, the payment shall be made no            later than 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 no later than 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 8.02 below or otherwise revoked in accordance such circumstances as thePlan is permitted to accept without resulting in the imposition of tax underCode Section 409A.

   Section 8.02. ModifiedDistribution Election.

    A Participant may from time to time modify his or her distribution electionwith respect to his or her Post-2004 Account by filing a revised distributionelection, properly completed and signed, with the Committee. However, except tothe extent permitted under regulations promulgated by the Secretary of theTreasury under Code Section 409A, a revised distribution election must complywith the following rules:

    (a) The revised distribution election may not accelerate either thetime or form of payment. For example, the revised distribution election may notchange from an installment payment to a single sum payment, or from a longerinstallment period to a shorter installment period. Similarly, the reviseddistribution election may not elect a distribution commencement date earlierthan the distribution commencement date applicable under the Participant'sprior 

 

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 distribution election. A revised election that does not comply with theserules will be null and void, and will be disregarded by the Plan.

    (b) The revised distribution election may (i) change the form ofpayment from a single sum payment to installment distributions, (ii) change theform of payment from a shorter installment period to a longer installmentperiod, or (iii) defer the distribution commencement date, and such a revisedelection will be given effect 12 months after the date on which the election ismade, but only if (i) in the case of an election related to payment at aspecified time, the revised election is made at least 12 months prior to thedate on which payment would be made or commence in the absence of the revisedelection, and (ii) in the case of any election other than one related to paymenton account of Disability or death, the first payment that is made pursuant tothe revised election is deferred for at least 5 years from the date paymentwould otherwise have been made. A revised election that does not comply withthese rules will be null and void, and will be disregarded by the Plan.

   Section 8.03. Calculationof Annual Distribution Amount.

    The annual distribution amount for the Post-2004 Account shall be calculatedas follows:

    (a) The annual distribution amount for the Participant's Post-2004Account, other than the portion of the Post-2004 Account that is deemed to beinvested in the Stock Unit Accounts (the "Distributable Account"),shall be determined by dividing (A) the aggregate balance in the DistributableAccount 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 thedistribution period selected by the Participant. Distributions shall be made incash. The amount of any distribution under this subsection (a) will be chargedpro-rata against the Participant's interest in each Investment Optioncomprising the Distributable Account. Notwithstanding the foregoing, the lastinstallment payment of the Distributable Account shall be adjusted to take intoaccount deemed investment gains or losses for the period between theJanuary 1 valuation date and the date of actual payment according to suchmethods and procedures adopted by the Committee.

 

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    (b) The annual distribution amount for the portion of the Participant'sPost-2004 Account that is credited to each of the Post-2004 Stock Unit Accountsshall be determined on a share basis by dividing (A) the number of WPS ResourcesStock Units credited to the relevant Stock Unit Account as of January 1 of theyear for which the distribution is being made (subject to subsequent adjustmentunder Section 9.02), by (B) the number of installment payments remaining tobe made under the distribution period selected by the Participant. TheParticipant will receive shares of WPS Resources Stock equal to the annualdistribution amount, subject only to the distribution of cash in lieu of anyfractional WPS Resources Stock Unit. The cash payment for any fractional WPSResources Stock Unit shall be determined based upon the closing price of a shareof WPS Resources Stock on January 21 of the year in which the distribution isbeing made, as such share price is reported in the Wall Street Journal's NewYork Stock Exchange Composite Transactions listing. If January 21 falls on aSaturday, Sunday or holiday, the calculation of the cash portion of thedistribution will be made based upon the closing price as reported for theimmediately preceding business day.

    Section 8.04. Timeof Distribution.

    Subject to the provisions of Sections 9.02 and 10.02, 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.

   Section 8.05. AutomaticSingle Sum Distribution. In the case of any Participant or Beneficiary whosePre-2005 Account and Post-2004 Account, in the aggregate, has a value of$100,000 or less as of the valuation date that immediately precedes the date onwhich distribution would first be made to the Participant or Beneficiary, theParticipant's Post-2004 

 

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 Account will be distributed in the form of a singlesum payment on the date on which distributions would otherwise commence, andsuch single sum payment shall be in lieu of any installment distribution periodthat would otherwise apply; provided that the Post-2004 Account will be sodistributed only if the Participant's Pre-2005 Account is distributed inaccordance with Section 7.05. Unless otherwise directed by the Committee, thesingle sum distribution shall be made in cash and/or shares of WPS ResourcesStock (as determined in accordance with Section 8.03).

 

 

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**ARTICLE IX. RULES WITH RESPECT TO WPS RESOURCES STOCKAND WPS RESOURCES STOCK UNITS

    Section 9.01. SharesAuthorized.

    (a) Subject to adjustment as provided in Section 9.02 below, the totalnumber of shares of WPS Resources Stock which may be distributed to Participantsor Beneficiaries pursuant to the Plan shall be seven hundred fifty thousand(750,000), which includes two hundred fifty thousand (250,000) shares that werepreviously approved by shareholders in connection with employee and directordeferred compensation plans, and five hundred thousand (500,000) shares forwhich shareholder approval will be sought at the Company's 2005 annualmeeting.

(i) The two hundred fifty thousand (250,000) shares, as            adjusted as provided in Section 9.02 below ,that were previously            approved by shareholders and to the extent not heretofore utilized,            may be used to satisfy any obligation under the Plan.

(ii) Of the five hundred thousand (500,000) shares for            which shareholder approval will be sought at the Company's 2005            annual meeting, no more than two hundred thousand (200,000) shares,            subject to adjustment as provided in Section 9.02 below, will be            issued to satisfy obligations with respect to (i) the five percent            (5%) premium on Annual Bonus Deferrals that are allocated to the            Incentive Stock Unit Account in accordance with Section 6.01(c), or            (ii) employer contribution credits under Sections 3.05 and 3.06 of            this Plan (or under the provisions of any predecessor plan) that are            granted to a Participant without the requirement that the            Participant execute a Deferral

 

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 election to forego an equal amount of            cash compensation as a condition of receiving such credits.

    (b) The number of available shares shall not be reduced by or as aresult of (i) any cash distributions pursuant to the Plan or (ii) bydistributions of shares of WPS Resources Stock that are attributable to LTIPDeferrals that relate to an award that was made under the Omnibus Plan andeither has been or will be charged against the pool of available shares underthe Omnibus Plan, i.e., the plan under which the share award was originallygranted and the plan from which the share award would have been paid except forthe Participant's election to defer delivery of the shares.

   Section 9.02. 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 9.03. 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 the Participant or his or her guardian or legal representative.

 

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** 

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

    Section 10.01.Definitions.

    For purposes of this Article X, the following terms shall have the followingrespective 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 American Stock Transfer & Trust Company, originally dated            as of December 12, 1996 between the Company and Firstar Trust            Company, as the same may be 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 

 

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 described in            Paragraph (ii) above) or disposing of any voting securities of the            Company.

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

(i) any Person (other than any employee benefit plan of            WPS Resources Corporation or of any subsidiary of WPS Resources            Corporation, 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 WPS Resources Corporation representing at least 30% of            the combined voting power of the WPS Resources Corporation'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 WPS Resources Corporation 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 WPS Resources Corporation            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 WPS            Resources Corporation or share exchange involving WPS Resources            Corporation in which WPS Resources Corporation is not the continuing            or surviving corporation other than a merger of WPS Resources            Corporation in which each of the holders of WPS Resources            Corporation's Common Stock 

 

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 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 WPS            Resources Corporation to a Person which is not a wholly owned            subsidiary of WPS Resources Corporation; or

(vi) the shareholders of WPS Resources Corporation approve            any plan or proposal for the liquidation or dissolution of WPS            Resources Corporation.

    (d) "Continuing Directors" means (i) any member of theBoard of Directors of WPS Resources Corporation who was a member of such Boardon May 1, 1997, (ii) any successor of a Continuing Director who isrecommended to succeed a Continuing Director by a majority of the ContinuingDirectors then on such Board, and (iii) additional directors elected by amajority of the Continuing 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 10.02.Amendments in Connection with a Change in Control.

    (a) Board Authority to Amend Plan. Prior to the occurrence of aChange in Control, the Board may exercise its authority under Section 11.06 toamend the Plan, including, to the extent deemed necessary or desirable by theBoard in anticipation of a Change in Control, to amend the Planto eliminate WPS Resources Stock Units and cause the value of such units asof the Amendment Date (such value to be determined under Section 5.06(c))to be reallocated to Reserve Account B. The term "Amendment Date"means the date on which an amendment to

 

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the Plan is validly adopted or the dateon which the amendment is or purports to be effective, whichever is later.

    (b) Automatic Amendments. The Plan shall automatically beamended upon 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,            or (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 corporation that is the survivor of a merger with the            Company or any successor to that corporation) and all subsidiaries,            or (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 

 

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 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 (including            for this purpose any successor corporation or entity that is the            survivor of a merger with the Company), or by any subsidiary or            affiliate of the Company or such successor, on such date.

    (c) Prohibition on Certain Amendments. Notwithstanding theforegoing, on or after a Change in Control, the Board or Company (including forthis purpose any successor corporation or entity that is the survivor of amerger with the Company or to which sponsorship of the Plan is transferredfollowing a Change in Control, or the board of directors or other managing bodyof any such entity)may not, without the written consent of the affectedParticipant (or in the case of a deceased Participant, the Participant'sBeneficiary) amend the Plan 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 or her 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;

 

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(v) Eliminate or reduce the distribution options made            available under Articles VII and VIII or otherwise terminate any            distribution elections then in effect; or

(vi) Modify the provisions of Sections 10.03 and 10.04 in            a manner detrimental or potentially detrimental to a Participant (or            Beneficiary), except and only to the extent that modification is            necessary to comply with applicable law.

   Section 10.03.Maximum Payment 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 or her sole discretion (which may be regular outside counselto the Company), which opinion sets forth (A) the amount of the Base Period 

 

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Income, (B) the amount and present value of Total Payments and (C) the amountand present value of any excess parachute payments determined without regard tothe limitations of this Section. As used in this Section, the term "BasePeriod Income" means an amount equal to the Participant's"annualized includible compensation for the base period" as defined inSection 280G(d)(1) of the Code. For purposes of such opinion, the value of anynoncash benefits or any deferred payment or benefit shall be determined by theCompany's independent auditors in accordance with the principles of Sections280G(d)(3) and (4) of the Code, which determination shall be evidenced in acertificate of such auditors addressed to the Company and the Participant. Suchopinion shall be addressed to the Company and the Participant and shall bebinding upon the Company and the Participant. If such opinion determines thatthere would be an excess parachute payment, the payments hereunder that areincludible in Total Payments or any other payment or benefit determined by suchcounsel to be includible in Total Payments shall be reduced or eliminated asspecified by the Participant in writing delivered to the Company within thirtydays of his or her receipt of such opinion or, if the Participant fails to sonotify the Company, then as the Company shall reasonably determine, so thatunder the bases of calculations set forth in such opinion there will be noexcess parachute payment. If such legal counsel so requests in connection withthe opinion required by this Section, the Participant and the Company shallobtain, at the Company's expense, and the legal counsel may rely on inproviding the opinion, the advice of a firm of recognized executive compensationconsultants as to the reasonableness of any item of compensation to be receivedby the Participant. If the provisions of Sections 280G and 4999 of the Code (orany successor provisions) are repealed without succession, then this Sectionshall be of no further 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 10.04.Resolution of 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 

 

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 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 asits 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 XI. GENERAL PROVISIONS

    Section 11.01.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 a duly designated officer of the Board. The Committee may,in its discretion, delegate any or all of its authority and responsibility;provided that the Committee shall not delegate authority and responsibility withrespect to non-ministerial functions that relate to the participation byParticipants who are subject to Section 16 of the Exchange Act at the time anysuch delegated authority or responsibility is exercised. To the extent of anysuch delegation, any references herein to the Committee shall be deemedreferences to such delegee. Interpretation of the Plan shall be within the solediscretion of the Committee and shall be final and binding upon each Participantand Beneficiary. The Committee may adopt and modify rules and regulationsrelating to the Plan as it deems necessary or advisable for the administrationof the Plan. If any delegee of the Committee shall also be a Participant orBeneficiary, any determinations affecting the delegee's participation in thePlan shall be made by the Committee.

   Section 11.02.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 or her Beneficiary or his or her heirs, legatees orlegal representatives, as the case may be, shall, if the Committee deems itnecessary, execute and deliver to the Company a restrictive stock transferagreement in such form, and subject to such terms and conditions, as shall bereasonably determined or approved by the Committee, which agreement, among otherthings, may impose certain restrictions on the sale or other disposition of anyshares of 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 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 11.03.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 or her legal representative shall file a written claim forsuch benefit with the Committee. The Committee shall review the claim within 90days following 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 

 

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 Committeeshall 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'sreceipt of the decision or deemed denial. The claimant will have theopportunity, upon request and free of charge, to have reasonable access to andcopies of all documents, records and other information relevant to the claimant'sappeal. The claimant may submit written comments, documents, records and otherinformation relating to his or her claim with the appeal. The Committee willreview all comments, documents, records and other information submitted by theclaimant relating to the claim, regardless of whether such information wassubmitted or considered in the initial claim determination. The Committee shallmake a determination on the appeal within 60 days after receiving the claimant'swritten appeal; provided that the Committee may determine that an additional60-day extension is necessary due to circumstances beyond the Committee'scontrol, in which event the Committee shall notify the claimant prior to the endof the initial period that an extension is needed, the reason therefor and thedate by which the Committee expects to render a decision. If the claimant'sappeal is denied in whole or part, the Committee shall provide written notice tothe claimant of such denial. The written notice shall include the specificreason(s) for the denial; reference to specific Plan provisions upon which thedenial is based; a statement that the claimant is entitled to receive, uponrequest and free of charge, reasonable access to and copies of all documents,records, and other information relevant to the claimant's claim; and astatement of the claimant's right to bring a civil action under section 502(a)of ERISA.

 

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   Section 11.04.Participant Rights Unsecured.

    (a) Unsecured Claim. The right of a Participant or theParticipant's Beneficiary to receive a distribution hereunder shall be anunsecured claim, and neither the Participant nor any Beneficiary shall have anyrights in or against any amount credited to his or her Account or any otherspecific assets of a Participating Employer. The right of a Participant orBeneficiary to the payment of benefits under this Plan shall not be assigned,encumbered, or transferred, except by will or the laws of descent anddistribution. The rights of a Participant hereunder are exercisable during theParticipant's lifetime only by the Participant or his or her guardian or legalrepresentative.

    (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 11.05.Income Tax Withholding.

    The amount actually distributed to the Participant will be reduced byapplicable income tax withholding (if any). Unless the Participant has made acontrary election with the consent of the Committee, 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. Further, no later than the date as of which anamount first becomes includible in the income of the Participant for employmenttax purposes, the Participant shall pay or make arrangements satisfactory to theCommittee regarding the payment of any such tax.

   Section 11.06.Amendment or Termination of Plan.

    (a) There shall be no time limit on the duration of the Plan.

 

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    (b) Except as otherwise limited pursuant to Section 10.02, theBoard (or where specified herein, the Committee) may at any time amend the Plan,including but not limited to modifying the terms and conditions applicable to(or otherwise eliminating) Deferrals or contribution credits to be made on orafter the amendment date; provided, however, that no amendment or terminationmay reduce or eliminate any Account balance accrued to the date of suchamendment or termination (except as such Account balance may be reduced as aresult of investment losses allocable to such Account).

    (c) Subject to Section 10.02, the Board may terminate the Plan inaccordance with and subject to the following rules:

(i) Prior to January 1, 2006, the Board at any time may            terminate the Plan and require that all benefits accrued be            currently distributed to Participants and Beneficiaries in a single            sum without regard to a Participant's prior election as to the            form and timing of benefit payments.

(ii) Effective January 1, 2006, and except as provided in            Paragraph (iii) below or except as otherwise permitted in            regulations promulgated by the Secretary of the Treasury under Code            Section 409A, any action that purports to terminate the Plan shall            instead be construed as an amendment to discontinue further            Deferrals and contributions credits, but the Plan will continue to            operate, in accordance with its terms as from time to time amended            in accordance with Sections 10.02 and 11.06, and in accordance with            applicable Participant elections, with respect to the Participant's            Account as accumulated through the date of termination and as            thereafter adjusted to reflect post-termination earnings or losses.            Except as provided in Paragraph (iii) below or except as otherwise            permitted in regulations promulgated by the Secretary of 

 

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 the            Treasury under Code Section 409A, in no event shall any such action            purporting to terminate the Plan form the basis for accelerating            distributions to Participants and Beneficiaries.

(iii) The Committee may (but need not) terminate the Plan            and require that all benefits accrued be currently distributed to            Participants and Beneficiaries in a single sum without regard to a            Participant's prior election as to the form and timing of benefit            payments, if such termination and distribution occurs within 12            months of a "change in control event", or within such            other period as permitted under regulations promulgated by the            Secretary of the Treasury under Code Section 409A. For purposes of            this Paragraph (iii), the term "change in control event"            has the meaning specified by the Secretary of the Treasury for            purposes of Code Section 409A, and a Change in Control (as defined            in Section 10.01 does not necessarily constitute a "change in            control event" as defined for purposes of Code Section 409A. A            Change in Control (as defined in Section 10.01 shall be a            permissible basis for terminating the Plan and distributing the            value of Accounts only if such transaction or event also constitutes            a "change in control event" as that term is defined for            purposes of Code Section 409A.

   Section 11.07.Administrative Expenses.

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

 

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   Section 11.08.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 11.09.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 11.10.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 Affiliate orother entity in which the Company or an Affiliate maintains an ownershipinterest. The Company may effectuate the offset without the consent of theParticipant (or the Participant's spouse or Beneficiary, in the event of theParticipant's death).

 

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