Common use of Adjustment Methodology Clause in Contracts

Adjustment Methodology. Each Altria Option shall be adjusted in the manner described below, effective as of the time of the Distribution, so that each Altria Option holder shall hold Adjusted Altria Options and Kraft Options in lieu of the Altria Options previously held. The following procedure shall be applied to each grant of Altria Options with the same grant date and exercise price held by each Altria Option holder. For the avoidance of doubt, the term “exercise price” refers to the amount payable by an option holder in order to acquire shares pursuant to a stock option award. (i) The Adjusted Altria Options shall have an exercise price equal to the Altria Post-Adjustment Price multiplied by the Option Conversion Ratio. The number of Adjusted Altria Options shall equal the number of Altria Options. (ii) The Kraft Options shall have an exercise price equal to the Kraft Price multiplied by the Option Conversion Ratio. The number of Kraft Options shall equal the number of Altria Options multiplied by the Distribution Ratio, rounded down to the nearest whole option. If the resulting aggregate Intrinsic Value of the Adjusted Altria Options and Kraft Options is less than the Intrinsic Value of the Altria Options, then the difference shall be paid to the option holder in cash as soon as practicable following the Distribution Date. If the resulting aggregate Intrinsic Value of the Adjusted Altria Options and Kraft Options is greater than the Intrinsic Value of the Altria Options, then the number of Kraft Options shall be reduced until the aggregate Intrinsic Value of the Adjusted Altria Options and Kraft Options is less than or equal to the Intrinsic Value of the Altria Options, and any difference shall be paid to the option holder in cash as soon as practicable following the Distribution Date. Notwithstanding the foregoing, if the Intrinsic Value of the Altria Options is negative, only the first two sentences of this Section 4.1(a)(ii) shall be applied. The cash payment described above shall be made by Altria to individuals who are Altria Group employees on the Distribution Date (or individuals no longer performing services for the Altria Group or the Kraft Group but whose last employment was with the Altria Group), and by Kraft to individuals who are Kraft Group employees on the Distribution Date (or individuals no longer performing services for the Altria Group or the Kraft Group but whose last employment was with the Kraft Group). (iii) The calculation described in the preceding sentence shall be applied using the rounding conventions determined by Altria to carry out the purpose of this Section 4.1.

Adjustment Methodology. Each Altria Option shall be adjusted in the manner described below, effective as of the time of the Distribution, so that each Altria Option holder shall hold Adjusted Altria Options and Kraft PMI Options in lieu of the Altria Options previously held. The following procedure shall be applied to each grant of Altria Options with the same grant date and exercise price held by each Altria Option holder. For the avoidance of doubt, the term “exercise price” refers to the amount payable by an option holder in order to acquire shares pursuant to a stock option award. (i) The Adjusted Altria Options shall have an exercise price equal to the Altria Post-Adjustment Price multiplied by the Option Conversion Ratio. The number of Adjusted Altria Options shall equal the number of Altria Options. (ii) The Kraft PMI Options shall have an exercise price equal to the Kraft PMI Price multiplied by the Option Conversion Ratio. The number of Kraft PMI Options shall equal the number of Altria Options multiplied by the Distribution Ratio, rounded down to the nearest whole optionOptions. If the resulting aggregate Intrinsic Value of the Adjusted Altria Options and Kraft PMI Options is less than the Intrinsic Value of the Altria Options, then the difference shall be paid to the option holder in cash as soon as practicable following the Distribution Date. If the resulting aggregate Intrinsic Value of the Adjusted Altria Options and Kraft PMI Options is greater than the Intrinsic Value of the Altria Options, then the number of Kraft PMI Options shall be reduced until the aggregate Intrinsic Value of the Adjusted Altria Options and Kraft PMI Options is less than or equal to the Intrinsic Value of the Altria Options, and any difference shall be paid to the option holder in cash as soon as practicable following the Distribution Date. Notwithstanding the foregoing, if the Intrinsic Value of the Altria Options is negative, only the first two sentences of this Section 4.1(a)(ii5.1(a)(ii) shall be applied. The cash payment described above shall be made by Altria to individuals who are Altria Non-PMI Group employees on the Distribution Date (or individuals no longer performing services for the Altria Non-PMI Group or the Kraft PMI Group but whose last employment was with the Altria Non-PMI Group), and by Kraft PMI to individuals who are Kraft PMI Group employees on the Distribution Date (or individuals no longer performing services for the Altria Non-PMI Group or the Kraft PMI Group but whose last employment was with the Kraft PMI Group). (iii) The calculation described in the preceding sentence shall be applied using the rounding conventions determined by Altria to carry out the purpose of this Section 4.15.1.