Document:

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INTEGRYS ENERGY GROUP, INC.
2014 OMNIBUS INCENTIVE COMPENSATION PLAN
RESTRICTED STOCK UNIT AGREEMENT

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. 2014 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.  Your award will not become effective until you acknowledge receipt online.

	
		
	Vesting Schedule:

	Twenty-five percent (25%) of your RSUs will vest on each of the first four anniversaries of the Grant Date (each, a “Vesting 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

	
		
	 
	[Standard Paragraph #1 - For use with regular grants made in February or March of each year.]  If your employment or service terminates prior to a Vesting Date as a result of death or you become disabled (as determined by the Committee based upon the definition set forth in the Company’s long term disability plan and provided that you are also disabled based on the definition set forth in Internal Revenue Code Section 409A), (1) if your termination or disability occurs on or after December 31 of the calendar year in which occurs the Grant Date, the RSUs will become fully vested on your date of termination or disability, and (2) if your termination or disability occurs prior December 31 of the calendar year in which occurs the Grant Date, you will become partially vested on your date of termination or disability, 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 fractional RSU, the number of RSUs that become vested will be rounded to the next higher whole number of RSUs.

[Alternate Paragraph #1 - For use in mid-year special grants where proration based on the calendar year might result in substantial vesting shortly following the Grant Date.  Under the alternate paragraph, proration is based on the number of months of employment completed during the one year period from the first day of the month in which occurs the Grant Date.] If your employment or service terminates prior to a Vesting Date as a result of death or you become disabled (as determined by the Committee based upon the definition set forth in the Company’s long term disability plan and provided that you are also disabled based on the definition set forth in Internal Revenue Code Section 409A), (1) if your termination or disability occurs on or after the first day of the twelfth (12th) month following the month in which occurs the Grant Date, the RSUs will become fully vested on your date of termination or disability, and (2) if your termination or disability occurs prior to the first day of the twelfth (12th) month following the month in which occurs the Grant Date, you will become partially vested on your date of termination or disability, 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 twelve (12) month period that begins on the first day of the month following the month in which occurs the Grant Date, and the denominator of which is twelve (12).  If the foregoing calculation results in vesting of a fractional RSU, the number of RSUs that become vested will be rounded to the next higher whole number of RSUs.

[Standard Paragraph #2 - For use with regular grants made in February or March of each year.]  For purposes of this Agreement, “Retirement” means termination of your employment or service with the Company and its Affiliates,  if  the termination occurs on or after your attainment of age sixty-two (62) or the termination occurs on or after your attainment of age fifty-five (55) and completion of at least ten (10) years of vesting service (as defined in the Integrys Energy Group 401(k) Plan for 

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	Administrative Employees) or if you are covered under a defined benefit pension plan maintained by the Company or an Affiliate, the termination qualifies you for retirement (as opposed to vested termination) benefits under such defined benefit pension plan.  If your employment or service terminates prior to a Vesting Date as a result of Retirement,  (1) if your Retirement occurs on or after December 31 of the calendar year in which occurs the Grant Date, your RSUs will continue to vest, 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, a portion of your RSUs will be immediately forfeited, and the remainder of your RSUs will continue to vest,  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 vested if you die after Retirement but prior to the scheduled Vesting Date or if you become entitled to settlement of your vested RSUs as a result of termination of your employment or service by reason of Retirement within two (2) years following the occurrence of a “change in control event” within the meaning of Internal Revenue Code Section 409A.  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 vesting of a fractional RSU, the number of RSUs that become vested will be rounded to the next higher 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.

[Alternate Paragraph #2 - For use in mid-year special grants where proration based on the calendar year might result in substantial vesting shortly following the Grant Date.  Under the alternate paragraph, proration is based on the number of months of employment completed during the one year period from the first day of the month in which occurs the Grant Date.]  For purposes of this Agreement, “Retirement” means termination of your employment or service with the Company and its Affiliates,  if  the termination occurs on or after your attainment of age sixty-two (62) or the termination occurs on or after your attainment of age fifty-five (55) and completion of at least ten (10) years of vesting service (as defined in the Integrys Energy Group 

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	401(k) Plan for Administrative Employees) or if you are covered under a defined benefit pension plan maintained by the Company or an Affiliate, the termination qualifies you for retirement (as opposed to vested termination) benefits under such defined benefit pension plan.  If your employment or service terminates prior to a Vesting Date as a result of Retirement,  (1) if your Retirement occurs on or after the first day of the twelfth (12th) month following the month in which occurs the Grant Date, your RSUs will continue to vest, 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 the first day of the twelfth (12th) month following the month in which occurs the Grant Date, a portion of your RSUs will be immediately forfeited, and the remainder of your RSUs will continue to vest,  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 vested if you die after Retirement but prior to the scheduled Vesting Date or if you become entitled to settlement of your vested RSUs as a result of termination of your employment or service by reason of Retirement within two (2) years following the occurrence of a “change in control event” within the meaning of Internal Revenue Code Section 409A.  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 twelve (12) month period that begins on the first day of the month following the month in which occurs the Grant Date, and the denominator of which is twelve (12).  If the foregoing calculation results in forfeiture of a fractional RSU, the number of RSUs that are forfeited will be 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.

In general, any RSUs that have not previously been forfeited will become fully vested, even if not otherwise vested in accordance with the vesting schedule above; if (1) a Change in Control (as defined in the Plan) has occurred and (2) your employment with the Company and its Affiliates has been involuntarily terminated for any reason other than Cause (or, if you have in effect with the Company or an Affiliate an employment, retention, change in control, severance or similar agreement that provides for “good reason” termination and, in accordance with such agreement, you terminate employment or service for “good reason”) within two 

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	years following the date of the Change in Control.  The vesting of your RSUs following a Change in Control will be governed by the terms of the Plan.   

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

	Settlement of Vested RSUs:
	Settlement of any RSUs that have become vested will occur on the earliest of the following dates:

1.  The Vesting Date applicable to the RSUs if (a) you are continuously employed by the Company or an Affiliate from the Grant Date through the Vesting Date or (b) you would have been continuously employed by the Company or an Affiliate from the Grant Date through the Vesting Date except for your Retirement. 

2.  As soon as practicable (and not more than ninety (90) days) following your date of death.

3.  Six (6) months following the date you become disabled (as defined above).

4.  In the case of any termination of your employment or service in which you have vested RSUs (other than as a result of disability or death), the date that would have been the latest Vesting Date applicable to any of the RSUs if you had remained continuously employed by the Company or an Affiliate from the Grant Date through the Vesting Date (but not sooner than six (6) months from the termination of your employment or service); provided, that distribution of all vested RSUs shall be made six (6) months following termination of your employment or service, if such termination occurs within two (2) years following the occurrence of a “change in control event” within the meaning of Internal Revenue Code Section 409A. 

Notwithstanding the foregoing, in the event of your Retirement prior to the occurrence of a “change in control event” within the meaning of Internal Revenue Code Section 409A, any RSUs not previously forfeited will be vested and settled as soon as practicable (and not more than ninety (90) days) following the occurrence of such “change in control event”.

For purposes of this Agreement, your employment or service will be terminated if the Committee determines that you have incurred a “separation from service” as such term is defined for purposes of Section 409A of the Internal Revenue Code, taking into account, 

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	in the case of an absence from service for disability, the maximum leave periods permitted under Section 409A for disability leaves of absence.

Except as provided below or in the Plan, your vested RSUs will be settled by delivery to you or, in the case of your death, to your estate, of a certificate(s) or credit in book entry form, 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. 

The Fair Market Value of any fractional RSU, including any fractional RSU remaining after the satisfaction of withholding obligations (as determined as of the date the tax withholding is determined) will be paid to you in cash or will be applied as additional tax withholding at the time your RSUs are settled.  
Notwithstanding anything to the contrary, settlement at the foregoing times is subject to any deferral election that you have made, if eligible.

	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 (including securities laws), Company or Affiliate 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 you would have received had your RSUs been actual shares of Common Stock, so long as the 

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	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, settlement and other terms of this Restricted Stock Unit Award Agreement as apply to 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 any 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 Company requires to meet its withholding obligation under applicable tax laws or regulations.  The Company may also satisfy the withholding requirement, in whole or in part, by withholding for its own account that number of shares of Common Stock otherwise deliverable to you, or by reducing the number of RSUs credited 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.  

	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 

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	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 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.

	Recoupment and Clawback

	As a condition of the granting of this Award, you agree, for yourself and your legal representative or guardians, the executor of your estate, and your heirs, that this Agreement, and any RSU or Stock issued or cash paid pursuant to this Agreement, shall be subject to any recoupment or clawback policy that may be adopted by the Company from time to time and to any requirement of applicable law, regulating or listing standard that requires the Company to recoup or claw back compensation paid pursuant to this Award.

	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 

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	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.

	Certain Corporate
Transactions

	Notwithstanding anything in the Plan or this Agreement to the contrary, if at the time of a Change in Control, or at any other time, your RSUs are cancelled and converted to a cash value, and if such cancellation and conversion occurs prior to the date on which vested amounts are to be settled under this Agreement, the cash value of your cancelled and converted RSUs will accrue interest equivalent at the prime rate of interest from the cancellation and conversion date to the settlement date.

	Severability:

	In the event any provision of this 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.

	Terms of Plan Govern:

	This Restricted Stock Unit Award is granted under and, except as specifically identified in this Agreement, 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 are eligible for and 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 

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	provisions set forth in this Agreement, and other terms and conditions of the Plan affecting outstanding Plan awards, will 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:  VP - HR & Corp Comms

10exh44

INTEGRYS ENERGY GROUP, INC.
NONQUALIFIED STOCK OPTION AGREEMENT

You have been granted a nonqualified stock option with respect to shares of common stock of Integrys Energy Group, Inc. (the “Company”) under the Integrys Energy Group, Inc. 2014 Omnibus Incentive Compensation Plan (the “Plan”)  This Agreement sets forth the terms, rights and obligations of you and the Company with respect to the grant of this option.  This option shall not become effective until you acknowledge receipt online.
The option is granted under, and is subject to, the terms of the Plan, which are specifically incorporated by reference in this Agreement.  Any capitalized terms used in this Agreement which are not defined shall have the meaning set forth in the Plan.
1.Grant of Option.  Subject to the terms of this Agreement, the Company grants to you the right and option (the “Option”) to purchase ___ shares of the 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 the Grant Date. 
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 and become exercisable 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 your  termination of employment from the Company and its Affiliates for any reason, any Optioned Shares not vested as of the date of such termination will be cancelled, except as otherwise provided in this Section 2. 
If the foregoing calculation results in vesting of a fractional Optioned Share, the number of Optioned Shares that become vested will be rounded to the next higher whole number of shares.

[Standard Paragraph #1 – For use with regular grants made in February or March of each year.]  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 or disability occurs on or after December 31 of the calendar year in which occurs the Grant Date, the Optioned Shares will become fully vested on your date of termination, or (2) if your termination or disability occurs prior to December 31 of the calendar year in which occurs the Grant Date, you will become partially vested on the date of termination, and the remaining Optioned Shares will be cancelled.  Your partially vested interest will be equal to the product obtained by multiplying the total number of Optioned Shares by a fraction, the numerator of which is the number of full months of service that you 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 fractional Optioned Share, the number of Optioned Shares that become vested will be rounded to the next higher whole number of shares.

[Alternate Paragraph #1 – For use in mid-year special grants where proration based on the calendar year might result in substantial vesting shortly following the Grant Date.  Under the alternate paragraph, proration is based on the number of months of employment completed during the one year period from the first day of the month in which occurs the Grant Date.]  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 or disability occurs on or after the first day of the twelfth (12th) month following the month in which occurs the Grant Date, the Optioned Shares will become fully vested on your date of termination, or (2) if your termination or disability occurs prior to the first day of the twelfth (12th) month following the month in which occurs the Grant Date, you will become partially vested on the date of termination, and the remaining Optioned Shares will be cancelled.  Your partially vested interest will be equal to the product obtained by multiplying the total number of Optioned Shares by a fraction, the numerator of which is the number of full months of service that you completed during the twelve (12) month period that begins on the first day of the month following the month in which occurs the Grant Date and the denominator of which is twelve (12).  If the foregoing calculation results in vesting of a fractional Optioned Share, the number of Optioned Shares that become vested will be rounded to the next higher whole number of shares.

[Standard Paragraph #2 – For use with regular grants made in February or March of each year.]  For purposes of this Agreement, “Retirement” means termination of your employment or service with the Company and its Affiliates,  if  the termination occurs on or after your attainment of age sixty-two (62) or the termination occurs on or after your attainment of age fifty-five (55) and completion of at least ten (10) years of vesting service (as defined in the Integrys Energy Group 401(k) Plan for Administrative Employees) or if you are covered under a defined benefit pension plan maintained by the Company or an Affiliate, the termination qualifies you for retirement (as opposed to vested termination) benefits under such defined benefit pension plan.  If your employment or service terminates as a result of Retirement, (1) if your Retirement occurs on or after December 31 of the calendar year in which occurs the Grant Date, the Optioned Shares will continue to vest, subject to the terms of the Plan, on the same schedule as would have applied had you continued employment, and (2) if your Retirement  occurs prior to December 31 of the calendar year in which occurs the Grant Date, a portion of the 

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Optioned Shares will be immediately forfeited, and the remainder of the Optioned Shares will continue to vest, subject to the terms of the Plan, on the same schedule as would have applied had you continued employment.  The portion of the Optioned Shares that are immediately forfeited will be equal to the product obtained by multiplying the total number of Optioned Shares by a fraction, the numerator of which is twelve (12) minus the number of full months of service that you 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 fractional Optioned Share, the number of Optioned Shares that become vested will be rounded to the next higher whole number of shares.  The number of Optioned Shares available for exercise on or after each vesting date will be reduced by a pro rata portion of the total number of forfeited Optioned Shares.

[Alternate Paragraph #2 – For use in mid-year special grants where proration based on the calendar year might result in substantial vesting shortly following the Grant Date.  Under the alternate paragraph, proration is based on the number of months of employment completed during the one year period from the first day of the month in which occurs the Grant Date.]  For purposes of this Agreement, “Retirement” means termination of your employment or service with the Company and its Affiliates,  if  the termination occurs on or after your attainment of age sixty-two (62) or the termination occurs on or after your attainment of age fifty-five (55) and completion of at least ten (10) years of vesting service (as defined in the Integrys Energy Group 401(k) Plan for Administrative Employees) or if you are covered under a defined benefit pension plan maintained by the Company or an Affiliate, the termination qualifies you for retirement (as opposed to vested termination) benefits under such defined benefit pension plan.  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, (1) if your Retirement occurs on or after the first day of the twelfth (12th) month following the month in which occurs the Grant Date, the Optioned Shares will continue to vest, subject to the terms of the Plan, on the same schedule as would have applied had you continued employment, and (2) if your Retirement  occurs prior to the first day of the twelfth (12th) month following the month in which occurs the Grant Date, a portion of the Optioned Shares will be immediately forfeited, and the remainder of the Optioned Shares will continue to vest, subject to the terms of the Plan, on the same schedule as would have applied had you continued employment.  The portion of the Optioned Shares that are immediately forfeited will be equal to the product obtained by multiplying the total number of Optioned Shares by a fraction, the numerator of which is twelve (12) minus the number of full months of service that you completed during the during the twelve (12) month period that begins on the first day of the month following the month in which occurs the Grant Date and the denominator of which is twelve (12).  If the foregoing calculation results in vesting of a fractional Optioned Share, the number of Optioned Shares that become vested will be rounded to the next higher whole number of shares.  The number of Optioned Shares available for exercise on or after each vesting date will be reduced by a pro rata portion of the total number of forfeited Optioned Shares.

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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 on the vesting date and ending on the earlier of:  
		
	a.
	the first anniversary of the date the Optionee’s employment with the Company and its Affiliates terminates for any reason other than Retirement, death or disability (as determined by the Committee based on the definition set forth  in the Company’s long-term disability plan); or

		
	b.
	in any other case, the 10th anniversary of the Grant Date.

During your life, the Option may be exercised only by you (or if you are incapacitated, by your legal representative).  If you die before exercising all of the vested Option, the executor of the your estate (or by such person as the executor of the estate certifies as inheriting the Option as a result of the operation of your 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.  In general, 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, if (a) a  Change in Control (as defined in the Plan) has occurred, and (b) your employment with the Company and its Affiliates has been involuntarily terminated for any reason other than Cause (or, if you have in effect with the Company or an Affiliate an employment, retention, change in control, severance or similar agreement that provides for “good reason” termination and, in accordance with such agreement, you terminate employment or service for “good reason”) within two (2) years following the date of the Change in Control.  The vesting of Optioned Shares following a Change in Control shall be governed by the terms of Section 13(b) of the Plan.
5.    Manner of Exercise and Payment.  In order to exercise this Option, you (or such other person entitled to exercise the Option as provided in Paragraph 3) must provide a written or electronic notice to the Company or its designated agent stating that you (or such other eligible person) 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 or by electronic transmission) to the Secretary of the Company or designated agent in such manner as the Secretary of the Company may prescribe.  
Exercise of all or a portion of the Option must be accompanied by contemporaneous payment equal to the number of Optioned Shares being purchased multiplied by the option exercise price or, in the case of clause (d) below, appropriate documentation which will result in payment to the Company on the settlement date (i.e., T+3) equal to the number of 

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Optioned Shares being purchased multiplied by the option exercise price.  Subject to such rules and restrictions as the Committee may prescribe, payment may be made:  (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 form together with irrevocable instructions to a broker-dealer (or confirmation from a broker-dealer that it has received such instructions) 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 exercise price and tax withholding.
Option exercise notices postmarked (if mailed) or received by the Secretary of the Company or designated delegate (if by facsimile, hand-delivery or electronic transmission) at or 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 has the right and the authority to deduct or withhold from any 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 such amount as the Company requires to meet its withholding obligation under applicable tax laws or regulations.  The Company may also satisfy its withholding obligation, in any other manner determined by the Committee. The Fair Market Value of fractional shares of Stock remaining after the withholding requirements are satisfied will be paid to you in cash or will be applied as additional tax withholding. 
7.    Miscellaneous.
(a)    You (or your legal representatives, the executor of your estate or your heirs) 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 you; provided that, following your 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 your estate (or by such person as the executor of the estate certifies as inheriting the Option as a result of the operation of your last will and testament or as a result of the laws of intestate succession).  In addition, by accepting this award, you agree not to sell any shares delivered to you at a time when applicable laws (including securities laws), Company or Affiliate policy or an agreement between the Company and its underwriters or other terms and conditions of the Plan prohibit a sale.
(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 

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terminate your employment at any time nor confer upon you any right to continue in the employ of the Company or any Affiliate.
(d)    As a condition of the granting of this Option, you agree, for yourself and your legal representatives or guardians, the executor of your estate, and your 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.  Neither you, your legal representatives, the executor of your estate or you heirs shall challenge or dispute the Committee’s decisions.
(e)    The existence of this Agreement or Option 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.
(f)    The Committee may modify this Option at any time.  However, no modification, extension or renewal shall (1) confer on you any right or benefit which you would not be entitled to if a new option was granted under the Plan at such time or (2) alter, impair or adversely affect this Option or the Agreement without your written consent; provided that the Committee need not obtain your 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.
(g)    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.
(h)    This Agreement may be executed in counterparts.
(i)    As a condition of the granting of this Option, you agree, for yourself and your legal representatives or guardians, the executor of your estate, and your heirs, that this Option and any Stock issued or cash paid pursuant to this Option shall be subject to any recoupment or clawback policy that may be adopted by the Company from time to time and to any requirement of applicable law, regulation or listing standard that requires the Company to recoup or claw back compensation paid pursuant to this Option.

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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.
INTEGRYS ENERGY GROUP, INC.

By: ______________________
Title:  VP – HR & Corp Comms

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