Document:

AUTOMATIC DATA PROCESSING, INC.

 

AMENDED AND RESTATED EMPLOYEES’

SAVINGS–STOCK PURCHASE PLAN

The following is an amendment and restatement, effective as of November 8, 2005, of the Employees’ Savings-Stock Purchase Plan of Automatic Data Processing, Inc., originally adopted on May 2, 1968 and approved by stockholders on October 31, 1968, as amended on November 14, 2006.

	
            1.            Purpose. The purpose of the Plan is to provide eligible employees of the Company, its Designated Subsidiaries and its Designated Foreign Subsidiaries with a convenient opportunity to purchase Common Stock of the Company. It is the intention of the Company to have the Plan qualify as an “Employee Stock Purchase Plan” under Section 423 of the Code. The provisions of the Plan shall, accordingly, be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code. 
  
	
            (a)         This Plan document is an omnibus document which includes, in addition to the Plan, separate sub-plans (“Non-Statutory Plans”) that permit offerings of grants to employees of certain Designated Foreign Subsidiaries that are not intended to satisfy the requirements of Section 423 of the Code. Offerings under the Non-Statutory Plans may be made to achieve desired tax or other objectives in particular locations outside the United States of America or to comply with local laws applicable to offerings in such foreign jurisdictions. The Plan shall be a separate and independent plan from the Non-Statutory Plans.

 
  
	
            (b)        Although the Plan is a separate and independent plan from the Non-Statutory Plans, the total number of Shares authorized to be issued under the Plan applies in the aggregate to both the Plan and the Non-Statutory Plans. Section 11 of the Plan sets forth the maximum number of Shares to be offered under the Plan (together with the Non-Statutory Plans), subject to adjustments as permitted under Section 17. The Administration Committee shall determine from time to time the method for allocating the number of such total Shares to be offered under the Plan and each Non-Statutory Plan. Such determination shall be in the Administration Committee’s discretion and shall not require stockholder approval.

 
  

 

 

 

	
            (c)          The Administration Committee may adopt Non-Statutory Plans applicable to particular Designated Foreign Subsidiaries or locations that are not participating in the Plan. The terms of each Non-Statutory Plan shall take precedence over other provisions in this Plan document in respect of any Designated Foreign Subsidiary participating therein, with the exception of Sections 11 and 17 with respect to the total number of Shares available to be offered under the Plan and all Non-Statutory Plans. Unless otherwise superseded by the terms of a Non-Statutory Plan, the provisions of this Plan document shall govern the operation of each Non-Statutory Plan. Except to the extent expressly set forth herein or where the context suggests otherwise, any reference herein to
“Plan” shall be construed to include a reference to the Plan and the Non-Statutory Plans.
  
	
            2.           Definitions.

 
  
	
            (a)         “Administration Committee” means a committee appointed by the Board. Notwithstanding the above, in the absence of a contrary designation by the Board, the Administration Committee shall be the Compensation Committee of the Board.
  
	
            (b)        “Board” means the Board of Directors of the Company.

 
  
	
            (c)         “Code” means the United States Internal Revenue Code of 1986, as amended.
  
	
            (d)        “Common Stock” means the Common Stock of the Company, $.10 par value per share.

 
  
	
            (e)         “Company” means Automatic Data Processing, Inc., a Delaware corporation.

 
  
	
            (f)         “Compensation” means the earnings received by an Employee from the Company, a Designated Subsidiary or a Designated Foreign Subsidiary as determined by the Administration Committee in a manner intended to comply with the requirements of Section 423 of the Code and the Treasury Regulations promulgated thereunder.

 
  

 

 

 

	
            (g)        “Continuous Status as an Employee” means the absence of any interruption or termination of service as an Employee. Continuous Status as an Employee shall not be considered interrupted in the case of: (i) sick leave, military leave, or other bona fide leave of absence which is required by law to be considered uninterrupted service or which is otherwise approved by the Administration Committee if the period of such leave does not exceed 90 days, or if longer, so long as the individual’s right to reemployment as an Employee is guaranteed either by contract or statute; or (ii) transfers between locations of the Company or between and among the Company, its Designated Subsidiaries or Designated Foreign Subsidiaries. For purposes of clarification, the
disposition of a Designated Subsidiary or Designated Foreign Subsidiary shall constitute a termination of the Continuous Status as an Employee of any Employee employed by such Designated Subsidiary or Designated Foreign Subsidiary.
  
	
            (h)        “Contributions” means all amounts credited to the account of a Participant pursuant to the Plan.

 
  
	
            (i)          “Corporate Transaction” means a sale of all or substantially all of the Company’s assets, or a merger, consolidation or other capital reorganization of the Company with or into another corporation, or any other transaction or series of related transactions in which the Company’s stockholders immediately prior thereto own less than 50% of the voting stock of the Company (or its successor or parent) immediately thereafter.

 
  
	
            (j)          “Designated Broker” shall mean Smith Barney, or such other institution selected by the Administration Committee.

 
  
	
            (k)        “Designated Country” means a jurisdiction or country other than the United States of America that is designated by the Board or the Administration Committee from time to time. 

 
  
	
            (l)          “Designated Foreign Subsidiaries” means all Subsidiaries organized under the laws of any Designated Country; provided, however, that Subsidiaries employing as a service for clients any worksite, leased, or similar type employees under a professional employer, employee leasing or similar type of employment relationship shall not be Designated Foreign Subsidiaries.
  

 

 

 

	
            (m)       “Designated Subsidiaries” means all Subsidiaries organized under the laws of any state of the United States of America, except with respect to any of such Subsidiaries which the Board or the Administration Committee has determined is not eligible to participate in the Plan; provided, however, that Subsidiaries employing as a service for clients any worksite, leased, or similar type employers under a professional employer, employee leasing, or similar type of employment relationship shall not be Designated Subsidiaries; provided, further, however, that at any given time, a Subsidiary that is a Designated Foreign Subsidiary in a Non-Statutory Plan may not be a Designated Subsidiary in the Plan.

 
  
	
            (n)        “Employee” means any person who is an employee of the Company or one of its Designated Subsidiaries or Designated Foreign Subsidiaries for tax purposes and who is customarily employed thereby for at least ten hours per week.
  
	
            (o)        “Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

 
  
	
            (p)        “Fair Market Value” shall have the meaning ascribed to it in Section 7(b).
  
	
            (q)        “GAAP” shall mean United States generally accepted accounting principles as in effect from time to time. 

 
  
	
            (r)         “New Purchase Date” shall have the meaning ascribed to it in Section 17(b).

 
  
	
            (s)         “Non-Statutory Plans” shall have the meaning ascribed to it in Section 1(a).

 
  
	
            (t)          “Offering Date” means the first day of each Offering Period, as determined in accordance with Section 4(a). 

 
  
	
            (u)        “Offering Period” means the period described in Section 4(a).

 
  
	
            (v)        “Plan” means this Automatic Data Processing, Inc. Amended and Restated Employees’ Savings–Stock Purchase Plan.

 
  

 

 

 

	
            (w)       “Participant” means an eligible Employee who has elected to participate in the Plan in accordance with Section 5.

 
  
	
            (x)        “Purchase Date” means the last day of each Purchase Period.

 
  
	
            (y)        “Purchase Period” means the period described in Section 4(b).

 
  
	
            (z)         “Purchase Price” means with respect to a Purchase Period an amount equal to 85% of the Fair Market Value of a Share of Common Stock on the Offering Date. 

 
  
	
            (aa)       “Reserves” shall have the meaning ascribed to it in Section 17(a).

 
  
	
            (bb)      “Retirement” means an Employee’s termination of employment under conditions prescribed by the Administration Committee from time to time.

 
  
	
            (cc)       “Rule 16b-3” means Rule 16b-3 adopted under Section 16 of the Exchange Act.

 
  
	
            (dd)       “Sales Benefit Earnings” means earnings of an Employee, determined in accordance with the Sales Benefit Earnings Calculation Summary, as established by the Company from time to time.

 
  
	
            (ee)       “Share” means a share of Common Stock, as adjusted in accordance with Section 17.

 
  

 

 

 

	
            (ff)        “Subsidiary” means a corporation which is a “subsidiary corporation” of the Company within the meaning of Section 424(f) of the Code; provided, however, that, with respect to determining Designated Foreign Subsidiaries, the term “Subsidiary” means a corporation or other entity organized or established under the laws of any country other than the United States of America, of which not less than 50% of the voting control is held, directly or indirectly, by the Company.

 
  
	
            3.           Eligibility.

 
  
	
            (a)         Any person who is an Employee of the Company or a Designated Subsidiary as of the Offering Date of a given Offering Period, or such later date established by the Administration Committee in respect of a given Offering Period, shall be eligible to participate in such Offering Period, subject to the requirements of Section 5(a) and the limitations imposed by Section 423(b) of the Code; provided, however, that any Employee working in a country in which participation by such Employee in the Plan is prohibited by law, or where an alternative employee stock purchase plan of the Company, or a similar plan, is offered, is not eligible to participate in the Plan. Any
person who is an Employee of a Designated Foreign Subsidiary as of the Offering Date of a given Offering Period, or such later date established by the Administration Committee in respect of a given Offering Period, shall be eligible to participate in such Offering Period under the Non-Statutory Plan in which such Designated Foreign Subsidiary participates, subject to the requirements of Section 5(a).

 
  
	
            (b)        Any provisions of the Plan to the contrary notwithstanding, each option to purchase Shares under the Plan shall be limited as necessary to prevent any Employee from (i) immediately after the grant, owning capital stock of the Company and holding outstanding options to purchase capital stock of the Company possessing, in the aggregate, more than five percent of the total combined voting power or value of all classes of stock of the Company or of any Subsidiary, including for this purpose any stock attributed to such Employee pursuant to Section 424(d) of the Code, or (ii) acquiring rights to purchase stock under all employee stock purchase plans (as described in Section 423 of the Code or any other similar arrangements maintained by the Company or any of its
Subsidiaries) of the Company and its Subsidiaries which accrue at a rate that exceeds $25,000 of the fair market value of such stock (determined at the time such option is granted in accordance with the principles set forth in Section 7(b)) for each calendar year in which such option is outstanding at any time.
  

 

 

 

	
            4.           Offering Periods and Purchase Periods.

 
  
	
            (a)         Offering Periods. The Plan shall be implemented by a series of consecutive Offering Periods of 27 months’ duration, with new Offering Periods commencing on October 1 of each year, or the first business day thereafter if October 1 is not a business day; provided, however, that the Administration Committee may determine that any Offering Period shall commence on a different date and/or be of a different duration (so long as such duration is not greater than 27 months). The Plan shall continue until terminated in accordance with Section 18 hereof.

 
  
	
            (b)        Purchase Periods. Subject to Section 17(b), each Offering Period shall include one Purchase Period of 24 months’ duration, commencing on the January 1 following the Offering Date in respect of such Offering Period and ending on December 31 of the following year; provided, however, that the Administration Committee may determine that any Purchase Period may have a different commencement date and a different duration, so long as such duration is no longer than that of the associated Offering Period.

 
  
	
            5.           Participation.

 
  
	
            (a)         An eligible Employee may become a Participant in respect of an Offering Period by electing to participate on the Company’s internet or intranet site or calling the Company’s Associate Benefit System, in each case, as approved by the Administration Committee, or in such other manner as the Administration Committee shall approve, in each case prior to the tenth day preceding the first day of the Purchase Period related to such Offering Period, unless a different time for electing to participate is set by the Administration Committee with respect to a given Offering Period. 

 
  
	
            (b)        In accordance with Section 6(a), payroll deductions in an amount necessary to purchase the number of Shares elected to be purchased by the Participant in respect of any Offering Period pursuant to Section 7 shall commence on the first full payroll following the first day of the associated Purchase Period and shall end on the last payroll paid on or prior to the Purchase Date of such Purchase Period, unless sooner terminated by the Participant as provided in Section 10.

 
  

 

 

 

	
            6.           Method of Payment of Contributions.

 
  
	
            (a)         Payroll deductions shall be made from a Participant’s Compensation during a Purchase Period in an amount necessary to purchase that number of Shares indicated by the Participant on his or her participation election, subject to the limitations of Section 7(a). All payroll deductions made by a Participant shall be credited to his or her account under the Plan. Except as permitted in Section 6(d), a Participant may not make a prepayment or any additional payments into such account.

 
  
	
            (b)        A Participant may discontinue his or her participation in the Plan as provided in Section 10. A Participant may elect at any time during an Offering Period to reduce (but not increase) the number of Shares he or she has elected to purchase in respect of such Offering Period in accordance with such procedures as may be established by the Administration Committee, and the Participant’s payroll deductions shall be reduced accordingly. 

 
  
	
            (c)         Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(b) herein, a Participant’s payroll deductions may be decreased by the Company during any Purchase Period to zero.

 
  
	
            (d)        Participants on an authorized leave of absence during the first 22 months of a Purchase Period may continue to participate in such Purchase Period for up to 12 months. Upon return from the leave of absence, the Participant may make up any deficit in the total amount which would have been in such Participant’s account but for such leave of absence through increased uniform payroll deductions over the remaining payroll periods in the Purchase Period, or the Participant may elect to submit a certified check for the full deficit in the account. If, however, the authorized leave of absence begins after the twenty-second month of a Purchase Period, then the Participant may only make up any deficit in the amount required to purchase the number of Shares that the
Participant elected to purchase by certified check. 

 
  

 

 

 

	
            (e)         At the time an option granted under the Plan is exercised, in whole or in part, or at the time some or all of the Common Stock issued to a Participant under the Plan is disposed of, the Participant must make adequate provisions for any applicable federal, state or other tax withholding obligations, if any, which arise upon the Purchase Date or the disposition of the Common Stock. At any time, the Company, a Designated Subsidiary or a Designated Foreign Subsidiary may, but will not be obligated to, withhold from the Participant’s compensation the amount necessary to meet applicable withholding obligations, including any withholding required to make available to the Company any tax deductions or benefits attributable to the sale or disposition of Common
Stock by the Participant earlier than as described in Section 423(a)(1) of the Code.
  
	
            7.           Grant of Option.

 
  
	
            (a)         At any time after the Offering Date of each Offering Period and prior to the tenth day preceding the first day of the Purchase Period related to such Offering Period (unless a different time for electing to participate is set by the Administration Committee with respect to a given Offering Period) each Participant shall be entitled to elect to receive (using the procedures set forth in Section 5) an option for a number of Shares not to exceed the amount that is equal to (i) ten percent of such Participant’s Compensation on the related Offering Date (or such other day as may be determined by the Administration Committee), divided by (ii) 85% of the Fair Market Value of a Share on the related Offering Date;
provided, however, that (x) the number of Shares for which an election is made shall not exceed that number of Shares permitted under Section 3(b) and (y) such election shall be subject to the limitations set forth in Section 11, if applicable. Upon making a proper election, a Participant shall be granted an option to purchase on the Purchase Date the number of Shares so elected (subject to Sections 3(b) and 11). The option granted hereunder may be reduced pursuant to Section 6.
  
	
            (b)        The fair market value of the Company’s Common Stock on a given date (the “Fair Market Value”) shall be the average of the high and low sales prices of a Share on the primary exchange over which the Common Stock is traded for such date or, in the event that the Common Stock is not traded on such date, then the immediately preceding trading date.

 
  
	
            8.           Exercise of Option; Interest. 

 
  

 

 

 

	
            (a)         Except as otherwise provided in Section 10 or Section 8(b), unless a Participant withdraws from the Plan as provided in Section 10 (or is deemed to have withdrawn under Section 8(b)), his or her option for the purchase of Shares will be exercised automatically on each Purchase Date, and the number of full Shares subject to the option will be purchased at the applicable Purchase Price with the accumulated Contributions in his or her account and the interest on such Contributions as calculated in accordance with Section 8(c). No fractional Shares shall be issued. Any amounts accumulated in a Participant’s account (including interest) that are in excess of that required to purchase the number of Shares that the Participant elected to purchase, or that are
not sufficient to purchase a full Share, shall be refunded to the Participant in cash. The Shares purchased upon exercise of an option hereunder shall be deemed to be transferred to the Participant as of the Purchase Date. During his or her lifetime, a Participant’s option to purchase Shares hereunder is exercisable only by him or her.

 
  
	
            (b)        In the event that the applicable Purchase Price on a given Purchase Date exceeds the Fair Market Value of a Share of Common Stock on such Purchase Date, all Participants will be deemed to have withdrawn from the Plan with respect to such Offering Period, in accordance with the provisions of Section 10(a).   

 
  
	
            (c)         Each Participant’s account shall be credited daily with interest at an annual rate determined by the Administration Committee and such interest shall be compounded daily.

 
  
	
            9.           Delivery. As promptly as practicable after each Purchase Date, the number of Shares purchased by each Participant upon exercise of his or her option shall be deposited into an account established in the Participant’s name with the Designated Broker. The Administration Committee may determine that, for one year following each Purchase Date, no Share purchased on such Purchase Date may be transferred out of such Participant’s account with the Designated Broker other than in connection with the “disposition,” as such term is used in Section 423(a)(1) of the Code, of such Share.

 
  
	
            10.        Voluntary Withdrawal; Termination of Employment.

 
  

 

 

 

	
            (a)         A Participant may withdraw all but not less than all the Contributions credited to his or her account under the Plan at any time prior to each Purchase Date by giving written notice to the Company in the manner directed by the Company. All of the Participant’s Contributions, plus any interest, credited to his or her account with respect to an Offering Period will be paid to him or her promptly after receipt of his or her notice of withdrawal and his or her option for the current Offering Period will be automatically terminated, and no further Contributions for the purchase of Shares may be made by the Participant with respect to such Offering Period.

 
  
	
            (b)        Upon termination of the Participant’s Continuous Status as an Employee prior to a Purchase Date for any reason other than Retirement or death, the Contributions, plus any interest, credited to his or her account will be returned to him or her and his or her option will be automatically terminated.

 
  
	
            (c)         Upon termination of a Participant’s Continuous Status as an Employee prior to a Purchase Date due to Retirement, the Participant may elect to purchase Shares with amounts accumulated in his or her account through the date of Retirement in accordance with Section 10(d) or the Participant may elect to cease participation in the Plan in respect of the then-current Offering Period and receive a full refund of the amounts accumulated in his or her account up to the date of Retirement. Upon termination of the Participant’s Continuous Status as an Employee prior to a Purchase Date due to death, the Participant’s election to participate in the Plan shall cease on the date the Participant dies and Shares will be purchased with amounts accumulated in his
or her account in accordance with Section 10(d).

 
  
	
            (d)        If a Participant who retires elects to purchase Shares with funds collected through the date of Retirement in accordance with Section 10(c), or if a Participant dies, on the last business day of the month in which the Participant retires or dies all amounts accumulated in his or her account, including any interest thereon, will be used to purchase, at a price equal to the applicable Purchase Price, as many whole Shares as such amount will purchase up to the maximum number of Shares that the Participant had elected to purchase during the Purchase Period, and the balance of funds, if any, will be paid in cash. All Shares purchased on behalf of deceased Participants will be issued, and all payments of excess funds will be made, in accordance with Section 13.

 
  
	
            (e)         A Participant’s withdrawal from the Plan during an Offering Period will not have any effect upon his or her eligibility to participate in a succeeding Offering Period or in any similar plan that may hereafter be adopted by the Company.

 
  
	
            11.        Shares.

 
  

 

 

 

	
            (a)         Subject to adjustment as provided in Section 17, the maximum number of Shares which shall be made available for sale under the Plan shall be 60,000,000. If the Administration Committee determines at any time that, on a given Purchase Date, the number of Shares with respect to which options are to be exercised may exceed the number of Shares that are available for sale under the Plan on such Purchase Date, the Board or the Administration Committee may in its discretion provide (x) that the Company shall make a pro rata allocation of the Shares available for purchase on such Purchase Date, in as uniform a manner as shall be practicable and as it shall determine to be equitable among all Participants exercising options to purchase Common Stock on such Purchase
Date, and continue all Offering Periods then in effect, or (y) that the Company shall make a pro rata allocation of the Shares available for purchase on such Purchase Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine to be equitable among all Participants exercising options to purchase Common Stock on such Purchase Date, and terminate any or all Offering Periods then in effect pursuant to Section 18 below. 

 
  
	
            (b)        The Participant shall have no interest or voting right in Shares covered by his or her option until such option has been exercised.

 
  
	
            (c)         Shares to be delivered to a Participant under the Plan will be registered in the name of the Participant.

 
  
	
            12.        Administration. 

 
  
	
            (a)         Subject to the express provisions of the Plan, the Administration Committee shall supervise and administer the Plan and shall have full power to adopt, amend and rescind any rules deemed desirable and appropriate for the administration of the Plan and not inconsistent with the Plan, to construe and interpret the Plan, and to make all other determinations necessary or advisable for the administration of the Plan. The determinations of the Administration Committee shall be final, binding, and conclusive. 

 
  

 

 

 

	
            (b)        The Board and the Administration Committee may delegate any or all of their authority and obligations under this Plan to such committee or committees (including without limitation, a committee of the Board) or officer(s) of the Company as they may designate. Notwithstanding any such delegation of authority, the Board may itself take any action under the Plan in its discretion at any time, and any reference in this Plan document to the rights and obligations of the Administration Committee shall be construed to apply equally to the Board. Any references to the Board mean only the Board. The authority of the Administration Committee includes, without limitation, the authority to (i) establish Non-Statutory Plans and determine the terms of such Non-Statutory Plans,
(ii) designate from time to time which Subsidiaries will be Designated Foreign Subsidiaries, and which Designated Foreign Subsidiaries will participate in a particular Non-Statutory Plan, (iii) determine procedures for eligible Employees to enroll in or withdraw from a Non-Statutory Plan, setting or changing payroll deduction percentages, and obtaining necessary tax withholdings, (iv) allocate the available Shares under the Plan to the Non-Statutory Plans for particular offerings, and (v) adopt amendments to the Plan or any Non-Statutory Plan in accordance with Section 18. 

 
  
	
            (c)         The authority of the Administration Committee will specifically include, without limitation, the power to make any changes to the Plan with respect to the participation of Employees of any Designated Foreign Subsidiary when the Administration Committee deems such changes to be necessary or appropriate to achieve a desired tax treatment in such foreign jurisdiction or to comply with the laws applicable to such Designated Foreign Subsidiary. Such changes may include, without limitation, the exclusion of particular Designated Foreign Subsidiaries from participation in the Plan; modifications to eligibility criteria, maximum number or value of Shares that may be purchased in a given period, or other requirements set forth herein; and procedural or administrative
modifications. Any modification relating to offerings to a particular Designated Foreign Subsidiary will apply only to such Designated Foreign Subsidiary, and will apply equally to all similarly situated employees of such Designated Foreign Subsidiary. 

 
  
	
            13.        Delivery Following the Death of a Participant. In the event of the death of a Participant, the Company shall deliver to the executor or administrator of the estate of the Participant any Shares and/or cash due to the Participant in accordance with the Plan or, if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such Shares and/or cash to the spouse or to any one or more dependents or relatives of the Participant.

 
  

 

 

 

	
            14.        Transferability. Neither amounts accumulated in a Participant’s account nor any rights with regard to the exercise of an option or to receive Shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution, or as provided in Section 13) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds in accordance with Section 10.

 
  
	
            15.        Use of Funds. All Contributions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such Contributions.

 
  
	
            16.        Reports. Statements of account will be made available to Participants by the Company or the Designated Broker in the form and manner designated by the Administration Committee.

 
  
	
            17.        Adjustments Upon Changes in Capitalization; Corporate Transactions.

 
  
	
            (a)         Adjustment. Subject to any required action by the stockholders of the Company, the number of Shares covered by each option under the Plan that has not yet been exercised and the number of Shares that have been authorized for issuance under the Plan but have not yet been placed under option (collectively, the “Reserves”), as well as the maximum number of Shares that may be purchased by a Participant in a Purchase Period, the number of Shares set forth in Section 11 above, and the price per Share covered by each option under the Plan that has not yet been exercised, shall be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock
split, stock dividend, subdivision, combination or reclassification of the Common Stock (including any such change in the number of shares of Common Stock effected in connection with a change in domicile of the Company), or any other increase or decrease in the number of Shares effected without receipt of consideration by the Company, or any increase or decrease in the value of a Share resulting from a spin-off or split-up; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.”  Such adjustment shall be made by the Administration Committee, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issue by the Company of Shares of stock of any class, or securities convertible into Shares of stock of any class, shall affect,
and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to an option.

 
  

 

 

 

	
            (b)        Corporate Transactions. In the event of a dissolution or liquidation of the Company, any Purchase Period and Offering Period then in progress will terminate immediately prior to the consummation of such action, unless otherwise provided by the Board. In the event of a Corporate Transaction, each option outstanding under the Plan shall be assumed or an equivalent option shall be substituted by the successor corporation or a parent or subsidiary of such successor corporation. In the event that the successor corporation refuses to assume or substitute for outstanding options, each Purchase Period and Offering Period then in progress shall be shortened and a new Purchase Date shall be set (the “New Purchase
Date”), as of which date any Purchase Period and Offering Period then in progress will terminate. The New Purchase Date shall be on or before the date of consummation of the transaction and the Board shall notify each Participant in writing, at least ten days prior to the New Purchase Date, that the Purchase Date for his or her option has been changed to the New Purchase Date and that his or her option will be exercised automatically on the New Purchase Date, unless prior to such date he or she has withdrawn from the Offering Period as provided in Section 10. For purposes of this Section 17, an option granted under the Plan shall be deemed to be assumed, without limitation, if, at the time of issuance of the stock or other consideration upon a Corporate Transaction, each holder of an option under the Plan would be entitled to receive upon exercise of the option the same number and kind of Shares of stock or the same amount of property, cash or securities as such holder would have
been entitled to receive upon the occurrence of the transaction if the holder had been, immediately prior to the transaction, the holder of the number of shares of Common Stock covered by the option at such time (after giving effect to any adjustments in the number of Shares covered by the option as provided for in this Section 17); provided, however, that if the consideration received in the transaction is not solely common stock of the successor corporation or its parent (as defined in Section 424(e) of the Code), the Board may, with the consent of the successor corporation, provide for the consideration to be received upon exercise of the option to be solely common stock of the successor corporation or its parent equal in Fair Market Value to the per Share consideration received by holders of Common Stock in the transaction.

 
  

 

 

 

	
            (c)         Sales of Designated Subsidiaries and Business Units. In the event the Company consummates the sale or transfer of a Designated Subsidiary, Designated Foreign Subsidiary, business unit or division to an unaffiliated person or entity, or the spin-off of a Designated Subsidiary, Designated Foreign Subsidiary, business unit or division to shareholders, during a Purchase Period, each Participant that is employed by such Designated Subsidiary, Designated Foreign Subsidiary, business unit or division, as applicable, shall be entitled to purchase Shares, on the last business day of the month in which the sale, transfer or spin-off, as applicable, of such Designated Subsidiary, Designated Foreign Subsidiary, business unit
or division, as applicable, is consummated, with funds collected through the date of the sale, transfer or spin-off, as applicable, of such Designated Subsidiary, Designated Foreign Subsidiary, business unit or division, as applicable, including any interest thereon, at a price equal to the Purchase Price applicable to such Purchase Period, up to the maximum number of Shares that the Participant had elected to purchase during the applicable Purchase Period, and the balance of funds, if any, will be paid in cash; provided, however, that if the number of months elapsed as of the date of the sale, transfer or spin-off of such Designated Subsidiary, Designated Foreign Subsidiary, business unit or division, as applicable, in any Purchase Period is less than 12, then the Contributions, plus any interest thereon (if any), credited to the Participant’s account as of the time of such sale,
transfer or spin-off with respect the offering to which such Purchase Period relates, will be returned to the Participant and the Participant’s option will be automatically terminated.

 
  
	
            The Administration Committee may, if it so determines in the exercise of its sole discretion, also make provision for adjusting the Reserves, as well as the price per Share covered by each outstanding option, in the event that the Company effects one or more reorganizations, recapitalizations, rights offerings or other increases or reductions of shares of its outstanding Common Stock, and in the event of the Company’s being consolidated with or merged into any other corporation.

 
  
	
            18.        Amendment or Termination.

 
 
	
            (a)         The Board may at any time and for any reason terminate the Plan. Except as provided in Section 17, no such termination of the Plan may affect options previously granted, provided that the Plan or an Offering Period may be terminated by the Board on a Purchase Date or by the Board’s setting a new Purchase Date with respect to an Offering Period and Purchase Period then in progress if the Board determines that termination of the Plan and/or the Offering Period is in the best interests of the Company and the stockholders or if continuation of the Plan and/or the Offering Period would cause the Company to incur adverse accounting charges as a result of a change after the effective date of the Plan in the GAAP rules applicable to the Plan. Either the Board or
the Administration Committee may amend the Plan, provided, however, that the Administration Committee may amend the Plan only to the extent required to comply with applicable law. Except as provided in Section 17 and in this Section 18, no amendment to the Plan shall make any change in any option previously granted that adversely affects the rights of any Participant. In addition, to the extent necessary to comply with Rule 16b-3 or Section 423 of the Code (or any successor rule or provision or any applicable law or regulation), the Company shall obtain stockholder approval in such a manner and to such a degree as so required.

 
  

 

 

 

	
            (b)        Without stockholder consent and without regard to whether any Participant rights may be considered to have been adversely affected, the Board or the Administration Committee shall be entitled to change the Offering Periods and Purchase Periods, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the
purchase of Common Stock for each Participant properly correspond with amounts withheld from the Participant’s Compensation, and establish such other limitations or procedures as the Board or the Administration Committee determines in its sole discretion advisable that are consistent with the Plan.

 
  
	
            19.        Notices. All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.

 
  
	
            20.        Conditions Upon Issuance of Shares. Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such Shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, applicable state securities laws and the requirements of any stock exchange upon which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

 
  
	
            As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.

 
  
	
            21.        Term of Plan; Effective Date. The Plan was originally adopted by the Board on May 2, 1968, and approved by the Company’s stockholders on October 31, 1968, and has been amended and approved by stockholders from time to time since then. The Plan, as amended and restated herein, is effective as of November 8, 2005 and shall continue in force and effect until terminated under Section 18.

 
 
	
            22.        Additional Restrictions of Rule 16b-3. The terms and conditions of options granted hereunder to, and the purchase of Shares by, persons subject to Section 16 of the Exchange Act shall comply with the applicable provisions of Rule 16b-3. This Plan shall be deemed to contain, and such options shall contain, and the Shares issued upon exercise thereof shall be subject to, such additional conditions and restrictions as may be required by Rule 16b-3 to qualify for the maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions.Unassociated Document

    EXHIBIT
      10(a)

     

    DIRECTORS
      DEFERRED COMPENSATION PLAN

    

    (As
      amended and restated October 3, 2006 as effective January 1, 2005, and amended
      December 6, 2006)

     

    The
      Directors Deferred Compensation Plan (the “Plan”) was amended and restated
      effective April 7, 2004, a copy of which is attached as Exhibit A and which
      shall remain in effect for all amounts deferred, earned and vested prior to
      January 1, 2005, except as modified by the Supplement to this Plan dated as
      effective August 2, 2006, which is not intended to materially modify any
      deferred compensation plans of the Company that existed prior to October 4,
      2004. The Plan was amended pursuant to the Agreement and Plan of Merger among
      WPS Resources Corporation (“WPS”), Wedge Acquisition Corporation and Peoples
      Energy Corporation dated as of July 8, 2006 (the “Merger Agreement”) on August
      1, 2006 and August 2, 2006. The Plan was then amended and restated for amounts
      deferred, earned and vested after January 1, 2005 on October 3, 2006 and further
      amended on December 6, 2006 as follows:

     

    	1.  	
            Purpose

          

     

    The
      purpose of the Directors Deferred Compensation Plan (the “Plan”) is to attract
      and retain well-qualified persons who are not employees of Peoples Energy
      Corporation (the “Company”) or any of its subsidiaries for service as directors
      of the Company by providing such persons with the opportunity to defer, in
      cash
      and/or shares of the Company’s common stock, all or a portion of the
      compensation which they earn as directors of the Company.

     

    	2.  	
            Administration

          

     

    The
      Board
      of Directors of the Company (the “Board”) shall have Authority to administer and
      interpret the provisions of the Plan and to prescribe forms and promulgate
      rules

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    and
      regulations with respect thereto. All determinations of the Board with respect
      to the Plan shall be final and binding upon all persons.

     

    	3.  	
            Eligibility

          

     

    Directors
      of the Company who are not employees of the Company or any of its subsidiaries
      are eligible to participate in the Plan.

     

    	4.  	
            Shares
              Available for Issuance

          

     

    Up
      to
      200,000 authorized, but unissued shares of the Company’s common stock, without
      par value (the “Common Stock”) may be issued pursuant to the Plan. No shares of
      Common Stock shall be issued pursuant to this Plan prior to compliance with
      requirements under applicable laws and regulations. On and after the Effective
      Time (as defined in the Merger Agreement), for purposes of the share equivalents
      as described herein, Common Stock means the common stock of WPS Resources
      Corporation.

     

    	5.  	
            Election
              to Defer

          

     

    (a)  An
      election to defer, or to cease to defer, compensation earned as a director
      of
      the Company shall be effective only with respect to compensation earned in
      the
      calendar year following the year in which the election is made, but in no event
      with respect to compensation earned within six months of the date on which
      the
      election is made; provided, however, that solely with respect to an election
      to
      defer in whole or in part the “Stock Payment” to be made May 1, 2000 under the
      Company’s Directors Stock and Option Plan, such election to defer may be made by
      a director delivering written notice thereof to the Company no later than March
      31, 2000. An election to defer shall specify the form and timing of payment
      under the Plan. All elections shall be in writing and shall be made on such
      forms and in such manner as the Board may from time to time
      prescribe.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)  An
      election shall be binding upon, and shall inure to the benefit of the heirs,
      legatees and personal representatives of the participant and the successors
      and
      assigns of the Company.

    (c)  Notwithstanding
      the foregoing, a participant may rescind a prior election to defer compensation
      earned as a director of the Company for the 2005 calendar year. Upon rescission,
      the compensation previously subject to the deferred election shall be payable
      to
      the participant as soon as administratively feasible after the date such amounts
      would otherwise be payable absent any deferral, but no later than March 15,
      2006, and shall be treated as taxable income to the participant. The Plan shall
      not allow the rescission of any deferral elections, other than as provided
      for
      in this subparagraph 5(c).

    (d)  Notwithstanding
      the foregoing, a participant may make a new payment election on or before
      December 31, 2007, with respect to both the time and form of payment of
      amounts that are attributable to services performed on or after January 1,
      2005
      provided that:

     

    (1)
       Elections
      made during calendar year 2006 may not apply to amounts that would be payable
      in
      2006, and may not cause amounts to be paid in 2006 that would not otherwise
      be
      payable in 2006; and

     

    (2)
       Elections
      made during calendar year 2007 may not apply to amounts that would be payable
      in
      2007, and may not cause amounts to be paid in 2007 that would not otherwise
      be
      payable in 2007.

     

    Such
      new
      payment elections shall at all times comply with Code Section 409A and the
      transition relief granted by IRS Notice 2006-79, and shall permit all rights
      granted thereby. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    	6.  	
            Deferral
              of Compensation

          

     

    (a)  Each
      participant may, with respect to cash compensation earned as a director of
      the
      Company, elect to have: (i) all or a portion of such compensation deferred
      and
      paid in cash in the manner set forth in subparagraphs 6(c) and 7(a) below and/or
      (ii) all or a portion of such compensation deferred and paid in shares of Common
      Stock in the manner set forth in subparagraphs 6(d) and 7(b) below.
      Additionally, each participant who elected to defer all or a portion of the
      “Stock Payments” deliverable prior to December 5, 2002, pursuant to the
      Company’s Directors Stock and Option Plan shall have such deferred amounts paid
      in the form of shares of Common Stock in the manner set forth in Paragraph
      7
      below, subject to the availability of shares of Common Stock for issuance under
      Paragraph 3 of the Directors Stock and Option Plan (as such shares may be
      adjusted pursuant to Paragraph 8 thereof), as modified, amended or supplemented
      from time to time.

    (b)  A
      bookkeeping account shall be established for each participant. The account
      shall
      reflect the amount of cash to which the participant is entitled in accordance
      with subparagraph 6(c) below and/or the number of share equivalents to which
      the
      participant is entitled in accordance with subparagraph 6(d) below.

    (c)  The
      account of a participant who elects to defer compensation in the form of cash
      shall be credited with the dollar amount of compensation so deferred on each
      date that the participant is entitled to payment for services as a director.
      Interest on the cash balance of the account shall be computed and credited
      quarterly on March 31, June 30, September 30 and December 31 of each year at
      the
      prime commercial rate as reported in the Wall Street Journal.

    (d)  The
      account of a participant who elects to defer compensation in the form of stock
      shall be credited with share equivalents on each date that the participant
      is
      entitled to a payment for services as a director. The number of share
      equivalents to be credited shall be 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    determined
      by dividing the amount of compensation so deferred by the mean price of a share
      of Common Stock on the New York Stock Exchange on the date that the participant
      is entitled to a payment for services as a director. Additional share
      equivalents shall be credited to the participant’s account on each date that the
      Company pays a dividend on the Common Stock. The number of additional share
      equivalents so credited shall be determined by dividing the dividend which
      would
      be paid on the number of shares of Common Stock equal to the number of share
      equivalents credited to the participant’s account as of the dividend record date
      by an amount equal to the mean price of a share of Common Stock on the New
      York
      Stock Exchange on the date which such dividend is paid to the Company’s
      shareholders. In determining the number of share equivalents to be credited
      to a
      participant’s account in accordance with this subparagraph 6(d), fractions of
      share equivalents shall be computed to three decimal places.

     

    	7.  	
            Payment

          

     

    (a)  Payment
      to the participant in the form of cash shall be made in a single payment on
      such
      date, or in such number of equal annual installments commencing on such date,
      as
      provided in the participant’s election.

    (b)  Payment
      to the participant in the form of shares of Common Stock shall be made in whole
      shares in a single payment on such date, or in such number of equal annual
      installments (or in installments as nearly equal as possible without the
      issuance of fractional shares) commencing on such date, as provided in the
      participant’s election. Any fractional share to which the participant is
      entitled as of date of the single payment or last installment shall be paid
      in
      cash.

    (c)  In
      the
      event of participant’s death, neither the participant nor any other person
      claiming under the participant shall have any right to the payment of any
      compensation 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    deferred
      under the Plan in advance of the schedule of payments as provided in the
      participant’s election except that:

    (1)  Any
      of
      the deferred compensation which shall not have been paid to the participant
      during his or her lifetime shall be paid to the participant’s spouse, if any,
      who shall survive the participant or to such person or persons other than such
      surviving spouse as the participant may designate in writing to receive the
      same. The participant shall have the right during his or her lifetime to
      designate and to change the designation of the person or persons to whom the
      Company shall make any payments of deferred compensation remaining unpaid at
      the
      death of the participant.

    (2)  In
      the
      event of the death of the participant prior to his or her receiving any deferred
      compensation, the single payment or installment payments provided for in
      subparagraph 7(c)(1) above shall be made or shall commence on the first day
      of
      the second month following the month in which the death of the participant
      occurred.

    (3)  Payments
      of deferred compensation required to be made to their surviving spouse of the
      participant of to such other persons or persons as the participant may have
      designated in writing to the Company to receive the same pursuant to
      subparagraph 7(c)(2) above shall be made in the same manner and, except as
      provided in subparagraph 7(c)(2) above, at the same time or times as such amount
      or amounts would have been paid to the participant’s election.

    (4)  If
      any
      amount of the deferred compensation shall remain unpaid upon the death of the
      last to survive of: (i) the participant; (ii) the participant’s spouse, unless a
      person or persons other than the spouse has been designated to receive the
      same,
      as provided in subparagraph 7(c)(1) above; or (iii) such other person or persons
      who may have been so 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    designated,
      the Company shall pay the aggregated amount thereof to the executor or
      administrator of the estate of the last to survive of the
      following:

    	(i)  	
            the
              participant;

          

    	(ii)  	
            the
              participant’s spouse, unless a person or persons other than the spouse has
              been designated as provided in subparagraph 7(c)(1) above; or
              

          

    	(iii)  	
            any
              person theretofore receiving payments under a written designation as
              in
              this paragraph 7 provided.

          

    The
      words
“person or persons” wherever they appear in this paragraph 7 are intended and
      shall be construed for all purposes to include the estate of the
      participant.

     

    	8.  	
            No
              Right of Assignment or
              Acceleration

          

     

    The
      right
      of the participant, the participant’s spouse, or any other person designated to
      receive deferred compensation is personal and, except as provided in
      subparagraphs 7(c)(1) and 7(c)(2) above, is not subject to acceleration or
      assignment. The Company shall have no liability for the payment of any of the
      deferred compensation to any other person or in any other person or in any
      other
      manner than is provided in this Plan.

     

    	9.  	
            Amendment
              or Discontinuance 

          

     

    The
      Board
      may amend, rescind or terminate the Plan as it shall deem advisable; provided,
      however, that no change shall have a retroactive effect and no change shall
      be
      made with respect to compensation deferred under the Plan which would impair
      a
      participant’s rights to such compensation without his or her consent. Any such
      amendment, rescission or termination of the Plan shall not have the effect
      of
      accelerating the timing of any payments under the Plan.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    	10.  	
            Governing
              Law

          

     

    This
      Plan
      and all determinations made actions taken pursuant hereto shall be governed
      by
      the laws of the State of Illinois pertaining to contracts made and to be
      performed wholly within such jurisdiction, except as federal law may
      apply.

     

    	11.  	
            Adjustments
              Upon Changes in
              Capitalization

          

     

    In
      the
      event there is any change in the Common Stock of the Company through the
      declaration of stock dividends, or through recapitalization resulting in stock
      split-ups, or combinations or exchanges of shares, or otherwise, then the number
      of shares remaining available for issuance under the Plan shall be appropriately
      adjusted. Appropriately adjustment shall also be made to the number of shares
      to
      which a participant is entitled under the Plan. Pursuant to this Paragraph,
      the
      number of share equivalents of Company Common Stock existing and undistributed
      as of the Effective Time (as defined under the Merger Agreement) shall be
      converted at the Effective Time into share equivalents of WPS common stock
      by
      multiplying the number of share equivalents of Company common stock by 0.825
      (rounded down to the nearest whole share).

     

    	12.  	
            Effective
              Date

          

     

    This
      amendment and restatement of the Plan is effective October 3, 2006.

     

    	13.  	
            Code
              Section 409A Compliance

          

     

    The
      Plan
      shall be administered in accordance with the requirements of Code Section 409A
      so that there will not be a plan failure under Code Section 409A(a)(1), and
      all
      amounts payable hereunder shall be distributed only in compliance with the
      requirements of paragraphs (2), (3) and (4) of such Code section. No
      distribution shall be made under the Agreement that would fail to meet the
      requirements of Code Section 409A. Alternatively, this Amendment and Restatement
      of the Plan is not intended to materially modify any deferred compensation
      plans
      of the Company that existed prior to October 4, 2004. However, if this Plan
      would otherwise be 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    interpreted
      to be a material modification of any deferred compensation plans of the Company
      that existed prior to October 4, 2004, as permitted by IRS Notice 2005-1,
      Q&A 18(b), this Plan shall be treated as material modification of such
      deferred compensation plans only as to the benefits provided by this Plan,
      and
      only the benefits provided by this Plan shall be subject to Code Section
      409A.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    DIRECTORS
      DEFERRED COMPENSATION PLAN

     

    (As
      amended and restated, effective April 7, 2004)

     

    1. Purpose

    The
      purpose of the Directors Deferred Compensation Plan (the "Plan") is to attract
      and retain well-qualified persons who are not employees of Peoples Energy
      Corporation (the "Company") or any of its subsidiaries for service as directors
      of the Company by providing such persons with the opportunity to defer, in
      cash
      and/or shares of the Company's common stock, all or a portion of the
      compensation which
      they earn as directors of the Company.

    2. Administration

    The
      Board
      of Directors of the Company (the "Board") shall have Authority
      to administer and interpret the provisions of the Plan and to prescribe forms
      and promulgate rules and regulations with respect thereto. All determinations
      of
      the Board
      with respect to the Plan shall be final and binding upon all
      persons.

    3. Eligibility

    Directors
      of the Company who are not employees of the Company or
      any of
      its subsidiaries are eligible to participate in the Plan.

    4. Shares
      Available for Issuance

    Up
      to
      200,000 authorized, but unissued shares of the Company's common stock, without
      par
      value
      (the "Common Stock") may be issued pursuant to the Plan. No shares of
Common
      Stock shall be issued pursuant to this Plan prior to compliance with
      requirements under applicable laws and regulations.

    5. Election
      to Defer

    (a) An
      election to defer, or to cease to defer, compensation earned as a director
      of the Company shall be effective only with respect to compensation earned
      in
      the calendar year following the year in which the election is made, but in
      no
      event with respect to 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    compensation
      earned within six months of the date on which the election is made; provided,
      however, that solely with respect to an election to defer in whole or in part
      the "Stock Payment" to be made May 1, 2000 under the Company's Directors Stock
      and Option Plan, such election to defer may be made by a director delivering
      written notice
      thereof to the Company no later than March 31, 2000. An election to defer shall
      specify
      the form and timing of payment under the Plan. All elections shall be in writing
      and shall be made on such forms and in such manner as the Board may from time
      to
time
      prescribe.

    (b) An
      election shall be binding upon, and shall inure to the benefit
      of the heirs, legatees and personal representatives of the participant and
      the
successors
      and assigns of the Company.

    6. Deferral
      of Compensation

    (a) Each
      participant may, with respect to cash compensation earned as a director of
      the
      Company, elect to have (i) all or a portion of such compensation deferred
and
      paid
      in cash in the manner set forth in subparagraphs 6(c) and 6(d) below and/or
      (ii)
all
      or a
      portion of such compensation deferred and paid in shares of Common Stock in
      the
      manner set forth in subparagraphs 6(e) and 6(f) below. Additionally, each
participant
      who elected to defer all or a portion of the "Stock Payments" deliverable prior
      to December 5, 2002, pursuant to the Company's Directors Stock and Option Plan
      shall
      have such deferred amounts paid in the form of shares of Common Stock in the
      manner
      set forth in subparagraph 6(e) and 6(f) below, subject to the availability
      of
      shares of Common Stock for issuance under Paragraph 3 of the Directors Stock
      and
      Option Plan (as such shares may be adjusted pursuant to Paragraph 8 thereof),
      as
      modified, amended or supplemented from time to time.

    (b) A
      bookkeeping account shall be established for each participant. The account
      shall reflect the amount of cash to which the participant is entitled in
      accordance with
      

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    subparagraph
      6(c) below and/or the number of share equivalents to which the participant
      is
      entitled in accordance with subparagraph 6(e) below.

    (c) The
      account of a participant who elects to defer compensation in the form
of
      cash
      shall be credited with the dollar amount of compensation so deferred on each
      date that the participant is entitled to payment for services as a director.
      Interest on the cash
      balance of the account shall be computed and credited quarterly on March 31,
      June 30,
      September 30 and December 31 of each year at the prime commercial rate as
reported
      in the Wall Street Journal.

    (d) Payment
      to the participant in the form of cash shall be made in a single
      payment on such date, or in such number of equal annual installments commencing
      on such date, as provided in the participant's election.

    (e) The
      account of a participant who elects to defer compensation in the
      form
      of stock shall be credited with share equivalents on each date that the
participant
      is entitled to a payment for services as a director. The number of share
equivalents
      to be credited shall be determined by dividing the amount of compensation
so
      deferred by the mean price of a share of Common Stock on the New York Stock
      Exchange
      on the date that the participant is entitled to a payment for services as a
      director.
      Additional share equivalents shall be credited to the participant's account
      on
      each date that the Company pays a dividend on the Common Stock. The number
      of
additional
      share equivalents so credited shall be determined by dividing the dividend
      which
      would be paid on the number of shares of Common Stock equal to the number of
      share equivalents credited to the participant's account as of the dividend
      record date by an
      amount
      equal to the mean price of a share of Common Stock on the New York Stock
Exchange
      on the date which such dividend is paid to the Company's shareholders. In
determining
      the number of share equivalents to be credited to a participant's account in
      accordance
      with this subparagraph 6(e), fractions of share equivalents shall be computed
      to
      three decimal places.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (f) 
      Payment
      to the participant in the form of shares of Common Stock shall
      be
      made in whole shares in a single payment on such date, or in such number of
      equal annual installments (or in installments as nearly equal as possible
      without the issuance
      of fractional shares) commencing on such date, as provided in the participant's
      election.
      Any fractional share to which the participant is entitled as of date of the
      single payment or last installment shall be paid in cash.

    7. Payment
      in the Event of Participant's Death

    Neither
      the participant nor any other person claiming under the participant shall
      have any right to the payment of any compensation deferred under the Plan in
      advance
      of the schedule of payments as provided in the participant's election except
      that:

    (a) Any
      of
      the deferred compensation which shall not have been paid to
      the
      participant during his or her lifetime shall be paid to the participant's
      spouse, if any,
      who
      shall survive the participant or to such person or persons other than such
      surviving
      spouse as the participant may designate in writing to receive the same. The
      participant
      shall have the right during his or her lifetime to designate and to change
      the
designation
      of the person or persons to whom the Company shall make any payments of deferred
      compensation remaining unpaid at the death of the participant and to designate
      and
      to
      change the designation of the timing of such payments.

    (b) In
      the
      event of the death of the participant prior to his or her receiving any deferred
      compensation, the single payment or installment payments provided for in
      subparagraph 7(a) above shall be made or shall commence on the first day of
      the
      second month following the month in which the death of the participant
      occurred.

    (c) Payments
      of deferred compensation required to be made to their surviving spouse of the
      participant of to such other persons or persons as the participant may have
      

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    designated
      in writing to the Company to receive the same pursuant to subparagraphs 7(a)
      or
      7(b) above shall be made in the same manner and, except as provided in
      subparagraph 7(b) above, at the same time or times as such amount or amounts
      would have been paid to the participant's election.

    (d) If
      any
      amount of the deferred compensation shall remain unpaid upon the death of the
      last to survive of (i) the participant, (ii) the participant's
      spouse, unless a person or persons other than the spouse
      has been designated to receive the same, as provided in subparagraph
      7(a) above, or (iii) such other person or persons who may
      have
      been so designated, the Company shall pay the aggregated
      amount thereof to the executor or administrator of the estate
      of
      the last to survive of the following:

    
      	 	
              (i)

            	
              the
                participant

            

    

    
      	 	
              (ii)

            	
              the
                participant's spouse, unless a person or persons other than the spouse
                has
                been designated as provided in subparagraph 7(a) above;
                or

            

    

    
      	 	
              (iii)

            	
              any
                person theretofore receiving payments under a written designation
                as in this paragraph 7 provided.

            

    

    The
      words
      "person or persons" wherever they appear in this paragraph 7 are intended
and
      shall
      be construed for all purposes to include the estate of the
      participant.

    8. No
      Right of Assignment or Acceleration

    The
      right
      of the participant, the participant's spouse, or any other person designated
      to
      receive deferred compensation is personal and, except as provided in
subparagraphs
      7(a) and 7(b) above, is not subject to acceleration or assignment. The
Company
      shall have no liability for the payment of any of the deferred compensation
      to
any
      other
      person or in any other person or in any other manner than is provided in this
      Plan.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    9. Amendment
      or Discontinuance

    The
      Board
      may amend, rescind or terminate the Plan as it shall deem advisable; provided,
      however, that no change shall have a retroactive effect and no change
      shall be made with respect to compensation deferred under the Plan which would
      impair
      a
      participant's rights to such compensation without his or her
      consent.

    10. Governing
      Law

    This
      Plan
      and all determinations made actions taken pursuant hereto shall be
      governed by the laws of the State of Illinois pertaining to contracts made
      and
      to be performed wholly within such jurisdiction, except as federal law may
      apply.

    11. Adjustments
      Upon Changes in Capitalization

    In
      the
      event there is any change in the Common Stock of the Company through
      the declaration of stock dividends, or through recapitalization resulting in
      stock split-ups,
      or combinations or exchanges of shares, or otherwise, then the number of shares
      remaining available for issuance under the Plan shall be appropriately adjusted.
      Appropriately adjustment shall also be made to the number of shares to which
      a
      participant is entitled under the Plan.

    12. Effective
      Date

    This
      amendment and restatement of the Plan is effective April 7, 2004.

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    SUPPLEMENT
      TO

    DIRECTORS
      DEFERRED COMPENSATION PLAN

    (As
      amended and restated, effective April 7, 2004)

    (Supplement
      effective August 2, 2006)

    

    The
      Plan
      as amended and restated, effective April 7, 2004 is now amended pursuant to
      the
      Agreement and Plan of Merger
      among
      WPS Resources Corporation
      (“WPS”),
      Wedge
      Acquisition Corporation and Peoples
      Energy Corporation dated as of July 8, 2006 (the “Merger Agreement”) on August
      2, 2006
      as
      follows:

    1. Paragraph
      4 shall read:

    “Up
      to
      200,000 authorized, but unissued shares of the Company’s common stock, without
      par value (the “Common Stock”) may be issued pursuant to the Plan. No shares of
      Common Stock shall be issued pursuant to this Plan prior to compliance with
      requirements under applicable laws and regulations. On and after the Effective
      Time (as defined in the merger
      agreement
      among
      WPS Resources Corporation,
      Wedge
      Acquisition Corporation and the
      Company dated July 8,
      2006),
      for purposes of the share equivalents as described herein, Common Stock means
      the common stock of WPS Resources Corporation.”

    2. The
      following language is added as the last sentence of Paragraph 11:

    “Pursuant
      to this Paragraph, the number of share equivalents of Company Common Stock
      existing and undistributed as of the Effective Time (as defined in the merger
      agreement among WPS Resources Corporation, Wedge Acquisition Corporation and
      the
      Company dated July 8, 2006) shall be converted at the Effective Time into share
      equivalents of WPS common stock by multiplying the number of share equivalents
      of Company common stock by 0.825 (rounded down to the nearest whole
      share).”

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