Exhibit 10.2

 

NIC INC. 2006 AMENDED AND RESTATED
STOCK OPTION AND INCENTIVE PLAN

 

Performance-Based Restricted Stock Agreement

 

The Company seeks to provide a means by which the Company, through the grant of
the Shares to Grantee, may retain Grantee’s services and motivate Grantee to
exert his or her best efforts on behalf of the Company and any Affiliate;

 

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties agree as follows:

 

1.             GRANT OF PERFORMANCE-BASED RESTRICTED STOCK.  NIC INC., A
COLORADO CORPORATION (THE “COMPANY”), HEREBY PROMISES TO GRANT TO
                                                     (“GRANTEE”), AS OF
                          , 20     (THE “GRANT DATE”)                           
SHARES OF THE COMPANY’S NO PAR VALUE COMMON STOCK (THE “SHARES”), SUBJECT TO THE
RESTRICTIONS, TERMS, CONDITIONS AND OTHER PROVISIONS OF THIS PERFORMANCE-BASED
RESTRICTED STOCK AGREEMENT (THE “AGREEMENT”) AND OF THE NIC INC. 2006 AMENDED
AND RESTATED STOCK OPTION AND INCENTIVE PLAN (THE “PLAN”), WHICH RESTRICTIONS,
TERMS, CONDITIONS AND OTHER PROVISIONS ARE INCORPORATED HEREIN BY THIS
REFERENCE.  UNLESS OTHERWISE DEFINED HEREIN, THE TERMS DEFINED IN THE PLAN SHALL
HAVE THE SAME DEFINED MEANINGS IN THIS AGREEMENT.

 

The actual number of Shares, if any, (subject to any adjustment to the number of
Shares as provided in Section 3 hereof, and as will be reflected by delivery of
Share certificates or registered as book entry shares with the Company’s
transfer agent) that will be delivered pursuant to this Agreement is dependent
upon the level of achievement of the performance goals set forth in Exhibit A
(the “Performance Goals”) during the period from January 1, 2008 through
December 31, 2010 (the “Performance Period”) and the compliance with all terms
and conditions set forth in this Agreement and the Plan.

 

2.             RESTRICTIONS AND FORFEITURE

 

IF GRANTEE’S CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT TERMINATES
FOR ANY REASON OTHER THAN DEATH OR DISABILITY (AS DISABILITY IS DEFINED IN
INTERNAL REVENUE CODE SECTION 22(E)(3)) OR FOLLOWING A CONTROL CHANGE AS
PROVIDED FOR IN SECTION 4(B), GRANTEE SHALL FORFEIT ALL RIGHTS TO RECEIVE ANY
UNDELIVERED SHARES UNDER THIS AGREEMENT.  GRANTEE’S RIGHT TO RECEIVE AN
UNDELIVERED SHARES WILL ALSO BE FORFEITED IF THE COMMITTEE DETERMINES THAT
GRANTEE ENGAGED IN MISCONDUCT IN CONNECTION WITH HIS OR HER EMPLOYMENT WITH NIC.

 

From the date of this Agreement and until a Share is delivered to Grantee,
Grantee shall have no rights to sell, assign, exchange, transfer, pledge,
hypothecate or otherwise encumber any right he or she may have to receive such
Share under this Agreement.

 

3.             ACCELERATION OF PAYMENT OF SHARES ON DEATH OR DISABILITY.

 

If Grantee’s Continuous Status as an Employee, Director or Consultant terminates
due to his or her death or disability, Grantee shall receive a pro rata portion
of the Shares eligible to be

 

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received under this Agreement.  The pro rata portion will be determined by
calculating the product of (a) the total number of Shares Grantee would have
received if his or her employment had not terminated and based on the ultimate
level of achievement toward the Performance Goals at the end of the Performance
Period multiplied by (b) a fraction, the numerator of which is the number of
full and partial months of employment Grantee completed after the Grant Date and
the denominator is thirty-six (36).  For the avoidance of doubt, unless
otherwise determined by the Committee in its sole discretion, in no event will
any Shares be paid on account of Grantee’s death or disability if the
Performance Goals are achieved at a level less than Threshold.

 

4.             TERMS AND CONDITIONS.

 

(A)           ADJUSTMENTS IN EVENT OF CHANGE IN COMMON STOCK.  IF ANY CHANGE IS
MADE IN THE SHARES, WITHOUT THE RECEIPT OF CONSIDERATION BY THE COMPANY (THROUGH
MERGER, CONSOLIDATION, REORGANIZATION, RECAPITALIZATION, REINCORPORATION, STOCK
DIVIDEND, DIVIDEND IN PROPERTY OTHER THAN CASH, STOCK SPLIT, LIQUIDATING
DIVIDEND, COMBINATION OF SHARES, EXCHANGE OF SHARES, CHANGE IN CORPORATE
STRUCTURE OR OTHER TRANSACTION NOT INVOLVING THE RECEIPT OF CONSIDERATION BY THE
COMPANY), THE NUMBER OF SHARES ELIGIBLE TO BE PAID PURSUANT TO THE TERMS AND
CONDITIONS OF THIS AGREEMENT (INCLUDING ANY DIVIDEND SHARES CREDITED TO
GRANTEE’S ACCOUNT IN ACCORDANCE WITH SECTION 4(C)) WILL BE APPROPRIATELY
ADJUSTED IN THE CLASS(ES) AND NUMBER OF SHARES AND PRICE PER SHARE OF STOCK OF
THOSE SUBJECT SHARES IN SUCH MANNER AS THE BOARD MAY DEEM EQUITABLE TO PREVENT
SUBSTANTIAL DILUTION OR ENLARGEMENT OF THE RIGHTS GRANTED TO GRANTEE; PROVIDED,
HOWEVER, THAT NO SUCH ADJUSTMENT SHALL CAUSE THE COMPANY TO ISSUE A FRACTIONAL
SHARE.  SUCH ADJUSTMENTS SHALL BE FINAL, BINDING AND CONCLUSIVE.  (THE
CONVERSION OF ANY CONVERTIBLE SECURITIES OF THE COMPANY SHALL NOT BE TREATED AS
A TRANSACTION NOT INVOLVING THE RECEIPT OF CONSIDERATION BY THE COMPANY.)

 

(B)           SALE OF THE COMPANY.  IN THE EVENT OF A DISSOLUTION, LIQUIDATION
OR SALE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY, OR A
TRANSACTION FOLLOWING WHICH THE COMPANY IS NOT THE SURVIVING CORPORATION IN ANY
MERGER, CONSOLIDATION, OR REORGANIZATION (A “CONTROL CHANGE”), THEN ALL OR A
PORTION OF THE NUMBER OF THE SHARES ELIGIBLE TO BE DELIVERED PURSUANT TO THIS
AGREEMENT SHALL BE DELIVERED IN ACCORDANCE WITH THE FOLLOWING:

 

(I)            IF THE CONTROL CHANGE OCCURS ON OR PRIOR TO THE FIRST ANNIVERSARY
OF THE GRANT DATE AND THIS AGREEMENT IS NOT ASSUMED, CONVERTED, OR REPLACED BY
THE CONTINUING ENTITY, GRANTEE SHALL BE PAID IMMEDIATELY BEFORE THE CONTROL
CHANGE A NUMBER OF SHARES EQUAL TO THAT NUMBER OF SHARES GRANTEE WOULD HAVE BEEN
PAID IF EACH OF THE PERFORMANCE GOALS WAS ACHIEVED AT THE “TARGET” LEVEL.

 

(II)           IF THE CONTROL CHANGE OCCURS AFTER THE FIRST ANNIVERSARY OF THE
GRANT DATE AND THIS AGREEMENT IS NOT ASSUMED, CONVERTED, OR REPLACED BY THE
CONTINUING ENTITY, GRANTEE SHALL BE PAID IMMEDIATELY BEFORE THE CONTROL CHANGE A
NUMBER OF SHARES BASED ON THE ACTUAL PERFORMANCE OF THE COMPANY AS IF THE
PERFORMANCE PERIOD ENDED ON DECEMBER 31 IMMEDIATELY PRECEDING THE DATE, ON WHICH
THE CONTROL CHANGE OCCURS, WITH APPROPRIATE ADJUSTMENTS, IF NECESSARY TO REFLECT
SUCH SHORTENED PERFORMANCE PERIOD.

 

2

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(III)          IF THE CONTROL CHANGE OCCURS ON OR BEFORE THE FIRST ANNIVERSARY
OF THE GRANT DATE AND THIS AGREEMENT IS ASSUMED BY THE CONTINUING ENTITY,
GRANTEE SHALL BE PAID AT THE END OF THE PERFORMANCE PERIOD THE SAME NUMBER OF
SHARES GRANTEE WOULD HAVE BEEN PAID IF EACH OF THE PERFORMANCE GOALS WAS
ACHIEVED AT THE “TARGET” LEVEL, SUBJECT TO GRANTEE’S CONTINUOUS STATUS AS AN
EMPLOYEE, DIRECTOR OR CONSULTANT THROUGH THE END OF THE PERFORMANCE PERIOD.

 

(IV)          IF THE CONTROL CHANGE OCCURS AFTER THE FIRST ANNIVERSARY OF THE
GRANT DATE AND THIS AGREEMENT IS ASSUMED BY THE CONTINUING ENTITY, GRANTEE SHALL
BE PAID AT THE END OF THE PERFORMANCE PERIOD THE SAME NUMBER OF SHARES BASED ON
THE ACTUAL PERFORMANCE OF THE COMPANY AS IF THE PERFORMANCE PERIOD ENDED ON
DECEMBER 31 IMMEDIATELY PRECEDING THE DATE ON WHICH THE CONTROL CHANGE OCCURS,
SUBJECT TO GRANTEE’S CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT
THROUGH THE END OF THE PERFORMANCE PERIOD WITH APPROPRIATE ADJUSTMENTS, IF
NECESSARY, TO REFLECT SUCH SHORTENED PERFORMANCE PERIOD.

 

NOTWITHSTANDING THE PROVISIONS OF CLAUSE (III) AND (IV) TO THE CONTRARY, IF,
DURING THE REMAINING PORTION OF THE APPLICABLE PERFORMANCE PERIOD FOR THE
APPLICABLE AWARD AND FOLLOWING THE CONTROL CHANGE, (A) GRANTEE’S CONTINUOUS
STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT IS TERMINATED BY THE COMPANY OTHER
THAN FOR CAUSE OR, (B) IF GRANTEE IS A PARTICIPANT IN AN ARRANGEMENT OR COVERED
BY AN EMPLOYMENT AGREEMENT THAT PROVIDES FOR CERTAIN RIGHTS UPON GRANTEE’S
RESIGNATION WITH “GOOD REASON” AND GRANTEE RESIGNS FOR SUCH A “GOOD REASON”,
THEN, TO THE EXTENT NOT THEN-VESTED, GRANTEE SHALL BE PAID UPON HIS OR HER
TERMINATION OF EMPLOYMENT THE NUMBER OF SHARES THAT WOULD HAVE BEEN PAID UNDER
(III) OR (IV) AS APPLICABLE.

 

                IF THIS AGREEMENT IS ASSUMED IN CONNECTION WITH A CONTROL CHANGE
TRANSACTION, THEN THE BOARD SHALL EQUITABLY AND PROPORTIONATELY ADJUST THE
NUMBER OF SHARES AND THE KIND OF SHARES OR SECURITIES COVERED BY THIS AGREEMENT
IMMEDIATELY AFTER SUCH TRANSACTION SOLELY AS NECESSARY TO PRESERVE (BUT NOT
INCREASE) THE LEVEL OF INCENTIVES INTENDED BY THIS AGREEMENT.

 

                THIS AGREEMENT SHALL NOT IN ANY WAY AFFECT THE RIGHT OF THE
COMPANY TO ADJUST, RECLASSIFY, REORGANIZE OR OTHERWISE CHANGE ITS CAPITAL OR
BUSINESS STRUCTURE OR TO MERGE, CONSOLIDATE, DISSOLVE, LIQUIDATE, SELL OR
TRANSFER ALL OR ANY PART OF ITS BUSINESS OR ASSETS.

 

(C)           DIVIDEND SHARES.  PROVIDED THIS AGREEMENT HAS NOT OTHERWISE BEEN
TERMINATED OR ANY OF GRANTEE’S RIGHTS TO RECEIVE SHARES HAVE NOT BEEN FORFEITED,
GRANTEE SHALL BE ENTITLED TO RECEIVE DIVIDEND EQUIVALENT ACCRUALS ON THE SHARES
FOR ANY CASH DIVIDENDS DECLARED BEFORE ANY SHARES ARE PAID UNDER THIS
AGREEMENT.  AT THE END OF THE PERFORMANCE PERIOD OR AT ANY OTHER TIME GRANTEE
BECOMES ENTITLED TO RECEIVE THE PAYMENT OF SHARES HEREUNDER, GRANTEE SHALL
RECEIVE AN ADDITIONAL NUMBER OF SHARES (“DIVIDEND SHARES”) DETERMINED AS
FOLLOWS: (1) AS OF EACH DATE (THE “DIVIDEND PAYMENT DATE”) THAT THE COMPANY
WOULD OTHERWISE PAY A DECLARED CASH DIVIDEND ON THE TOTAL NUMBER OF SHARES SET
FORTH IN SECTION 1 IF SUCH SHARES WERE OUTSTANDING, THE COMPANY WILL CREDIT A
NUMBER OF DIVIDEND SHARES TO A NOTIONAL ACCOUNT ESTABLISHED FOR THE BENEFIT OF
GRANTEE.  THE NUMBER OF DIVIDEND SHARES SO CREDITED WILL BE CALCULATED BY
DIVIDING THE AMOUNT OF

 

3

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SUCH HYPOTHETICAL CASH DIVIDEND PAYMENT BY THE FAIR MARKET VALUE OF THE
COMPANY’S COMMON STOCK ON THE DIVIDEND PAYMENT DATE (ROUNDED DOWN TO THE NEAREST
WHOLE DIVIDEND SHARE); AND (2) ON THE DATE SOME OR ALL OF THE SHARES ARE PAID
UNDER THIS AGREEMENT, THE TOTAL NUMBER OF DIVIDEND SHARES CREDITED TO GRANTEE’S
NOTIONAL ACCOUNT WILL BE CONVERTED INTO AN EQUIVALENT NUMBER OF SHARES AND PAID
TO GRANTEE.

 

(D)           NO RIGHTS AS A SHAREHOLDER.  EACH SHARE POTENTIALLY ELIGIBLE TO BE
DELIVERED PURSUANT TO THIS AGREEMENT IS NOT CONSIDERED ISSUED OR OUTSTANDING
UNTIL AN ACTUAL DELIVERY OF THE SHARE HAS BEEN MADE.  ACCORDINGLY, UNTIL SUCH
SHARE HAS BEEN DELIVERED TO GRANTEE PURSUANT TO THE TERMS OF THIS AGREEMENT,
GRANTEE SHALL HAVE NO RIGHTS AND PRIVILEGES AS A SHAREHOLDER OF THE COMPANY WITH
RESPECT TO SUCH SHARE, INCLUDING NO RIGHT TO VOTE OR RECEIVE DIVIDENDS PAID ON
ANY SHARES.  NOTWITHSTANDING THE FOREGOING SENTENCE, GRANTEE IS ENTITLED TO
RECEIVE DIVIDEND SHARES AS PROVIDED ABOVE IN SECTION 4(C).

 

(E)           NO RIGHTS TO CONTINUED RELATIONSHIP.  GRANTEE’S RIGHT TO RECEIVE
ANY SHARES UNDER THIS AGREEMENT SHALL NOT CONFER UPON GRANTEE ANY RIGHT WITH
RESPECT TO CONTINUANCE OF EMPLOYMENT BY THE COMPANY OR BY AN AFFILIATE, NOR
SHALL IT INTERFERE IN ANY WAY WITH THE RIGHT OF HIS OR HER EMPLOYER TO TERMINATE
HIS OR HER EMPLOYMENT AT ANY TIME.

 

Grantee’s right to receive any Shares hereunder shall not confer upon Grantee
any right with respect to continuance of a directorship of the Company or of an
Affiliate, nor shall it interfere in any way with the right of the shareholders
to remove him or her as a director at any time.

 

Grantee’s right to receive any Shares hereunder shall not confer upon Grantee
any right with respect to continuance of any consulting arrangement with the
Company or any Affiliate, nor shall it interfere in any way with the right of
the Company or an Affiliate, as the case may be, to terminate any such
arrangement.

 

(F)            COMPLIANCE WITH OTHER LAWS AND REGULATIONS.  THIS AGREEMENT AND
THE OBLIGATION OF THE COMPANY TO SELL AND DELIVER SHARES HEREUNDER, SHALL BE
SUBJECT TO ALL APPLICABLE FEDERAL AND STATE LAWS, RULES, AND REGULATIONS, AND TO
SUCH APPROVALS BY ANY GOVERNMENT OR REGULATORY AGENCY AS MAY BE REQUIRED.  THE
COMPANY SHALL NOT BE REQUIRED TO ISSUE OR DELIVER ANY CERTIFICATES FOR SHARES
PRIOR TO THE COMPLETION OF ANY REGISTRATION OR QUALIFICATION OF SUCH SHARES
UNDER ANY FEDERAL OR STATE LAW, OR ANY RULE OR REGULATION OF ANY GOVERNMENTAL
BODY WHICH THE COMPANY SHALL, IN ITS SOLE DISCRETION, DETERMINE TO BE NECESSARY
OR ADVISABLE; PROVIDED, HOWEVER, THE COMPANY SHALL USE REASONABLE EFFORTS TO
CAUSE SUCH ISSUANCE OR DELIVERY TO COMPLY WITH ALL SUCH LAWS AND RULES AS
PROMPTLY AS PRACTICABLE.

 

To the extent applicable, it is intended that this Agreement and the Plan comply
with the provisions of Section 409A of the Code.  This Agreement and the Plan
shall be administered in a manner consistent with this intent, and any provision
that would cause this Agreement or the Plan to fail to satisfy Section 409A of
the Code shall have no force or effect until amended to comply with Section 409A
of the Code (which amendment

 

4

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may be retroactive to the extent permitted by Section 409A of the Code and may
be made by the Company without the consent of Grantee).

 

(G)           WITHHOLDING TAXES. GRANTEE AGREES TO MAKE APPROPRIATE ARRANGEMENTS
WITH THE COMPANY OR AFFILIATE, AS THE CASE MAY BE, FOR THE SATISFACTION OF ALL
FEDERAL, STATE AND LOCAL INCOME AND EMPLOYMENT TAX WITHHOLDING REQUIREMENTS
APPLICABLE TO THE DELIVERY OF ANY SHARES.  NO CERTIFICATES REPRESENTING SHARES
WILL BE DELIVERED UNTIL GRANTEE HAS MADE ACCEPTABLE ARRANGEMENTS FOR THESE
WITHHOLDING REQUIREMENTS.  GRANTEE MAY ELECT TO PAY ALL MINIMUM REQUIRED AMOUNTS
OF TAX WITHHOLDING, OR ANY PART THEREOF, BY ELECTING TO TRANSFER TO THE COMPANY,
OR HAVE WITHHELD FROM ANY SHARES OTHERWISE ELIGIBLE TO BE DELIVERED UNDER THIS
AGREEMENT, SHARES HAVING A VALUE EQUAL TO THE MINIMUM AMOUNT REQUIRED TO BE
WITHHELD UNDER FEDERAL, STATE OR LOCAL LAW OR SUCH LESSER AMOUNT AS MAY BE
ELECTED BY GRANTEE. THE VALUE OF SHARES TO BE TRANSFERRED TO THE COMPANY SHALL
BE THE FAIR MARKET VALUE OF THE SHARES ON THE DATE THAT THE AMOUNT OF TAX TO BE
WITHHELD IS TO BE DETERMINED (THE “TAX DATE”), AS DETERMINED BY THE COMPANY. ANY
SUCH ELECTIONS BY GRANTEE TO HAVE SHARES WITHHELD FOR THIS PURPOSE WILL BE
SUBJECT TO THE FOLLOWING RESTRICTIONS:

 

(I)            ALL ELECTIONS MUST BE MADE PRIOR TO THE TAX DATE;

 

(II)           ALL ELECTIONS SHALL BE IRREVOCABLE; AND

 

(III)          IF GRANTEE IS AN OFFICER OR DIRECTOR OF THE COMPANY WITHIN THE
MEANING OF SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934 (“SECTION 16”),
GRANTEE MUST SATISFY THE REQUIREMENTS OF SUCH SECTION 16 AND ANY APPLICABLE
RULES THEREUNDER WITH RESPECT TO THE USE OF COMMON STOCK TO SATISFY SUCH TAX
WITHHOLDING OBLIGATION.

 

5.             Investment Representation.  The Company may require that Grantee
furnish to the Company, as a condition of acquiring stock hereunder, (a) written
assurances satisfactory to the Company, or counsel for the Company, as to
Grantee's knowledge and experience in financial and business matters and/or to
employ a purchaser representative reasonably satisfactory to the Company, or
counsel for the Company, who is knowledgeable and experienced in financial and
business matters, and that he or she is capable of evaluating, alone or together
with the purchaser representative, the merits and risks of acquiring the Shares;
and (b) written assurances satisfactory to the Company, or counsel for the
Company, stating that Grantee is acquiring the stock for Grantee's own account
and not with any present intention of selling or otherwise distributing the
stock.  The Company may (a) restrict the transferability of the stock and
require a legend to be endorsed on the certificates representing such stock, as
appropriate to reflect resale restrictions, if any, imposed by the Board or as
appropriate to comply with any applicable state or federal securities laws,
rules or regulations; and (b) condition the issuance and delivery of stock upon
the listing, registration or qualification of such stock upon a securities
exchange or quotation system or under applicable securities laws.  The Company
will use reasonable efforts to cause such issuance and delivery to be in
compliance with all applicable listing, registration or qualification
requirements or applicable exception therefrom as promptly as practicable
following Grantee's entitlement to the shares.  The foregoing requirements, and
any assurances given pursuant to such requirements, shall be

 

5

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inoperative if (a) the issuance of stock has been registered under a then
currently effective registration statement under the Securities Act, or (b) as
to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities laws. 

 

6.             Grantee Bound by the Plan.  Grantee agrees to be bound by all the
terms and provisions of the Plan.  To the extent that the terms of this
Agreement are inconsistent with the terms of the Plan, the terms of the Plan
shall govern.  The captions used in this Agreement, and the Plan are inserted
for convenience and shall not be deemed a part of the Agreement for construction
or interpretation.

 

7.             Governing Law.  This Agreement and the Plan shall be construed in
accordance with the laws of the State of Colorado, without regard to the
conflict of laws principles.

 

8.             Notices.  Any notice to the Company or the Board that is required
to be made under the terms of the Agreement or under the terms of the Plan shall
be addressed to the Company in care of its Compensation Committee Chairman at
25501 West Valley Parkway, Suite 300, Olathe, Kansas 66061 with a copy to its
General Counsel at the same address.  Any notice that is required to be made to
Grantee under the terms of the Agreement or under the terms of the Plan shall be
addressed to him or her at the address indicated below:

 

 

 

unless Grantee notifies the Company of his or her address change in writing as
provided in this Section 8 in which case the notice shall be addressed to
Grantee at his or her new address.  A notice under this Section 8 shall be
deemed to have been given or delivered upon personal delivery or upon deposit in
the United States mail, by registered or certified mail, postage prepaid and
properly addressed as provided in this Section 8.

 

This Agreement has been executed and delivered by the parties hereto effective
date above written.

 

 

NIC, INC.

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

GRANTEE

 

 

 

 

 

 

 

 

 

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Exhibit A

 

Performance Goals

 

The total number of Shares granted under this Award that will ultimately be
delivered to Grantee based on the achievement of the established performance
goals will depend on the Company’s consolidated financial performance with
respect to each of the following three measures for the Performance Period:

 

·                  Operating income growth (three-year compound annual growth
rate) – 25% weighting

 

·                  Total revenue growth (three-year compound annual growth rate)
– 25% weighting

 

·                  Cash flow return on invested capital (three-year average) –
50% weighting

 

Each of these metrics is defined as follows:

 

The definition of Operating Income is consistent with that term defined in
generally accepted accounting principles and will be derived from the face of
the consolidated statements of income included in the Company’s Annual Reports
on Form 10-K for the respective fiscal years.

 

The definition of Total Revenue is consistent with that term defined in
generally accepted accounting principles and will be derived directly from the
face of the consolidated statements of income included in the Company’s Annual
Reports on Form 10-K for the respective fiscal years.

 

Cash Flow Return on Invested Capital is defined as consolidated cash flow from
operating activities minus capital expenditures, the difference of which is
divided by the difference between total assets and non-interest bearing current
liabilities.  Consolidated cash flow from operating activities and capital
expenditures will be derived from the face of the consolidated statements of
cash flows included in the Company’s Annual Report on Form 10-K for the
respective fiscal years.  Total assets and non-interest bearing liabilities will
be derived from the face of the consolidated balance sheets included in the
Company’s Annual Reports on Form 10-K for the respective fiscal years.

 

Calculation of Deliverable Shares

 

At the end of the Performance Period, the Company will deliver a number of
Shares based on a pre-defined schedule of Threshold, Target and Superior Company
performance.  The Threshold, Target and Superior Performance Goals for each of
the three measures above have been established by the Committee and are set
forth in the table immediately below.

 

A-1

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Performance Goals

 

 

 

Threshold

 

Target

 

Superior

 

 

 

 

 

 

 

 

 

Operating income growth

 

15

%

20

%

25

%

 

 

 

 

 

 

 

 

Total revenue growth

 

15

%

20

%

25

%

 

 

 

 

 

 

 

 

Cash flow return on invested capital

 

15

%

20

%

25

%

 

The total number of Shares granted in Section 1 of this Agreement was determined
based on the quotient of [75%] [115%] of the Grantee’s base salary (on the Grant
Date) divided by the market value of one Share on the Grant Date.  Accordingly,
only if all Performance Goals are achieved at the Superior level will the total
number of Shares be delivered.

 

If less than Superior performance is obtained for all three Performance Goals,
then the number of Shares to be delivered at the end of the Performance Period
will be the quotient obtained by dividing (a) the product of (1) the Grantee’s
base salary as of the Grant Date times (2) the weighted percentages of 25%, 50%
or 75% for Company performance at Threshold, Target or Superior levels,
respectively by (b) the fair market value of one Share on the Grant Date.  For
each performance measure, the weighted percentage will be 0% if Threshold
performance is not achieved for that Performance Goal, and no additional shares
will be awarded for performance in excess of the Superior level.  For amounts
between the Threshold and Target levels or between the Target and Superior
levels, straight line interpolation, rounded up to the next whole share, will be
used to determine the number of Shares that is to be delivered.

 

A-2

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