Nicor Inc.
Form 8-K
Exhibit 10.02
Form of Agreement
PERFORMANCE CASH UNIT AGREEMENT
NICOR INC. 2005 LONG-TERM INCENTIVE PROGRAM
THIS AGREEMENT, entered into as of March 17, 2005 (the "Agreement Date"),
by and between _______________ (the "Employee"), and Nicor Inc., an Illinois
corporation (the "Company");
WITNESSETH THAT:
WHEREAS, the Company maintains the Nicor Inc. 2005 Long-Term Incentive
Program (the "Program"), which is part of the Nicor Inc. 1997 Long-Term
Incentive Plan (the "Plan") and which are incorporated into and form a part of
this Agreement, for the benefit of key executive and management employees of the
Company and any corporation during any period in which 50% or more of the total
combined voting power of all classes of stock entitled to vote is owned,
directly or indirectly, by the Company (a "Subsidiary"); 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 ________ 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 sum 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 on the May 1 following the end of the Performance Period.
4. Total Shareholder Return. For purposes of this Agreement, the Total
Shareholder Return 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.
5. Performance Period. For purposes of this Agreement, the Performance
Period shall be the period beginning January 1, 2005, and ending December 31,
2007.
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, 2007.
(b) The Employee is continuously employed by the Company and the
Related Companies during the period beginning on the Agreement Date
and ending on March 17, 2006, and such employment terminates on or
after March 17, 2006 and before January 1, 2008 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.
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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 before age 65 because of
early retirement pursuant to any plan of the Company or a Related Company that
covers the Participant and that is qualified under section 401(a) of the
Internal Revenue Code. 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 be total and permanent during the remainder of the Employee's lifetime.
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
a participant for no consideration to or for the benefit of the participant's
immediate family (including a trust for the benefit of a participant's immediate
family or to a partnership for members of a participant'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. Immediate family is defined as the participant's spouse,
children, stepchildren and adoptive relationships.
11. 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.
12. Change in Control. In the event that a change in control (within the
meaning of the Plan) 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.
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
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.
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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.
_________________________________
Participant
Nicor Inc.
By: _____________________________
Name:
Title:
ATTEST:
__________________________
Assistant Secretary
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Exhibit 1
PERFORMANCE CASH UNIT AGREEMENT
NICOR INC. 2005 LONG-TERM INCENTIVE PROGRAM
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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 1, 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 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.
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