PEOPLES ENERGY
CORPORATION
DIRECTORS STOCK AND OPTION
PLAN
(Effective December 1, 1999 and
amended October 3, 2001, November 7, 2001,
December 4, 2002, August 1, 2006,
August 2, 2006, and October 3, 2006, as effective January 1,
2005)
1.
Purpose
The purpose of the Peoples Energy Corporation
Directors Stock and Option Plan is to provide non-employee members
of the Board of Directors with a proprietary interest in the
Company to improve the Company's ability to attract and retain
highly qualified individuals to serve as directors of the Company
and to strengthen the commonality of interest between directors and
shareholders. The Plan grants deferred shares to Directors of the
Company after December 4, 2002. Prior to December 5, 2002, the Plan
permitted the grant of shares of common stock and non-qualified
stock options to acquire shares of the Company's common stock as
part of each non-employee director's retainer
compensation.
2.
Definitions
When used herein, the following terms shall have
the respective meanings set forth below:
"Agent" means a securities broker-dealer selected by the
Company and registered under the Exchange Act.
"Annual
Retainer" means the
annual retainer payable by the Company to Non-Employee Directors
and shall include, for purposes of this Plan, meeting fees, cash
retainers and any other cash compensation payable to Non-Employee
Directors by the Company for services as a Director.
"Board" or "Board of Directors" means the Board
of Directors of the Company.
"Broker-Assisted Transaction
" means a broker-assisted
transaction through such securities broker as the Company may
designate and with whom the Participant establishes a brokerage
account, whereby the Participant effects a sale of shares of Common
Stock to be delivered by the Company in connection with the
exercise of an Option and such broker (i) delivers cash proceeds
from such sale to the Company in satisfaction of the purchase price
and/or any applicable taxes required to be paid by the Participant,
and (ii) deducts from the number of shares otherwise deliverable to
the Participant upon the exercise of an Option such number of
shares of Common Stock as shall have a value equal to the amount of
the Option exercise price and/or taxes required to be paid in
connection with such exercise (or portion thereof not paid in cash)
and applies such shares in satisfaction of such sale
transaction.
"Change In
Control" means:
i) the acquisition by any Person or
Persons acting in concert, of ownership of stock held by such
Person or Persons acting in concert, constitutes more than fifty
percent (50%) of the total fair market value or total voting power
of the stock of Peoples Energy Corporation (calculated in
accordance with Section 318(a) of the Code and subject to the
limitations of Internal Revenue Service, Notice 2005-1);
or
(ii) a change in the ownership of a
substantial portion of the assets (as defined for purposes of
Section 409A of the Code) of Peoples Energy Corporation;
or
(iii) a change in the effective
control (as defined for purposes of Section 409A of the Code) of
Peoples Energy Corporation.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Committee" means the Compensation Committee of the
Board.
"Common
Stock" means the common
stock, no par value, of the Company. Effective as of August 2,
2006, after the Effective Time (as defined under the Agreement and
Plan of Merger among WPS Resources Corporation (“WPS”),
Wedge Acquisition Corporation and the Company dated as of July 8,
2006), the definition of Company Common Stock with respect to
Deferred Shares are additional Deferred Shares shall mean WPS
common stock.
"Company" means Peoples Energy Corporation, an Illinois
corporation, and any successor corporation.
"Deferred
Share" means the right to
receive a share of Common Stock pursuant to the terms of Section 6
hereof. Prior to the delivery of the underlying shares of Common
Stock, Deferred Shares represent an unfunded unsecured promise to
deliver shares of Common Stock in the future.
"Distribution Date" means, with respect to a Deferred Share credited
to a Non-Employee Director, the earliest of (i) the first
anniversary of the cessation of the Non-Employee Director's service
as a director of the Company for any reason, (ii) the day after the
cessation of the Non-Employee Director's service as a director of
the Company following the attainment of his or her seventieth
(70th) birthday, and (iii) the date a Change in Control
occurs.
"Effective
Date" means December 1,
1999.
"Employee" means any officer or common law employee of the
Company or of any of its business units or divisions or of any
Subsidiary.
"Exchange
Act" means the Securities
Exchange Act of 1934, as amended.
"Non-Employee Director" or "Participant" means any person who is
elected or appointed to the Board of Directors of the Company and
who is not an Employee.
"Option" means an option to acquire the Company's Common
Stock granted pursuant to the terms of this Plan.
"Option
Payment" means that
portion of the Annual Retainer to be paid to Non-Employee Directors
in Options rather than cash for services rendered as a director of
the Company, as provided in Section 5 hereof.
"Plan" means this Directors Stock and Option Plan,
adopted by the Board on December 1, 1999, as it may be amended from
time to time.
"Plan
Year" means the period
commencing on January 1 of each year and ending on December 31
during the term of this Plan, with the first Plan Year commencing
January 1, 2000.
"SEC" means the United States Securities and Exchange
Commission.
"Stock
Payment" means that
portion of the Annual Retainer to be paid to Non-Employee Directors
in shares of Common Stock rather than cash for services rendered as
a director of the Company, as provided in Section 5
hereof.
"Subsidiary" means any corporation, limited liability
company, partnership, limited partnership, or other entity of which
the Company beneficially owns, directly or indirectly, 50 percent
or more of the outstanding voting securities.
3.
Shares of Common Stock Subject to
the Plan
A. Subject to Section 8 below, the maximum
aggregate number of shares of Common Stock that may be awarded
under the Plan pursuant to Deferred Shares or Stock Payments or
sold pursuant to the exercise of Options distributed under the Plan
is 200,000 shares. If an Option ceases to be exercisable by reason
of the expiration of the term of the Option, the termination of the
Non-Employee Director's status as a member of the Board (other than
termination as provided in Section 7 below) or the waiver by a
Participant of the right to exercise an Option, then the shares of
Common Stock which were subject to such exercise but as to which
the Participant has not exercised shall again become available for
delivery or sale pursuant to Stock Payments, Deferred Shares, or
Option Payments.
B. The Common Stock to be delivered under the Plan
may be made available from treasury stock or shares of Common Stock
purchased on the open market. Shares of Common Stock purchased on
the open market shall be purchased by the Agent in compliance with
Regulation M under the Exchange Act to the extent compliance shall
be required by law.
4.
Administration
A. The Plan will be administered by the Committee.
The Company shall pay all costs of administration of the
Plan.
B. Subject to and not inconsistent with the
express provisions of the Plan, the Committee has and may exercise
such powers and authority of the Board as may be necessary or
appropriate for the Committee to carry out its functions under the
Plan. Without limiting the generality of the foregoing, the
Committee shall have full power and authority (i) to determine all
questions of fact that may arise under the Plan, (ii) to interpret
the Plan and to make all other determinations necessary or
advisable for the administration of the Plan and (iii) to
prescribe, amend and rescind rules and regulations relating to the
Plan, including, without limitation, any rules which the
Committee
determines are necessary or
appropriate to ensure that the Company and the Plan will be able to
comply with all applicable provisions of any applicable federal,
state or local law. All interpretations, determinations and actions
by the Committee will be final and binding upon all persons,
including the Company and the Participants.
5.
Determination of Annual Retainer
and Deferred Shares
A. The Board shall determine the Annual Retainer
payable to all Non-Employee Directors of the Company. The cash
portion of the Annual Retainer shall be paid to Non-Employee
Directors at such times and in such manner as may be determined by
the Board of Directors.
B. Each director who is a Non-Employee Director on
May 1 of each Plan Year commencing prior to 2003 shall receive,
effective as of such date, a Stock Payment of 300 shares of Common
Stock and an Option Payment of 3000 Options as a portion of the
Annual Retainer payable to such director for the Plan Year in which
such date occurs. Each director who is a Non-Employee Director on
May 1 of each Plan Year commencing after 2002 shall receive,
effective as of such May 1, an award of one thousand (1000)
Deferred Shares.
6.
Terms of Deferred
Shares
Each Deferred Share award granted under the Plan
shall be evidenced by a written agreement which shall comply with
and be subject to the following terms and conditions:
A. A bookkeeping account shall be established for
each Non-Employee Director. The account shall reflect the number of
Deferred Shares awarded to the Non-Employee Director in accordance
with paragraph 5.B. above.
B. Additional Deferred Shares shall be credited to
each Deferred Share account on each date that the Company pays a
dividend on the Common Stock. The number of additional Deferred
Shares 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 Deferred Shares credited to the Participant's
account as of the dividend record date ("Dividend Equivalent") 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 Deferred
Shares to be credited to a Participant's account in accordance with
this paragraph 6.B., fractions of a Deferred Share shall be
computed to three decimal places.
C. Shares of Common Stock underlying an award of
Deferred Shares shall be delivered to the Non-Employee Director on
the Distribution Date. Delivery of such Common Stock shall be made
in whole shares in a single payment on such date, or, if the
Participant has so elected in such number of equal annual
installments (or in installments as nearly equal as possible
without the issuance of fractional shares) commencing on the
Distribution Date, as provided in the Participant's election. Such
election shall be made on or before December 31, 2006 with respect
to amounts deferred on or before January 1, 2007. Participant shall
make such election with respect to amounts deferred on or after
January 1, 2007 on or before December 31 of the calendar year prior
to the year in which service for which benefits under this Plan are
payable begins. Any fractional share of Common Stock to which the
Participant is entitled as of the date of the single payment or
last installment shall be paid in cash.
D. Neither the Participant nor any other person
claiming under the participant shall have any right to the
distribution of any shares of Common Stock relating to Deferred
Shares in advance of the
Distribution
Date or in advance of the date an installment payable pursuant to
the Participant's election is otherwise due. Any shares of Common
Stock in respect of Deferred Shares which shal
