Exhibit 10.10
 
 
INTEGRYS ENERGY GROUP, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
 
 
    THIS AGREEMENT is entered into as of May 17, 2007 (the “Grant Date”), by and
between INTEGRYS ENERGY GROUP, INC. (the “Company”), and __________________
____________________ (the “Optionee”).  This Agreement sets forth the terms,
rights and obligations of the parties with respect to the grant of an option to
the Optionee.  This option shall not become effective until the Optionee signs
and returns the “Acknowledgement Form” attached hereto.
    The option is granted under, and is subject to, the terms of the Integrys
Energy Group, Inc. 2007 Omnibus Incentive Compensation Plan (the “Plan”), which
are specifically incorporated by reference in this Agreement.  Any terms used in
this Agreement which are not defined shall have the meaning set forth in the
Plan.
    The parties to this Agreement covenant and agree as follows:
    1.         Grant of Option.  Subject to the terms of this Agreement, the
Company grants to the Optionee the right and option (the “Option”) to purchase
______ shares of Common Stock of the Company, par value $1.00 (the “Optioned
Shares”) from the Company, at an option price per share equal to $___________
(the closing sales price of a share of Common Stock of the Company as reported
on the New York Stock Exchange Composite Transaction reporting system on May 17,
2007).
 
    In the event of certain corporate transactions described in Section 12 of
the Plan, the number of Optioned Shares and the per share option price will be
adjusted by the Compensation Committee of the Board of Directors of the Company
(the “Committee”).  The Committee’s determination as to any adjustment shall be
final.
    2.         Vesting of Option.  The Optioned Shares will vest in accordance
with the following schedule:
 

Percentage of Optioned Shares Vested  Date of Vesting    
 25%
 1st anniversary of Grant Date
 An additional 25%
 2nd anniversary of Grant Date
 An additional 25%
 3rd anniversary of Grant Date
 The final 25%
 4th anniversary of Grant Date

 
provided, however, that, in the event of the Optionee’s termination of
employment from the Company and its Affiliates for any reason other than
retirement on or after age fifty-five, death or disability (as defined in the
employer-provided long term disability plan applicable to the Optionee), any
Optioned Shares not vested as of the date of such termination will be
cancelled. 

--------------------------------------------------------------------------------

 
Notwithstanding the vesting schedule described above, the Committee may extend
the date(s) of vesting to a later date to take into account any period of the
Optionee’s leave of absence, unless prohibited by law.
 
3.         Exercise of Option.  The Option, to the extent vested in accordance
with Paragraph 2, may be exercised during the period beginning May 17, 2008, and
ending: 
 
a.         on the first anniversary of the date the Optionee’s employment with
the Company and its Affiliates terminates for any reason other than retirement
on or after age fifty-five, death or disability (as defined in the Company’s
long-term disability plan); or
 
b.         in any other case, May 17, 2017.
 
    During the life of the Optionee, this Option may be exercised only by the
Optionee (or if the Optionee is incapacitated, by the Optionee’s legal
representative).  If the Optionee dies before exercising all of the vested
Option, the executor of the Optionee’s estate (or by such person as the executor
of the estate certifies as inheriting the Option as a result of the operation of
the Optionee’s last will and testament or as a result of the laws of interstate
succession) may exercise all or any portion of the vested Option that has not
been exercised, during the exercise periods described above.
4.         Change in Control.  Upon the occurrence of a Change of Control (as
defined in the Plan), the Option, to the extent then outstanding and
unexercised, will become fully vested (if not previously vested) but shall
otherwise be subject to the terms of the Plan with respect to such Change in
Control.
 
5.         Manner of Exercise and Payment.  In order to exercise this Option,
the Optionee (or such other person entitled to exercise the Option as provided
in Paragraph 3) must provide a written notice to the Company stating that the
Optionee would like to exercise all or a portion of the Option and specifying
the number of vested Optioned Shares which are being purchased.  The exercise
notice must be delivered (in person or by mail or by facsimile) to the Secretary
of the Company. 
 
    The written notice must be, in the case of clauses (a), (b) and (c) below,
accompanied by payment equal to the number of Optioned Shares being purchased
multiplied by the option price or, in the case of clause (d) below, accompanied
by the documents specified in such clause (d), which will result in payment to
the Company on the settlement date (i.e., T+3) equal to the number of Optioned
Shares being purchased multiplied by the option price.  Subject to such rules
and restrictions as the Committee may prescribe, payment may be made, at the
Optionee’s election:  (a) in cash or by certified check payable to the Company;
(b) by delivering previously acquired shares of Common Stock, duly endorsed in
blank or accompanied by stock powers duly endorsed in blank, with a fair market
value at the time of exercise, as determined by the Committee, equal to the
required payment amount; (c) by any combination of (a) and (b); or (d) by
delivering to the Company or its designated agent an executed irrevocable option
exercise
 
-2-

--------------------------------------------------------------------------------

form together with irrevocable instructions to a broker-dealer to sell or margin
a sufficient portion of the Optioned Shares to be exercised and to deliver the
sale or margin proceeds directly to the Company to pay the option price.
    Option exercise notices postmarked (if mailed) or received by the Secretary
of the Company (if by facsimile or hand-delivery) prior to 11:59 p.m. (central
time) of the date specified in Paragraph 3 shall be given effect.  Any notice
postmarked or received after such time shall be null and void.
    6.         Tax Withholding.  Upon exercise of all or any part of the Option,
the Company may satisfy its withholding obligations in any manner determined by
the Committee, including by withholding a portion of the Optionee’s compensation
or, in the case of a “cashless” exercise, by withholding a number of the
Optioned Shares being purchased that have a fair market value, as determined by
the Committee, equal to the amount required to be withheld.  The fair market
value of fractional shares of Stock remaining after the withholding requirements
are satisfied will be paid to the Optionee in cash.  The Company may also
require the Optionee to deliver a check for the Company’s withholding tax
obligation prior to effecting the exercise of the option or delivering the
shares issuable upon exercise.
 
    7.         Miscellaneous.
 
        (a)        The Optionee (or his legal representative) shall not be
deemed to be a shareholder of the Company with respect to any of the Optioned
Shares being purchased until such shares are paid for in full, and the Company’s
withholding tax liability is satisfied, to the Committee’s satisfaction.
 
        (b)        The Option shall not be transferable by the Optionee;
provided that, following the Optionee’s death,  the Option, to the extent
exercisable in accordance with the terms of the Plan and this Agreement, may be
exercised by the executor of the Optionee’s estate (or by such person as the
executor of the estate certifies as inheriting the Option as a result of the
operation of the Optionee’s last will and testament or as a result of the laws
of intestate succession).
 
        (c)        It is fully understood that nothing contained in this
Agreement or the Plan shall interfere with or limit in any way the right of the
Company or any Affiliate to terminate the Optionee’s employment at any time nor
confer upon the Optionee any right to continue in the employ of the Company or
any Affiliate.
 
        (d)        As a condition of the granting of this Option, the Optionee
agrees, for himself, his legal representatives, the executor of his estate, and
his heirs, that the Plan and this Agreement shall be subject to discretionary
interpretation by the Committee and that any interpretation by the Committee of
the terms of the Plan and this Agreement shall be final, binding and conclusive
on the Optionee, his legal representatives, the executor of his estate and his
heirs.  The Optionee, his legal representatives, the executor of his estate and
his heirs shall not challenge or dispute the Committee’s decisions.
 
 
-3-

--------------------------------------------------------------------------------

        (e)        The Committee may modify this Option at any time.  However,
no modification, extension or renewal shall (i) confer on the Optionee any right
or benefit which he would not be entitled to if a new option was granted under
the Plan at such time or (ii) alter, impair or adversely affect this Option or
the Agreement without the written consent of the Optionee; provided that the
Committee need not obtain written consent of the Optionee for a modification of
the Option to the extent that the Plan specifically permits the Committee action
or to the extent that the Committee deems such modification necessary to comply
with any applicable law, the listing requirements of any principal securities
exchange or market on which the shares underlying the Option are then traded, or
to preserve favorable accounting or tax treatment of the Option for the Company.
 
        (f)         No individual may exercise the Option and no shares will be
issued under this Agreement unless and until the Company has determined to its
satisfaction that such exercise and issuance comply with all relevant provisions
of applicable law, including the requirements of any stock exchange on which the
shares may then be traded.   
 
    8.         Governing Law.  This Agreement shall be governed by the internal
laws of the State of Illinois, without regard to the principle of conflict of
laws, as to all matters, including, but not limited to, matters of validity,
construction, effect, performance and remedies.  No legal action or proceeding
may be brought with respect to this Agreement more than one year after the later
of (a) the last date on which the act or omission giving rise to the legal
action or proceeding occurred; or (b) the date on which the individual bringing
such legal action or proceeding had knowledge (or reasonably should have had
knowledge) of such act or omission.  Any such action or proceeding must be
commenced and prosecuted in its entirety in the federal or state court having
jurisdiction over Brown County, Wisconsin or Cook County, Illinois, and each
individual with any interest hereunder agrees to submit to the personal
jurisdiction thereof, and agrees not to raise the objection that such courts are
not a convenient forum.  Such action or other legal proceeding shall be heard
pursuant to a bench trial and, the parties to such proceeding shall waive their
rights to a trial by jury.
 
    9.         Severability.  In the event any provision of the Agreement is
held illegal or invalid for any reason, the illegality or invalidity will not
affect the remaining provisions of the Agreement, and the Agreement shall be
construed and enforced as if the illegal or invalid provision had not been
included.
 
    10.        Terms of Plan Govern.  All parties acknowledge that this option
is granted under and pursuant to the Plan, which shall govern all rights,
interests, obligations and undertakings of both the Company and the Participant.
 
INTEGRYS ENERGY GROUP, INC.
 
 
By:  /s/ Bud Treml
Title:  Senior VP & Chief HR Officer                          
 
 
-4-

--------------------------------------------------------------------------------

 
ACKNOWLEDGEMENT FORM
 
 
 
I have read the terms of the Integrys Energy group, Inc. Nonqualified Stock
Option Agreement, dated May 17, 2007, and I hereby declare that I understand and
agree to be bound by the terms and conditions of the Agreement.
 
                                                                             
Optionee
 
 
Print name:                                                            
 
 
 
 
 
PLEASE DETACH THIS ACKNOWLEDGEMENT FORM FROM THE OPTION AGREEMENT AND RETURN IT
TO THE GREEN BAY HUMAN RESOURCES DEPARTMENT.  YOUR OPTION WILL NOT BECOME
EFFECTIVE UNTIL THE COMPANY RECEIVES THIS ACKNOWLEDGMENT FORM.
 
 

--------------------------------------------------------------------------------