Document:

PERFORMANCE CASH UNIT AGREEMENT FORM

    PERFORMANCE
      CASH UNIT AGREEMENT

    NICOR
      INC. 2007 LONG-TERM INCENTIVE PROGRAM

     

        THIS
      AGREEMENT,
      entered into as of ______ ____, 2007 (the "Agreement Date"), by and between
      «First_Name» «MiName» «Last_Name» (the "Employee"), and Nicor Inc., an Illinois
      corporation (the "Company");

                                                                                   
WITNESSETH
      THAT:

               
      

               
      WHEREAS, the Company maintains the Nicor Inc. 2007 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 form 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 «PU» 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 Factor (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.

     

    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 TSR: (i) the
      starting stock price will be an average of the closing prices for the 20 trading
      days ending on December 31, 2006 and (ii) the ending stock price will be an
      average of the closing prices for the 20 trading days ending on December 31,
      2009.

     

               
      5.   Performance Period.  For purposes of this Agreement,
      the Performance Period shall be the period beginning January 1, 2007, and ending
      December 31, 2009.

     

    6. 
      Performance Factors.  For purposes of this Agreement, the term
      "Total 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Shareholder
      Return Performance Factor" for the Performance Period shall be determined in
      accordance with Exhibit 1 to this Agreement.

     

    7. 
      Vesting.  The Employee shall be vested in and entitled to payment of
      benefits under this Agreement only if the requirements of either paragraph
      (a)
      or paragraph (b) next below are satisfied: 

     

    (a) 
      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,
      2009.

     

                     
      (b)  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, 2010 by reason of his Retirement (as
      defined below) or death.

     

    The
      Employee shall not be vested in or entitled to payment of benefits under this
      Agreement unless the requirements of paragraph (a) or paragraph (b) next above
      are satisfied.  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
      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.  For purposes of this Agreement, the term "Retirement"
      means:  (a) termination of employment because the Employee has reached
      normal retirement age of 65 years; (b) termination of employment because the
      Employee becomes Disabled; or (c) 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
      "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 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.

     

                                                                  
      

                                                                                                                                                                                                       

                           
      __                  
_________________

                                                                  
      «First_Name»«MiName»«Last_Name»

     

             
                                                                                     
Nicor Inc.

                                                                           
      

                                                                                   
      By:  __________________

                                                                                           Russ
      M. Strobel

                                                                           
                    
Chairman, President and

                                                                           
                    
Chief Executive Officer

     

     

     

    ATTEST:

     

    ____________________                                                       

    Assistant Secretary

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

                                                                                                                                            
      

    Exhibit
      I

     

      

                                    
PERFORMANCE
      CASH
      UNIT AGREEMENT

    NICOR
      INC. 2007 LONG-TERM INCENTIVE
      PROGRAM

                                                                                                                                            
      

     

     

    Performance
      Factor

     

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

     

      
      If the Nicor Total
                                  
The Performance

    Shareholder
      Return
      Is:                              
Factor Shall Be:  

     

    At
      or above the 90th
      percentile                               
2.00

    At
      the 75th
      percentile                                            
 1.50

    At
      the 60th
      percentile                                             
1.00

    At
      the 50th
      percentile                                            
 0.75

    At
      the 40th
      percentile                                          
   0.50

    At
      the 25th
      percentile                                             
0.25

    Less
      than the 25th
      percentile                                   
0.00

     

    For
      purposes of this Exhibit I, 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
      utility group for the Performance Period.  If the Standard and Poor's
      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 Factor will be interpolated.RESTRICTED STOCK UNIT AGREEMENT FORM

                                      RESTRICTED
      STOCK UNIT
      AGREEMENT

                                  NICOR
      INC. 2006 LONG-TERM
      INCENTIVE PLAN

     

    THIS
      AGREEMENT, entered into as of the ___ day of ______, 2007 (the
“Agreement Date”), by and between «NAME» (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 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 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 «AMOUNT» 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 fourth anniversary
      of the Agreement Date;

    (b)       
the Employee’s death or Disability;

    (c)       
a Change in Control;
      or

    (d)       
the six-month
      anniversary following Employee’s separation from service (within
      the meaning of Section 409A of the Code) due to Retirement (as defined
      below).

    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.

    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.  

    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 

    
      
        2

      

      
        
        

        
          

        

      

      
        
        

      

          this Agreement, the
        Employee shall not be deemed to be a holder of any shares of Stock 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.

                                                                                                                     
                                                                                        

                                                                                                                «NAME»

                                                                                                               
NICOR
      INC.

                                                                                                    
      By:                                         

                                                                                                           
  
      Its:                                                 

                                                                                 
      

    ATTEST:

                                                                           
      

    Its: 
Assistant
      Secretary

    
      
        4

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