Document:

exh109.htm

    Exhibit
      10.9

    
 

    INTEGRYS
      ENERGY GROUP, INC.

    2007
      OMNIBUS INCENTIVE COMPENSATION PLAN

    RESTRICTED
      STOCK UNIT AWARD

    

    

    

    

    You
      have been
      granted a Restricted Stock Unit (“RSU”) award with respect to
      _________  ________ shares of common stock of Integrys Energy Group,
      Inc. (the “Company”) under the Integrys Energy Group, Inc. 2007 Omnibus
      Incentive Compensation Plan (the “Plan”) with the following terms and
      conditions.  The common stock of the Company is referred to in this
      Agreement as the Common Stock.  This agreement shall not become
      effective until the Participant signs and returns the “Acknowledgement Form”
attached hereto.

     

    
      	
              Grant
                Date:

              
              

            	
              February
                14,
                2008

              
              

            
	
              Number
                of
                Restricted

               Stock
                Units:

              
              

            	
              _______  Stock
                Units

              
              

            

    

     

    Vesting
      Schedule:

     

    
      Twenty-five
        percent
        (25%) of your RSUs will vest (and will be settled) on each of the first four
        anniversaries of the Grant Date, provided that you are continuously employed
        by
        the Company or an Affiliate from the Grant Date through such vesting date,
        as
        shown on  the following schedule:

    

    

      
        	
                Amount

              	
                Vesting
                  Date

              
	
                25%
                  of the
                  RSUs

              	
                First
                  anniversary of Grant Date

              
	
                25%
                  of the
                  RSUs

              	
                Second
                  anniversary of Grant Date

              
	
                25%
                  of the
                  RSUs

              	
                Third
                  anniversary of Grant Date

              
	
                25%
                  of the
                  RSUs

              	
                Fourth
                  anniversary of Grant Date

              

      

    

     

    If
      application of
      the vesting schedule on any vesting date would result in vesting of a fractional
      RSU, the number of RSUs  that become vested on that vesting date will
      be rounded to the next higher whole number of
      RSUs.

     

    
    

    If
      your employment or service terminates
      as a result of death or disability (as determined by the Committee based upon
      the definition set forth in the Company’s long term disability plan), (1) if
      your termination occurs on or after December 31 of the calendar year in which
      occurs the Grant Date of your RSUs, the RSUs will become fully vested on your
      date of termination, and 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (2)
      if your termination occurs prior to
      December 31 of the calendar year in which occurs the Grant Date of your RSUs,
      you will become partially vested on your date of termination, and the remaining
      RSUs will be forfeited.  Your partially vested interest will be equal
      to the product obtained by multiplying the total number of your RSUs by a
      fraction, the numerator of which is the number of full months of service that
      you have completed during the calendar year in which occurs the Grant Date
      and
      the denominator of which is twelve (12).  If the foregoing calculation
      results in vesting of a factional RSU, the number of RSUs that become vested
      will be rounded to the next higher whole number of RSUs.  Settlement
      of your vested RSUs will occur as soon as practicable following your death,
      or
      six months following termination of you employment or service for
      disability.  For purposes of this Agreement, your employment or
      service will be terminated on account of disability if the Committee determines
      that such disability causes you to incur a “separation from service” as such
      term is defined for purposes of Section 409A of the Internal Revenue Code,
      taking into account the maximum leave periods permitted under Section 409A
      for
      disability leaves of absence.

     

    
    

    If
      your employment or service terminates
      as a result of retirement on or after age fifty-five (55) with ten (10) or
      more
      years of service, or retirement on or after age sixty-two (62) (“Retirement”),
      (1) if your Retirement occurs on or after December 31 of the calendar year
      in
      which occurs the Grant Date of your RSUs, your RSUs will continue to vest and
      will be settled, subject to the terms of the Plan, on the same schedule as
      would
      have applied had you continued your employment, and (2) if your Retirement
      occurs prior to December 31 of the calendar year in which occurs the Grant
      Date
      of your RSUs, a portion of your RSUs will be immediately forfeited, and the
      remainder of your RSUs will continue to vest and will be settled, subject to
      the
      terms of the Plan, on the same schedule as would have applied had you continued
      your employment; provided that under both clause (1) and (2), any RSUs that
      have
      not been forfeited will be immediately settled if you die after Retirement
      but
      prior to the scheduled settlement date.  The portion of your RSUs that
      are immediately forfeited will be equal to the product obtained by multiplying
      the total number of your RSUs by a fraction, the numerator of which is twelve
      (12) minus the number of full months of service that you have completed during
      the calendar year in which occurs the Grant Date and the denominator of which
      is
      twelve (12).  If the foregoing calculation results in forfeiture of a
      factional RSU, the number of RSUs that are forfeited will be

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    rounded
      down to the next lower whole
      number of RSUs.  The number of RSUs available on each vesting date
      will be reduced by a pro rata portion of the total number of forfeited
      RSUs.

     

    
    

    Upon
      the occurrence
      of a Change of Control (as defined in the Plan) during your employment or
      following your Retirement, the RSUs that have not previously been forfeited
      will
      become fully vested and will be settled, even if not otherwise vested in
      accordance with the vesting schedule above; provided, that if the Change
      of Control
      does not constitute a change in control event for purposes of Internal Revenue
      Code Section 409A, the RSUs will converted to a cash value and will be settled
      (with interest equivalent at the prime rate of interest from the Change of
      Control Date to the settlement date) on the same schedule as would have applied
      if the Change of Control had not occurred and assuming that you had continued
      your employment.

     

    
    

    Except
      as provided
      in the preceding paragraph, your vested RSUs will be settled by delivery to
      you
      or, in the case of your death, to your estate, of a certificate(s) for the
      number of shares of Common Stock equal to the number of RSUs that are vested
      and
      that are to be settled on that date.  Settlement will be made on or as
      soon as practicable following the specified settlement date.

     

    
    

    Notwithstanding
      anything to the contrary, settlement at the foregoing times is subject to any
      deferral election that you have made, if eligible.

     

    
    

    
    

    
    

    Upon
      any other
      termination of employment or service, you will forfeit the RSUs that have not
      yet vested.

    
    
 
    Nature
      of
      RSUs:

     

    Your
      RSUs are not
      actual shares of Common Stock. Each RSU represents the right to receive a share
      of Common Stock upon satisfaction of the terms and conditions of the Award,
      but
      the RSU is not itself Common Stock.    No shares of Common
      Stock will be issued unless and until the Company has determined to its
      satisfaction that such issuance complies with all relevant provisions of
      applicable law, including the requirements of any stock exchange on which the
      shares may then be traded.

     

    
    

    Transferability
      of
RSUs
      :

     

    You
      may not sell,
      transfer or otherwise alienate or hypothecate any of your
      RSUs.   In addition, by accepting this Award, you agree not to
      sell any shares of Common Stock delivered to you in connection with this Award
      at a time when applicable laws 

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (including
      securities laws), Company policies or an agreement between the Company and
      its
      underwriters or other terms and conditions of the Plan prohibit a
      sale.

     

    
    

    Voting
      and
      Dividends:

     

    Since
      the RSUs are not actual shares of
      Common Stock, you may not exercise voting rights, or receive dividends or other
      distributions paid with respect to Common Stock, until such time as you become
      vested and receive actual shares of Common Stock in settlement of your
      Award.  However, you will receive a credit equivalent to any dividends
      or other distributions paid with respect to the Common Stock that would have
      received had your RSUs been actual shares of Common Stock, so long as the
      applicable record date for such dividend or distribution occurs after the Grant
      Date and before you forfeit such RSUs. This credit will be made in the form
      of
      additional RSUs that will be subject to the same risk of forfeiture,
      restrictions on transferability and other terms of this Restricted Stock Unit
      Award agreement as are the RSUs with respect to which the dividend or
      distribution credit was granted.  In the case of any dividend or
      distribution other than a dividend or distribution that is paid in shares of
      Common Stock, the number of additional RSUs will be determined by dividing
      the
      dividend or distribution credit by the closing share price of a share of Common
      Stock, as reported on the New York Stock Exchange, on the dividend or
      distribution payment date. In the case of any such dividend or distribution
      that
      is paid in shares of Common Stock, the number of shares of Common Stock that
      you
      would have received as a result of such dividend or distribution had your RSUs
      been actual shares of Common Stock will constitute an equal number of additional
      RSUs. You will have no right to dividend or distribution credits that are paid
      with respect to Common Stock where the record date occurs on or after the date
      on which the RSUs have been settled or the date on which you have forfeited
      the
      RSUs.

     

    
    

    Tax
      Withholding:

     

    To
      the extent that
      the receipt or the vesting of the RSUs, or dividend and other distribution
      credits made  with respect to the RSUs, or the transfer of Common
      Stock in settlement of your RSU Award, results in income to you for Federal,
      state or local income tax purposes or results in “wages” to you for FICA or
      other employment tax purposes, the Company has the right and the authority
      to
      deduct or withhold from other compensation payable to you an amount sufficient
      to satisfy its withholding obligations under applicable tax laws or
      regulations.  Alternatively, the Company may require that you deliver
      to the Company at the time the Company is obligated to withhold taxes in
      connection with such receipt or vesting, as the case may be, such amount as
      the

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    Company
      requires to
      meet its withholding obligation under applicable tax laws or
      regulations.  The Company may (but need not) permit you to satisfy the
      withholding requirement, in whole or in part, by electing to have the Company
      withhold for its own account that number of shares of Common Stock otherwise
      deliverable to you on the date the tax is to be determined having an aggregate
      Fair Market Value on the date the tax is to be determined equal to the minimum
      statutory total tax that the Company must withhold in connection with the
      vesting or settlement of such RSUs  Your election must be irrevocable,
      in writing, and submitted to the Secretary of the Company before the applicable
      vesting date.  The Fair Market Value of any fractional share of Common
      Stock not used to satisfy the withholding obligation (as determined on the
      date
      the tax is determined) will be paid to you in cash at the time your RSUs are
      settled.
  
    Powers
      of Company
      Not Affected:

     

    
    

    
    

    
    

    
    

    
    

    
    

    
    

    
    

    
    

    
    

    
    

    The
      existence of
      this Agreement or the RSUs  herein granted shall not affect in any way
      the right or power of the Company or its shareholders to make or authorize
      any
      or all adjustments, recapitalizations, reorganizations or other changes in
      the
      Company’s capital structure or its business, or any merger or consolidation of
      the Company, or any issuance of bonds, debentures, preferred, or prior
      preference stock ahead of or affecting the Common Stock  or the rights
      thereof, or dissolution or liquidation of the Company, or any sale or transfer
      of all or any part of its assets or business, or any other corporate act or
      proceeding, whether of a similar character or otherwise.

     

    
      Employment:

      
      

      
      

      
      

    

    
    

    The
      granting of
      RSUs under this Agreement shall not be construed as granting to you any right
      with respect to continued employment by the Company or an
      Affiliate.

     

    
      Interpretation:

      
      

      
      

      
      

      
      

      
      

      
      

       

    

    
    

    As
      a condition of
      the granting of this Award, you agree, for yourself and your legal
      representatives or guardians, the executor of your estate, and your heirs,
      that
      this Agreement shall be interpreted by the Committee and that any interpretation
      by the Committee of the terms of this Agreement or the Plan and any
      determination made by the Committee pursuant to this Agreement shall be final,
      binding and conclusive.

     

    
      Assignment
        of
        Agreement:

      
      

      
      

       

    

    
    

    You
      may not assign
      this Agreement, and any attempted assignment shall be null and void and of
      no
      legal effect.

     

    
      Amendment
        or
        Modification:

      
      

      
      

      
      

      
      

      
      

       

    

    
    

    No
      term or
      provision of this Agreement may be amended, modified or supplemented
      orally.  Amendment, modification or supplementation can be
      accomplished only (a) by an instrument in 

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

       

    

    writing
      signed by
      the party against whom or which the enforcement of the amendment, modification
      or supplement is sought, or (b) as otherwise provided in the Plan.

     

    
      Governing
        Law:

      
      

      
      

      
      

      
      

      
      

      
      

      
      

      
      

      
      

      
      

      
      

      
      

      
      

      
      

      
      

      
      

      
      

      
      

       

    

    
    

    This
      Agreement
      shall be governed by the internal laws of the State of Illinois, without regard
      to the principle of conflict of laws, as to all matters, including, but not
      limited to, matters of validity, construction, effect, performance and
      remedies.  No legal action or proceeding may be brought with respect
      to this Agreement more than one year after the later of (a) the last date on
      which the act or omission giving rise to the legal action or proceeding
      occurred; or (b) the date on which the individual bringing such legal action
      or
      proceeding had knowledge (or reasonably should have had knowledge) of such
      act
      or omission.  Any such action or proceeding must be commenced and
      prosecuted in its entirety in the federal or state court having jurisdiction
      over Brown County, Wisconsin or Cook County, Illinois, and each individual
      with
      any interest hereunder agrees to submit to the personal jurisdiction thereof,
      and agrees not to raise the objection that such courts are not a convenient
      forum.  Such action or other legal proceeding shall be heard pursuant
      to a bench trial, and the parties to such proceeding shall waive their rights
      to
      trial by jury.

    
    

     

    
      Severability:

      
      

      
      

      
      

      
      

      
      

       

    

    In
      the event any
      provision of the Restricted Stock Unit Award agreement is held illegal or
      invalid for any reason, the illegality or invalidity will not affect the
      remaining provisions of the agreement, and the agreement shall be construed
      and
      enforced as if the illegal or invalid provision had not been
      included.

     

    Counterparts:

     

    
    

    This
      Agreement may
      be executed in counterparts.

     

    
    

    Term
      of Plan
      Govern:

     

    This
      Restricted
      Stock Unit Award is granted under and governed by the terms and conditions
      of
      the Plan as amended and in effect from time to time.  Additional
      provisions regarding your Award and definitions of
      capitalized terms used and not defined in this Award can be found in the
      Plan.  [If you make a timely election to defer the delivery of shares
      of Common Stock that otherwise would be deliverable to you in accordance with
      this Agreement, the shares of Common Stock that would otherwise be
      delivered  to you under this Agreement but that you are eligible to
      and have elected to defer will continue to be held (even after you have become
      vested) as stock units  that will be credited under and distributed in
      accordance with the terms of the Deferred Compensation Plan; provided that
      the
      vesting and forfeiture provisions set forth in this Agreement, and other terms
      and conditions of the Plan affecting outstanding Plan awards, will 

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

       

    

    continue
      to apply
      to such  stock units (and to any additional  stock units
      that may be credited to you as a result of deemed dividends or other
      distributions) to the same extent as such provisions, terms and conditions
      apply
      to the RSUs.]

     

    
    

    INTEGRYS
      ENERGY
      GROUP, INC.

     

    

    

    

                                                                    
      

    By: ______________________________

    Title:  Senior
      VP & Chief
      HR Officer

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    ACKNOWLEDGEMENT
      FORM

    

    

    I
      have read the
      terms of the Integrys Energy Group, Inc. Restricted Stock
      Unit
      Agreement, dated February 14, 2008, and I hereby declare that I understand
      and
      agree to be bound by the terms and conditions of the Agreement.

    

                                                                          
      

    _________________________________

    Participant

    

    Print
      name:_________________________               

    

    

    PLEASE
      DETACH THIS
      ACKNOWLEDGEMENT FORM FROM THE RESTRICTED STOCK UNIT AGREEMENT AND RETURN IT
      TO
      THE GREEN BAY HUMAN RESOURCES DEPARTMENT. YOUR RESTRICTED STOCK UNIT AWARD
      WILL
      NOT BECOME EFFECTIVE UNTIL THE COMPANY RECEIVES THIS ACKNOWLEDGMENT
      FORM.

    

    

    
      
        
        

      

      
        8exh1010.htm

    
      
        Exhibit
          10.10

         

      

       

      INTEGRYS
        ENERGY GROUP,
        INC.
NONQUALIFIED
        STOCK OPTION
        AGREEMENT

       

       

          THIS
        AGREEMENT is
        entered into as of May 17, 2007 (the “Grant Date”), by and between INTEGRYS
        ENERGY GROUP, INC. (the “Company”), and __________________ ____________________
        (the “Optionee”).  This Agreement sets forth the
        terms, rights and obligations of the parties with respect to the grant of
        an
        option to the Optionee.  This option shall not become effective until the
        Optionee signs and returns the “Acknowledgement Form” attached
        hereto.

          The
        option is granted
        under, and is subject to, the terms of the Integrys Energy Group, Inc. 2007
        Omnibus Incentive Compensation Plan (the “Plan”), which are specifically
        incorporated by reference in this Agreement.  Any terms used in this
        Agreement which are not defined shall have the meaning set forth in the
        Plan.

          The
        parties to this
        Agreement covenant and agree as follows:

          1.        
        Grant
        of Option.  Subject to the terms of this Agreement, the Company
        grants to the Optionee the right and option (the “Option”) to purchase ______
        shares of Common Stock of the Company, par value $1.00 (the “Optioned Shares”)
        from the Company, at an option price per share equal to $___________ (the
        closing sales price of a share of Common Stock of the Company as reported
        on the
        New York Stock Exchange Composite Transaction reporting system on May 17,
        2007).

       

          In
        the event of
        certain corporate transactions described in Section 12 of the Plan, the number
        of Optioned Shares and the per share option price will be adjusted by the
        Compensation Committee of the Board of Directors of the Company (the
“Committee”).  The Committee’s determination as to any adjustment shall be
        final.

          2.        
        Vesting
        of Option.  The Optioned Shares will vest in accordance with the
        following schedule:

       

      
      

      
        	Percentage
                of Optioned Shares Vested	 Date
                of Vesting
	 	 
	
                 25%

              	 1st
                anniversary of Grant
                Date
	
                 An
                  additional
                  25%

              	 2nd
                anniversary of Grant
                Date
	
                 An
                  additional
                  25%

              	 3rd
                anniversary of Grant
                Date
	
                 The
                  final
                  25%

              	 4th
                anniversary of Grant
                Date

      

      
      

       

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

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      Notwithstanding
        the vesting schedule described above, the Committee may extend the date(s)
        of
        vesting to a later date to take into account any period of the Optionee’s leave
        of absence, unless prohibited by law.

       

      3.         Exercise
        of Option.  The Option, to the extent vested in accordance with
        Paragraph 2, may be exercised during the period beginning May 17, 2008, and
        ending:  

       

      a.        
on
        the first
        anniversary of the date the Optionee’s employment with the Company and its
        Affiliates terminates for any reason other than retirement on or after age
        fifty-five, death or disability (as defined in the Company’s long-term
        disability plan); or

       

      b.        
in
        any other case, May
        17, 2017. 

       

          During
        the life of
        the Optionee, this Option may be exercised only by the Optionee (or if the
        Optionee is incapacitated, by the Optionee’s legal representative).  If the
        Optionee dies before exercising all of the vested Option, the executor of
        the
        Optionee’s estate (or by such person as the executor of the estate certifies as
        inheriting the Option as a result of the operation of the Optionee’s last will
        and testament or as a result of the laws of interstate succession) may exercise
        all or any portion of the vested Option that has not been exercised, during
        the
        exercise periods described above. 

      4.         Change
        in Control.  Upon the occurrence of a Change of Control (as defined
        in the Plan), the Option, to the extent then outstanding and unexercised,
        will
        become fully vested (if not previously vested) but shall otherwise be subject
        to
        the terms of the Plan with respect to such Change in Control.

       

      5.         Manner
        of Exercise and Payment.  In order to exercise this Option, the
        Optionee (or such other person entitled to exercise the Option as provided
        in
        Paragraph 3) must provide a written notice to the Company stating that the
        Optionee would like to exercise all or a portion of the Option and specifying
        the number of vested Optioned Shares which are being purchased.  The
        exercise notice must be delivered (in person or by mail or by facsimile)
        to the
        Secretary of the Company.  

       

          The
        written notice
        must be, in the case of clauses (a), (b) and (c) below, accompanied by payment
        equal to the number of Optioned Shares being purchased multiplied by the
        option
        price or, in the case of clause (d) below, accompanied by the documents
        specified in such clause (d), which will result in payment to the Company
        on the
        settlement date (i.e., T+3) equal to the number of Optioned Shares being
        purchased multiplied by the option price.  Subject to such rules and
        restrictions as the Committee may prescribe, payment may be made, at the
        Optionee’s election:  (a) in cash or by certified check payable to the
        Company; (b) by delivering previously acquired shares of Common Stock, duly
        endorsed in blank or accompanied by stock powers duly endorsed in blank,
        with a
        fair market value at the time of exercise, as determined by the Committee,
        equal
        to the required payment amount; (c) by any combination of (a) and (b); or
        (d) by
        delivering to the Company or its designated agent an executed irrevocable
        option
        exercise

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

      

      form
        together with
        irrevocable instructions to a broker-dealer to sell or margin a sufficient
        portion of the Optioned Shares to be exercised and to deliver the sale or
        margin
        proceeds directly to the Company to pay the option price.

          Option
        exercise
        notices postmarked (if mailed) or received by the Secretary of the Company
        (if
        by facsimile or hand-delivery) prior to 11:59 p.m. (central time) of the
        date
        specified in Paragraph 3 shall be given effect.  Any notice postmarked or
        received after such time shall be null and void.

          6.        
        Tax
        Withholding.  Upon exercise of all or any part of the Option, the
        Company may satisfy its withholding obligations in any manner determined
        by the
        Committee, including by withholding a portion of the Optionee’s compensation or,
        in the case of a “cashless” exercise, by withholding a number of the Optioned
        Shares being purchased that have a fair market value, as determined by the
        Committee, equal to the amount required to be withheld.  The fair market
        value of fractional shares of Stock remaining after the withholding requirements
        are satisfied will be paid to the Optionee in cash.  The Company may also
        require the Optionee to deliver a check for the Company’s withholding tax
        obligation prior to effecting the exercise of the option or delivering the
        shares issuable upon exercise.

       

          7.        
        Miscellaneous.

       

              (a)       
        The Optionee (or his legal representative) shall not be deemed to be a
        shareholder of the Company with respect to any of the Optioned Shares being
        purchased until such shares are paid for in full, and the Company’s withholding
        tax liability is satisfied, to the Committee’s satisfaction.

       

              (b)       
        The Option shall not be transferable by the Optionee; provided that, following
        the Optionee’s death,  the Option, to the extent exercisable in accordance
        with the terms of the Plan and this Agreement, may be exercised by the executor
        of the Optionee’s estate (or by such person as the executor of the estate
        certifies as inheriting the Option as a result of the operation of the
        Optionee’s last will and testament or as a result of the laws of intestate
        succession). 

       

              (c)       
        It is fully understood that nothing contained in this Agreement or the Plan
        shall interfere with or limit in any way the right of the Company or any
        Affiliate to terminate the Optionee’s employment at any time nor confer upon the
        Optionee any right to continue in the employ of the Company or any
        Affiliate.

       

              (d)       
        As a condition of the granting of this Option, the Optionee agrees, for himself,
        his legal representatives, the executor of his estate, and his heirs, that
        the
        Plan and this Agreement shall be subject to discretionary interpretation
        by the
        Committee and that any interpretation by the Committee of the terms of the
        Plan
        and this Agreement shall be final, binding and conclusive on the Optionee,
        his
        legal representatives, the executor of his estate and his heirs.  The
        Optionee, his legal representatives, the executor of his estate and his heirs
        shall not challenge or dispute the Committee’s decisions.

    

     

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    

            (e)       
      The Committee may modify this Option at any time.  However, no
      modification, extension or renewal shall (i) confer on the Optionee any right
      or
      benefit which he would not be entitled to if a new option was granted under
      the
      Plan at such time or (ii) alter, impair or adversely affect this Option or
      the
      Agreement without the written consent of the Optionee; provided that the
      Committee need not obtain written consent of the Optionee for a modification
      of
      the Option to the extent that the Plan specifically permits the Committee action
      or to the extent that the Committee deems such modification necessary to comply
      with any applicable law, the listing requirements of any principal securities
      exchange or market on which the shares underlying the Option are then traded,
      or
      to preserve favorable accounting or tax treatment of the Option for the
      Company.

     

            (f)        
      No individual may exercise the Option and no shares will be issued under this
      Agreement unless and until the Company has determined to its satisfaction that
      such exercise and issuance comply with all relevant provisions of applicable
      law, including the requirements of any stock exchange on which the shares may
      then be traded.   

     

        8.        
      Governing
      Law.  This Agreement shall be governed by the internal laws of the
      State of Illinois, without regard to the principle of conflict of laws, as
      to
      all matters, including, but not limited to, matters of validity, construction,
      effect, performance and remedies.  No legal action or proceeding may be
      brought with respect to this Agreement more than one year after the later of
      (a)
      the last date on which the act or omission giving rise to the legal action
      or
      proceeding occurred; or (b) the date on which the individual bringing such
      legal
      action or proceeding had knowledge (or reasonably should have had knowledge)
      of
      such act or omission.  Any such action or proceeding must be commenced and
      prosecuted in its entirety in the federal or state court having jurisdiction
      over Brown County, Wisconsin or Cook County, Illinois, and each individual
      with
      any interest hereunder agrees to submit to the personal jurisdiction thereof,
      and agrees not to raise the objection that such courts are not a convenient
      forum.  Such action or other legal proceeding shall be heard pursuant to a
      bench trial and, the parties to such proceeding shall waive their rights to
      a
      trial by jury.

     

        9.        
      Severability. 
      In the event any provision of the Agreement is held illegal or invalid for
      any
      reason, the illegality or invalidity will not affect the remaining provisions
      of
      the Agreement, and the Agreement shall be construed and enforced as if the
      illegal or invalid provision had not been included.

     

        10.       
      Terms
      of Plan Govern.  All parties acknowledge that this option is granted
      under and pursuant to the Plan, which shall govern all rights, interests,
      obligations and undertakings of both the Company and the
      Participant.

     

    INTEGRYS
      ENERGY GROUP,
      INC.

     

     

    By: 
/s/
      Bud Treml

    Title: 
Senior
      VP &
Chief HR
      Officer                          

     

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

       

    

    ACKNOWLEDGEMENT
      FORM

     

     

     

    I
      have read the terms of the
      Integrys Energy group, Inc. Nonqualified Stock Option Agreement, dated May
      17,
      2007, and I hereby declare that I understand and agree to be bound by the terms
      and conditions of the Agreement.

     

                                                                                 
      

    Optionee

     

     

    Print
      name:                                                            
      

     

     

     

     

     

    PLEASE
      DETACH THIS
      ACKNOWLEDGEMENT FORM FROM THE OPTION AGREEMENT AND RETURN IT TO THE GREEN BAY
      HUMAN RESOURCES DEPARTMENT.  YOUR OPTION WILL NOT BECOME EFFECTIVE UNTIL
      THE COMPANY RECEIVES THIS ACKNOWLEDGMENT FORM.

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