Exhibit 10.14

 
INTEGRYS ENERGY GROUP, INC.
DEFERRED COMPENSATION PLAN

As Amended and Restated Effective April 1, 2008

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 TABLE OF CONTENTS
     
 Page
     
 ARTICLE I. DEFINITIONS AND CONSTRUCTION
 2
 
 Section 1.01. Definitions.
 2
 
 Section 1.02. Construction and Applicable Law.
 5
 
   
 ARTICLE II. PARTICIPATION 
 6
 
 Section 2.01. Eligibility.
 6
     
 ARTICLE III. EMPLOYEE DEFERRED COMPENSATION 
 7
 
 Section 3.01. Application.
 7
 
 Section 3.02. Deferrals Of Base Compensation.
 7
 
 Section 3.03. Deferrals of Annual Bonus Awards.
 8
 
 Section 3.04. Deferral of LTIP Share Awards.
 8
 
 Section 3.05. Matching Contribution Credits. 
 9
 
 Section 3.06. Defined Contribution Restoration Credits. 
 10
 
 Section 3.07. Defined Contribution SERP Credits.
 11
 
 Section 3.08. Other Deferrals and Credits.
 12
 
 Section 3.09. Involuntary Termination of Deferral Elections.
 12
     
 ARTICLE IV. DIRECTOR DEFERRED COMPENSATION 
 13
 
 Section 4.01. Application.
 13
 
 Section 4.02. Deferrals Of Director Fees. 
 13
 
 Section 4.03. Director Deferred Stock Units. 
 14
 
 Section 4.04. Involuntary Termination of Deferral Elections.
 14
       ARTICLE V. PARTICIPANT ACCOUNTS, RESERVE ACCOUNT A, RESERVE ACCOUNT B,
AND STOCK UNITS ACCOUNTS
 15
 
Section 5.01. Participant Accounts. 
15
 
Section 5.02. Reserve Account A.
 15  
Section 5.03. Reserve Account B.
 16  
Section 5.04. Integrys Stock Units. 
 17  
Section 5.05. Special Rules Applicable to Restricted Stock Deferrals. 
20
 
 
 
ARTICLE VI. ACCOUNTING AND HYPOTHETICAL INVESTMENT ELECTIONS 
22   
Section 6.01. Hypothetical Investment of Participant Accounts. 
22   
Section 6.02. Accounts are For Record Keeping Purposes Only. 
24       
ARTICLE VII. DISTRIBUTION OF PRE-2005 ACCOUNT  
25   
Section 7.01. Distribution Election. 
25   
Section 7.02. Modified Distribution Election. 
26   
Section 7.03. Calculation of Annual Distribution Amount.  
26 

 
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   Section 7.04. Time of Distribution.
 27
   Section 7.05. Single Sum Distribution at the Committee’s Option.
27
       ARTICLE VIII. DISTRIBUTION OF POST-2004 ACCOUNT 
 29
   Section 8.01. Distribution Election. 
 29
 
 Section 8.02. Modified Distribution Election.
 30
   Section 8.03. Calculation of Annual Distribution Amount. 
 30
   Section 8.04. Time of Distribution.
 31
   Section 8.05. Automatic Single Sum Distribution. 
 31
   Section 8.06. Distributions For Employment Tax Obligations.
 32
       ARTICLE IX. RULES WITH RESPECT TO INTEGRYS STOCK AND INTEGRYS STOCK
UNITS 
 33
   Section 9.01. Shares Authorized. 
 33
   Section 9.02. Transactions Affecting Integrys Stock.
 33
   Section 9.03. No Shareholder Rights With Respect to Integrys Stock Units. 
 33
       ARTICLE X. SPECIAL RULES APPLICABLE IN THE EVENT OF A CHANGE IN CONTROL
OF THE COMPANY 
 34
   Section 10.01. Definitions.
 34
   Section 10.02. Amendments in Connection with a Change in Control. 
 36
   Section 10.03. Maximum Payment Limitation.
 38
   Section 10.04. Resolution of Disputes.
 39
       ARTICLE XI. GENERAL PROVISIONS 
 40
   Section 11.01. Administration.
 40
   Section 11.02. Restrictions to Comply with Applicable Law.
 40
   Section 11.03. Claims Procedures.
 41
   Section 11.04. Participant Rights Unsecured. 
 42
   Section 11.05. Income Tax Withholding.
 42
   Section 11.06. Amendment or Termination of Plan.
 43
   Section 11.07. Administrative Expenses.
 45
   Section 11.08. Effect on Other Employee Benefit Plans.
 45
   Section 11.09. Successors and Assigns.
 45
   Section 11.10. Right of Offset. 
 45
   Section 11.11. Amounts Accumulated Under Peoples Energy Corporation Plans.
 45
   Section 11.12. Miscellaneous Distribution Rules. 
 46

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INTEGRYS ENERGY GROUP, INC.
DEFERRED COMPENSATION PLAN

The Integrys Energy Group, Inc. Deferred Compensation Plan (the “Plan”), which
was previously known as the WPS Resources Corporation Deferred Compensation
Plan, has been adopted to promote the best interests of Integrys Energy Group,
Inc. (the “Company”) and the stockholders of the Company by attracting and
retaining key management employees and non-employee directors possessing a
strong interest in the successful operation of the Company and its subsidiaries
or affiliates and encouraging their continued loyalty, service and counsel to
the Company and its subsidiaries or affiliates.  The Plan is amended and
restated effective April 1, 2008 as set forth herein.
 
Except as expressly provided herein, the Plan, as herein amended and restated,
applies to (i) those employees who are actively employed by the Company or a
Participating Employer on or after January 1, 2005 (the effective date of
Internal Revenue Code Section 409A), and who have been designated for
participation by the Committee, and (ii) non-employee directors of the Company
and designated subsidiaries and affiliates with service as a director on or
after January 1, 2005.  Except as expressly provided herein, distribution of
benefits to an employee who retired from or terminated employment with the
Company and its Affiliates prior to January 1, 2005, or a director whose service
with the Company and its Affiliates terminated prior to January 1, 2005, shall
be governed by the terms of the Plan (or predecessor plan) as in effect on the
date of the employee’s or director’s retirement or termination of employment or
service.

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ARTICLE I.  DEFINITIONS AND CONSTRUCTION
 
Section 1.01.  Definitions.
 
The following terms have the meanings indicated below unless the context in
which the term is used clearly indicates otherwise:
 
(a) Account:  The record keeping account or accounts maintained to record the
interest of each Participant under Section 5.01 of the Plan.
 
(b) Act:  The Securities Act of 1933, as interpreted by regulations and rules
issued pursuant thereto, all as amended and in effect from time to time.  Any
reference to a specific provision of the Act shall be deemed to include
reference to any successor provision thereto.
 
(c) Affiliate:  A corporation, trade or business that, with the Company, forms
part of a controlled group of corporations or group of trades or businesses
under common control within the meaning of Code Section 414(b) and  (c);
provided that Code Section 414(b) and (c) shall be applied by substituting “at
least fifty percent (50%)” for “at least eighty percent (80%)” each place it
appears..
 
(d) Annual Bonus Deferral:  A deferral of all or a portion of an Eligible
Employee’s annual bonus award in accordance with Section 3.03.
 
(e) Base Compensation:  The base salary or wage payable by a Participating
Employer to an Eligible Employee for services performed prior to reduction for
contributions by the Eligible Employee to this Plan or pre-tax or after-tax
contributions by the Eligible Employee to any other  employee benefit plan
maintained by a Participating Employer, but exclusive of extraordinary payments
such as overtime, bonuses, meal allowances, reimbursed expenses, termination
pay, moving pay, commuting expenses, severance pay, non-elective deferred
compensation payments or accruals, stock options or other equity grants or
awards, or the value of employer-provided fringe benefits or coverage, all as
determined in accordance with such uniform rules, regulations or standards as
may be prescribed by the Committee.
 
(f) Base Compensation Deferral:  A deferral of all or a portion of an Eligible
Employee’s Base Compensation in accordance with Section 3.02.
 
(g) Beneficiary:  The person or entity designated by a Participant to be his or
her beneficiary for purposes of this Plan.  If a Participant designates his or
her spouse as a beneficiary, such beneficiary designation automatically shall
become null and void, with respect to any undistributed portion of the
Participant’s Account, on the date that the Committee obtains actual knowledge
of the Participant’s divorce or legal separation from such spouse.  If a valid
designation of beneficiary is not in effect at the time of the Participant’s
death, the estate of the Participant is deemed to be the sole beneficiary.  If a
beneficiary dies while entitled to receive distributions from the Plan, any
remaining payments shall be paid to the estate of that beneficiary.  Beneficiary
designations shall be in writing, filed with the Committee, and in such form as
the Committee may prescribe for this purpose.
 
 
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(h) Board:  The Board of Directors of the Company.
 
(i) Code:  The Internal Revenue Code of 1986, as interpreted by regulations and
rulings issued pursuant thereto, all as amended and in effect from time to
time.  Any reference to a specific provision of the Code shall be deemed to
include reference to any successor provision thereto.
 
(j) Committee:  The Compensation Committee of the Board (with respect to
Eligible Employee participation) or the Governance Committee of the Board (with
respect to Director participation), or such other committee as may be appointed
by the Board and that satisfies the requirements of Section 11.01.
 
(k) Company:  Integrys Energy Group, Inc. or any successor corporation.  Prior
to February 21, 2007, the Company was known as WPS Resources Corporation.
 
(l) Director:  A non-employee member of the Board, a non-employee member of the
board of directors of an Affiliate who is designated for participation by the
Board, and where the context so requires, a former director entitled to receive
a benefit hereunder.
 
(m) Director Deferral:  A deferral by a Director of all or a portion of his or
her Director Fees in accordance with Section 4.02.
 
(n) Director Fees:  Those fees, other than fees that are automatically credited
to the Director in the form of Stock Units pursuant to Section 4.03, that are
payable in cash to a Director for services rendered on the Board (including
attendance fees and fees for serving as a committee chair) or for service on the
board of directors of an Affiliate.
 
(o) Disability:  The inability of a Participant to engage in any substantial
gainful activity by reason of a medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, as determined by the
Committee.
 
(p) Eligible Employee:  A common law employee of a Participating Employer who
has been designated by the Committee as being eligible to participate in this
Plan and, where the context so requires, a former employee entitled to receive a
benefit hereunder.
 
(q) ERISA:  The Employee Retirement Income Security Act of 1974, as interpreted
by regulations and rulings issued pursuant thereto, all as amended and in effect
from time to time.  Any reference to a specific provision of ERISA shall be
deemed to include reference to any successor provision thereto.
 
(r) Exchange Act:  The Securities Exchange Act of 1934, as interpreted by
regulations and rules issued pursuant thereto, all as amended and in effect from
time to time.  Any reference to a specific provision of the Exchange Act shall
be deemed to include reference to any successor provision thereto.
 
(s) Integrys Stock:  The common stock, $1.00 par value, of the Company.
 
 
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(t) Integrys Stock Units or Stock Units:  The hypothetical shares of Integrys
Stock that are credited to a Participant’s Stock Unit Account in accordance with
Section 5.04.  A Participant’s Stock Units are further classified as Locked
Stock Units or Discretionary Stock Units, in accordance with Section 5.04.
 
(u) Investment Options:  The hypothetical investment accounts described in
Article V and such other investment options as the Committee may from time to
time determine (which may, but need not, be based upon one or more of the
investment options available under a defined contribution plan sponsored by the
Company or an Affiliate).
 
(v) LTIP Deferral:  A deferral of all or a portion of the performance shares,
restricted stock or other stock-based compensation awarded to an Eligible
Employee under the Omnibus Plan, in accordance with Section 3.04.
 
(w) Omnibus Plan:  The Integrys Energy Group, Inc. 2007 Omnibus Incentive
Compensation Plan, the Integrys Energy Group, Inc. 2005 Omnibus Incentive
Compensation Plan (previously known as the WPS Resources Corporation 2005
Omnibus Incentive Compensation Plan), or the Integrys Energy Group, Inc. 2001
Omnibus Incentive Compensation Plan (previously known as the WPS Resources
Corporation 2001 Omnibus Incentive Compensation Plan), as required by the
context.
 
(x) Participant:  A Director and/or an Eligible Employee, as required by the
context.
 
(y) Participating Employer:  The Company and each Affiliate that, with the
consent of the Committee, participates in the Plan for the benefit of one or
more Participants.
 
(z) Pre-2005 Account:  See Section 5.01.
 
(aa) Post-2004 Account:  See Section 5.01.
 
(bb) Separation from Service:   The date on which a Participant terminates
employment from the Company and all Affiliates, provided that (1) such
termination constitutes a separation from service for purposes of Code Section
409A, and (2) the facts and circumstances indicate that the Company (or the
Affiliate) and the Participant reasonably believed that the Participant would
perform no further services (either as an employee or as an independent
contractor) for the Company (or the Affiliate) after the Participant’s
termination date, or believed that the level of services the Participant would
perform for the Company (or the Affiliate) after such date (either as an
employee or as an independent contractor) would permanently decrease such that
the Participant would be providing insignificant services to the Company or an
Affiliate.  For this purposes, a Participant is deemed to provide insignificant
services to the Company or an Affiliate, and thus to have incurred a bona fide
Separation from Service, if the Participant provides services at an annual rate
that is less than twenty percent (20%) of the services rendered by such
individual, on average, during the immediately preceding thirty-six (36) months
of employment (or his or her actual period of employment, if
less).  Notwithstanding the foregoing, if a Participant takes a leave of absence
from the Company or an Affiliate for purposes of military leave, sick leave or
other bona fide leave of absence, the Participant’s employment will be deemed to
continue for the first six (6) months of the leave of absence, or if longer, for
so long as the Participant’s right to reemployment is provided by either
 
 
4

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by statute or by contract; provided that if the leave of absence is due to a
medically determinable physical or mental impairment that can be expected to
result in death or last for a continuous period of not less than six (6) months,
where such impairment causes the Executive to be unable to perform the duties of
his or her position of employment or any substantially similar position of
employment, the leave may be extended for up to twenty-nine (29) months without
causing a Separation from Service.
 
(cc) Stock Unit Account:  The portion of a Participant’s overall Account that is
deemed to be invested in Stock Units, as described in Section 5.04.
 
(dd) Trust:  The Integrys Energy Group, Inc. Deferred Compensation Trust (which
was previously known as the WPS Resources Corporation Deferred Compensation
Trust) or other funding vehicle which may from time to time be established, as
amended and in effect from time to time.
 
(ee) Valuation Date:  See Section 6.01(c).
 
Section 1.02.  Construction and Applicable Law.
 
(a) Wherever any words are used in the masculine, they shall be construed as
though they were used in the feminine in all cases where they would so apply;
and wherever any words are use in the singular or the plural, they shall be
construed as though they were used in the plural or the singular, as the case
may be, in all cases where they would so apply.  Titles of articles and sections
are for general information only, and the Plan is not to be construed by
reference to such items.
 
(b) This Plan is intended to be a plan of deferred compensation maintained for a
select group of management or highly compensated employees as that term is used
in ERISA, and shall be interpreted so as to comply with the applicable
requirements thereof.  In all other respects, the Plan is to be construed and
its validity determined according to the laws of the State of Illinois, without
regard to the principle of conflict of laws, to the extent such state laws are
not preempted by federal law.  In case any provision of the Plan is held illegal
or invalid for any reason, the illegality or invalidity will not affect the
remaining parts of the Plan, but the Plan shall, to the extent possible, be
construed and enforced as if the illegal or invalid provision had never been
inserted.
 

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ARTICLE II.  PARTICIPATION
 
Section 2.01.  Eligibility.
 
(a) A Director shall be eligible to participate in the Plan immediately upon
becoming a member of the Board.
 
(b) An employee shall be eligible to participate in the Plan only if the
employee is employed by a Participating Employer and if the employee has been
designated as an Eligible Employee by the Committee.  When designating an
employee as an Eligible Employee, the Committee, in its sole discretion, may
designate the employee for participation in the entire Plan or any part thereof.
 

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ARTICLE III.  EMPLOYEE DEFERRED COMPENSATION
Section 3.01.  Application.
 
This Article III applies to Participants other than Directors.
 
Section 3.02.  Deferrals Of Base Compensation.
 
(a) Amount.  A Participant may elect, in such form and manner as the Committee
may prescribe, to defer payment of a portion of the Base Compensation that would
otherwise be paid to the Participant.  A Participant’s election shall specify
the percentage (in increments of 1% to a maximum of 100% or such lesser amount
or percentage as may be established by the Committee or as may be consistent
with Code Section 409A and necessary in order to comply with applicable
withholding obligations, whether attributable to withholdings required under
applicable law or other authorized withholdings) of the Participant’s Base
Compensation that the Participant wishes to defer.
 
(b) Initial Deferral Election.  In the case of a Participant who has been
designated for participation for the first time (and who has not previously been
designated as being eligible for participation in another deferred compensation
plan that is required to be aggregated with this Plan for purposes of Code
Section 409A) and who completes a deferral election within 30 days of becoming
eligible to participate in the Plan, the Participant’s validly executed deferral
election shall become effective with respect to services to be performed
subsequent to the election, or as soon thereafter as practicable.  If the
Participant does not submit a deferral election during the initial 30 day
election period, the Participant may thereafter elect to defer payment of Base
Compensation by submitting a validly executed deferral election to the
Committee, but the election shall become effective and shall apply only to Base
Compensation for the calendar year following the calendar year during which the
election is received and accepted by the Committee, or as soon thereafter as
practicable.  A Participant’s deferral election, once effective, shall remain in
effect until modified by the Participant in accordance with subsection (c) below
or otherwise revoked in accordance with Plan rules.
 
(c) Revised Deferral Election.  Except to the extent that the Committee is
permitted (and elects) to give earlier effect to a Participant’s revocation or
revision to his or her deferral election in accordance with regulations
promulgated by the Secretary of the Treasury under Code Section 409A, a
Participant’s deferral election, once effective with respect to a calendar year,
may not be revoked or modified with respect to Base Compensation for that
calendar year.  A Participant may modify his or her then current deferral
election by filing a revised deferral election form, properly completed and
signed, with the Committee.  However, except to the extent that the Committee is
permitted (and elects) to give earlier effect to a Participant’s revised
election in accordance with regulations promulgated by the Secretary of the
Treasury under Code Section 409A, the revised election will be effective only
with respect to Base Compensation for  the calendar year following the calendar
year during which the revised election is received and accepted by the
Committee, or as soon thereafter as practicable.  A Participant’s revised
deferral
 
 
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election, once effective, shall remain in effect until again modified by the
Participant under this subsection (c) or otherwise revoked in accordance with
Plan rules.
 
(d) Base Compensation Paid Following Year End For the Payroll Period That
Includes December 31.  For purposes of applying a Participant’s deferral
election, Base Compensation paid after December 31 of a calendar year that is
attributable solely to services performed during the payroll period that
includes December 31, if paid in accordance with the normal timing arrangement
by which a Participating Employer compensates employees for services rendered,
is treated as Base Compensation for services performed in the subsequent
calendar year, even though part or all of the Participant’s services might have
been performed in the prior calendar year.
 
Section 3.03.  Deferrals of Annual Bonus Awards.
 
A Participant may elect, in such form and manner as the Committee may prescribe,
to defer payment of a portion of the annual cash bonus that is awarded and that
would otherwise be paid to the Participant with respect to any year.  A
Participant’s election shall specify the percentage (in increments of 1% to a
maximum of 100% or such lesser amount or percentage as may be established by the
Committee or as may be consistent with Code Section 409A and necessary in order
to comply with applicable withholding obligations, whether attributable to
withholdings required under applicable law or other authorized withholdings) of
the Participant’s annual cash bonus that the Participant wishes to defer.  In
the case of any award that is not performance-based compensation for purposes of
Code Section 409A, a validly executed deferral election shall be effective only
if the deferral election is received and accepted by the Committee prior to the
last day of the calendar year preceding the calendar year for which the annual
bonus is paid, or by such other time as provided in regulations promulgated by
the Secretary of the Treasury.  In the case of any award that is
performance-based compensation for purposes of Code Section 409A, a validly
executed deferral election shall become effective with respect to the annual
bonus that may be awarded to the Participant with respect to a calendar year if
the Participant’s deferral election is received and accepted by the Committee at
least 6 months prior to the end of the (calendar year) performance period for
the bonus, or by such earlier (but not later) date as the Committee may
establish.  A Participant’s election to defer part or all of an annual bonus
award becomes irrevocable at the end of the permitted elected period, and the
Participant may not thereafter revoke or modify his or her election.  A
Participant’s election to defer part or all of an annual bonus award shall be
effective only for the annual bonus to which the election relates, and shall not
carry over from year to year or from bonus to bonus.
 
Section 3.04.  Deferral of LTIP Share Awards.
 
A Participant may elect, in such form and manner as the Committee may prescribe,
to defer payment of a portion of any performance share, restricted stock or
other stock-based compensation awarded to the Participant under the Omnibus
Plan.  A Participant’s election shall specify the whole number of shares (up to
100% of such shares or such lesser number or percentage as may be established by
the Committee or as may be consistent with Code Section 409A and necessary in
order to comply with applicable withholding obligations, whether attributable to
withholdings required under applicable law or other authorized withholdings) of
 
 
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the Participant’s award that the Participant wishes to defer.  In the case of
any award that is not performance-based compensation for purposes of Code
Section 409A, a validly executed deferral election shall be effective only if
the deferral election is received and accepted by the Committee in accordance
with rules established by the Committee pursuant to Code Section 409A.  In the
case of any award that is performance-based compensation for purposes of Code
Section 409A, a validly executed deferral election shall become effective with
respect to shares to be earned by the Participant with respect to any Omnibus
Plan performance period if the Participant’s deferral election is received and
accepted by the Committee at least 6 months prior to the end of such performance
period or by such earlier (but not later) date as the Committee may
establish.  A Participant’s election to defer part or all of an LTIP share award
becomes irrevocable at the end of the permitted elected period, and the
Participant may not thereafter revoke or modify his or her election.  A
Participant’s election to defer an award shall be effective only for the Omnibus
Plan award, service period or performance period to which the election relates,
and a Participant’s election does not carry over from award to award,
performance period to performance period or from service period to service
period.
 
Section 3.05.  Matching Contribution Credits.
 
(a) Allocation of Credits.  A Participant who is a participant in a defined
contribution 401(k) savings plan maintained by the Company or an Affiliate
(“Savings Plan”), and who makes Base Compensation Deferrals and/or Annual Bonus
Deferrals under this Plan, shall be entitled to a matching contribution credit,
determined as of December 31 of each year, equal to the difference (if any)
between:
 
(i)  
The value of the matching contribution that the Participant would have received
for the calendar year under or with respect to the Savings Plan in which the
Participant is eligible, if Base Compensation Deferrals and Annual Bonus
Deferrals made by the Participant under this Plan were instead treated as
“compensation” under the Savings Plan for purposes of applying the Participant’s
deferral election under the Savings Plan; provided that all limits and
restrictions otherwise imposed under the Savings Plan, including the maximum
compensation limit under Section 401(a)(17) of the Code, shall continue to
apply; and

 
(ii)  
The value of the matching contribution actually received by the Participant for
that year under the Savings Plan.

 
(b) Investment of Credits.  Matching contribution credits with respect to
periods prior to January 1, 2008 will be credited to the Participant in the form
of Locked Stock Units under Section 5.04(b).  Matching contribution credits with
respect to periods after December 31, 2007 shall be credited to the
Participant’s Account in accordance with the Participant’s investment direction
under Section 6.01(a).
 
(c) No Duplication.  The credit under this Section shall not duplicate any
credit to which the Participant is entitled under Section 3.06 below.
 
 
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Section 3.06.  Defined Contribution Restoration Credits.
 
(a) Eligibility.  Unless the Committee determines otherwise, a Participant who
is hired on or after January 1, 2008 (other than a Participant whose employment
contract or agreement excludes the Participant from receiving pension
restoration, supplemental retirement or similar restoration benefits or credits)
and who is eligible to make contributions to a qualified defined contribution
retirement plan maintained by the Company or an Affiliate (“Defined Contribution
Plan”) may be eligible to receive an additional credit to his or her Account for
each year, in accordance with the rules of this Section.  Effective January 1,
2013, unless the Committee determines otherwise, all Participants (other than a
Participant whose employment contract or agreement excludes the Participant for
receiving pension restoration, supplemental retirement or similar restoration
benefits or credits) may be eligible to receive an additional credit to his or
her Account for each year, in accordance with the rules of this Section.
 
(b) Amount of Additional Credit.  The additional credit for any year shall be:
 
(i)  
Matching Contribution Credit.  If the Participant for any year is eligible to
make elective deferral or other contributions to the Defined Contribution Plan
and to receive a matching contribution with respect to such amounts, the
Participant shall receive an additional credit under this Plan equal to five
percent (5%) of the Participant’s compensation for the year that is in excess of
the Code Section 401(a)(17) limitation in effect for such year.  For this
purposes, the Participant’s compensation shall be the Participant’s compensation
as defined in the Defined Contribution Plan, except that Base Compensation
Deferrals and Annual Bonus Deferrals made by the Participant under this Plan
shall be treated as if they had been paid to the Participant in cash.  This
credit is to approximately reflect the matching contribution that the
Participant could have received under the Defined Contribution Plan if the
Participant had been permitted to make contributions to the Defined Contribution
without being subject to the limitations under Code Sections 401(a)(17), 402(g),
415 or any limitation under the Code.

 
(ii)  
Non-Elective Contribution Credit.  If the Participant for any year is eligible
for an employer non-elective (non-matching) contribution under the Defined
Contribution Plan and if the Participant’s allocation under the Defined
Contribution Plan is limited because of the limitations of Code Section
401(a)(17) or 415, the Participant shall receive an additional credit under this
Plan equal to the difference between (A) the employer non-elective contribution
that would have been allocated to the

 
 
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Participant for the year under the Defined Contribution Plan if the Code Section
401(a)(17) and 415 limitations did not apply and if Base Compensation and Annual
Bonus Deferrals made by the Participant under this Plan are treated as if they
had been paid to the Participant in cash, and (B) the employer non-elective
contribution to which the Participant is actually entitled for such year under
the Defined Contribution Plan.

 
(c) Vesting.  A Participant will have a vested and non-forfeitable right to the
credits made under this Section, and any deemed investment gains or losses, if
the Participant terminates employment with the Company and its Affiliates after
having completed at least three (3) years of service.  If the Participant
terminates employment prior to completing three (3) years of service, the
Participant’s credits under this Section, together will all deemed investment
gains or losses, shall be forfeited.
 
Section 3.07.  Defined Contribution SERP Credits.
 
(a) Eligibility.  This Section is limited to Participants who have been
specifically selected by the Committee to receive SERP Credits under this
Section with respect to periods on and after April 1, 2008 (with respect to
periods on and after January 1, 2013 in the case of a Participant who is covered
under a qualified defined benefit plan).  Even though the Committee may have
designated an employee as being generally eligible for the Plan, the employee
shall not be eligible for the Defined Contribution SERP credits described in
this Section unless the Committee has specifically designated the employee as
being eligible.
 
(b) Amount of SERP Credit.  The SERP Credit shall be calculated and credited
following the conclusion of each calendar year.  If the Committee has designated
a Participant as being eligible to receive a SERP credit under this Section, the
Committee shall also designate the percentage of the Participant’s base salary
and annual incentive that is to be credited to the Participant’s Account as a
SERP Credit; provided that if the Committee designates a Participant as being
eligible to receive a SERP Credit under this Section but the Committee does not
affirmatively designated the applicable percentage of the Participant’s base
salary and annual incentive to be credited, the applicable percentage shall be
twelve percent (12%) until the Committee affirmatively designates a different
percentage.  For this purpose, any Base Compensation and Annual Bonus Deferrals
made by the Participant under this Plan are treated as if they had been paid to
the Participant in cash.  The Committee may from time to time change that amount
of the SERP Credit applicable to any Participant, and the fact that a
Participant receives a SERP Credit for any year (or portion of a year) does not
provide the Participant with any right or entitlement to a SERP Credit with
respect to any other period.  Any changes in the SERP Credit to which a
Participant receives shall be made in accordance with the requirements of Code
Section 409A.
 
(c) Vesting.  A Participant will have a vested and non-forfeitable right to the
credits made under this Section, and any deemed investment gains or losses, if
the Participant terminates employment with the Company and its Affiliates after
having completed at least five (5) years of service.  If the Participant
terminates employment prior to completing five (5) years of service,
 
 
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the Participant’s credits under this Section, together will all deemed
investment gains or losses, shall be forfeited.
 
Section 3.08.  Other Deferrals and Credits.
 
The Committee, in its discretion, may, with respect to any Participant,
determine that the Participant is eligible to make deferrals with respect to
additional components of the Participant’s remuneration or receive employer
contribution credits in addition to the credits described herein.  In no event,
however, shall the Committee authorize such additional deferrals or credits
unless the Committee has first determined that the deferrals or credits have
been elected or authorized in a manner that will not result in the imposition of
tax under Code Section 409A.
 
Section 3.09.  Involuntary Termination of Deferral Elections.
 
A Participant’s deferral elections shall be automatically revoked upon the
Participant’s termination of employment from the Participating Employers, unless
the Committee determines otherwise in accordance with the requirements of Code
Section 409A.  In addition, and subject to Code Section 409A, a Participant’s
deferral election will terminate if the Committee determines that the
Participant is no longer eligible to participate in the Plan or that revocation
of a Participant’s eligibility is necessary or desirable in order for the Plan
to qualify under ERISA as a plan of deferred compensation for a select group of
management or highly compensated employees.

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ARTICLE IV.  DIRECTOR DEFERRED COMPENSATION
Section 4.01.  Application.
 
This Article IV applies only to Directors.
 
Section 4.02.  Deferrals Of Director Fees.
 
(a) Amount.  A Director may elect, in such form and manner as the Committee may
prescribe, to defer payment of all or a portion of the Director Fees that would
otherwise be paid in cash  to the Director.  A Director’s election shall specify
the percentage (in increments of 1% to a maximum of 100% or such lesser amount
or percentage as may be established by the Committee or as may be consistent
with Code Section 409A and necessary in order to comply with applicable
withholding obligations, whether attributable to withholdings required under
applicable law or other authorized withholdings) of the Director Fees that the
Director wishes to defer.
 
(b) Initial Deferral Election.  In the case of a Director who has become
eligible for participation in the Plan for the first time (and who has not
previously been designated as being eligible for participation in another
deferred compensation plan that is required to be aggregated with this Plan for
purposes of Code Section 409A), and who completes a deferral election within 30
days of becoming eligible to participate in the Plan, the Director’s validity
executed deferral election shall become effective with respect to services to be
performed subsequent to the election, or as soon thereafter as practicable.  If
the Director does not submit an initial deferral election during the initial 30
day election period, the Director may thereafter elect to defer the payment of
Director Fees by submitting a validly executed deferral election to the
Committee, but the election shall become effective and shall apply only to
Directors Fees for the calendar year following the calendar year in which the
election is received and accepted by the Committee, or as soon thereafter as
practicable.  A Director’s deferral election, once effective, shall remain in
effect until modified by the Director in accordance with subsection (c) below or
otherwise revoked in accordance with Plan rules.
 
(c) Revised Deferral Election.  Except to the extent that the Committee is
permitted (and elects) to give earlier effect to a Director’s revocation or
revision to his or her deferral election in accordance with regulations
promulgated by the Secretary of the Treasury under Code Section 409A, a
Director’s deferral election, once effective with respect to a calendar year,
may not be modified or revoked with respect to Director Fees for that calendar
year.  A Director may modify his or her then current deferral election by filing
a revised deferral election form, properly completed and signed, with the
Committee.  However, except to the extent that the Committee is permitted (and
elects) to give earlier effect to a Participants revision to his or her deferral
election in accordance with regulations promulgated by the Secretary of the
Treasury under Code Section 409A, the revised election will be effective with
respect to Director Fees for the calendar year following the calendar year
during which the revised election is received and accepted by the Committee, or
as soon thereafter as practicable.  A Director’s revised deferral
 
 
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election, once effective, shall remain in effect until again modified by the
Director in accordance with this subsection (c) or otherwise revoked in
accordance with Plan rules.
 
(d) Director Fees Paid Following Year End For the Period That Includes
December 31.  For purposes of applying a Director’s deferral election, Director
Fees paid after December 31 of a calendar year that are attributable solely to
services performed during the a period that includes December 31, if paid in
accordance with the normal timing arrangement by which a Participating Employer
compensates Directors for services rendered, is treated as Director Fees for
services performed in the subsequent calendar year, even though part or all of
the Director’s services might have been performed in the prior calendar year.
 
Section 4.03.  Director Deferred Stock Units.
 
The Board may from time to time direct that a portion of the remuneration to be
earned by a Director for service on the Board shall be credited under this Plan
in the form of Stock Units.  Except to the extent that the Committee is
permitted (and elects) to give earlier effect to a direction in accordance with
regulations promulgated by the Secretary of the Treasury under Code Section
409A, any such direction shall be effective with respect to remuneration to be
earned by the Director on and after January 1 of the calendar year following the
date of such direction, and shall continue in effect through December 31 of the
calendar year in which modified or revoked by a subsequent direction of the
Board.  The Board’s direction may provide either for the direct credit of Stock
Units or for the mandatory deferral of a prescribed amount of cash remuneration
that will be converted into Stock Units in accordance with Section 5.04.
 
Section 4.04.  Involuntary Termination of Deferral Elections.
 
A Director’s deferral elections shall be automatically revoked upon the
Director’s termination of service with the Participating Employers, unless the
Committee determines otherwise in accordance with Code Section 409A.

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ARTICLE V.  PARTICIPANT ACCOUNTS, RESERVE ACCOUNT A, RESERVE ACCOUNT B, AND
STOCK UNITS ACCOUNTS
 
Section 5.01.  Participant Accounts.
 
A record keeping Account will be maintained to record the interest of each
Participant under the Plan.  An Account is established for record keeping
purposes only and not to reflect the physical segregation of assets on the
Participant’s behalf.  A Participant’s Account will consist of separate balances
to record a Participant’s interest in each of the Investment Options, and to
record the portion of a Participant’s overall Account that is attributable to
deferrals and contribution credits made and vested prior to January 1, 2005,
together with any earnings or loss thereon through the date of distribution from
the Plan (the “Pre-2005 Account”), and the portion of the Participant’s overall
Account that is attributable to deferrals and contribution credits made or
vested after December 31, 2004, together with any earnings or loss thereon
through the date of distribution from the Plan (the “Post-2004
Account”).  Further, a Participant’s Account will consistent of separate
balances to record the portion of a Participant’s overall Account that is
attributable to credits under Sections 3.06, 3.07 or 5.05, or any other credits,
that are subject to a vesting schedule.  The Committee (or its delegate) may
direct that a Participant’s Account include such additional sub-accounts and
balances as the Committee (or its delegate) may determine to be necessary or
appropriate.
 
Section 5.02.  Reserve Account A.
 
(a) Limited Purpose Account.  Reserve Account A is limited to compensation or
director fees attributable to employment or service with Wisconsin Public
Service Corporation and that were deferred by a Participant prior to January 1,
1996, together with attributed earnings on such deferrals.  Except for
attributed earnings as described below, no further deferrals, contributions or
credits of any kind will be made to this account on behalf of a Participant, nor
may a Participant transfer amounts from another Investment Option to Reserve
Account A.  A Participant may transfer amounts credited to Reserve Account A to
another available Investment Option, but the transferred amount may not
subsequently be transferred back to Reserve Account A.
 
(b) Crediting of Interest Equivalent.  Reserve Account A will be credited with
an interest equivalent on the balance in the account from time to time during
the year.  Unless the Committee prescribes an alternate method, the annual
interest equivalent rate (on a non-compounded basis) will be the greater of:
 
(i)  
six percent (6.0%); or

 
(ii)  
a rate equal to the consolidated return on common shareholders’ equity  of the
Company and all consolidated subsidiaries (ROE); provided, however, that unless
the Committee determines otherwise, this Paragraph (ii) will not apply to a
Participant following termination of

 
 
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employment if the Participant’s termination of employment with the Company and
its Affiliates occurs prior to attainment of age fifty-five (55) and prior to
the occurrence of a Change in Control (as defined in Section 10.01).  For the
months of April through September, ROE means the consolidated return on equity
of the Company and all consolidated subsidiaries for the twelve (12) months
ended on the preceding February 28 (or 29) as calculated pursuant to the
Company’s standard accounting procedure for financial reporting to
shareholders.  For the months October through March, ROE means return on equity
as described above for the twelve (12) months ended on the preceding August 31.

 
(c) Revised Rate.  Subject to Article X, the Committee may revise the interest
equivalent rate or the manner in which it is calculated, but in no event shall
the rate be less than six percent (6%) per annum.  Any such revised rate shall
be effective with the calendar month following such action by the Committee.
 
Section 5.03.  Reserve Account B.
 
(a) Availability.  Reserve Account B is an available Investment Option only with
respect to eligible deferrals or contribution credits made prior to April 1,
2008.  Effective April 1, 2008, Reserve Account B is closed to new deferrals,
contribution credits, or transfers from another Investment Option.  A
Participant may transfer amounts credited to Reserve Account B to another
available Investment Option, but the transferred amount may not subsequently be
transferred back to Reserve Account B.
 
(b) Crediting of Interest Equivalent.  Reserve Account B will be credited with
an interest equivalent on the balance in the account from time to time during
the year.  Unless the Committee prescribes an alternate method, the annual
interest equivalent rate (on a non-compounded basis) will be the greater of:
 
(i)  
six percent (6.0%); or

 
(ii)  
a rate equal to seventy percent (70%) of the consolidated return on common
shareholders equity of the Company and all consolidated subsidiaries (ROE);
provided, however, that unless the Committee determines otherwise, this
Paragraph (ii) will not apply to a Participant following termination of
employment if the Participant’s termination of employment with the Company and
its Affiliates occurs prior to attainment of age fifty-five (55) and prior to
the occurrence of a Change in Control (as defined in Section 10.01).  For the
months of April through September, ROE means the consolidated return on equity
of the Company and all consolidated subsidiaries for the

 
 
16

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twelve (12) months ended on the preceding February 28 (or 29) as calculated
pursuant to the Company’s standard accounting procedure for financial reporting
to shareholders.  For the months October through March, ROE means return on
equity as described above for the twelve (12) months ended on the preceding
August 31.

 
(c) Revised Rate.  Subject to Article X, the Committee may revise the interest
equivalent rate or the manner in which it is calculated, but in no event shall
the rate be less than six percent (6%) per annum.  Any such revised rate shall
be effective with the calendar month following such action by the Committee.
 
Section 5.04.  Integrys Stock Units.
 
(a) Locked and Discretionary Stock Units.  For purposes of the Plan, the term
“Locked Stock Units” refers to the portion of a Participant’s Account that has
been credited to the Plan in the form of Integrys Stock Units with respect to
which the Participant is not able to exercise investment discretion or otherwise
cause such amounts to be transferred to an alternate Investment Option.  The
term “Discretionary Stock Units” refers to the portion of a Participant’s
Account that, at any point in time, in deemed to be invested in Integrys Stock
Units, but the Participant is permitted, in accordance with the rules of the
Plan, to exercise investment discretion with respect to such amounts or to cause
such amounts to be transferred to an alternate Investment Option.  The Locked
Stock Units are described in subsection (b) below.  The Discretionary Stock
Units are all  Stock Units credited to the Participant’s Account, other than the
Locked Stock Units.
 
(b) Locked Stock Units.  The following are Locked Stock Units, meaning that the
Participant is not able to exercise investment discretion, either with respect
to the Stock Units that may be credited to the Participant’s Account from these
sources, or with respect to any additional Stock Units that are credited as a
result of the deemed payment of dividends or other distributions on such Stock
Units:
 
(i)  
Stock Units attributable to deferrals or contribution credits made prior to June
30, 2001 that, at the time of the deferral or contribution credits, were
allocated to a Stock Unit Account (“Prior Plan Stock Units”).

 
(ii)  
Stock Units attributable to Annual Bonus Deferrals made after June 30, 2001 and
prior to April 1, 2008, if the Participant received the five percent (5%)
premium for Annual Bonus Awards irrevocably directed to a Stock Unit Account
(“Incentive Stock Units”).

 
(iii)  
Stock Units attributable to deferral of Omnibus Plan performance shares the
final award for which was made after June 30, 2001 and prior to April 1, 2008
(“Incentive Stock Units”).

 
 
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(iv)  
Stock Units attributable to deferral of Omnibus Plan restricted stock that
became vested prior to April 1, 2008 (“Restricted Stock Units”).

 
(v)  
Stock Units attributable to deferral of Omnibus Plan restricted stock with
vesting dates after March 31, 2008, but only until the date on which the
Participant becomes vested in such Stock Units.  When the Participant’s interest
in the Stock Units becomes vested, such Stock Units will become Discretionary
Stock Units.

 
(vi)  
Stock Units attributable to matching contribution credits made with respect to
periods prior to January 1, 2008 under Section 3.05 (“Matching Contribution
Stock Units”).

 
(vii)  
Stock Units attributable to the portion of a Director’s compensation that, in
accordance with Section 4.03, is automatically deemed to be invested in Stock
Units with no ability on a part of an individual Director to elect an alternate
form of deemed investment (“Director Stock Units”).

 
(viii)  
Any amounts credited in the form of Stock Units under a predecessor deferred
compensation plan (including, without limitation, the deferred compensation
plans of Peoples Energy Corporation), if the Participant did not have the right,
under such predecessor plan, to direct that the amount be transferred to an
alternate deemed investment.

 
(ix)  
Any other Stock Units that the Committee directs be treated as Locked Stock
Units or that are required to be treated as Locked Stock Units pursuant to the
terms of the employment contract, incentive program or other plan that sets
forth the Participant’s entitlement to be credited with Stock Units under the
Plan.

 
(c) Crediting of Stock Units.
 
(i)  
Awards or Credits Already Expressed in the Form of Integrys Stock.  With respect
to any amount that is being credited under the Plan in the form of Stock Units
and that, immediately prior to being credited to the Participant’s Stock Unit
Account, is already expressed as an award of shares of Integrys Stock, e.g.,
Omnibus Plan performance shares or restricted stock awards, the Participant will
be credited, on a one-for-one basis, with a number of Stock

 
 
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Units equal to the number of shares of Integrys Stock that are being deferred or
credited under the Plan.

 
(ii)  
Conversion of Other Awards or Credits to Stock Units.  With respect to any
amount that is being credited under the Plan in the form of Stock Units and
that, immediately prior to being credited to the Participant’s Stock Unit
Account, is not expressed in the form of shares of Integrys Stock, the amount of
the deferral or credit shall be converted, for record-keeping purposes, into
whole and fractional Stock Units, with fractional units calculated to four
decimal places.  Except as provided in subparagraph (iii) below with respect to
Director Stock Units under Section 4.03, the conversion shall be accomplished by
dividing the amount of the deferral or credit by the closing price of a share of
Integrys Stock on the date on which the deferral or credit would otherwise have
been paid to the Participant, as reported in the Wall Street Journal’s New York
Stock Exchange Composite Transaction listing.

 
(iii)  
Special Rule for Certain Director Stock Units.  All Stock Unit amounts directed
by the Board in accordance with Section 4.03, for which the Director is not able
to elect an alternate form of deemed investment, shall be credited to the
Director’s Account in the form of Stock Units.  If the Board directs that a
Director be credited with a prescribed number of Stock Units, the number of
units so prescribed shall be credited to the Director’s Account as of January 1
of the calendar year following the date of the Board’s direction or at such
other time as the Board may prescribe consistent with Code Section 409A.  If the
Board directs that the Director be credited with Stock Units with a prescribed
value, the amount or value prescribed by the Board will be converted, for record
keeping purposes, into whole and fractional Stock Units as of January 1 of the
calendar year following the date of the Board’s direction, or at such other time
as the Board may prescribe consistent with Code Section 409A, with fractional
units calculated to four decimal places.  The conversion shall be accomplished
by dividing the amount or value designated by the Board by the closing price of
a share of Integrys Stock on the business day immediately preceding the January
1 crediting date, as reported in the Wall Street Journal’s New York Stock
Exchange Composite Transactions listing; provided that if the Board directs,
consistent with Code Section 409A, that the Stock Units should be determined as
of a date other than January 1, the conversion of the amount or

 
 
 
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value designated by the Board shall be determined based upon the closing price
of a share of Integrys Stock on the date designated by the Board, or if that
date is not a business day, on the immediately preceding business day.

 
(d) Crediting of Additional Stock Units For Deemed Dividends and Similar
Distributions.  Any dividends (or similar distribution) that would have been
payable on the Stock Units credited to a Participant’s Stock Unit Account had
such Stock Units been actual shares of Integrys Stock, if not already expressed
in the form of shares of Integrys Stock or shares in another entity, shall be
converted, for record keeping purposes, into whole and fractional Stock Units,
with fractional units calculated to four decimal places.  The conversion shall
be accomplished by dividing the amount of the dividend or distribution by the
closing price of a share of Integrys Stock on the payment date for the dividend
or distribution.
 
(e) Conversion from Stock Units to Another Investment Option.  If a Participant
elects under Section 6.01(d) to transfer all or any portion of his or her
Discretionary Stock Units to an alternate Investment Option, the Stock Units to
which such election relates shall be converted, for record keeping purposes,
from Stock Units into an amount that is equal to the product obtained by
multiplying the number of such Stock Units that are being transferred by the
closing price of a share of Integrys Stock, on the effective date of such
investment transfer, as reported in the Wall Street Journal’s New York Stock
Exchange Composite Transaction listing.
 
(f) Securities Law Restrictions.  Notwithstanding anything to the contrary
herein, all transfer elections under Section 6.01(d) by a Participant who is
subject to Section 16 of the Exchange Act  are subject to review by the
Committee prior to implementation.  Further, the following transfer transactions
under Section 6.01(d) by a Participant who is subject to Section 16 of the
Exchange Act are prohibited: (i) elections to transfer the deemed investment of
the affected Participant’s Account into Stock Units within six (6) months of an
election to reallocate deemed investments out of Stock Units; and (ii) elections
to transfer the deemed investment of the affected Participant’s Account out of
Stock Units within six (6) months of an election to reallocate deemed
investments into Stock Units (collectively, “Prohibited Transactions”).  All
Prohibited Transactions are void.  In accordance with Section 11.02, the
Committee may restrict additional transactions, or impose other rules and
procedures, to the extent deemed desirable by the Committee in order to comply
with the Exchange Act, including, without limitation, application of the review
and approval provisions of this Section 5.04(f) to Participants who are not
subject to Section 16 of the Exchange Act.
 
Section 5.05.  Special Rules Applicable to Restricted Stock Deferrals.
 
Unless otherwise determined by the Committee, the Participant’s interest in
Stock Units attributable to a deferral of an Omnibus Plan restricted stock award
shall be subject to the same vesting or forfeiture conditions to which the
Participant would have been subject if the Participant had received the
restricted stock directly rather than electing to defer delivery of such
shares.  Similarly, except with respect to dividend (or other distribution)
credits that the Committee has determined are at all times fully vested and
therefore are to be credited to a special Restricted Stock Dividend Account, the
dividend (or distribution) credit shall be credited to the Participant in the
form of additional Stock Units, in accordance with Section 5.04(d), and
 
 
20

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such additional Stock Units shall be subject to the same vesting or forfeiture
conditions as apply with respect to the underlying Integrys Stock Units on which
the dividend (or distribution) credit is based.

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ARTICLE VI.  ACCOUNTING AND HYPOTHETICAL INVESTMENT ELECTIONS
Section 6.01.  Hypothetical Investment of Participant Accounts.
 
(a) Deemed Investment of All Deferrals and Contribution Credits Other Than
Deferrals of Restricted Stock.
 
(i)  
In accordance with uniform rules prescribed by the Committee, each Participant
shall designate, in writing or in such other manner as the Committee may
prescribe, how deferrals and other authorized contribution credits made while
the designation is in effect, other than deferrals of restricted stock, are
credited among the Investment Options.  When selecting more than one Investment
Option, the Participant shall designate, in whole multiples of 1% or such other
percentage determined by the Committee, the percentage to be credited to each of
the available Investment Options.  If the Participant fails to make a timely and
complete investment designation, the deferrals or other contribution credits for
which there is not a valid investment election shall be credited to the same
“lifecycle” fund that is or would be the default investment option for the
Participant under the qualified defined contribution plan in which the
Participant is eligible, or is such other Investment Option specified by the
Committee for this purpose.

 
(ii)  
For purposes of crediting a Participant’s deferral of an Omnibus Plan
performance share award, or other award that is expressed in shares of Integrys
Stock, among the Investment Options, the following rules shall apply.  With
respect to the portion of the award that the Participant allocates into Stock
Units, the Participant will be credited with Stock Units, on a one-for-one
basis, in accordance with Section 5.04(c)(i).  With respect to the portion of
the award that the Participant allocates to Investment Option(s) other than
Stock Units, the amount to be credited to each Investment Option other than
Stock Units will be determined by multiplying the number of shares of Integrys
Stock that corresponds to the portion of the award that the Participant has
allocated to that Investment Option by the closing price of a share of Integrys
Stock on the date on which the deferral or credit would otherwise have been paid
to the Participant, as reported in the Wall Street Journal’s New York Exchange
Composite Transaction listing.

 
 
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(iii)  
A Participant’s investment election or deemed investment election shall become
effective for deferrals and other contribution credits beginning with the first
payroll period commencing or payment date occurring on or after the date on
which the election is received and accepted by the Committee, or such other date
established by the Committee for this purpose, and shall remain in effect for
all future deferrals and contribution credits unless and until modified by a
subsequent election that becomes effective in accordance with the rules of this
subsection.  The Participant’s election under this Section 6.01(a) governs the
deemed investment of deferrals and contribution credits made while the
Participant’s election is in effect.  A Participant’s ability to transfer
amounts that are deemed to be invested in one Investment Option to another
Investment Option is governed by Section 6.01(d).

 
(b) Deemed Investment of Restricted Stock Deferrals.  Restricted stock deferrals
are credited to the Plan in the form of Locked Stock Units until vested, at
which time such Stock Units will become Discretionary Stock Units.  The
Participant is not permitted to make an investment election with respect to
Locked Stock Units or to cause Locked Stock Units to be transferred to an
alternate Investment Option.  A Participant may transfer Discretionary Stock
Units to an alternate Investment Option in accordance with Section 6.01(d).
 
(c) Allocation of Deemed Investment Gain or Loss.  On each day that the New York
Stock Exchange is open for business, or at such other times as the Committee may
prescribe (the “Valuation Date”), the Account of each Participant will be
credited (or charged) based upon the investment gain (or loss) that the
Participant would have realized with respect to his or her Account since the
immediately preceding Valuation Date had the Account been invested in accordance
with the terms of the Plan and where applicable, the Participant’s
election.  Subject to the special rules set forth in Article V with respect to
Reserve Account A, Reserve Account B, and Integrys Stock Units, the credit (or
charge) shall be the sum, separately calculated for each of the Investment
Options, of the product obtained by multiplying (i) the portion (if any) of the
Participant’s Account as of the immediately prior Valuation Date that is deemed
to have been invested in each Investment Option, and (ii) the rate of return
experienced by that Investment Option since the immediately preceding Valuation
Date.  The Committee, in its discretion, may prescribe alternate rules for the
valuation of Participant Accounts, including, without limitation, the
application of unit accounting principles.
 
(d) Reallocation of Account. Subject to such restrictions as may be in effect or
implemented pursuant to Section 5.04(f), and in accordance with rules prescribed
by the Committee (which may include limitations on the timing or frequency of
reallocation transactions initiated by some or all Participants), each
Participant may elect to reallocate his or her Account (other than Locked Stock
Units) among the available Investment Options; provided that no amounts may be
allocated to Reserve Account A or Reserve Account B.  When selecting more than
one Investment Option, the Participant shall designate, in whole multiples of 1%
or such other percentage determined by the Committee, the percentage of his or
her available
 
 
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Account that is deemed to be invested in each available Investment Option after
the investment reallocation is given effect.  Once effective, a Participant’s
reallocation shall remain in effect unless and until modified by a subsequent
election that becomes effective in accordance with the rules prescribed by the
Committee.  Other than a reallocation of a Participant’s Account pursuant to a
revised investment election submitted by the Participant, the deemed investment
allocation of a Participant will not be adjusted to reflect differences in the
relative investment return realized by the various hypothetical Investment
Options that the Participant has designated.
 
Section 6.02.  Accounts are For Record Keeping Purposes Only.
 
Plan Accounts and the record keeping procedures described herein serve solely as
a device for determining the amount of benefits accumulated by a Participant
under the Plan, and shall not constitute or imply an obligation on the part of a
Participating Employer to fund such benefits.  In any event, a Participating
Employer may, in its discretion, set aside assets and/or contribute to the Trust
assets equal to part or all of such account balances and invest such assets in
Integrys Stock, life insurance or any other investment deemed appropriate.  Any
such assets held by a Participation Employer or the Trust  shall be and remain
the sole property of the Participating Employer or the Trust, as applicable, and
except to the extent that the Trust authorizes a Participant to direct the
trustee with respect to the voting of Integrys Stock held in the Trust, a
Participant shall have no proprietary rights of any nature whatsoever with
respect to such assets.

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ARTICLE VII.  DISTRIBUTION OF PRE-2005 ACCOUNT
Section 7.01.  Distribution Election.
 
(a) Election.  A Participant, at the time he or she commenced participation in
the Plan, made a distribution election with respect to his or her Pre-2005
Account.  The election specified the distribution commencement date, the
distribution period, and the distribution method applicable following the
Participant’s death.  Any such election was required to be consistent with the
following rules (or if the  Participant failed to make a selection with respect
to a particular item, in accordance with the default rules set forth below):
 
(i)  
Distribution Commencement Date.  Unless the Participant has selected a later
commencement date, which in no event shall be later than the first distribution
period following the Participant’s attainment of age 72, distribution of a
Participant’s Pre-2005 Account will commence either (A) within 60 days following
the end of the calendar year in which the Participant terminates employment or
service from the Company and all Affiliates, or (B) if determined by the
Committee to be consistent with the “grand-father” rules of Code Section 409A
and if directed by the Committee for purposes of creating administratively
consistency between the distribution provisions of Articles VII and VIII, within
60 days following the end of the calendar year in which occurs the 6 month
anniversary of the date on which the Participant terminates employment or
service from the Company and all Affiliates.  For purposes of this Plan, a
Participant who is Disabled shall be deemed to have retired or terminated at the
conclusion of benefits under all disability income plans sponsored by a
Participating Employer or to which a Participating Employer contributes, unless
otherwise determined by the Committee.

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

 
(iii)  
Distribution of Remaining Account Following Participant’s Death.  In the event
of the Participant’s death, the Participant’s remaining undistributed interest
will be distributed to the Participant’s Beneficiary in accordance with the
distribution election (single sum payment or installments) elected by the
Participant.  If the  Participant had elected a single sum, the payment shall be
made no later than March 1 following the calendar year in which occurs the
Participant’s death.  If the Participant had

 
 
25

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elected an installment distribution, (A) any installments previously commenced
to the Participant shall continue to the Beneficiary and (B) if installment
distributions had not commenced as of the date of the Participant’s death,
payments over the installment period elected by the Participant shall commence
to the Beneficiary no later than March 1 following the calendar year in which
occurs the Participant’s death.

 
(b) Effectiveness of Election.  A distribution election shall be deemed made
only when it is received and accepted as complete by the Committee, and shall
remain in effect until modified by the Participant in accordance with Section
7.02 below or otherwise revoked in accordance with Plan rules.
 
Section 7.02.  Modified Distribution Election.
 
A Participant may from time to time modify his or her distribution election by
filing a revised distribution election, properly completed and signed, with the
Committee.  However, a revised distribution election will be given effect only
if the Participant remains employed by a Participating Employer for twelve (12)
consecutive months following the date that the revised election is received and
accepted as complete by the Committee.
 
Section 7.03.  Calculation of Annual Distribution Amount.
 
(a) Pre-2001 Retirees.  For any Participant who retired or terminated employment
or service prior to January 1, 2001, distribution of the Participant’s Account
will be calculated and made under the distribution provisions of the Plan
applicable to the Participant on the date of the Participant’s retirement or
termination of employment or service.
 
(b) Post-2000 Retirees.  For a Participant who retires or terminates employment
or service after December 31, 2000, the annual distribution amount for the
Pre-2005 Account, unless the Committee specifies a different or alternate method
and such different or alternate method does not result in the imposition of tax
under Code Section 409A, shall be calculated as follows:
 
(i)  
The annual distribution amount for the Participant’s Pre-2005 Account, other
than the portion of the Pre-2005 Account that is deemed to be invested in Stock
Units (the “Distributable Account”), shall be determined by dividing (A) the
aggregate balance in the Distributable Account as of January 1 of the year for
which the distribution is being made, by (B) the number of installment payments
remaining to be made under the distribution period selected by the
Participant.  Distributions shall be made in cash.  The amount of any
distribution under this Paragraph (i) will be charged pro-rata against the
Participant’s interest in each

 
 
26

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Investment Option comprising the Distributable Account.  Notwithstanding the
foregoing, the last installment payment of the Distributable Account shall be
adjusted to take into account deemed investment gains or losses for the period
between the January 1 valuation date and the date of actual payment according to
such methods and procedures adopted by the Committee.

 
(ii)  
The annual distribution amount for the portion of the Participant’s Pre-2005
Account that is credited in the form of Stock Units shall be determined on a
share basis by dividing (A) the number of Integrys Stock Units as of January 1
of the year for which the distribution is being made (subject to subsequent
adjustment under Section 9.02), by (B) the number of installment payments
remaining to be made under the distribution period selected by the Participant.
The Participant will receive shares of Integrys Stock equal to the annual
distribution amount, subject only to the distribution of cash in lieu of any
fractional Integrys Stock Unit.  The cash payment for any fractional Integrys
Stock Unit shall be determined based upon the closing price of a share of
Integrys Stock on January 21 of the year in which the distribution is being
made, as such share price is reported in the Wall Street Journal’s New York
Stock Exchange Composite Transactions listing.  If January 21 falls on a
Saturday, Sunday or holiday, the calculation of the cash portion of the
distribution will be made based upon the closing price as reported for the
immediately preceding business day.

 
Section 7.04.  Time of Distribution.
 
Subject to the provisions of Sections 9.02 and 10.02, each distribution of
Integrys Stock made to a Participant (or Beneficiary) shall be distributed on
January 22 (or if January 22 falls on a Saturday, Sunday or holiday, the
immediately following business day).  For distribution and tax reporting
purposes, the value of Integrys Stock distributed shall equal the number of
shares distributed multiplied by the closing price of Integrys Stock on January
21 (or if January 21 falls on a Saturday, Sunday or holiday, the immediately
preceding business day) of the year in which the distribution is being made as
reported in the Wall Street Journal’s New York Stock Exchange Composite
Transaction listing.  The cash portion of any distribution will be made no later
than March 1 of the year for which the distribution is being made.
 
Section 7.05.  Single Sum Distribution at the Committee’s Option.
 
(a) In the case of a Participant whose employment with the Company and its
Affiliates is involuntarily terminated by the Company or an Affiliate, or whose
employment with
 
 
27

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the Company and its Affiliates is mutually terminated in accordance with a
separation agreement and release between the Company or an Affiliate and such
Participant, the Committee may (but need not) direct that the Participant’s
Pre-2005 Account be distributed in the form of a single sum payment in lieu of
distribution over any installment distribution period that would otherwise
apply.  If so directed by the Committee, the single sum distribution shall be
made in cash and/or shares of Integrys Stock (as determined in accordance with
Section 7.03) and shall be made at the time specified in Section 7.04.
 
(b) In the case of any other Participant or Beneficiary whose Pre-2005 Account
has a value of $100,000 or less as of the valuation date that immediately
precedes the date on which distribution would first be made to the Participant
or Beneficiary, the Committee may (but need not) direct that the Participant’s
Pre-2005 Account be distributed in the form of a single sum payment in lieu of
any installment distribution period that would otherwise apply.  If so directed
by the Committee, the single sum distribution shall be made in cash and/or
shares of Integrys Stock (as determined in accordance with Section 7.03) and
shall be made at the time specified in Section 7.04.
 

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ARTICLE VIII.  DISTRIBUTION OF POST-2004 ACCOUNT
 
Section 8.01.  Distribution Election.
 
(a) Election.  A Participant, on or before December 31, 2008 or if later, at the
time he or she commences participation in the Plan, shall make a distribution
election with respect to his or her Post-2004 Account.  The election shall be in
such form as the Committee shall prescribe, and shall specify the distribution
commencement date, the distribution period, and the distribution method
applicable following the Participant’s death.  Any such election shall be
consistent with the following rules (or if the  Participant fails to make a
selection with respect to a particular item, in accordance with the default
rules set forth below):
 
(i)  
Distribution Commencement Date.  Unless the Participant has selected a later
commencement date, distribution of a Participant’s Post-2004 Account will
commence within 60 days following the end of the calendar year in which occurs
the 6 month anniversary of the Participant’s Separation from Service.

 
(ii)  
Distribution Period.  Distributions will be made in 1 to 15  annual
installments, as elected by the Participant.  The default is 10 annual
installments. For purposes of applying the rules of Code Section 409A, a
Participant’s election of annual installments is treated as an election of a
single form of payment rather than an election of multiple separate payments.

 
(iii)  
Distribution of Remaining Account Following Participant’s Death.  In the event
of the Participant’s death, the Participant’s remaining undistributed interest
in his or her Post-2004 Account will be distributed to the Participant’s
Beneficiary in accordance with the distribution election (single sum payment or
installments) elected by the Participant.  If the  Participant had elected a
single sum, the payment shall be made no later than March 1 following the
calendar year in which occurs the Participant’s death.  If the Participant had
elected an installment distribution, (A) any installments previously commenced
to the Participant shall continue to the Beneficiary and (B) if installment
distributions had not commenced as of the date of the Participant’s death,
payments over the installment period elected by the Participant shall commence
to the Beneficiary no later than March 1 following the calendar year in which
occurs the Participant’s death.

 
 
29

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(b) Effectiveness of Election.  A distribution election shall be deemed made
only when it is received and accepted as complete by the Committee, and shall
remain in effect until modified by the Participant in accordance with Section
8.02 below or otherwise revoked in accordance such circumstances as the Plan is
permitted (and elects) to accept without resulting in the imposition of tax
under Code Section 409A.
 
Section 8.02.  Modified Distribution Election.
 
A Participant may from time to time modify his or her distribution election with
respect to his or her Post-2004 Account by filing a revised distribution
election, properly completed and signed, with the Committee.  However, except to
the extent permitted under regulations promulgated by the Secretary of the
Treasury under Code Section 409A, a revised distribution election must comply
with the following rules:
 
(a) The revised distribution election may not accelerate the time of payment in
violation of Code Section 409A.  For example, a  revised distribution election
may not elect a distribution commencement date earlier than the distribution
commencement date applicable under the Participant’s prior distribution
election.   A revised election that does not comply with these rules will be
null and void, and will be disregarded by the Plan.
 
(b) The revised distribution election may (i) change the form of payment from a
single sum payment to installment distributions, (ii) from installment
distributions to a single sum distribution, (iii) from one installment period to
a different installment period, or (iv) defer the distribution commencement
date, and such a revised election will be given effect 12 months after the date
on which the election is made, but only if (i) the revised election is made at
least 12 months prior to the date on which payment would be made or commence in
the absence of the revised election, and (ii) in the case of any election other
than one related to payment on account of Disability or death, the first payment
that is made pursuant to the revised election is deferred for at least 5 years
from the date payment would otherwise have been made.  For purposes of Code
Section 409A, the installment payment option is considered to be a single form
of payment rather than a series of independent payments.  A revised election
that does not comply with these rules will be null and void, and will be
disregarded by the Plan.
 
Section 8.03.  Calculation of Annual Distribution Amount.
 
The annual distribution amount for the Post-2004 Account shall be calculated as
follows:
 
(a) The annual distribution amount for the Participant’s Post-2004 Account,
other than the portion of the Post-2004 Account that is deemed to be invested in
Stock Units (the “Distributable Account”), shall be determined by dividing (A)
the aggregate balance in the Distributable Account as of January 1 of the year
for which the distribution is being made, by (B) the number of installment
payments remaining to be made under the distribution period selected by the
Participant.  Distributions shall be made in cash.  The amount of any
distribution under this subsection (a) will be charged pro-rata against the
Participant’s interest in each Investment Option comprising the Distributable
Account.  Notwithstanding the foregoing, the last installment payment of the
Distributable Account shall be adjusted to take into account deemed
 
 
30

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investment gains or losses for the period between the January 1 valuation date
and the date of actual payment according to such methods and procedures adopted
by the Committee.
 
(b) The annual distribution amount for the portion of the Participant’s
Post-2004 Account that is credited in the form of Stock Units shall be
determined on a share basis by dividing (A) the number of Integrys Stock Units
as of January 1 of the year for which the distribution is being made (subject to
subsequent adjustment under Section 9.02), by (B) the number of installment
payments remaining to be made under the distribution period selected by the
Participant. The Participant will receive shares of Integrys Stock equal to the
annual distribution amount, subject only to the distribution of cash in lieu of
any fractional Integrys Stock Unit.  The cash payment for any fractional
Integrys Stock Unit shall be determined based upon the closing price of a share
of Integrys Stock on January 21 of the year in which the distribution is being
made, as such share price is reported in the Wall Street Journal’s New York
Stock Exchange Composite Transactions listing.  If January 21 falls on a
Saturday, Sunday or holiday, the calculation of the cash portion of the
distribution will be made based upon the closing price as reported for the
immediately preceding business day.
 
Section 8.04.  Time of Distribution.
 
Subject to the provisions of Sections 9.02 and 10.02, each distribution of
Integrys Stock made to a Participant (or Beneficiary) shall be distributed on
January 22 (or if January 22 falls on a Saturday, Sunday or holiday, the
immediately following business day).  For distribution and tax reporting
purposes, the value of Integrys Stock distributed shall equal the number of
shares distributed multiplied by the closing price of Integrys Resources Stock
on January 21 (or if January 21 falls on a Saturday, Sunday or holiday, the
immediately preceding business day) of the year in which the distribution is
being made as reported in the Wall Street Journal’s New York Stock Exchange
Composite Transaction listing.  The cash portion of any distribution will be
made no later than March 1 of the year for which the distribution is being made.
 
Section 8.05.  Automatic Single Sum Distribution.
 
In the case of any Participant or Beneficiary whose Post-2004 Account has a
value equal to or less than the applicable dollar amount under Code
Section 402(g)(1)(B), e.g., $15,500 for 2008, the Participant’s Post-2004
Account will be distributed in the form of a single sum payment on the date on
which distributions would otherwise commence, and such single sum payment shall
be in lieu of any installment distribution period that would otherwise
apply.  Unless otherwise directed by the Committee, the single sum distribution
shall be made in cash and/or shares of Integrys Stock (as determined in
accordance with Section 8.03).  The foregoing rule shall apply only if (1) the
payment results in the termination of liquidation of the Participant’s entire
interest in his or her Post-2004 Account and his or her entire interest in all
other plans, programs or arrangements that are required to be aggregated with
the Participant’s Post-2004 Account for purposes of Code Section 409A, and (2)
the payment is not greater than the applicable dollar amount under Code Section
402(g)(1)(B).
 
 
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Section 8.06.  Distributions For Employment Tax Obligations.
 
(a) Notwithstanding the time or schedule of payments otherwise applicable to the
Participant, the Committee may direct that distribution from a Participant’s
Account be made (i) to pay the Federal Insurance Contributions Act (“FICA”) tax
imposed under Code Sections 3101, 3121(a) and 3121(v)(2) with respect to
compensation deferred under the Plan, (ii) to pay the income tax at source on
wages imposed under Code Section 3401 or the corresponding withholding
provisions of applicable state, local, or foreign tax laws as a result of the
payment of FICA taxes, and (iii) to pay the additional income tax at source on
wages attributable to the “pyramiding” of Code Section 3401 wages and taxes;
provided that the total amount distributed under this provision must not exceed
the aggregate of the FICA tax and the income tax withholding related to such
FICA tax.  In addition or in the alternative, the Committee may direct that all
FICA taxes owed in connection with any allocation hereunder be withheld from
other compensation owed to the Participant.
 
(b) The amount actually distributed to the Participant in accordance with the
time or schedule of payments applicable to the Participant will be reduced by
applicable tax withholding except to the extent such withholding requirements
previously were satisfied in accordance with subsection (a) above.
 

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ARTICLE IX.  RULES WITH RESPECT TO INTEGRYS STOCK
AND INTEGRYS STOCK UNITS
 
Section 9.01.  Shares Authorized.
 
(a) Subject to adjustment as provided in Section 9.02 below, the total number of
shares of Integrys Stock which may be distributed to Participants or
Beneficiaries pursuant to the Plan shall be one million four hundred fifty
thousand (1,450,000).
 
(b) The number of available shares shall not be reduced by or as a result of (i)
any cash distributions pursuant to the Plan or (ii) by distributions of shares
of Integrys Stock that are attributable to LTIP Deferrals that relate to an
award that was made under the Omnibus Plan and either has been or will be
charged against the pool of available shares under the Omnibus Plan, i.e., the
plan under which the share award was originally granted and the plan from which
the share award would have been paid except for the Participant’s election to
defer delivery of the shares.
 
Section 9.02.  Transactions Affecting Integrys Stock.
 
In the event of any merger, share exchange, reorganization, consolidation,
recapitalization, stock dividend or stock split involving Integrys Stock, or
other event in which Integrys Stock is subdivided or combined, or a cash
dividend the amount of which, on a per share basis, exceeds, fifteen percent
(15%) of the fair market value of a share of Integrys Stock at the time the
dividend is declared, or the Company shall effect any other dividend or other
distribution of Integrys Stock that the Board determines by resolution is
extraordinary  or special in nature or that is in connection with a transaction
that the Company characterizes publicly as a recapitalization or reorganization
of Integrys Stock or words of similar import, or any other event shall occur,
which, in the judgment of the Committee necessitates an adjustment to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under this Plan, the Committee shall make appropriate equitable
adjustments with respect to the Integrys Stock Units (if any) credited to the
Account of each Participant.  The nature of any such adjustment shall be
determined by the Committee, in its discretion.
 
Section 9.03.  No Shareholder Rights With Respect to Integrys Stock Units.
 
Participants shall have no rights as a stockholder pertaining to Integrys Stock
Units credited to their Accounts.  No Integrys Stock Unit nor any right or
interest of a Participant under the Plan in any Integrys Stock Unit may be
assigned, encumbered, or transferred, except by will or the laws of descent and
distribution.  The rights of a Participant hereunder with respect to any
Integrys Stock Unit are exercisable during the Participant’s lifetime only by
the Participant or his or her guardian or legal representative.

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ARTICLE X.   SPECIAL RULES APPLICABLE IN THE EVENT OF A CHANGE IN CONTROL OF THE
COMPANY
 
Section 10.01.  Definitions.
 
For purposes of this Article X, the following terms shall have the following
respective meanings:
 
(a) An “Affiliate” of, or a person “affiliated” with, a specified person is a
person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the person
specified and the term “Associate” used to indicate a relationship with any
person, means (i) any corporation or organization (other than the registrant or
a majority-owned subsidiary of the registrant) of which such person is an
officer or partner or is, directly or indirectly, the beneficial owner of 10
percent or more of any class of equity securities, (ii) any trust or other
estate in which such person has a substantial beneficial interest or as to which
such person serves as trustee or in a similar fiduciary capacity, and (iii) any
relative or spouse of such person, or any relative of such spouse, who has the
same home as such person or who is a director or officer of the registrant or
any of its parents or subsidiaries.
 
(b) A person shall be deemed to be the “Beneficial Owner” of any securities:
 
(i)  
which such Person or any of such Person’s Affiliates or Associates has the right
to acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement, or under-standing, or
upon the exercise of conversion rights, exchange rights, or other rights,
warrants or options, or otherwise; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, (A) securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or
any of such Person’s Affiliates or Associates until such tendered securities are
accepted for purchase or (B) securities issuable upon exercise of Rights
pursuant to the terms of the Company’s Rights Agreement with American Stock
Transfer & Trust Company, originally dated as of December 12, 1996 between the
Company and Firstar Trust Company, as the same may be amended from time to time
(or any successor to such Rights Agreement) at any time before the issuance of
such securities;

 
(ii)  
which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or has “beneficial ownership” of
(as determined pursuant to Rule 13d-3 of the General Rules and

 
 
34

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Regulations under the Act), including pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security under this
subparagraph (ii) as a result of an agreement, arrangement or understanding to
vote such security if the agreement, arrangement or understanding:  (A) arises
solely from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations under the Act and (B) is not also then
reportable on a Schedule 13D under the Act (or any comparable or successor
report); or

 
(iii)  
which are beneficially owned, directly or indirectly, by any other Person with
which such Person or any of such Person’s Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described in Paragraph (ii)
above) or disposing of any voting securities of the Company.

 
(c) A “Change in Control” shall be deemed to have occurred if:
 
(i)  
any Person (other than any employee benefit plan of the Company or an Affiliate,
any Person organized, appointed or established pursuant to the terms of any such
benefit plan or any trustee, administrator or fiduciary of such a plan) is or
becomes the Beneficial Owner of securities of the Company representing at least
30% of the combined voting power of the Company’s then outstanding securities;

 
(ii)  
one-half or more of the members of the Board are not Continuing Directors;

 
(iii)  
there shall be consummated any merger, consolidation, or reorganization of the
Company with any other corporation as a result of which less than 50% of the
outstanding voting securities of the surviving or resulting entity are owned by
the former shareholders of the Company other than a shareholder who is an
Affiliate or Associate of any party to such consolidation or merger;

 
(iv)  
there shall be consummated any merger of the Company or share exchange involving
the Company in which the Company is not the continuing or surviving corporation
other than a merger of the Company in which each of the

 
 
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holders of the Company’s Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger;

 
(v)  
there shall be consummated any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company to a Person which is not a wholly owned subsidiary
of the Company; or

 
(vi)  
the shareholders of the Company approve any plan or proposal for the liquidation
or dissolution of the Company.

 
(d) “Continuing Directors” means (i) any member of the Board of Directors of the
Company who was a member of such Board on May 18, 2007, (ii) any successor of a
Continuing Director who is recommended to succeed a Continuing Director by a
majority of the Continuing Directors then on such Board, and (iii) additional
directors elected by a majority of the Continuing Directors then on such Board.
 
(e) “Person” means any individual, firm, partnership, corporation or other
entity, including any successor (by merger or otherwise) of such entity, or a
group of any of the foregoing acting in concert; provided, that in the case of a
merger, consolidation or reorganization of the Company with any other
corporation or a share exchange involving the Company, the shareholders of the
other corporation that is a party to the merger, consolidation, reorganization
or share exchange shall not be considered to be acting in concert for purposes
of Section 10.01(c)(i).
 
Section 10.02.  Amendments in Connection with a Change in Control.
 
(a) Board Authority to Amend Plan.  Prior to the occurrence of a Change in
Control, the Board may exercise its authority under Section 11.06 to amend the
Plan, including, to the extent deemed necessary or desirable by the Board in
anticipation of a Change in Control, to amend the Plan to eliminate Integrys
Stock Units and cause the value of such units as of the Amendment Date (such
value to be determined under Section 5.04(e)) to be reallocated to an alternate
Investment Option that is then available for new investments and that is most
similar to a fixed income fund.  The term “Amendment Date” means the date on
which an amendment to the Plan is validly adopted or the date on which the
amendment is or purports to be effective, whichever is later.
 
(b) Automatic Amendments.  The Plan shall automatically be amended upon a Change
in Control to provide that:
 
(i)  
the rate of interest equivalent to be credited with respect to Reserve Account A
for each month following the Change in Control shall be the greater of (A) the
rate of interest equivalent otherwise applicable with respect to Reserve

 
 
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Account A if such amount were calculated based upon the consolidated return on
common shareholders equity of the Company (including for this purpose any
successor corporation that is the survivor of a merger with the Company or any
successor to that corporation) and all consolidated  subsidiaries, or (B) a rate
equal to two (2) percentage points above the prime lending rate at US Bank
Milwaukee, Milwaukee, Wisconsin (or any successor thereto) as of the last
business day of that month; and

 
(ii)  
the rate of interest equivalent to be credited with respect to Reserve Account B
for each month following the Change in Control shall be the greater of (A) the
rate of interest equivalent otherwise applicable with respect to Reserve Account
B if such amount were calculated based upon the consolidated return on common
shareholders equity of the Company (including for this purpose any successor
corporation that is the survivor of a merger with the Company or any successor
to that corporation) and all consolidated subsidiaries, or (B) a rate equal to
two (2) percentage points above the prime lending rate at US Bank Milwaukee,
Milwaukee, Wisconsin (or any successor thereto) as of the last business day of
that month.  The minimum rate of interest equivalent under clause (B) shall
cease to apply on the third anniversary of the Change in Control in the event
that the Participant is actively employed by the Company (including for this
purpose any successor corporation or entity that is the survivor of a merger
with the Company), or by any subsidiary or affiliate of the Company or such
successor, on such date.

 
(c) Prohibition on Certain Amendments.  Notwithstanding the foregoing, on or
after a Change in Control, the Board or Company (including for this purpose any
successor corporation or entity that is the survivor of a merger with the
Company or to which sponsorship of the Plan is transferred following a Change in
Control, or the board of directors or other managing body of any such entity)
may not, without the written consent of the affected Participant (or in the case
of a deceased Participant, the Participant’s Beneficiary) amend the Plan or take
an action to terminate the Plan that would:
 
(i)  
Result in a decrease in the number of, or a change in the type of, Investment
Options that were made available under the Plan immediately prior to the Change
of Control; or

 
(ii)  
Cause the Accounts to be valued under Section 6.01(c) less frequently than
quarterly; or

 
 
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(iii)  
Impair or otherwise limit a Participant’s rights to reallocate his or her
Accounts under Section 6.01(d) as in effect on the date immediately prior to the
Change in Control; or

 
(iv)  
Decrease the interest rate credited under Reserve Account A or Reserve Account B
as determined pursuant to subsection (b) above, except as specifically provided
therein;

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

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

 
Section 10.03.  Maximum Payment Limitation.
 
(a) Limit on Payments.  Except as provided in subsection (b) below, if any
portion of the payments or benefits described in this Plan or under any other
agreement with or plan of the Company (in the aggregate, “Total Payments”),
would constitute an “excess parachute payment”, then the Total Payments to be
made to the Participant shall be reduced such that the value of the aggregate
Total Payments that the Participant is entitled to receive shall be one dollar
($1) less than the maximum amount which the Participant may receive without
becoming subject to the tax imposed by Section 4999 of the Code or which the
Company may pay without loss of deduction under Section 280G(a) of the Code;
provided that this Section shall not apply in the case of a Participant who has
in effect a valid employment contract providing that the Total Payments to the
Participant shall be determined without regard to the maximum amount allowable
under Section 280G of the Code.  The terms “excess parachute payment” and
“parachute payment” shall have the meanings assigned to them in Section 280G of
the Code, and such “parachute payments” shall be valued as provided
therein.  Present value shall be calculated in accordance with Section
280G(d)(4) of the Code.  Within forty (40) days following delivery of notice by
the Company to the  Participant of its belief that there is a payment or benefit
due the Participant which will result in an excess parachute payment as defined
in Section 280G of the Code, the Participant and the Company, at the Company’s
expense, shall obtain the opinion (which need not be unqualified) of nationally
recognized tax counsel selected by the Company’s independent auditors and
acceptable to the Participant in his or her sole discretion (which may be
regular outside counsel to the Company), which opinion sets forth (A) the amount
of the Base Period Income, (B) the amount and present value of Total Payments
and (C) the amount and present value of any excess parachute payments determined
without regard to the limitations of this Section.  As used in this Section, the
term “Base Period Income” means an amount equal to the Participant’s “annualized
includible compensation for the base period” as defined in Section 280G(d)(1) of
the Code.  For purposes of such opinion, the value of any noncash benefits or
any deferred payment or benefit shall be determined by the Company’s independent
auditors in
 
 
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accordance with the principles of Sections 280G(d)(3) and (4) of the Code, which
determination shall be evidenced in a certificate of such auditors addressed to
the Company and the Participant.  Such opinion shall be addressed to the Company
and the Participant and shall be binding upon the Company and the
Participant.  If such opinion determines that there would be an excess parachute
payment, the payments hereunder that are includible in Total Payments or any
other payment or benefit determined by such counsel to be includible in Total
Payments shall be reduced or eliminated as specified by the Participant in
writing delivered to the Company within thirty days of his or her receipt of
such opinion or, if the Participant fails to so notify the Company, then as the
Company shall reasonably determine, so that under the bases of calculations set
forth in such opinion there will be no excess parachute payment.  If such legal
counsel so requests in connection with the opinion required by this Section, the
Participant and the Company shall obtain, at the Company’s expense, and the
legal counsel may rely on in providing the opinion, the advice of a firm of
recognized executive compensation consultants as to the reasonableness of any
item of compensation to be received by the Participant.  If the provisions of
Sections 280G and 4999 of the Code (or any successor provisions) are repealed
without succession, then this Section shall be of no further force or effect.
 
(b) Employment Contract Governs.  The provisions of subsection (a) above shall
not apply to a Participant whose employment is governed by an employment
contract that provides for Total Payments in excess of the limitation described
in subsection (a) above.
 
Section 10.04.  Resolution of Disputes.
 
If, after a Change in Control, (a) a dispute arises with respect to the
enforcement of the Participant’s rights under the Plan, or (b) any legal
proceeding shall be brought to enforce or interpret any provision contained in
the Plan or to recover damages for breach of the Plan, in either case so long as
the Participant is not acting in bad faith or otherwise pursuing a course of
action that a reasonable person would determine to be frivolous, the Participant
shall recover from the Company any reasonable attorneys’ fees and necessary
costs and disbursements incurred as a result of such dispute or
legal  proceeding (“Expenses”), and prejudgment interest on any money judgment
obtained by the Participant calculated at the rate of interest announced by US
Bank Milwaukee, Milwaukee, Wisconsin (or any successor thereto), from time to
time as its prime or base lending rate from the date that payments to the
Participant should have been made under this Plan.  Within ten (10) days after
the Participant’s written request therefore and reasonable substantiation that
such Expense has been incurred, (but in no event later than the end of the
calendar year following the calendar year in which such Expense is incurred),
the Company shall pay to the Participant, or such other person or entity as the
Participant may designate in writing to the Company, the Participant’s Expenses
in advance of the final disposition or conclusion of any such dispute or legal
proceeding.  In the case of a deceased Participant, this Section shall apply
with respect to the Participant’s Beneficiary or estate.

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ARTICLE XI.  GENERAL PROVISIONS
 
Section 11.01.  Administration.
 
The Committee shall administer and interpret the Plan and supervise preparation
of Participant elections, forms, and any amendments thereto.  To the extent
necessary to comply with applicable conditions of Rule 16b-3, the Committee
shall consist of not less than two members of the Board, each of whom is also a
director of the Company and qualifies as a “non-employee director” for purposes
of Rule 16b-3.  If at any time the Committee shall not be in existence or not be
composed of members of the Board who qualify as “non-employee directors”, then
all determinations affecting Participants who are subject to Section 16 of the
Exchange Act shall be made by the full Board, and all determinations affecting
other Participants shall be made by the Board or a duly designated officer of
the Board.  The Committee may, in its discretion, delegate any or all of its
authority and responsibility; provided that the Committee shall not delegate
authority and responsibility with respect to non-ministerial functions that
relate to the participation by Participants who are subject to Section 16 of the
Exchange Act at the time any such delegated authority or responsibility is
exercised.  To the extent of any such delegation, any references herein to the
Committee shall be deemed references to such delegee.  Interpretation of the
Plan shall be within the sole discretion of the Committee and shall be final and
binding upon each Participant and Beneficiary.  The Committee has the
discretionary authority to adopt and modify rules and regulations relating to
the Plan, interpret and construe the Plan and make determinations regarding
eligibility and benefits,  as it deems necessary or advisable for the
administration of the Plan; any such action, interpretation, construction or
determination shall be final and binding on all Participants and Beneficiaries
unless determined by a court of competent jurisdiction to be arbitrary and
capricious.  If any delegee of the Committee shall also be a Participant or
Beneficiary, any determinations affecting the delegee’s participation in the
Plan shall be made by the Committee.
 
Section 11.02.  Restrictions to Comply with Applicable Law.
 
(a) General Restrictions.  Notwithstanding any other provision of the Plan, the
Company shall have no liability to deliver any shares of Integrys Stock under
the Plan or make any  payment unless such delivery or payment would comply with
all applicable laws and the applicable requirements of any securities exchange
or similar entity.  In addition, transactions under the Plan are intended to
comply with all applicable conditions of Rule 16b-3 under the Exchange Act.  The
Committee shall administer the Plan so that transactions under the Plan will be
exempt from Section 16 of the Exchange Act, and shall have the right to restrict
any transaction, or impose other rules and requirements, to the extent it deems
necessary or desirable for such exemption to be met.
 
(b) Restriction on Transfer.  Shares of Integrys Stock issued under the Plan may
not be sold or otherwise disposed of except (i) pursuant to an effective
registration statement under the Act, or in a transaction which, in the opinion
of counsel for the Company, is exempt from registration under the Act; and (ii)
in compliance with state securities laws.  Further, as a condition to issuance
of shares of Integrys Stock under the Plan, the Participant, his or her
Beneficiary or his or her heirs, legatees or legal representatives, as the case
may be, shall, if the
 
 
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Committee deems it necessary, execute and deliver to the Company a restrictive
stock transfer agreement in such form, and subject to such terms and conditions,
as shall be reasonably determined or approved by the Committee, which agreement,
among other things, may impose certain restrictions on the sale or other
disposition of any shares of stock acquired under the Plan. The Committee may
waive the foregoing restrictions, in whole or in part, in any particular case or
cases or may terminate such restrictions whenever the Committee determines that
such restrictions afford no substantial benefit to the Company.
 
(c) Additional Restrictions; Legends.  All shares of Integrys Stock delivered
under the Plan shall be subject to such stock transfer orders and other
restrictions as the Committee may deem advisable under the Plan and any
applicable federal or state securities laws, and the Committee may cause a
legend or legends to be put on any certificates to make appropriate references
to such restrictions.
 
Section 11.03.  Claims Procedures.
 
(a) If a Participant or Beneficiary (the “claimant”) believes that he is
entitled to a benefit under the Plan that is not provided, the claimant or his
or her legal representative shall file a written claim for such benefit with the
Committee no later than ninety (90) days after the first payment is made (or
should have been made) in accordance with the terms of the Plan or under
Regulations issued by the Secretary of the Treasury under Code Section 409A.  If
the Committee denies the claim, it shall deliver to the claimant, within 135
days of the date the first payment to the Participant was made (or should have
been made) in accordance with the terms of the Plan or under Regulations issued
by the Secretary of the Treasury under Code Section 409A, a written notice to
the claimant of such denial.  The written notice shall include the specific
reason(s) for the denial; reference to specific Plan provisions upon which the
denial is based; a description of any additional material or information
necessary for the claimant to perfect the claim and an explanation of why such
material or information is necessary; and a description of the Plan’s review
procedures (as set forth in subsection (b)) and the time limits applicable to
such procedures, including a statement of the claimant’s right to bring a civil
action under section 502(a) of ERISA following an adverse determination upon
review.
 
(b) The claimant has the right to appeal the Committee’s decision by filing a
written appeal with the Committee.  Notice of the appeal must be received by the
Committee no later than 180 days after the first payment is made (or should have
been made) in accordance with the terms of the Plan or under Regulations issued
by the Secretary of the Treasury under Code Section 409A.  The claimant will
have the opportunity, upon request and free of charge, to have reasonable access
to and copies of all documents, records and other information relevant to the
claimant’s appeal.  The claimant may submit written comments, documents, records
and other information relating to his or her claim with the appeal.  The
Committee will review all comments, documents, records and other information
submitted by the claimant relating to the claim, regardless of whether such
information was submitted or considered in the initial claim determination.  The
Committee shall make a determination on the appeal within 60 days after
receiving the claimant’s written appeal; provided that the Committee may
determine that an additional 60-day extension is necessary due to circumstances
beyond the Committee’s control, in which event the Committee shall notify the
claimant prior to the end of the initial period that
 
 
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an extension is needed, the reason therefore and the date by which the Committee
expects to render a decision. If the claimant’s appeal is denied in whole or
part, the Committee shall provide written notice to the claimant of such
denial.  The written notice shall include the specific reason(s) for the denial;
reference to specific Plan provisions upon which the denial is based; a
statement that the claimant is entitled to receive, upon request and free of
charge, reasonable access to and copies of all documents, records, and other
information relevant to the claimant’s claim; and a statement of the claimant’s
right to bring a civil action under section 502(a) of ERISA.
 
(c) Notwithstanding anything in the Plan to the contrary, and as a condition of
participating in the Plan, a Participant agrees, on behalf of the Participant
and all persons or entities that may claim through the Participant, that (1) any
claim for benefits or other legal action or legal proceeding concerning the Plan
may be brought more than one (1) year after the later of (A) the last date on
which the act or omission giving rise to the claim, legal action or other legal
proceeding occurred, or (B) the date the individual or entity bringing such
claim, legal action or other legal proceeding had knowledge (or reasonably
should have had knowledge) of the act or omission, and (2) that any legal action
or legal proceeding concerning the Plan may only be heard in a “bench” trial and
that any right to a jury trial is waived.
 
Section 11.04.  Participant Rights Unsecured.
 
(a) Unsecured Claim.  The right of a Participant or the Participant’s
Beneficiary to receive a distribution hereunder shall be an unsecured claim, and
neither the Participant nor any Beneficiary shall have any rights in or against
any amount credited to his or her Account or any other specific assets of a
Participating Employer.  The right of a Participant or Beneficiary to the
payment of benefits under this Plan shall not be assigned, encumbered, or
transferred, except by will or the laws of descent and distribution.  The rights
of a Participant hereunder are exercisable during the Participant’s lifetime
only by the Participant or his or her guardian or legal representative.
 
(b) Contractual Obligation.  The Company may authorize the creation of a trust
or other arrangements to assist it in meeting the obligations created under the
Plan, subject to the restrictions on funding imposed by Code
Section 409A(b)(3).  However, any liability to any person with respect to the
Plan shall be based solely upon any contractual obligations that may be created
pursuant to the Plan.  No obligation of a Participating Employer shall be deemed
to be secured by any pledge of, or other encumbrance on, any property of a
Participating Employer.  Nothing contained in this Plan and no action taken
pursuant to its terms shall create or be construed to create a trust of any
kind, or a fiduciary relationship between a Participating Employer and any
Participant or Beneficiary, or any other person.
 
Section 11.05.  Income Tax Withholding.
 
The amount actually distributed to the Participant will be reduced by applicable
income tax withholding (if any).  Unless the Participant has made a contrary
election with the consent of the Committee, income tax on the entire annual
distribution amount will be withheld from the cash portion of the distribution,
and Integrys Stock will be used to satisfy withholding
 
 
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obligations only to the extent that the cash portion of the distribution is
insufficient for this purpose.  No later than the date as of which an amount
first becomes includible in the income of the Participant for employment  tax
purposes, the Participant shall pay or make arrangements satisfactory to the
Committee regarding the payment of any such tax.  In addition, if prior to the
date of distribution of any amount hereunder, the Federal Insurance
Contributions Act (FICA) tax imposed under Code Sections 3101, 3121(a) and
3121(v)(2), where applicable, becomes due, the Company may direct that the
Participant’s benefit be reduced to reflect the amount needed to pay the
Participant’s portion of such tax.
 
Section 11.06.  Amendment or Termination of Plan.
 
(a) There shall be no time limit on the duration of the Plan.
 
(b) Except as otherwise limited pursuant to Section 10.02 on or after a Change
in Control, the Board (or where specified herein, the Committee) may at any time
amend the Plan, including but not limited to modifying the terms and conditions
applicable to (or otherwise eliminating) deferrals or contribution credits to be
made on or after the amendment date; provided, however, that no amendment or
termination may reduce or eliminate any Account balance accrued to the date of
such amendment or termination (except as such Account balance may be reduced as
a result of investment losses allocable to such Account).  Further, the
Corporation’s Chief Human Resources Officer (or any successor to such position)
is authorized to amend the Plan to the extent that such amendment is determined
to be necessary or desirable in order to comply or facilitate compliance with
the requirements of Code Section 409A or other applicable law; or that is
otherwise desirable to promote efficient Plan administration; provided that any
such amendment shall not increase Plan benefits or result in non-ministerial
action that is prohibited under Section 11.01.
 
(c) The Board may terminate the Plan (or the Plan shall automatically terminate)
in accordance with the following provisions.  Upon termination of the Plan,
Accounts may be paid to Participants and Beneficiaries, but only if the
following are met:
 
(i)  
The Board terminates the Plan within twelve (12) months of a corporate
dissolution taxed under Code Section 331, or with the approval of a bankruptcy
court pursuant to 11 U.S.C. §503(b)(1)(A), and the amounts accrued under the
Plan but not yet paid are distributed to the Participants or Beneficiaries, as
applicable, in a single sum payment, regardless of any distribution election
then in effect, by the latest of: (A) the last day of the calendar year in which
the Plan termination and liquidation occurs, (B) the last day of the calendar
year in which the amount is no longer subject to a substantial risk of
forfeiture, or (C) the last day of the first calendar year in which payment is
administratively practicable.

 
(ii)  
The Board terminates the Plan at any time during the period that begins thirty
(30) days prior and ends twelve (12)

 
 
 
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months following a Change of Control Event (as defined for purposes of Code
Section 409A), provided that all arrangements required to be aggregated with
this Plan under Code Section 409A are terminated and liquidated with respect to
each Participant that experienced the Change in Control Event, so that all
participants under similar arrangements are required to receive all amounts of
compensation deferred under the terminated arrangements within twelve (12)
months of the date of termination of the arrangements.

 
(iii)  
The Board terminates the Plan at any other time, provided that such termination
does not occur proximate to a downturn in the financial health of the Company or
an Affiliate. In such event, all amounts accrued under the Plan but not yet paid
will be distributed to all Participants or Beneficiaries, as applicable, in a
single sum payment no earlier than twelve (12) months (and no later than
twenty-four (24) months) after the date of termination, regardless of any
distribution election then in effect.  This provision shall not be effective
unless all other plans required to be aggregated with this Plan under Code
Section 409A are also terminated and liquidated.  Notwithstanding the foregoing,
any payment that would otherwise be paid during the twelve (12)-month period
beginning on the Plan termination date pursuant to the terms of the Plan shall
be paid in accordance with such terms.  In addition, the Company or any
Affiliate shall be prohibited from adopting a similar arrangement within three
(3) years following the date of the Plan’s termination, unless any individual
who was a Participant under this Plan is excluded from participating thereunder
for such three (3) year period.

 
(iv)  
Except as provided in Paragraphs (i), (ii) and (iii) above or as otherwise
permitted in regulations promulgated by the Secretary of the Treasury under Code
Section 409A, any action that purports to terminate the Plan shall instead be
construed as an amendment to discontinue further benefit accruals, but the Plan
will continue to operate, in accordance with its terms as from time to time
amended and in accordance with applicable Participant elections, with respect to
the Participant’s benefit accrued through the date of termination, and in no
event shall any such action purporting to terminate the Plan form the basis for
accelerating distributions to Participants and Beneficiaries.

 
 
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Section 11.07.  Administrative Expenses.
 
Costs of establishing and administering the Plan will be paid by the
Participating Employers.
 
Section 11.08.  Effect on Other Employee Benefit Plans.
 
Deferrals credited to a Participant’s Account under this Plan shall not be
considered “compensation” for the purpose of computing benefits under any
qualified retirement plan maintained by a Participating Employer, but shall be
considered compensation for welfare benefit plans, such as life and disability
insurance programs sponsored by a Participating Employer, unless otherwise
provided by the terms of such plan.
 
Section 11.09.  Successors and Assigns.
 
This Plan shall be binding upon and inure to the benefit of the Participating
Employers, their successors and assigns and the Participants and their heirs,
executors, administrators, and legal representatives.
 
Section 11.10.  Right of Offset.
 
The Company shall have the right to offset from the benefits payable hereunder
any amount that the Participant owes to the Company or Affiliate or other entity
in which the Company or an Affiliate maintains an ownership interest.  The
Company may effectuate the offset without the consent of the Participant (or the
Participant’s spouse or Beneficiary, in the event of the Participant’s death).
 
Section 11.11.Amounts Accumulated Under Peoples Energy Corporation Plans.
 
Notwithstanding anything in the Plan to the contrary, the following rules apply
with respect to accounts originally established under the Peoples Energy
Corporation Executive Deferred Compensation Plan, the Peoples Energy Corporation
Directors Deferred Compensation Plan and/or the Peoples Energy Corporation
Directors Stock and Option Plan (collectively, the “Peoples Plans”) and
transferred to this Plan:
 
(a) Amounts held under the Peoples Plans as Integrys Stock Units and transferred
to this Plan will continue to be held as Integrys Stock Units.  The transferred
Integrys Stock Units will be Locked Stock Units.
 
(b) “Cash accounts” transferred from the Peoples Plans shall continue to be
credited with interest equivalent based on the rate specified in the Peoples
Plan (the “Prime Rate Investment”), unless the Participant is offered the
opportunity and elects to transfer such portion of the Participant’s Account to
another Investment Option in accordance with Section 6.01(d).  If
 
 
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a Participant elects to transfer to an alternate Investment Option, the
transferred amounts may not be subsequently transferred back to the Prime Rate
Investment.
 
(c)   Distribution of the portion of the Participant’s overall Account that is
attributable to participation in the Peoples Plans will be made in accordance
with the terms of the applicable Peoples Plan (and if applicable, the
Participant’s distribution election); provided that, in accordance with Internal
Revenue Service transition rules under Code Section 409A, on before December 31,
2008, a Participant may elect to have the portion of the benefit that was
accrued and vested after December 31, 2004 distributed in accordance with the
Participant’s distribution election under Article VIII of this Plan
(Distribution of Post-2004 Account).  An election in accordance with the
Internal Revenue Service transition rules shall not operate to accelerate into
the year in which the election is made amounts that would otherwise be
distributed in a subsequent year, or to defer distribution of amounts that would
otherwise be paid in the year in which the election is made into a subsequent
year.
 
(d) The shares of stock authorized for issuance under the predecessor Peoples
Plans are not available for new grants under this Plan.  However, grants
previously made under the Peoples Plan and now held under this Plan will be
charged against the pool of available shares for the predecessor Peoples Plans.
 
Section 11.12.  Miscellaneous Distribution Rules.
 
(a) Accelerated Distribution Following Section 409A Failure.  If an amount under
this Plan is required to be included in a Participant’s income under Code
Section 409A prior to the date such amount is actually distributed, the
Participant shall receive a distribution, in a lump sum, within ninety (90) days
after the date it is finally determined that the Plan fails to meet the
requirements of Code Section 409A.  The distribution shall equal the amount
required to be included in the Participant’s income as a result of such failure.
 
(b) Permitted Delay in Payment.  If a distribution required under the terms of
this Plan would jeopardize the ability of the Company or of an Affiliate to
continue as a going concern, the Company or the Affiliate shall not be required
to make such distribution.  Rather, the distribution shall be delayed until the
first date that making the distribution does not jeopardize the ability of the
Company or of an Affiliate to continue as a going concern.  Further, if any
distribution pursuant to the Plan will violate the terms of Section 16(b) of the
Securities Exchange Act of 1934 or other Federal securities laws, or any other
applicable law, then the distribution shall be delayed until the earliest date
on which making the distribution will not violate such law.
 

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