KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT

1.   Definitions .

(a)   Act .  For purposes of this Agreement, the term “ Act ” means the Securities Exchange Act of 1934, as amended.

(b)   Affiliate and Associate .  An “ Affiliate ” of, or a person “ affiliated ” with, a specified person, is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified and the term “ Associate ” used to indicate a relationship with any person, means:

(i)   any corporation or organization (other than the registrant or a majority-owned subsidiary of the registrant) of which such person is an officer or partner or is,

directly or indirectly, the beneficial owner of 10 percent or more of any class of equity securities,

(ii)   any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity, and

(iii)   any relative or spouse of such person, or any relative of such spouse, who has the same home as such person or who is a director or officer of the registrant or any of its parents or subsidiaries.

(c)   Beneficial Owner .  For purposes of this Agreement, a Person shall be deemed to be the “ Beneficial Owner ” of any securities:

(i)   which such Person or any of such Person ’ s Affiliates or Associates has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, (A) securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person ’ s Affiliates or Associates until such tendered securities are accepted for purchase or (B) securities issuable upon exercise of any rights agreement that the Company may have in effect at a time before the issuance of such securities;

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

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

(iii)   which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person ’ s Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in Subsection 1(c)(ii) above) or disposing of any voting securities of the Company.

(d)   Cause .   “ Cause ” for termination by the Company of the Executive ’ s employment in connection with a Change of Control of the Company shall, for purposes of this Agreement, be limited to:

(i)   the engaging by the Executive in intentional conduct not taken in good faith which has caused demonstrable and serious financial injury to the Company, as evidenced by a determination in a binding and final judgment, order or decree of a court or administrative agency of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, in an action, suit or proceeding, whether civil, criminal, administrative or investigative;

(ii)   conviction of a felony (as evidenced by binding and final judgment, order or decree of a court of competent jurisdiction, in effect after exhaustion of all rights of

appeal) which substantially impairs the Executive ’ s ability to perform his duties or responsibilities; or

(iii)   continuing willful and unreasonable refusal by the Executive to perform the Executive ’ s duties or responsibilities (unless significantly changed without the Executive ’ s consent).

(e)   Change in Control of the Company .  For purposes of this Agreement, a Change in Control of the Company shall be deemed to have occurred if:

(i)   any Person (other than any employee benefit plan of the Company or of any subsidiary of the Company, any Person organized, appointed or established pursuant to the terms of any such benefit plan or any trustee, administrator or fiduciary of such a plan) is or becomes the Beneficial Owner of securities of the Company representing at least 30% of the combined voting power of the Company ’ s then outstanding securities;

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

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

(iv)   there shall be consummated any merger of the Company or share exchange involving the Company in which the Company is not the continuing or surviving corporation other than a merger of the Company in which each of the holders of the Company ’ s Common Stock immediately prior to the merger have the same

proportionate ownership of common stock of the surviving corporation immediately  after the merger;

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

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

(f)   Code .  For purposes of this Agreement, the term “ Code ” means the Internal Revenue Code of 1986, including any amendments thereto or successor tax codes thereof.

(g)   Continuing, Director .  For purposes of this Agreement, the term “ Continuing Director ” means:

(i)   any member of the Board of Directors of the Company who was a member of such Board on the date of this Agreement;

(ii)   any successor of a Continuing Director who is recommended to succeed a Continuing Director by a majority of the Continuing Directors then on such Board; and

(iii)   additional directors elected by a majority of the Continuing Directors then on such Board.

(h)   Covered Termination .  Except as provided in 2(b), for purposes of this Agreement, the term “ Covered Termination ” means any Termination of Employment where the Termination Date is any date on or after the date on which a Change in Control of the Company has occurred and prior to the end of the Employment Period.

(j)   Good Reason .  For purposes of this Agreement, the Executive shall have a “ Good Reason ” for termination of employment in connection with a Change in Control of the Company in the event of:

(i)   any breach of this Agreement by the Company, including specifically any breach by the Company of its agreements contained in Sections 4, 5 or 6 hereof;

(ii)   the removal of the Executive from, or any failure to reelect or reappoint the Executive to, any of the positions held with the Company or the Employer on the date of the Change in Control of the Company or any other positions with the Company or the Employer to which the Executive shall thereafter be elected, appointed or assigned, except in the event that such removal or failure to reelect or reappoint relates to the termination by the Company of the Executive ’ s employment for Cause or by reason of disability pursuant to Section 12 hereof;

(iii)   a good faith determination by the Executive that there has been a significant adverse change, without the Executive ’ s written consent, in the Executive ’ s working conditions or status with the Company or the Employer from such working conditions or status in effect during the 180-day period immediately prior to the Change in Control of the Company, including but not limited to (A) a significant change in the nature or scope of the Executive ’ s authority, powers, functions, duties or responsibilities,

or (B) a significant reduction in the level of support services, staff, secretarial and other assistance, office space and accoutrements; or

(iv)   failure by the Company to obtain the agreement referred to in Section 17(a) hereof as provided therein.

(k)   Normal Retirement Date .  For purposes of this Agreement, the term “ Normal Retirement Date ” means the earlier of:

(i)   “ Normal Retirement Date ” as defined in Part A of the Wisconsin Public Service Corporation Retirement Plan, or any successor plan, as in effect on the date of the Change in Control of the Company; or

(ii)   such earlier retirement date chosen by the Executive prior to the commencement of the Employment Period.

(l)   Person .  For purposes of this Agreement, the term “ Person ” shall mean any individual, firm, partnership, corporation or other entity, including any successor (by merger or otherwise) of such entity, or a group of any of the foregoing acting in concert.

(m)   Separation from Service .  For purposes of this Agreement, the term “Separation from Service” means the date on which the Executive has a Termination of Employment or if later, separates from service (within the meaning of Code Section 409A) from the Company and each other corporation, trade or business that, with the Company, constitutes a controlled group of corporations or group of trades or businesses under common control within the meaning of Code Sections 414(b) or (c).  For this purpose, Code Sections 414(b) and (c) shall be applied by substituting “at least 50 percent” for “at least 80 percent” each place it appears.     Specifically, if Executive continues to provide services to the Company or an affiliate in a

(n)   Termination of Employment .  For purposes of this Agreement, the Executive’s “Termination of Employment” shall occur when the Company and Executive reasonably anticipate that no further services will be performed by the Executive for the Company after a certain date or that the level of bona fide services the Executive will perform after such date as an employee of the Company will permanently decrease to no more than 20% of the average level of bona fide services performed by the Executive (whether as an employee or independent contractor) for the Company over the immediately preceding 36-month period (or such lesser period of services).  For purposes of this definition, the term Company includes each other corporation, trade or business that, with the Company, constitutes a controlled group of corporations or group of trades or businesses under common control within the meaning of Code Sections 414(b) or (c).  For this purpose, Code Sections 414(b) and (c) shall be applied by substituting “at least 50 percent” for “at least 80 percent” each place it appears.  An Executive is not considered to have a Termination of Employment if the Executive is absent from active employment due to military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed the greater of (i) six months, or (ii) the period during which the Executive’s right to reemployment by the Company or controlled group member is provided either by statute or by contract; provided that if the leave of absence is due to a medically determinable physical or mental impairment that can be expected to result in death or last for a continuous period of not less than six months, where such impairment causes the Executive to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, the leave may be extended for up to 29 months without causing a

(o)   Termination Date .  For purposes of this Agreement, except as otherwise provided in Section 2(b), Section 10(b) and Section 17(a) hereof, the term “ Termination Date ” means:

(i)   if the Executive ’ s employment is terminated by the Executive ’ s death, the date of death;

(ii)   if the Executive ’ s employment is terminated by reason of voluntary early retirement, as agreed in writing by the Company and the Executive, the date of such early retirement which is set forth in such written agreement;

(iii)   if the Executive ’ s employment is terminated for purposes of this Agreement by reason of disability pursuant to Section 12 hereof, the earlier of thirty days after the Notice of Termination is given or one day prior to the end of the Employment Period;

(iv)   if the Executive ’ s employment is terminated by the Executive voluntarily (other than for Good Reason), the date the Notice of Termination is given; and

(v)   if the Executive ’ s employment is terminated by the Company (other than by reason of disability pursuant to Section 12 hereof) or by the Executive for Good

Reason, the earlier of thirty days after the Notice of Termination is given or one day prior to the end of the Employment Period.  Notwithstanding the foregoing,

(A)   If termination is for Cause pursuant to Section 1(d)(iii) of this Agreement and if the Executive has cured the conduct constituting such Cause as described by the Company in its Notice of Termination within such thirty day or shorter period, then the Executive ’ s employment hereunder shall continue as if the Company had not delivered its Notice of Termination.

(B)   If the Company (or the Employer) shall give a Notice of Termination for Cause or by reason of disability and the Executive in good faith notifies the Company that a dispute exists concerning the termination within the fifteen day period following receipt thereof, then the Executive may elect to continue his employment during such dispute, and the Termination Date shall be determined under this paragraph.  If the Executive so elects and it is thereafter determined that Cause or disability (as the case may be) did exist, the Termination Date shall be the earlier of (1) the date on which the dispute is finally determined, either (x) by mutual written agreement of the parties or (y) in accordance with Section 22 hereof, (2) the date of the Executive ’ s death, or (3) one day prior to the end of the Employment Period.  If the Executive so elects and it is thereafter determined that Cause or disability (as the case may be) did not exist, then the employment of the Executive hereunder shall continue after such determination as if the Company (of the Employer) had not delivered its Notice of Termination and there shall be no Termination Date arising out of such Notice.  In either case, this Agreement continues, until the Termination Date, if any, as if the Company (or the Employer) had not delivered the Notice of Termination except that, if it

is finally determined that the Company (or the Employer) properly terminated the Executive for the reason asserted in the Notice of Termination, the Executive shall in no case be entitled to a Termination Payment (as hereinafter defined) arising out of events occurring after the Company delivered its Notice of Termination.

(C)   If the Executive shall in good faith give a Notice of Termination for Good Reason and the Company (or the Employer) notifies the Executive that a dispute exists concerning the termination within the fifteen day period following receipt thereof, then the Executive may elect to continue his employment during such dispute and the Termination Date shall be determined under this paragraph.  If the Executive so elects and it is thereafter determined that Good Reason did exist, the Termination Date shall be the earliest of (1) the date on which the dispute is finally determined, either (x) by mutual written agreement of the parties or (y) in accordance with Section 22 hereof, (2) the date of the Executive ’ s death or (3) one day prior to the end of the Employment Period.  If the Executive so elects and it is thereafter determined that Good Reason did not exist, then the employment of the Executive hereunder shall continue after such determination as if the Executive had not delivered the Notice of Termination asserting Good Reason and there shall be no Termination Date arising out of such Notice.  In either case, this Agreement continues, until the Termination Date, if any, as if the Executive had not delivered the Notice of Termination except that, if it is finally determined that Good Reason did exist, the Executive shall in no case be denied the benefits described in Sections 8(b) and 9 hereof (including a Termination Payment) based on events occurring after the Executive delivered his Notice of Termination.

(D)   Except as provided in Paragraph (B) and (C) above, if the party receiving the Notice of Termination notifies the other party that a dispute exists concerning the termination within the appropriate period following receipt thereof and it is finally determined that the reason asserted in such Notice of Termination did not exist, then (1) if such Notice was delivered by the Executive, the Executive will be deemed to have voluntarily terminated his employment and the Termination Date shall be the earlier of the date fifteen days after the Notice of Termination is given or one day prior to the end of the Employment Period and (2) if delivered by the Company, the Company will be deemed to have terminated the Executive other than by reason of death, disability or Cause.

2.   Termination or Cancellation Prior to Change in Control .

(a)   Subject to Subsection 2(b) hereof, the Company (and the Employer) and the Executive shall each retain the right to terminate the employment of the Executive or terminate and cancel this Agreement at any time prior to a Change in Control of the Company.  Subject to Subsection 2(b) hereof, in the event the Executive ’ s employment is terminated by the Company (or the Employer) prior to a Change in Control of the Company, this Agreement shall be terminated and cancelled and of no further force and effect, and any and all rights and obligations of the parties hereunder shall cease.  In the event the Executive ’ s employment is terminated by the Executive prior to a Change in Control of the Company, except for obligations of the Executive in Section 14(b) hereof which shall survive such termination, this Agreement shall be terminated and cancelled and of no further force and effect and any and all rights and obligations of the parties except those in Section 14 shall cease.

(b)   Anything in this Agreement to the contrary notwithstanding, if a Change in Control of the Company shall occur and if the Executive ’ s employment with the Company or a

subsidiary of the Company shall have been terminated by the Company or the Employer (other than a termination due to the Executive ’ s death or as a result of the Executive ’ s disability) or if this Agreement shall have been otherwise terminated and cancelled by the Company during the period of 180 days prior to the date on which the Change in Control of the Company shall occur, then for all purposes of this Agreement such termination of employment shall be deemed a “ Covered Termination ” (and the Executive’s Termination Date shall be the date of such termination of employment) and any such termination and cancellation of this Agreement unless effected in the manner specified in Section 19 hereof, shall be null and void unless it shall be reasonably demonstrated by the Company that such termination of employment or termination and cancellation of this Agreement:

(i)   shall not have been at the request of a third party who had taken steps reasonably calculated to effect a Change in Control of the Company; or

(ii)   shall not otherwise have arisen in connection with or in anticipation of a Change in Control of the Company.

3.   Employment Period .  If a Change in Control of the Company occurs when the Executive is employed by the Company or a subsidiary of the Company, the Company will, or will cause the Employer to, continue thereafter to employ the Executive during the Employment Period, and the Executive will remain in the employ of the Employer in accordance with and subject to the terms and provisions of this Agreement.  Any termination of the Executive ’ s employment during the Employment Period, whether by the Company or the Employer, shall be deemed a termination by the Company for purposes of this Agreement.

4.   Duties .  During the Employment Period, the Executive shall, in the same capacities and positions held by the Executive at the time of the Change in Control of the

5.   Compensation .  During the Employment Period, the Executive shall be compensated as follows:

(a)   The Executive shall receive, at reasonable intervals (but not less often than monthly) and in accordance with such standard policies as may be in effect immediately prior to the Change in Control of the Company, an annual base salary in cash equivalent of not less than the Executive ’ s highest annual base salary as in effect during the 180-day period immediately prior to the Change in Control of the Company, subject to any deferral election then in effect and subject to adjustment as hereinafter provided.

(b)   The Executive shall receive fringe benefits at least equal in valu