Document:

RESTRICTED STOCK UNIT AGREEMENT BETWEEN NICOR AND STROBEL

                                        RESTRICTED
      STOCK UNIT
      AGREEMENT

                                   NICOR
      INC. 2006
      LONG-TERM INCENTIVE PLAN

     

    THIS
      AGREEMENT, entered into as of the 22 day of March, 2007
      (the “Agreement Date”), by and between Russ M. Strobel (the “Employee”), and
      Nicor Inc., an Illinois corporation (the “Company”).

                                               WITNESSETH
      THAT:

    WHEREAS,
      the Company maintains the Nicor Inc. 2006 Long-Term
      Incentive Plan (the “Plan”), which is incorporated into and forms a part of this
      Agreement for the benefit of key executive and management employees of the
      Company and a 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 an award
      of Restricted Stock Units pursuant to Section 4.4 of the Plan and as provided
      herein;

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

    1.        
      Award.  Subject to the terms of this Agreement and the Plan, the
      Employee is hereby awarded the right to receive 12,860 shares of Stock (the
“Restricted Stock Units”) subject to vesting as provided in Paragraph 4, the
      delivery of which shares of Stock is deferred until the earliest of:

    (a)       
the Employee’s death or disability
      (within the meaning of Section 409A of the
      Code); 

    (b)       
a Change in Control;
      or

    (c)       
the six-month
      anniversary following Employee’s separation from service (within
      the meaning of Section 409A of the Code) from the Company and all Related
      Companies.

    2.        
Limit
      on
      Alienation.  Restricted Stock Units may not be sold, assigned,
      transferred (except as permitted under Paragraph 6), pledged or otherwise
      encumbered.

    3.        
Dividend
      Equivalents.  The Employee shall be entitled to receive a cash payment
      equal to the amount of dividends which otherwise would have been paid on the
      shares of Restricted Stock Units as if such shares were issued and outstanding
      (the “Dividend Equivalents”) at the same time and manner as dividends are paid
      on shares of Stock.  Employee’s rights to Dividend Equivalents shall cease
      on the earlier of (a) the date on which the Employee has forfeited the
      Restricted Stock Units, or (b) the date the actual shares of Stock are delivered
      as provided in Paragraph 1.

    4.        
      Vesting.  The Employee shall vest in full in the Restricted Stock
      Units on the earlier of (a) the fourth anniversary of the Agreement Date; (b)
      the date on which a Change in Control occurs; (c) the date of the Employee’s
      death after the first anniversary 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

          of
        the Agreement Date; (d) the date on which the Employee is determined to have
        become subject to a Disability after the first anniversary of the Agreement
        

          Date; or (e) the
        Employee’s Retirement after the first anniversary of the Agreement Date. 
If the Employee’s employment with the Company and all Related 

          Companies terminates
        prior to vesting in the Restricted Stock Units, he shall forfeit the Restricted
        Stock Units and his right to receive the actual shares of 

          Stock subject
        thereto.  

       

    

    For purposes of this
      Agreement, the term "Disability" 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.  For purposes of
      this Agreement, “Retirement” means the date the Employee has attained at least
      (i) age 65, or (ii) age 55 and has at least 10 years of employment with the
      Company or any Related Companies.

    5.        
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 be paid 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 the Employee
      fails to designate a beneficiary, or if the designated beneficiary of the
      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.

    6.        
      Transferability.  Restricted Stock 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 the Restricted Stock 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 (including a trust for the benefit of the
      Employee’s Immediate Family or to a partnership for members 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. 

    7.        
Employment
      and
      Shareholder Status.  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.  Except as otherwise provided
      in this Agreement, the Employee shall not be deemed to be a holder of any shares
      of Stock

    
      
        2

      

      
        
        

        
          

        

      

          pursuant
        to the
        Restricted Stock Units until the date of the issuance of a certificate to
        him of
        the actual shares of Stock subject to such Restricted Stock 

          Units.  Except
        for Dividend Equivalents, the Employee shall not have any rights to dividends
        or
        any other rights of a shareholder with respect to the shares of 

          Stock covered by
        the
        Restricted Stock Units until such shares of Stock have been issued to the
        Employee.

       

    

    8.        
      Withholding.  The Company may require that the Employee pay to the
      Company, or the Company may otherwise withhold, at the time of delivery of
      the
      shares of Stock pursuant to the Restricted Stock Units, any such amount as
      is
      required by law or regulation to be withheld for federal, state or local income
      tax or any other taxes incurred by reason of such payment.  If the tax
      obligation arises during a period in which the Employee is either an officer
      of
      the Company subject to Section 16(a) of the Exchange Act or prohibited from
      trading under any policy of the Company or by reason of the Exchange Act, then
      the tax withholding obligation shall automatically be satisfied by the Company
      withholding in shares of Stock otherwise deliverable under the Restricted Stock
      Units, and by signing this Agreement the Employee authorizes the Company to
      so
      withhold.   

    9.        
Unfunded
      Promise.  The Employee’s right to receive payment of any amounts under
      this Agreement shall be an unfunded entitlement and shall be an unsecured claim
      against the general assets of the Company.

    10.      
Adjustment
      to Number of
      Shares Subject to Agreement.  In the event of any change in the
      outstanding shares of Stock by reason of any stock dividend, split, spin-off,
      recapitalization, merger, consolidation, combination, exchange of shares or
      other similar change, the terms of this Agreement and the number of Restricted
      Stock Units and this Agreement shall be adjusted in the manner specified in
      Section 6.4 of the Plan.

    11.      
Definitions. 
      Except where the context clearly implies or indicates the contrary, a word,
      term, or phrase used in the Plan is similarly used in this Agreement.

    12.      
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 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.

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

    14.      
Amendment. 
This
      Agreement may be amended by written agreement of the Employee and the Company,
      without the consent of any other person.

                                            

    
      
        3

      

      
        
        

        
          

        

      

      
        
        

      

    

    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/
      RUSS M. STROBEL

                                                                                              
Russ
      M. 
Strobel

                                                                                                                           
       NICOR INC.

                                                                                                   
       By: /s/ CLAUDIA
      COLALILLO                                                     

                                                                                               Senior
      Vice President Human
      Resources                                               

                                                                                                 and
        Corporate
        Communications                                                                          

    

                                                                                 

    ATTEST:

    /s/
      NEIL MALONEY

    Its: 
Assistant
      Secretary

     

    
      
        4LETTER AGREEMENT BETWEEN NICOR INC. AND HAWLEY

    March 22, 2007

     

     

    Richard L. Hawley

    5480 156th
      Avenue
      SE

    Bellevue, WA98006

     

    Dear Rick,

     

    This will
      acknowledge your
      agreement with Nicor Inc., that you will receive an
      additional three years of continuous service for each actual
      year of continuous service you earn with Nicor
      Inc., and its affiliates for purposes
      of determining your eligibility for retiree health care coverage under Nicor
      Inc.’s retiree health plan for management employees hired on or after January 1,
      1998.  Since you have already completed three years
      of
      continuous service with Nicor, as a result of the additional service credits
      you
      will be considered to have earned twelve years of continuous service. 
Accordingly, under
      the current terms of
      the plan, you will be eligible for the retiree
      health coverage upon your retirement
      from Nicor.  However, please note that Nicor has
      reserved the right to amend or terminate the retiree health plan at any
      time.  This agreement does not modify that right in any manner.

     

    Notwithstanding
      the terms of
      the plans, you will not be eligible for the Company’s cap on its contribution
      toward premium payments.  Accordingly, you will be responsible for the full
      cost of the premiums, as in effect from time to time, for such
      coverage.   

     

    Except as described
      in this
      letter agreement, your eligibility for Nicor’s retiree health plan and the
      benefits to which you may become eligible to receive are subject to the terms
      and conditions of such plan as in effect at the time of your actual separation
      from service with Nicor and its affiliates.   

     

    Please acknowledge
      your
      agreement to the terms of this letter by signing below and returning a copy
      to
      my attention.  

     

    Sincerely,

     

     /s/ CLAUDIA J. COLALILLO

    Claudia J.
      Colalillo

    Senior Vice
      President Human
      Resources & Corporate Communications

    Nicor Inc.

     

    Acknowledged
      and
      Agreed:

     

    /s/ RICHARD
      L.
      HAWLEY                                                           

    Richard L. Hawley

     
Date: 
    3-22-2007

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