Document:

exhibit1006perfcashagreement.htm

    
      Nicor Inc.

      Form
8-K

      Exhibit
10.06

       

       

    

    PERFORMANCE
CASH UNIT AGREEMENT

    NICOR INC. 2006 LONG-TERM
INCENTIVE PLAN

    

    THIS
AGREEMENT, entered into as of March 25, 2010 (the "Agreement Date"), by and
between Rick Murrell (the "Employee"), and Nicor Inc., an Illinois corporation
(the "Company");

    WITNESSETH
THAT:

    

    WHEREAS, the Company maintains the
Nicor Inc. 2010 Long-Term Incentive Program (the "Program"), which is part of
the Nicor Inc. 2006 Long-Term Incentive Plan (the “Plan”) and which is
incorporated into and forms a part of this Agreement, for the benefit of key
executive and management employees of the Company and any Related Company;
and

    

    WHEREAS,
the Employee has been selected by the Compensation Committee of the Board of
Directors of the Company (the "Committee") to receive a Performance Cash Unit
award;

    

    NOW,
THEREFORE, IT IS AGREED, by and between the Company and the Employee, as
follows:

    

    1.  Award.  The
Employee is hereby awarded 50,900 Performance Cash Units, effective as of the
Agreement Date.

    

    2.  Amount of Payment.
Subject to the provisions of this Agreement, the Program and the Plan, the
Company shall distribute to the Employee, for each Performance Cash Unit awarded
under this Agreement, an amount equal to one dollar times the product of, (1)
the number of Performance Cash Units MULTIPLIED BY (2) the Total Shareholder
Return Performance Multiplier (as defined below) for the Performance Period (as
defined below).

    

    3.  Time of
Payment.  Amounts due under paragraph 2 with respect to
Performance Cash Units shall be paid as a lump sum cash payment as soon as
practicable after the end of the Performance Period; provided, however, if
payment is not made by 2 1⁄2 months following the end of the Performance Period,
payment will be made no later than December 31 of the calendar year following
the end of the Performance Period.  Notwithstanding the foregoing, (i)
with respect to Performance Cash Units that vest pursuant to paragraph 7(b)
below, amounts due under paragraph 2 with respect to such vested Performance
Cash Units will be paid in a lump sum as soon as practicable following the
Employee’s death or Disability, as applicable, but in no event later than March
15 of the calendar year following the calendar year in which the Employee dies
or becomes Disabled and (ii) any amounts with respect to Performance Cash Units
that the Committee determines in its discretion to vest pursuant to paragraph
7(c)will be paid in a lump sum no later than March 15 of the calendar year
following the calendar year in which the Committee makes such
determination.

    

    4.  Total Shareholder
Return.  For purposes of this Agreement, the Total Shareholder
Return (TSR) is defined as the three-year total shareholder return of the
Company calculated with dividends reinvested, for all shares of common stock of
the Company (“Company Stock”) reported for the New York Stock Exchange -
Composite Transactions ending on the last day of the Performance Period (or, if
Company Stock is not traded on that date, on the next preceding date on which
Company Stock is traded).  For purposes of calculating the

     

     

    
      
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    TSR: (i)
the starting stock price will be an average of the closing prices for the 20
trading days ending on December 31, 2009 and (ii) the ending stock price will be
an average of the closing prices for the 20 trading days ending on December 31,
2012.

    

    5.  Performance
Period.  For purposes of this Agreement, the Performance Period
shall be the period beginning January 1, 2010 and ending December 31,
2012.

    

    6.  Performance
Multipliers.  For purposes of this Agreement, the term "Total
Shareholder
Return Performance Multiplier" for the Performance Period shall be determined in
accordance with Exhibit A to this Agreement, provided, however, that, (i) with
respect to Performance Cash Units that vest pursuant to paragraph 7(b) below,
the Total Shareholder Return Performance Multiplier shall be deemed to be 100%
and (ii) if the Committee exercises its discretion to vest all or a portion of
the Performance Cash Units in accordance with paragraph 7(c) below, the Total
Shareholder Return Performance Multiplier shall be determined in the sole
discretion of the Committee.

    

    7.  Vesting.  The
Employee shall be vested in and entitled to payment of benefits under this
Agreement only as follows:

    

    
      	
               
      

            	
              (a)

            	
              If
      the Employee is continuously employed by the Company and the Related
      Companies during the period beginning on the Agreement Date and ending on
      December 31, 2012, the Employee shall be vested in 100% of the Performance
      Cash Units.

            

    

    

    
      	 	
              (b)  

            	
              If
      the Employee is continuously employed by the Company and the Related
      Companies through the first anniversary of the Agreement Date, and such
      employment terminates before January 1, 2013 by reason of the Employee’s
      Disability (as defined below) or death, the Employee shall be vested in a
      pro rata portion of the Performance Cash Units based upon the total number
      of full months the Employee was employed during the Performance Period and
      the Employee shall immediately forfeit the portion of the Performance Cash
      Units that does not so vest.

            

    

    

    
      	
                

            	(c)	
              If
      the Employee is continuously employed by the Company and the Related
      Companies through the first anniversary of the Agreement Date, and such
      employment terminates before January 1, 2013 due to the Employee’s
      Retirement, the Performance Cash Units or a portion thereof will vest only
      in the sole discretion of the
Committee.

            

    

    

    The
Employee shall not be vested in or entitled to payment of benefits under this
Agreement except as expressly provided in subsections (a), (b) or (c) next
above.  Nothing in this paragraph 7 shall be deemed to increase the
amount of benefits (if any) payable under this Agreement, as determined without
regard to this paragraph 7.

    

    8.  Heirs and
Successors.  This Agreement shall be binding upon, and inure to
the benefit of, the Company and its successors and assigns, and upon any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise,
all or substantially all of the Company's assets and
business.  Subject to the terms of the Plan, any benefits payable to
the Employee under this Agreement that are not paid at the time of the
Employee's death shall 

     

     

    
      
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    be paid
at the time and in the form determined in accordance with the provisions of this
Agreement, to the beneficiary designated by the Employee in writing filed with
the Committee in such form and at such time as the Committee shall
require.  If a deceased Employee fails to designate a beneficiary, or
if the designated beneficiary of the deceased Employee dies before the Employee
or before complete payment of the amounts distributable under this Agreement,
the Committee shall, in its discretion, direct that amounts to be paid under
this Agreement be paid to:

    

    
      	
               
      

            	
              (a)

            	
              one
      or more of the Employee's relatives by blood, adoption or marriage and in
      such proportion as the Committee decides;
or

            

    

    

    
      	
               
      

            	
              (b)

            	
              the
      legal representative or representatives of the estate of the last to die
      of the Employee and his
beneficiary.

            

    

    

    9.  Retirement;
Disability.  For purposes of this Agreement, the term
"Retirement" means:  (a) termination of employment because the
Employee has reached normal retirement age of 65 years; or (b) termination of
employment because the employee has attained at least age 55 and has at least 10
years of employment with the Company or any Related Companies.  For
purposes of this Agreement, the term “Disability” or "Disabled" means the
inability of the Employee, by reason of a medically determinable physical or
mental impairment, to engage in any substantial gainful activity, which
condition, in the opinion of a physician selected by the Committee, is expected
to result in death or can be expected to last for a continuous period of not
less than 12 months.

    

       10.  Transferability.  Performance
Cash Units awarded under this Agreement are not transferable except as
designated by the Employee by will or by the laws of descent and
distribution.  Notwithstanding the foregoing, the Committee may permit
Performance Cash Units awarded under this Agreement to be transferred by the
Employee for no consideration to or for the benefit of the Employee’s Immediate
Family, subject to such limits as the Committee may establish, and the
transferee shall remain subject to all terms and conditions applicable to such
award prior to such transfer.

    

    11.  Employment.  This
Agreement does not constitute a contract of employment, and does not confer on
the Employee the right to be retained in the employ of the Company or any
Related Company.

    

    12.  Change in
Control.   In the event that a Change in Control occurs
prior to the end of the Performance Period, Performance Cash Units may be paid
out in such manner and amounts as determined by the Committee.

    

    13.  Plan
Governs.  Notwithstanding anything in this Agreement to the
contrary, the terms of this Agreement shall be subject to the terms of the
Program and of the Plan, copies of which may be obtained by the Employee from
the office of the Secretary of the Company.  In the event of any
conflict between any terms of this Agreement and the terms of the Plan, the
terms of the Plan shall govern.

    

    14.  Administration.  The
authority to manage and control the operation and administration of this
Agreement shall be vested in the Committee, and the Committee shall have all
powers with respect to this Agreement as it has with respect to the Program and
the 

     

     

    
      
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    Plan.  Any
interpretation of the Agreement by the Committee and any decision made by it
with respect to the Agreement is final and binding on all persons.

    

    15.  Amendment.  This
Agreement may be amended by written agreement of the Employee and the Company,
without the consent of any other person.  Notwithstanding the
foregoing, the Company may in its sole discretion, amend the this Agreement, the
Program or the Plan in such manner as it may determine is necessary or
desirable either for the Performance Cash Units to be exempt from the
application of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”) or to satisfy the requirements of Section 409A of the Code,
provided that no such amendment may change the Program's "performance goals,"
within the meaning of Section 162(m) of the Code, with respect to any
person who is a "covered employee," within the meaning of Section 162(m) of
the Code.

    

    

    IN
WITNESS WHEREOF, the Employee has hereunto set his hand, and the Company has
caused these presents to be executed in its name and on its behalf, and its
corporate seal to be affixed hereto, all as of the Agreement Date.

     

     

    
      	 	 	 	/s/ RICK MURRELL 	 
	 	 	 	Rick
      Murrell	 
	 	 	 	 	 	 
	 	 	 	Nicor
      Inc.	 
	 	 	 	 	 	 
	 	
               

            	 	By:
       	/s/
      RUSS M. STROBEL 	 
	 	 	 	 	Russ M.
      Strobel	 
	 	 	 	 	
              Chairman,
      President and Chief Executive Officer

            	 
	 	 	 	 	 	 

    

    
      
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    Exhibit
A

    

    

    PERFORMANCE
CASH UNIT AGREEMENT

    NICOR INC. 2006 LONG-TERM
INCENTIVE PLAN

    

    

    

    Performance
Multiplier

    

    The
following Schedule shall be used to determine the Performance
Multiplier.

    

    
      	
              Performance Unit Multiplier
      Schedule

            
	
              Nicor TSR Ranking

            	 	
              Payout Multiple

            
	
              90th
      Percentile or higher

            	 	
              200%

            
	
              50th
      Percentile

            	 	
              100%

            
	
              25th
      Percentile

            	 	
              25%

            
	
              Below
      25th
      Percentile

            	 	
              0%

            

    

     

    For
purposes of this Exhibit A, the percentile of the Nicor Total Shareholder Return
shall be the three year total shareholder return of the Company for the
Performance Period, as compared to the companies in the Standard and Poor's
MidCap 400 Utility group for the Performance Period.  If the Standard
and Poor's MidCap 400 Utility group is not available for the entire Performance
Period, the Committee shall apply such other measure as it determines to be
appropriate to preserve the intent of this Agreement.  For results
between performance levels, the Performance Multiplier will be
interpolated.

    

     

    
      
        -5-exhibit1007longtermincentive.htm

    Nicor
Inc.

    Form
8-K

    Exhibit
10.07

     

    NICOR INC. 2010 LONG-TERM
INCENTIVE PROGRAM

     

    This 2010
Long-Term Incentive Program was approved at the March 2010 meeting of the
Compensation Committee, along with the program participants and
awards.

     

    Following
is a description of the 2010 Long-Term Incentive Program.  Nicor Inc.
(the “Company”) will make use of a combination of performance units and
restricted stock units.  The Company may also provide awards of stock
options and restricted stock in select circumstances.  Grants of
performance units and restricted stock units for the 2010 Long-Term Incentive
Program will be made from, and are subject to the terms of, the 2006 Long Term
Incentive Plan.

     

    Award
Agreements

     

    All
awards will be evidenced by an agreement between the Company and the award
recipient in a form approved by the Compensation Committee.  In the
event of a conflict between the description of the awards contained herein and
the terms of the form award agreements approved by the Compensation Committee,
the terms of the agreements shall govern.

     

    Description of Restricted
Stock Units

     

    
      	
              ·  

            	
              Restricted
      stock units give the employee the right to receive shares of stock at a
      designated time or event in the future.  The participant holding
      restricted stock units will have the right to receive dividend equivalent
      rights, which are equal to the amount of dividends that would be paid on
      the restricted shares, as if such shares were
  outstanding.

            

    

     

    
      	
              ·  

            	
              Restricted
      stock units will vest and the shares of Nicor stock will be delivered on
      the fourth anniversary of date of
grant.

            

    

     

    Description of Performance
Units

     

    
      	
              ·  

            	
              Each
      performance unit equals $1.00 and total units are a percentage of base
      salary at the time of the award.

            

    

     

    
      	
              ·  

            	
              Performance
      units pay out based on total shareholder return over a three-year
      performance period.

            

    

     

    
      	
              ·  

            	
              Performance
      units will pay out in cash, unless a participant in the Stock Deferral
      Plan elects to defer up to 50% of their payout into that
      plan.  Deferral elections must meet the guidelines and timing of
      the Stock Deferral Plan to be
effective.

            

    

     

    How Performance Unit Payouts
are Determined

     

    
      	
              ·  

            	
              All
      performance units pay out at the end of a three-year performance
      period.  Payouts generally will be made as soon as practicable
      following the end of the performance period, but not later than
      December 31 of the calendar year following the end of the performance
      period.

            

    

     

     

    
      
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              ·  

            	
              The
      payout is based on a measure of relative total shareholder return
      (TSR).  Nicor’s TSR will be measured as the change in share
      price over the three-year period plus dividends granted over that
      period.  For the measurement of Nicor share price, rather than
      focusing on a single-day’s price, the average of the closing share prices
      over a 20-day period will be used for the base and ending
      TSRs.

            

    

     

    
      	
              ·  

            	
              The
      performance measure and multiplier (described below) is based on the Nicor
      TSR over the performance period, as compared to the performance of the
      companies in a utility industry peer group (S&P MidCap 400 Utility
      group).

            

    

     

    
      	
              ·  

            	
              The
      following schedule shall be used to determine the Performance
      Multiplier:

            

    

     

    
      	
              Performance Unit Multiplier
      Schedule

            
	
              Nicor TSR Ranking*

            	 	
              Payout Multiple

            
	 
      	 	
              (%
      of Target)

            
	
              90th
      Percentile or higher

            	 	
              200%

            
	
              50th
      Percentile

            	 	
              100%

            
	
              25th
      Percentile

            	 	
              25%

            
	
              Below
      25th
      Percentile

            	 	
              0%

            
	 	 	 
	*
      Values between the data points will be
interpolated.

    

     

    
      	
              ·  

            	
              In the event that Nicor’s
      relative performance results in above-target PCU award payout, though
      absolute performance over the same three-year period is negative, the
      Committee has the discretion to reduce the payout to no less than the
      target award.

            

    

     

    Description of Stock Options
(granted under special circumstances only)

     

    
      	
              ·  

            	
              Option
      exercise price set at the fair market value on date of
    grant.

            

    

     

    
      	
              ·  

            	
              Options
      vest after one year and are generally exercisable at the end of three
      years.

            

    

     

    
      	
              ·  

            	
              Options
      expire ten years from date of
grant.

            

    

     

    
      	
              ·  

            	
              Options
      will be non-qualified stock
options.

            

    

     

    Description of Restricted
Stock (granted under special circumstances only)

     

    
      	
              ·  

            	
              Restricted
      Stock – actual shares of common stock, which are subject to restrictions
      on receipt and transfer and are forfeitable in the event the employee
      leaves the Company prior to vesting.  The participant holding
      restricted stock shall have all of the rights of a common shareholder,
      including the right to vote the shares and receive all dividends paid on
      such shares.

            

    

     

    
      	
              
                
                  ·  

                

              

            	
              Restricted
      stock and deferred restricted stock will vest at the end of four years of
      employment from the date of grant.

            

    

     

    

    
      
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    Transferability

     

    With
Committee approval, restricted stock units, performance units, stock options and
restricted stock may be transferred for no consideration to or for the benefit
of the participant’s immediate family as defined in the plan.  All
terms and conditions remain applicable after transfer.

     

    Termination
Provisions

     

    In the
case of death, disability or retirement for all participants, excluding
employees of Tropical Shipping:

     

    
      	
              ·  

            	
              Unvested
      performance units held for more than one year (as of the date of death,
      disability or retirement) will be eligible for payout at the end of the
      performance period based on the normal per-unit performance/pay out
      guidelines.  The award will not be
  prorated.

            

    

     

    
      	
              ·  

            	
              Unvested
      restricted stock units held for more than one year (as of the date of
      death, disability or retirement) will vest and the stock will be paid on
      the earlier of separation from service or the fourth anniversary of grant
      date.

            

    

     

    
      	
              ·  

            	
              All
      stock options held for more than one year (as of the date of death,
      disability or retirement) will be immediately
      exercisable.  Stock options held less than one year will be
      forfeited.

            

    

     

    
      	
              ·  

            	
              Stock
      options will remain exercisable for ten years after the date of
      grant.

            

    

     

    
      	
              ·  

            	
              Unvested
      restricted stock held for more than one year from date of grant will vest
      upon death or disability, but not
retirement.

            

    

     

    
      	
              ·  

            	
              Unvested
      restricted stock at retirement will be forfeited, unless the Committee
      chooses to exercise discretion and accelerate vesting for all or part of
      the unvested award.

            

    

     

    In the
case of death, disability or retirement for all participants who are employees
of Tropical Shipping:

    

    
      	
              ·  

            	
              Unvested
      performance units held for more than one year (as of the date of death or
      disability) will be eligible for a prorated payout.  The
      proration will be based on (i) a Total Shareholder Return Performance
      Multiplier of 100% and (ii) the total number of full months employed
      during the performance period.

            

    

     

    
      	
              ·  

            	
              Unvested
      performance units held for more than one year (as of the date of
      retirement) will be eligible for payout only at the sole discretion of the
      Committee.  The Committee will have sole discretion to determine
      the (i) Total Shareholder Return Performance Multiplier and (ii) the
      number of Performance Cash Units, or a portion thereof, deemed
      vested.

            

    

     

    
      	
              ·  

            	
              Unvested
      restricted stock units held for more than one year (as of the date of
      death or disability) will vest and the stock will be paid on the earlier
      of separation from service or the fourth anniversary of grant
      date.

            

    

     

    

    
      
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                ·  

              

            	
              Unvested
      restricted stock units held for more than one year (as of the date of
      retirement) will be forfeited, unless the Committee chooses to exercise
      discretion and accelerate vesting for all or part of the unvested
      award.  The stock for these awards will be paid on the earlier
      of separation from service or the fourth anniversary of grant
      date.

            

    

     

    
      	
              ·  

            	
              All
      stock options held for more than one year (as of the date of death,
      disability or retirement) will be immediately
      exercisable.  Stock options held less than one year will be
      forfeited.

            

    

     

    
      	
              ·  

            	
              Stock
      options will remain exercisable for ten years after the date of
      grant.

            

    

     

    
      	
              ·  

            	
              Unvested
      restricted stock held for more than one year from date of grant will vest
      upon death or disability, but not
retirement.

            

    

     

    
      	
              ·  

            	
              Unvested
      restricted stock at retirement will be forfeited, unless the Committee
      chooses to exercise discretion and accelerate vesting for all or part of
      the unvested award.

            

    

     

    

    In the
case of termination of employment for any other reason, unvested awards will be
forfeited unless the Compensation Committee chooses to override this
policy:

    

    
      	
              ·  

            	
              Unvested
      restricted stock units held for less than four years are immediately
      forfeited.

            

    

    

    
      	
              ·  

            	
              Performance
      units held less than three years are immediately
  forfeited.

            

    

    

    
      	
              ·  

            	
              Stock
      options held less than one year are immediately
  forfeited.

            

    

    

    
      	
              ·  

            	
              Stock
      options held for one year or longer will be exercisable, with the
      remaining term limited to three months after the date of
      termination.  After this date, all unexercised options will
      expire and be immediately
cancelled.

            

    

    

    
      	
              ·  

            	
              Restricted
      stock held for less than four years are immediately
    forfeited.

            

    

    

    

     

    

    

    

    

    Nicor
Human Resources

    March
2010

     

     

    
      
        -4-

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