Tropical
Annual Incentive Compensation Plan
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Revised January 1,
2008 This is a
confidential document.  Distribution is restricted to Company
Officers, Directors, and the Participant only.
  
 Tropical
Annual
 Incentive
Compensation Plan
 
  I.
              PLAN
      OBJECTIVE & PARTICIPATION
 
 The
Tropical Annual Incentive Compensation Plan (“Plan”) is open to the President of
Tropical Shipping.  The objective of the plan is to encourage and
reward the President for efforts that result in increased company income and
achievement of specified financial and non-financial goals and corporate key
objectives.
 
 II.
              PLAN
      DESCRIPTION
 
 The plan
design consists of financial and non-financial performance
criteria.  The performance criteria focus is on the achievement of
established and documented strategic goals.  Performance targets may
include measures of company financial and operating performance, defined group
objectives or individual performance objectives.
 
 An
incentive target is assigned representing an estimated percentage of salary,
which the participant is eligible to earn under the plan.  The
incentive target is then weighted between the various performance
criteria.  Measurement indexes are prepared for each designated goal,
which are determined as part of the management strategic planning
process.
 
 Based on
actual year-end results, these indexes will provide a scaled incentive as a
percentage of the target incentive for each performance
criteria.  Performance criteria and results will be approved by the
Compensation Committee of the Nicor Inc. Board of Directors (the
“Committee”).
 
 III.
              PERFORMANCE
      CRITERIA SETTING GUIDELINES
 
 An
important aspect of this Plan will be the establishment of effective performance
criteria.  In addition to measures of corporate financial and
operating performance, other non-financial measures of performance may also be
established.  The goals should be realistic and measurable wherever
possible by quantifiable performance criteria.  It is recognized that
measurement of some goals may require subjective assessments of
performance.  Goals should be consistent with the longer-term
strategic plan.
  Performance
criteria will be established at the beginning of each calendar
year.  Each performance criterion will have an index, against which
the results of the goal are measured.  Each index will have a
threshold, target and maximum incentive amount.
 
 The
Committee may take into account all of the facts and circumstances which exist
during the performance period and may, if it determines in its discretion that
adjustments are warranted, make appropriate upward or downward revisions in
performance criteria, add or delete goals, or change the relative percentages
assigned to the various performance goals.
  
 IV.
              PAYMENT
      OF FINAL INCENTIVES
 
 No
incentive award is payable until the Committee approves such
payment.  The Committee may make appropriate upward or downward
adjustments if, after taking into consideration all of the facts and
circumstances of the performance period, it determines in its discretion that
adjustments are warranted.
 
 The
amount of incentive award earned for financial/budget related goals can vary
above and below target based upon results achieved.  For targets met,
the incentive award earned will be 100% of target.  When targets are
exceeded or are not reached, the incentive award earned will be proportionately
more or less than the target.  No incentive award is paid for any
performance that falls below the threshold performance level or above the
maximum performance level.  Prorating shall occur between each
incremental step within the index.
  Subject
to the provisions of the “Incentive Payment Deferral” section below, incentive
awards will be paid to the participant in a single lump sum.  Payment
will be made no later than the date two and one-half (2 1⁄2) months after the end
of the calendar year in which the services were performed (or, in the event that
payment by such date is administratively impracticable, no later than December
31).  Incentive payments under this Plan are intended to satisfy the
short-term deferral exemption under Treas. Reg. Sec.
1.409A-1(b)(4).  All incentives will be paid in cash, except as
provided below.
  Incentive Payment
Deferral
 Deferral under the Nicor Stock
Deferral Plan.  A participant in the Nicor Stock Deferral Plan
may elect to defer up to 50% of his incentive payment into that
plan.  All such elections must be made in accordance with the terms of
the Nicor Stock Deferral Plan in order to be effective.  In the event
of conflict between the terms of the Nicor Stock Deferral Plan and this Plan,
the terms of the Nicor Stock Deferral Plan shall control.  Appropriate
taxes for the entire incentive award amount will be withheld from the portion of
the incentive award being paid in cash.
  Deferral under this
Plan.Notwithstanding anything contained herein to the
contrary, if any portion of any incentive award which would otherwise be payable
to a “covered individual” (within the meaning of Section 162(m) of the Code) is
not deductible by reason of Section 162(m) of the Code, such portion shall
automatically be deferred under this Plan.  All such deferred amounts
shall be credited with compounded interest equal to the prime rate, applied on
the last day of each calendar quarter.  The deferred incentive award
amounts and interest shall be paid to the covered individual in a lump sum on
the first regularly scheduled payroll date of Tropical Shipping following the
six month anniversary of the covered individual’s separation from
service.
  V.
              ADMINISTRATION
 
 Administration
of the plan is the responsibility of the Officer Compensation Committee, which
is appointed by the Tropical Shipping Board of Directors.
 
 
 At the
beginning of each plan year (which is the calendar year), the overall plan
design and the performance criteria will be reviewed and approved by the
Committee.  At the end of the plan year, final results are approved by
the Committee.
 
 Calculation
of payments is based on MIP Adjusted Gross, which is defined as base wages paid
during the plan year, and excluding incentives, allowances or stock
options.  If the participant voluntarily terminates or is terminated
for cause prior to the end of the performance period, then no incentive shall be
granted.  In the event the participant shall die, become disabled,
retire or is terminated without cause before the end of the performance period,
then at the conclusion of the defined performance period the Committee will
authorize payment of an incentive to the participant or beneficiary in such
amount as the Committee deems appropriate.
 
 Record
keeping for the plan involves the recording of accruals, verification of final
incentive payment amounts, and processing of incentive
disbursement.  This is the responsibility of the Human Resources
Director and the Compensation & Benefits Manager.
 
 All
expenses of the plan, including incentive payments, are paid from the general
assets of Tropical Shipping or its subsidiaries.
 
 The
Committee shall, subject to the provisions of the Plan, have sole and complete
authority and discretion to interpret the Plan and make all determinations
necessary or advisable for the administration of the Plan.  Amendment
or termination of this Plan may occur at any time, with the approval of the
Committee.  No such amendment or termination shall negatively impact
an incentive award amount which the participant accrued under the Plan prior to
the calendar year in which the amendment or termination is
made.