PERFORMANCE CASH UNIT AGREEMENT NICOR INC. 2006 LONG-TERM INCENTIVE PROGRAM
Form
8-K
Exhibit
10.3
NICOR
INC. 2006 LONG-TERM INCENTIVE PROGRAM
THIS
AGREEMENT, entered into as of March 16th
2006
(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. 2006 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
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 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 ½ 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, 2005 and (ii)
the
ending stock price will be an average of the closing prices for the 20 trading
days ending on December 31, 2008.
5. Performance
Period.
For
purposes of this Agreement, the Performance Period shall be the period beginning
January 1, 2006, and ending December 31, 2008.
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, 2008.
|
|
(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
16,
2007, and such employment terminates on or after March 16, 2007 and
before
January 1, 2009 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)
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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 before age 65 because of early retirement pursuant
to
any plan of the Company or a Related Company that covers the Employee 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.
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 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»
By:
__________________
Xxxx
Xxxxxxx
Chairman,
President and
Chief
Executive Officer
ATTEST:
____________________
Assistant
Secretary
Exhibit
I
NICOR
INC. 2006 LONG-TERM INCENTIVE PROGRAM
Performance
Factor
The
following Schedule shall be used to determine the Performance
Factor.
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If
the Nicor Total
Shareholder
Return Is:
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The
Performance
Factor
Shall Be:
|
|
At
or above the 90th
percentile
|
2.00
|
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At
the 75th
percentile
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1.50
|
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At
the 60th
percentile
|
1.00
|
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At
the 50th
percentile
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0.75
|
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At
the 40th
percentile
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0.50
|
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At
the 25th
percentile
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0.25
|
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Less
than the 25th
percentile
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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 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.
