Nicor Inc.
Form 8-K
Exhibit 10.02

PERFORMANCE CASH UNIT AGREEMENT
NICOR INC. 2006 LONG-TERM INCENTIVE PLAN

THIS AGREEMENT, entered into as of [Agreement Date] (the "Agreement Date"), by
and between [First_Name] [Middle_Initial] [Last_Name] (the "Employee"), and
Nicor Inc., an Illinois corporation (the "Company");
WITNESSETH THAT:

WHEREAS, the Company maintains the Nicor Inc. [insert program year] 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 [insert number of units] 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 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, [insert last day preceding performance period] and (ii)
the ending stock price will be an average of the closing prices for the 20
trading days ending on December 31,[insert last day of performance period].
 
 

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5.  Performance Period.  For purposes of this Agreement, the Performance Period
shall be the period beginning January 1, [insert first day of performance
period], and ending December 31,[insert last day of performance period].

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.

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,[insert last day of performance period].

 
(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, [insert first day following performance period]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
 
 

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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.
 

 
 

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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.
 
 
 

      [First_Name] [Middle_Initial] [Last_Name]  
Nicor Inc.

 

 
 
By:
[Signature                                                                                                                           
]       [Authorized Nicor Officer Name]       [Authorized Nicor Officer Title]  
              ATTEST:                       Assistant Secretary      

 
 
 
 

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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.