**Exhibit 10.2**

 

**NICINC. 2006 AMENDED AND RESTATEDSTOCK OPTION AND INCENTIVE PLAN**

 

**Performance-BasedRestricted Stock Agreement**

 

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

 

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

 

# **1.             Grant of Performance-BasedRestricted 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 tothe restrictions, terms, conditions and other provisions of this Performance-BasedRestricted Stock Agreement (the “Agreement”) and of the NIC Inc. 2006 Amendedand Restated Stock Option and Incentive Plan (the “Plan”), which restrictions,terms, conditions and other provisions are incorporated herein by thisreference.  Unless otherwise definedherein, the terms defined in the Plan shall have the same defined meanings inthis Agreement.

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The actualnumber of Shares, if any, (subject to any adjustment to the number of Shares asprovided in Section 3 hereof, and as will be reflected by delivery ofShare certificates or registered as book entry shares with the Company’stransfer agent) that will be delivered pursuant to this Agreement is dependentupon 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 andconditions set forth in this Agreement and the Plan.

 

# **2.             Restrictions and Forfeiture**

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# If Grantee’s Continuous Status as an Employee, Director or Consultantterminates for any reason other than death or disability (as disability isdefined in Internal Revenue Code Section 22(e)(3)) or following a Control Changeas provided for in Section 4(b), Grantee shall forfeit all rights toreceive any undelivered Shares under this Agreement.  Grantee’s right to receive an undelivered Shareswill also be forfeited if the Committee determines that Grantee engaged inmisconduct in connection with his or her employment with NIC.

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From the dateof this Agreement and until a Share is delivered to Grantee, Grantee shall haveno rights to sell, assign, exchange, transfer, pledge, hypothecate or otherwiseencumber any right he or she may have to receive such Share under thisAgreement.

 

# **3.             Acceleration of Payment of Shares onDeath or Disability**.

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If Grantee’sContinuous Status as an Employee, Director or Consultant terminates due to hisor her death or disability, Grantee shall receive a pro rata portion of theShares eligible to be 

 

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

 

# **4.             Terms and Conditions**.

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## **(a)           Adjustments in Event of Change inCommon Stock**. If any change is made in the Shares, without the receipt ofconsideration by the Company (through merger, consolidation, reorganization,recapitalization, reincorporation, stock dividend, dividend in property otherthan cash, stock split, liquidating dividend, combination of shares, exchangeof shares, change in corporate structure or other transaction not involving thereceipt of consideration by the Company), the number of Shares eligible to bepaid pursuant to the terms and conditions of this Agreement (including anyDividend 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 priceper share of stock of those subject Shares in such manner as the Board may deemequitable to prevent substantial dilution or enlargement of the rights grantedto Grantee; provided, however, that no such adjustment shall cause the Companyto issue a fractional share.  Such adjustmentsshall be final, binding and conclusive. (The conversion of any convertible securities of the Company shall notbe treated as a transaction not involving the receipt of consideration by theCompany.)

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## **(b)           Sale of the Company**.  In the event of a dissolution, liquidation orsale of all or substantially all of the assets of the Company, or a transactionfollowing which the Company is not the surviving corporation in any merger,consolidation, or reorganization (a “Control Change”), then all or a portion ofthe number of the Shares eligible to be delivered pursuant to this Agreementshall be delivered in accordance with the following:

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### (i)            Ifthe Control Change occurs on or prior to the first anniversary of the GrantDate and this Agreement is not assumed, converted, or replaced by the continuingentity, Grantee shall be paid immediately before the Control Change a number ofShares equal to that number of Shares Grantee would have been paid if each ofthe Performance Goals was achieved at the “Target” level.

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### (ii)           Ifthe Control Change occurs after the first anniversary of the Grant Date andthis Agreement is not assumed, converted, or replaced by the continuing entity,Grantee shall be paid immediately before the Control Change a number of Sharesbased on the actual performance of the Company as if the Performance Periodended on December 31 immediately preceding the date, on which the ControlChange occurs, with appropriate adjustments, if necessary to reflect suchshortened Performance Period.

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### (iii)          Ifthe Control Change occurs on or before the first anniversary of the Grant Dateand this Agreement is assumed by the continuing entity, Grantee shall be paidat the end of the Performance Period the same number of Shares Grantee wouldhave been paid if each of the Performance Goals was achieved at the “Target”level, subject to Grantee’s Continuous Status as an Employee, Director orConsultant through the end of the Performance Period.

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### (iv)          Ifthe Control Change occurs after the first anniversary of the Grant Date andthis Agreement is assumed by the continuing entity, Grantee shall be paid atthe end of the Performance Period the same number of Shares based on the actualperformance of the Company as if the Performance Period ended on December 31immediately preceding the date on which the Control Change occurs, subject toGrantee’s Continuous Status as an Employee, Director or Consultant through theend of the Performance Period with appropriate adjustments, if necessary, toreflect such shortened Performance Period.

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## Notwithstanding the provisions of clause (iii) and(iv) to the contrary, if, during the remaining portion of the applicablePerformance Period for the applicable award and following the Control Change, (A) Grantee’sContinuous Status as an Employee, Director or Consultant is terminated by theCompany other than for cause or, (B) if Grantee is a participant in anarrangement or covered by an employment agreement that provides for certainrights upon Grantee’s resignation with “good reason” and Grantee resigns forsuch a “good reason”, then, to the extent not then-vested, Grantee shall bepaid upon his or her termination of employment the number of Shares that wouldhave been paid under (iii) or (iv) as applicable.

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##                 If this Agreement is assumed in connection with a Control Changetransaction, then the Board shall equitably and proportionately adjust thenumber of Shares and the kind of Shares or securities covered by this Agreementimmediately after such transaction solely as necessary to preserve (but notincrease) the level of incentives intended by this Agreement.

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##                 This Agreement shall not in any way affect the right of the Company toadjust, reclassify, reorganize or otherwise change its capital or businessstructure or to merge, consolidate, dissolve, liquidate, sell or transfer allor any part of its business or assets.

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## **(c)           ****Dividend Shares******.  Provided this Agreement has not otherwisebeen terminated or any of Grantee’s rights to receive Shares have not beenforfeited, Grantee shall be entitled to receive dividend equivalent accruals onthe Shares for any cash dividends declared before any Shares are paid underthis Agreement.  At the end of thePerformance Period or at any other time Grantee becomes entitled to receive thepayment of Shares hereunder, Grantee shall receive an additional number ofShares (“Dividend Shares”) determined as follows: (1) as of each date (the“Dividend Payment Date”) that the Company would otherwise pay a declared cashdividend on the total number of Shares set forth in Section 1 if suchShares were outstanding, the Company will credit a number of Dividend Shares toa notional account established for the benefit of Grantee.  The number of Dividend Shares so creditedwill be calculated by dividing the amount of 

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## such hypothetical cash dividendpayment by the Fair Market Value of the Company’s common stock on the DividendPayment Date (rounded down to the nearest whole Dividend Share); and (2) onthe date some or all of the Shares are paid under this Agreement, the totalnumber of Dividend Shares credited to Grantee’s notional account will beconverted into an equivalent number of Shares and paid to Grantee.

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## **(d)           No Rights as a Shareholder**.  Each Share potentially eligible to bedelivered pursuant to this Agreement is not considered issued or outstandinguntil an actual delivery of the Share has been made.  Accordingly, until such Share has beendelivered to Grantee pursuant to the terms of this Agreement, Grantee shallhave no rights and privileges as a shareholder of the Company with respect tosuch Share, including no right to vote or receive dividends paid on anyShares.  Notwithstanding the foregoingsentence, Grantee is entitled to receive Dividend Shares as provided above in Section 4(c).

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## **(e)           No Rights to Continued Relationship**.  Grantee’s right to receive any Shares underthis Agreement shall not confer upon Grantee any right with respect tocontinuance of employment by the Company or by an Affiliate, nor shall itinterfere in any way with the right of his or her employer to terminate his orher employment at any time.

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

 

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

 

## **(f)            Compliance with Other Laws andRegulations**. This Agreement and the obligation of the Company to sell and deliverShares hereunder, shall be subject to all applicable federal and state laws,rules, and regulations, and to such approvals by any government or regulatoryagency as may be required.  The Companyshall not be required to issue or deliver any certificates for Shares prior tothe completion of any registration or qualification of such Shares under anyfederal or state law, or any rule or regulation of any governmental bodywhich the Company shall, in its sole discretion, determine to be necessary oradvisable; provided, however, the Company shall use reasonable efforts to causesuch issuance or delivery to comply with all such laws and rules aspromptly as practicable.

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

 

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may be retroactive to the extent permitted bySection 409A of the Code and may be made by the Company without theconsent 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 incomeand employment tax withholding requirements applicable to the delivery of anyShares.  No certificates representingShares will be delivered until Grantee has made acceptable arrangements forthese withholding requirements.  Granteemay elect to pay all minimum required amounts of tax withholding, or any partthereof, by electing to transfer to the Company, or have withheld from anyShares otherwise eligible to be delivered under this Agreement, Shares having avalue equal to the minimum amount required to be withheld under federal, stateor local law or such lesser amount as may be elected by Grantee. The value ofShares to be transferred to the Company shall be the fair market value of theShares 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 Granteeto have Shares withheld for this purpose will be subject to the followingrestrictions:

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### (i)            Allelections must be made prior to the Tax Date;

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### (ii)           Allelections shall be irrevocable; and

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### (iii)          IfGrantee is an officer or director of the Company within the meaning of Section 16of the Securities Exchange Act of 1934 (“Section 16”), Grantee mustsatisfy the requirements of such Section 16 and any applicable rules thereunderwith respect to the use of Common Stock to satisfy such tax withholdingobligation.

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**5.             InvestmentRepresentation**.  The Company may require that Grantee furnishto the Company, as a condition of acquiring stock hereunder, (a) written assurancessatisfactory to the Company, or counsel for the Company, as to Grantee'sknowledge and experience in financial and business matters and/or to employ apurchaser representative reasonably satisfactory to the Company, or counsel forthe Company, who is knowledgeable and experienced in financial and businessmatters, and that he or she is capable of evaluating, alone or together withthe 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 notwith any present intention of selling or otherwise distributing the stock.  The Company may (a) restrict thetransferability of the stock and require a legend to be endorsed on thecertificates representing such stock, as appropriate to reflect resalerestrictions, if any, imposed by the Board or as appropriate to comply with anyapplicable state or federal securities laws, rules or regulations; and (b)condition the issuance and delivery of stock upon the listing, registration orqualification of such stock upon a securities exchange or quotation system orunder applicable securities laws.  TheCompany will use reasonable efforts to cause such issuance and delivery to bein compliance with all applicable listing, registration or qualificationrequirements or applicable exception therefrom as promptly as practicablefollowing Grantee's entitlement to the shares. The foregoing requirements, and any assurances given pursuant to suchrequirements, shall be

 

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

 

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

 

**7.             Governing Law.**  ThisAgreement and the Plan shall be construed in accordance with the laws of theState of Colorado, without regard to the conflict of laws principles.

 

**8.             Notices.**  Anynotice to the Company or the Board that is required to be made under the termsof the Agreement or under the terms of the Plan shall be addressed to theCompany in care of its Compensation Committee Chairman at 25501 West ValleyParkway, Suite 300, Olathe, Kansas 66061 with a copy to its General Counsel atthe same address.  Any notice that isrequired to be made to Grantee under the terms of the Agreement or under theterms of the Plan shall be addressed to him or her at the address indicatedbelow:

 

 

 

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

 

This Agreement has beenexecuted 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 willultimately be delivered to Grantee based on the achievement of the establishedperformance goals will depend on the Company’s consolidated financialperformance with respect to each of the following three measures for thePerformance Period:

 

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

 

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

 

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

 

Each of these metrics isdefined as follows:

 

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

 

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

 

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

 

**Calculationof Deliverable Shares**

 

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

 

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 Agreementwas determined based on the quotient of [75%] [115%] of the Grantee’s basesalary (on the Grant Date) divided by the market value of one Share on theGrant Date.  Accordingly, only if allPerformance Goals are achieved at the Superior level will the total number ofShares be delivered.

 

If less than Superior performance is obtained for all three PerformanceGoals, then the number of Shares to be delivered at the end of the PerformancePeriod will be the quotient obtained by dividing (a) the product of (1) theGrantee’s base salary as of the Grant Date times (2) the weightedpercentages of 25%, 50% or 75% for Company performance at Threshold, Target orSuperior levels, respectively by (b) the fair market value of one Share onthe Grant Date.  For each performancemeasure, the weighted percentage will be 0% if Threshold performance is notachieved for that Performance Goal, and no additional shares will be awardedfor performance in excess of the Superior level.  For amounts between the Threshold and Targetlevels or between the Target and Superior levels, straight line interpolation,rounded up to the next whole share, will be used to determine the number ofShares that is to be delivered.

 

A-2

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