EXHIBIT 10.37  SEVERANCE
AGREEMENT   THIS
AGREEMENT is entered into as of the _____ day of _____________ by and
between Madison Gas and Electric Company, a Wisconsin corporation (the
"Company"), and  (the
"Employee"), and shall be effective as of ___________________. This
Agreement supersedes any and all previous Severance Agreements entered into by
and between the Employee and the Company, including but not limited to such
agreement which was effective
_________________.   W
I T N E S S E T H  WHEREAS,
Employee currently serves as a key employee of the Company and the services and
knowledge of Employee are valuable to the Company in connection with the
management of the Company's business; and  WHEREAS,
the Board of Directors of the Company (the "Board") has determined that
it is in the best interests of the Company and its shareholders to secure
Employee's continued services and to ensure Employee's continued dedication and
objectivity in the event of any threat or occurrence of, or negotiation or other
action that could lead to, or create the possibility of, a Change in Control (as
defined in Section 1) of the Company, without concern as to whether Employee
might be hindered or distracted by personal uncertainties and risks created by
any such possible Change in Control, and to encourage Employee's full attention
and dedication to the Company, the Board has authorized the Company to enter
into this Agreement.  NOW,
THEREFORE, for and in consideration of the premises and the mutual covenants and
agreements herein contained, the Company and Employee hereby agree as
follows:  1. Definitions.
As used in this Agreement, the following terms shall have the respective
meanings set forth below:  (a)
"Cause" means (1) a material breach by Employee of those duties and
responsibilities of Employee which do not differ in any material respect from
the duties and responsibilities of Employee during the 90-day period immediately
prior to a Change in Control (other than as a result of incapacity due to
physical or mental illness) which is demonstrably willful and deliberate on
Employee's part, committed in bad faith or without reasonable belief that such
breach is in the best interests of the Company, and is not remedied in a
reasonable period of time after receipt of written notice from the Company
specifying such breach or (2) the commission by Employee of a felony involving
moral turpitude.  (b)
"Change in Control" means the occurrence of any of the following
events:  (1)
the acquisition by any individual, entity or group (a "Person"),
including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), of
beneficial ownership within the meaning of Rule 13d-3 promulgated under the
Exchange Act, of 20% or more of either (i) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding securities of the Company entitled
to vote generally in the election of directors (the "Outstanding Company
Voting Securities"); provided, however, that the following
acquisitions shall not constitute a Change in Control:    (A)
any acquisition directly from the Company (excluding any acquisition resulting
from the exercise of a conversion or exchange privilege in respect of
outstanding convertible or exchangeable securities),  (B)
any acquisition by the Company,  (C)
any acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company,  (D)
any acquisition by any corporation pursuant to a reorganization, merger or
consolidation involving the Company, if, immediately after such reorganization,
merger or consolidation, each of the Shareholder Continuity Condition (as
defined below), the Beneficial Ownership Condition (as defined below) and the
Board of Directors Continuity Condition (as defined below) shall be satisfied;  and
provided further that, for purposes of clause (B), if any Person
(other than the Company or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company) shall become the beneficial owner of 20% or more of the Outstanding
Company Common Stock or 20% or more of the Outstanding Company Voting Securities
by reason of an acquisition by the Company and such Person shall, after such
acquisition by the Company, become the beneficial owner of any additional shares
of the Outstanding Company Common Stock or any additional Outstanding Voting
Securities and such beneficial ownership is publicly announced, such additional
beneficial ownership shall constitute a Change in Control;  (2)
individuals who, as of the date hereof, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a majority of such
Board; provided, however, that any individual who becomes a
director of the Company subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by the vote
of at least a majority of the directors then comprising the Incumbent Board
shall be deemed to have been a member of the Incumbent Board; and
provided further, that no individual who was initially elected as
a director of the Company as a result of an actual or threatened election
contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act, or any other actual or threatened solicitation of
proxies or consents by or on behalf of any Person other than the Board shall be
deemed to have been a member of the Incumbent Board;  (3)
the approval by the shareholders of the Company of a reorganization, merger or
consolidation unless, in any such case, immediately after such reorganization,
merger or consolidation each of the Shareholder Continuity Condition, the
Beneficial Ownership Condition and the Board of Directors Continuity Condition
shall be satisfied; or  (4)
approval by the shareholders of the Company of (i) a plan of complete
liquidation or dissolution of the Company or (ii) the sale or other disposition
of all or substantially all of the assets of the Company other than to a
corporation with respect to which, immediately after such sale or other
disposition each of, the Shareholder Continuity Condition, the Beneficial
Ownership Condition and the Board of Directors Continuity Condition shall be
satisfied.   2    For
purposes of this Section 1 (b), the "Shareholder Continuity Condition"
shall be satisfied in connection with a transaction if at least 60% of the then
outstanding shares of common stock of the corporation resulting from such
transaction and at least 60% of the combined voting power of the then
outstanding securities of such corporation entitled to vote generally in the
election of directors is then beneficially owned, directly or indirectly, by all
or substantially all of the individuals or entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such transaction and
in substantially the same proportions relative to each other as their ownership,
immediately prior to such transaction, of the Outstanding Company Common Stock
and the Outstanding Company Voting Securities, as the case may be.  For
purposes of this Section 1 (b), the "Beneficial Ownership Condition"
shall be satisfied in connection with a transaction if no Person (other than the
Company, any employee benefit plan (or related trust) sponsored or maintained by
the Company or the corporation resulting from such transaction (or any
corporation controlled by the Company) and any Person which beneficially owned,
immediately prior to such transaction, directly or indirectly, 20% or more of
the Outstanding Company Common Stock or the Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly, 20%
or more of the then outstanding shares of common stock of such corporation or
20% or more of the combined voting power of the then outstanding securities of
such corporation entitled to vote generally in the election of directors.  For
purposes of this Section 1(b), the "Board of Directors Continuity
Condition" shall be satisfied in connection with a transaction if at least a
majority of the members of the board of directors of the corporation resulting
from such transaction were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board providing for such
transaction.  (c)
"Date of Separation" means the effective date on which the Employee has
experienced a Separation from Service.  (d)
"Disability" means the Employees inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months.  (e)
"Good Reason" means, without Employee's express written consent, the
occurrence of any of the following events after a Change in Control:  (1)
any of (i) the assignment to Employee of any duties inconsistent in any material
respect with Employee's position(s), duties, responsibilities or status with the
Company immediately prior to such Change in Control, (ii) a change in Employee's
reporting responsibilities, titles or offices with the Company as in effect
immediately prior to such Change in Control or (iii) any removal or involuntary
termination of Employee from the Company otherwise than as expressly permitted
by this Agreement or any failure to re-elect Employee to any position with the
Company held by Employee immediately prior to such Change in Control;  (2)
a reduction by the Company in Employee's rate of annual base salary or the
failure by the Company to increase such rate of base salary each year after such
Change in Control by an amount which at least equals, on a percentage basis, the
mean average percentage increase in the rates of base salary for all officers
(within the meaning of Rule 3b-2 promulgated under the Exchange Act) of the
Company during the two full fiscal years of the Company immediately preceding
such Change in Control;  (3)
any requirement of the Company that Employee (i) be based anywhere other than at
the offices where the Employee is based at the time of the Change in Control or
(ii) travel on Company business to an extent substantially more burdensome than
the travel obligations of Employee immediately prior to such Change in
Control;  3     (4)
the failure of the Company to:  (i)
continue in effect any employee benefit plan or compensation plan in which
Employee is participating immediately prior to such Change in Control, unless
Employee is permitted to participate in other plans providing Employee with
substantially comparable benefits, or the taking of any action by the Company
which would adversely affect Employee's participation in or materially reduce
Employee's benefits under any such plan,  (ii)
provide Employee and Employee's dependents welfare benefits (including, without
limitation, medical, prescription, dental, disability, salary continuance,
employee life, group life, accidental death and travel accident insurance plans
and programs) in accordance with the most favorable plans, practices, programs
and policies of the Company and its affiliated companies in effect for Employee
immediately prior to such Change in Control or, if more favorable to Employee,
as in effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies,  (iii)
provide fringe benefits in accordance with the most favorable plans, practices,
programs and policies of the Company and its affiliated companies in effect for
Employee immediately prior to such Change in Control or, if more favorable to
Employee, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies,  (iv)
provide an office or offices of a size and with furnishings and other
appointments, together with exclusive personal secretarial and other assistance,
at least equal to the most favorable of the foregoing provided to Employee by
the Company and its affiliated companies immediately prior to such Change in
Control or, if more favorable to Employee, as provided generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies,  (v)
provide Employee with paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for Employee immediately prior to such Change in Control or, if more
favorable to Employee, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies,  (vi)
reimburse Employee promptly for all reasonable employment expenses incurred by
Employee in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for Employee
immediately prior to such Change in Control, or if more favorable to Employee,
as in effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies, or  (vii)
pay Employee promptly Employee's base salary or bonus, if any, in accordance
with the most favorable policies, practices and procedures of the Company and
its affiliated companies in effect for Employee immediately prior to such Change
in Control, or if more favorable to Employee, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies; or  (5)
the failure of the Company to obtain the assumption agreement from any successor
as contemplated in Section 10(b).   4    For
purposes of this Agreement, any good faith determination of Good Reason made by
Employee shall be conclusive; provided, however, that an isolated,
insubstantial and inadvertent action taken in good faith and which is remedied
by the Company promptly after receipt of notice thereof given by Employee shall
not constitute Good Reason.  (f)
"Nonqualifying Separation" means Employee's Separation from Service (1)
by the Company for Cause, (2) by Employee for any reason other than a Good
Reason, (3) as a result of Employee's death or (4) by the Company due to
Employee's absence from Employee's duties with the Company on a full-time basis
for at least 180 consecutive days as a result of Employee's incapacity due to
physical or mental illness; provided, however, that a Separation
from Service by Employee for any reason whatsoever during the Window Period (as
hereinafter defined) shall not constitute a Nonqualifying Separation.  (g)
"Separation from Service" means a termination of services provided by
Employee to the Company, as determined by the Company in accordance with
Treasury Regulation section 1.409A-1(h). In determining whether Employee has
experienced a Separation from Service, the following provisions shall apply:  (1)
Subject to subsection (2) below, Employees Separation from Service shall occur
when Employee has experienced a termination of employment with the Company.
Employee shall be considered to have experienced a termination of employment
when the facts and circumstances indicate that Employee and the Company
reasonably anticipate that either:  (i)
no further services will be performed for the Company after a certain date;
or  (ii)
that the level of bona fide services Employee will perform for the Company after
such date (whether as an employee or consultant) will permanently decrease to no
more than 20% of the average level of bona fide services performed by Employee
(whether as an employee or consultant) over the immediately preceding 36-month
period (or the full period of services to the Company if Employee has been
providing services to the Company for less than 36 months).  (2)
If Employee is on military leave, sick leave, or other bona fide leave of
absence, the employment relationship between Employee and the Company shall be
treated as continuing intact, provided that the period of such leave does not
exceed six months, or if longer, so long as Employee retains a right to
reemployment with the Company under an applicable statute or by contract. If the
period of a military leave, sick leave, or other bona fide leave of absence
exceeds six months and Employee does not retain a right to reemployment under an
applicable statute or by contract, the employment relationship shall be
considered to be terminated for purposes of this Agreement as of the first day
immediately following the end of such six-month period. In applying the
provisions of this paragraph, a leave of absence shall be considered a bona fide
leave of absence only if the leave of absence is approved by the Company and
there is a reasonable expectation that Employee will return to perform services
for the Company.  (h)
"Termination Period" means the period of time beginning with a Change in
Control and ending on the earliest to occur of (1) Employee's 70th birthday, (2)
Employee's death, and (3) that date which is 24 months following such Change in
Control.  (i)
"Window Period" means the 30-day period commencing one year after the
date of a Change in Control.   5    2.
Obligations of Employee. (a) Employee agrees that in the event any person
or group attempts a Change in Control, Employee shall not voluntarily leave the
employ of the Company without Good Reason (i) until such attempted Change in
Control terminates or (ii) if a Change in Control shall occur, until 90 days
following such Change in Control. For purposes of the foregoing subsection (i),
Good Reason shall be determined as if a Change in Control had occurred when such
attempted Change in Control became known to the Board.  (b)
Employee acknowledges and agrees that (i) all records and other material not
released to the general public and (ii) all trade secrets, confidential and
proprietary information, unpublished data and information, in each case relating
to the operations, services and business of the Company, whether reduced to
writing or not ("Confidential Material"), are confidential and are the
sole property of the Company. Employee agrees that Employee will not disclose
any Confidential Material to any person or entity, either during or subsequent
to Employee's employment by the Company, nor will Employee use any Confidential
Material, except in the regular course of Employee's employment by the Company,
without the Company's written consent. Employee agrees not to make use of the
Confidential Material, except on behalf of the Company. Upon termination of
Employee's employment, Employee agrees to surrender all Confidential Material
and any copies thereof as may be in possession or under control of Employee.  3.
Payments Upon Separation from Service. (a) If during the Termination
Period, Employee incurs a Separation from Service, other than by reason of a
Nonqualifying Separation, then the Company shall pay to Employee (or Employee's
beneficiary or estate), as compensation for services rendered to the
Company:  (1)
a cash amount equal to each of the following:  (i)
Employee's full annual base salary from the Company and its affiliated companies
through the Date of Separation, to the extent not theretofore paid, within 30
days following the Date of Separation, in accordance with the Companys normal
payroll practices,  (ii)
Employee's annual bonus in an amount at least equal to the highest annualized
bonus paid or payable, including by reason of any deferral, to Employee by the
Company and its affiliated companies in respect of any of the three fiscal years
of the Company (or such portion thereof during which Employee performed services
for the Company if Employee shall have been employed by the Company for less
than such three fiscal year period) immediately preceding the fiscal year in
which the Change in Control occurs, multiplied by a fraction, the numerator of
which is the number of days in the fiscal year in which the Date of Separation
occurs through the Date of Separation and the denominator of which is 365 or
366, as applicable, at the time annual bonuses are otherwise paid to employees
of the Company for the fiscal year in which the Date of Separation occurs,
and  (iii)
any accrued vacation pay, to the extent not theretofore paid, within 30 days
following the Date of Separation, in accordance with the Companys normal
payroll practices; plus  (2)
a lump-sum cash amount, within 30 days following the Date of Separation, in an
amount equal to the sum of:  (i)
__________ times Employee's highest annual base salary from the Company and its
affiliated companies in effect during the 12-month period prior to the Date of
Separation, plus   6    (ii)
__________  times Employee's highest annualized bonus, paid or payable,
including by reason of any deferral, to Employee by the Company and its
affiliated companies in respect of any of the five fiscal years of the Company
(or such portion thereof during which Employee performed services for the
Company if Employee shall have been employed by the Company for less than such
five fiscal year period) immediately preceding the fiscal year in which the
Change in Control occurs;  provided,
however, that in the event there are fewer than whole
calendar months remaining from the Date of Separation to the date of Employee's
70th birthday, the amount calculated in accordance with this Section 3(a)(2)
shall be reduced by multiplying such amount by a fraction the numerator of which
is the number of calendar months, including a partial month (with a partial
month being expressed as a fraction the numerator of which is the number of days
remaining in such calendar month and the denominator of which is the number of
days in such calendar month), so remaining and the denominator of which is
.  Notwithstanding
the foregoing, if on the Date of Separation, Employee is a specified employee
within the meaning of Section 409A(a)(2) of the Internal Revenue Code of 1986,
as amended (the Code), such payments made pursuant to this
Section 3(a)(2) shall instead be made on the first business day of the
seventh full month after the Date of Separation.  (b)
In addition to the payments to be made pursuant to paragraph (a) of this Section
3: (1) For a period of  years commencing on
the Date of Separation, the Company shall continue to keep in full force and
effect all medical, accident, disability and life insurance plans with respect
to Employee and Employee's dependents with the same level of coverage, upon the
same terms and otherwise to the same extent as such plans shall have been in
effect immediately prior to the Date of Separation. Notwithstanding the
foregoing sentence, if any of the medical, accident, disability or life
insurance plans then in effect generally with respect to other peer executives
of the Company and its affiliated companies would be more favorable to Employee,
such plan coverage shall be substituted for the analogous plan coverage provided
to Employee immediately prior to the Date of Separation, and the Company and
Employee shall share the costs of such plan coverage in the same proportion as
such costs were shared immediately prior to the Date of Separation.  The
obligation of the Company to continue coverage of Employee and Employee's
dependents under such plans shall cease at such time as Employee and Employee's
dependents obtain comparable coverage under another plan, including a plan
maintained by a new employer. Execution of this Agreement by Employee shall not
be considered a waiver of any rights or entitlements Employee and Employee's
dependents may have under applicable law to continuation of coverage under the
group health plan maintained by the Company or its affiliated companies.  (2)
So long as Employee has children who would otherwise be eligible for benefits
under the Felber Scholarship Program, any successor thereto or any program then
in effect providing similar or more favorable benefits to other peer executives
of the Company and its affiliated Companies, then such children shall be
entitled to the most favorable of such benefits as if Employee were still
employed by the Company and its affiliated Companies or as if Employee has
retired from the Company, whichever assumption results in the most favorable
benefits being provided.  (3)
If Employee is at least 50 years old at the Date of Separation, then Employee
shall be eligible for retiree health benefits no less favorable than the most
favorable benefits provided under any of the Madison Gas and Electric Company
Health Benefit Plan, any successor thereto or any program then in effect
providing more favorable benefits to other peer executives of the Company and
its affiliated Companies.   7    (c)
If during the Termination Period, Employee incurs a Separation from Service by
reason of a Nonqualifying Separation, then the Company shall pay to Employee,
within 30 days following the Date of Separation, in accordance with the
Companys normal payroll practices, a cash amount equal to the sum of (1)
Employee's full annual base salary from the Company through the Date of
Separation, to the extent not theretofore paid and (2) any accrued vacation pay,
to the extent not theretofore paid.  4.
Certain Additional Payments by the Company. (a) Anything in this
Agreement to the contrary notwithstanding, in the event it shall be determined
that any payment or distribution by the Company or its affiliated companies to
or for the benefit of Employee (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
4) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Code, or any interest or penalties are incurred by Employee with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"),
then the Company shall pay to Employee an additional payment (a "Gross-Up
Payment") in an amount such that after payment by Employee of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
Employee retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.  (b)
Subject to the provisions of Section 4(c), all determinations required to be
made under this Section 4, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by the Company's
public accounting firm (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and Employee within 15
business days of the receipt of notice from Employee that there has been a
Payment, or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control, Employee shall appoint another
nationally recognized public accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Section 4, shall be paid by the Company to Employee within five days of the
receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by Employee, it shall furnish Employee
with a written opinion that failure to report the Excise Tax on Employee's
applicable federal income tax return would not result in the imposition of a
negligence or similar penalty. Any determination by the Accounting Firm shall be
binding upon the Company and Employee. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 4(c) and Employee thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or
for the benefit of Employee.  (c)
Employee shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company of
the Gross-Up Payment. Such notification shall be given as soon as practicable
but no later than 10 business days after Employee is informed in writing of such
claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. Employee shall not pay such claim
prior to the expiration of the 30-day period following the date on which
Employee gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If the
Company notifies Employee in writing prior to the expiration of such period that
it desires to contest such claim, Employee shall:  (1)
give the Company any information reasonably requested by the Company relating to
such claim,  8    (2)
take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,  (3)
cooperate with the Company in good faith in order effectively to contest such
claim, and  (4)
permit the Company to participate in any proceedings relating to such claim;  provided,
however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Employee harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 4(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
Employee to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and Employee agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided further, that if the Company directs Employee
to pay such claim and sue for a refund, the Company shall advance the amount of
such payment to the Employee on an interest-free basis and shall indemnify and
hold Employee harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and provided further, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of Employee with
respect to which such contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company's control of the contest shall
be limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and Employee shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.  (d)
If, after the receipt by Employee of an amount advanced by the Company pursuant
to Section 4(c), Employee becomes entitled to receive, and receives, any refund
with respect to such claim, Employee shall (subject to the Company's complying
with the requirements of Section 4(c)) promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by Employee of an amount advanced by
the Company pursuant to Section 4(c), a determination is made that Employee
shall not be entitled to any refund with respect to such claim and the Company
does not notify Employee in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.  (e)
Any Gross-Up Payment, as determined pursuant to this Section 4, shall be paid by
the Company to Employee within five days of the receipt of the Accounting Firms
determination; provided that, the Gross-Up Payment shall in all events be
paid no later than the end of Employees taxable year next following the
Employees taxable year in which the Excise Tax (and any income or other related
taxes or interest or penalties thereon) on a Payment are remitted to the
Internal Revenue Service or any other applicable taxing authority or, in the
case of amounts relating to a claim described in this Section 4 that does not
result in the remittance of any federal, state, local and foreign income,
excise, social security and other taxes, the calendar year in which the claim is
finally settled or otherwise resolved.  5.
Withholding Taxes. The Company may withhold from all payments due to
Employee (or Employee's beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Company is required to
withhold therefrom.   9    6.
Reimbursement of Expenses. If any contest or dispute shall arise under
this Agreement during Employees lifetime involving Employee's Separation from
Service with the Company or involving the failure or refusal of the Company to
perform fully in accordance with the terms hereof, the Company shall reimburse
Employee, on a current basis, for all legal fees and expenses, if any, incurred
by Employee in connection with such contest or dispute, together with interest
at a rate equal to the rate of interest published in The Wall Street Journal
under the caption "Money Rates" as the prime rate, but in no event higher than
the maximum legal rate permissible under applicable law, such interest to accrue
from the date the Company receives Employee's statement for such fees and
expenses through the date of payment thereof; provided, however,
that in the event the resolution of any such contest or dispute includes a
finding denying, in total, Employee's claims in such contest or dispute,
Employee shall be required to reimburse the Company, over a period of 12 months
from the date of such resolution, for all sums advanced to Employee pursuant to
this Section 6. 7.
Operative Event. Notwithstanding any provision herein to the contrary, no
amounts shall be payable hereunder unless and until there is a Change in Control
at a time when Employee is employed by the Company.  8.
Termination of Agreement. (a) This Agreement shall be effective on the
date hereof and shall continue as provided in paragraph (b) of this Section 8;
provided, however, that this Agreement shall terminate in any
event upon the first to occur of (i) Employee's 70th birthday, (ii) Employee's
death or (iii) Employee's Separation from Service with the Company prior to a
Change in Control.  (b)
This Agreement shall continue in effect for three years from the date hereof;
provided, however, that commencing on the first anniversary
hereof, and each such anniversary thereafter, the term of this Agreement shall
automatically be extended for one additional year unless, not later than the
first anniversary hereof, and each such anniversary thereafter, as the case may
be, the Company or the Employee shall have given notice, in accordance with
Section 11, not to extend the term of this Agreement; provided,
however, that no such action shall be taken by the Company during any
period of time when the Board has knowledge that any person has taken steps
reasonably calculated to effect a Change in Control until, in the opinion of the
Board, such person has abandoned or terminated its efforts to effect a Change in
Control; provided further, that in no event shall this Agreement
be terminated in the event of a Change in Control; and provided
further that in the event of a Change in Control when there are less than
twenty-four months remaining in the term of this Agreement, the term of this
Agreement shall be extended so that this Agreement shall terminate twenty-four
months after such Change in Control.  9.
Scope of Agreement. Nothing in this Agreement shall be deemed to entitle
Employee to continued employment with the Company or its subsidiaries, and if
Employee's Separation from Service with the Company shall occur prior to a
Change in Control, then Employee shall have no further rights under this
Agreement; provided, however, that Employee's Separation from
Service following a Change in Control shall be subject to all of the provisions
of this Agreement.  10.
Successors; Binding Agreement.  (a)
This Agreement shall not be terminated by any merger or consolidation of the
Company whereby the Company is or is not the surviving or resulting corporation
or as a result of any transfer of all or substantially all of the assets of the
Company. In the event of any such merger, consolidation or transfer of assets,
the provisions of this Agreement shall be binding upon the surviving or
resulting corporation or the person or entity to which such assets are
transferred.   10    (b)
The Company agrees that concurrently with any merger, consolidation or transfer
of assets referred to in paragraph (a) of this Section 10, it will cause any
successor or transferee unconditionally to assume, by written instrument
delivered to Employee (or Employee's beneficiary or estate), all of the
obligations of the Company hereunder. Failure of the Company to obtain such
assumption prior to the effectiveness of any such merger, consolidation or
transfer of assets shall be a breach of this Agreement and shall entitle
Employee to compensation and other benefits from the Company in the same amount
and on the same terms as Employee would be entitled hereunder if Employee's
Separation from Service occurred following a Change in Control other than by
reason of a Nonqualifying Separation. For purposes of implementing the
foregoing, the date on which any such merger, consolidation or transfer becomes
effective shall be deemed the Date of Separation.  (c)
This Agreement shall inure to the benefit of and be enforceable by Employee's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If Employee shall die while any amounts
would be payable to Employee hereunder had Employee continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to such person or persons appointed in writing by
Employee to receive such amounts or, if no person is so appointed, to Employee's
estate.  11.
Notice. (a) For purposes of this Agreement, all notices and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered or five days after deposit in the
United States mail, certified and return receipt requested, postage prepaid,
addressed (1) if to the Employee, to the Employee's address of record with the
Company, and if to the Company, to Madison Gas and Electric Company, P. O. Box
1231, Madison, WI 53701-1231, attention
, or (2) to such other address as
either party may have furnished to the other in writing in accordance herewith,
except that notices of change of address shall be effective only upon
receipt.  (b) A
written notice of Employee's Date of Separation by the Company or Employee, as
the case may be, to the other, shall:  (i)
indicate the specific termination provision in this Agreement relied upon,  (ii)
to the extent applicable, set forth in reasonable detail the facts and
circumstances claimed to provide a basis for Employee's Separation from Service
under the provision so indicated and  (iii)
specify the Separation Date (which date shall be not less than 15 days after the
giving of such notice).  The
failure by Employee or the Company to set forth in such notice any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of Employee or the Company hereunder or preclude Employee or the
Company from asserting such fact or circumstance in enforcing Employee's or the
Company's rights hereunder.  12. Full
Settlement; Resolution of Disputes. (a) The Company's obligation to make any
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against
Employee or others. In no event shall Employee be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to Employee under any of the provisions of this Agreement and, such amounts
shall not be reduced whether or not Employee obtains other employment.   11    (b)
If there shall be any dispute between the Company and Employee in the event of
Employee's Separation from Service, then, unless and until there is a final,
nonappealable judgment by a court of competent jurisdiction declaring that such
termination was for Cause, that the determination by Employee of the existence
of Good Reason was not made in good faith, or that the Company is not otherwise
obligated to pay any amount or provide any benefit to Employee and Employee's
dependents or other beneficiaries, as the case may be, under paragraphs (a) and
(b) of Section 3, the Company shall pay all amounts, and provide all benefits,
to Employee and Employee's dependents or other beneficiaries, as the case may
be, that the Company would be required to pay or provide pursuant to paragraphs
(a) and (b) of Section 3 as though such termination were by the Company without
Cause or by Employee with Good Reason; provided, however, that the
Company shall not be required to pay any disputed amounts pursuant to this
paragraph except upon receipt of an undertaking by or on behalf of Employee to
repay all such amounts to which Employee is ultimately adjudged by such court
not to be entitled.  13.
Employment with Subsidiaries. Employment with the Company for purposes of
this Agreement shall include employment with affiliated corporations and other
entities described in Treasury Regulation § 1.409A-1(h)(3).  14.
Governing Law; Validity. The interpretation, construction and performance
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of Wisconsin without regard to the principle
of conflicts of laws. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which other provisions shall remain in full force
and effect.  15.
Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.  16.
Miscellaneous. No provision of this Agreement may be modified or waived
unless such modification or waiver is agreed to in writing and signed by
Employee and by a duly authorized officer of the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Failure by Employee
or the Company to insist upon strict compliance with any provision of this
Agreement or to assert any right Employee or the Company may have hereunder,
including, without limitation, the right of Employee to incur a Separation from
Service for Good Reason, shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement. The rights and benefits
payable hereunder are in addition to any rights of, or benefits payable to,
Employee, Employee's estate or Employee's beneficiaries under (i) the Income
Continuation Agreement, if any, between the Company and Employee, (ii) the
Deferred Compensation Agreement between the Company and Employee, if any, and
(iii) any other employee benefit plan or compensation program of the Company,
excluding any other severance plan, policy or arrangement of the Company. This
Agreement supersedes, in its entirety, any agreement relating to severance
previously entered into between Employee and the Company.  17.
Compliance with Section 409A of the Code. This Agreement is intended to
comply with the provisions of Section 409A of the Code and shall be interpreted
and construed accordingly. The Company shall have the discretion and authority
to amend this Agreement at any time to satisfy any requirements of Section 409A
of the Code or guidance provided by the U.S. Treasury Department to the extent
applicable to this Agreement. By accepting this Agreement,
Employee agrees that no provision of this Agreement or any communications
related to this Agreement shall be interpreted as guaranteeing the tax
consequences or treatment of any amounts payable to Employee under this
Agreement. The amount of any reimbursements or in-kind benefits provided under
this Agreement during a calendar year shall not affect the reimbursements or
in-kind benefits provided in any other calendar year and Employees right to
have the Company provide such reimbursements or in-kind benefits may not be
liquidated or exchanged for any other benefit. In addition, any such
reimbursements shall not be made after the last day of the calendar year
following the calendar year in which the applicable expense is incurred.  IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed by a duly
authorized officer of the Company and Employee has executed this Agreement as of
the day and year first above written.   EMPLOYEE    By:___________________________  MADISON GAS AND
ELECTRIC COMPANY    By:___________________________  12