SNAP-ON INCORPORATED
COMBINED PERFORMANCE
SHARE AND
MANAGEMENT INCENTIVE AWARD AGREEMENT
THIS
AGREEMENT (“Agreement”) is made and entered into as of _______, ____ by and
between SNAP-ON INCORPORATED, a Delaware corporation (the “Company”), and
_______________, an employee of the Company or of a subsidiary of the Company (the
“Key Employee”).
W I T N E S S E T H :
WHEREAS,
the Organization and Executive Compensation Committee of the Board of Directors of the
Company (such committee, whether acting as such or through the ad hoc committee of the
Board to which such committee delegated its authority in connection with this Agreement,
the “Committee”), by actions of the Committee on ______, approved the grant (the
“Grant”) to the Key Employee of _______ (the “Grant Number”)
Performance Shares and the opportunity to receive a cash amount (the “Incentive
Award”) pursuant to the Company’s 2001 Incentive Stock and Awards Plan (the
“Awards Plan”), to be effective ________;
WHEREAS,
the Key Employee may elect to defer receipt of the Performance Shares and/or the Incentive
Award by executing an Election to Defer Compensation (the “Deferral Election”)
at a later date; and
WHEREAS,
the Grant contemplated that the Grant will also be subject to the terms of an award
agreement, the form of which is to be determined by the Company, and this Agreement is
intended to serve as the additional agreement that the Grant contemplated.
NOW,
THEREFORE, in consideration of the premises and of the covenants and agreements herein set
forth, the parties hereby mutually covenant and agree as follows:
| 1. |
Performance Shares. Subject to the terms and conditions set forth herein,
as of _______, _____, the Company hereby awards to the Key Employee ______
Performance Shares which the Key Employee shall have the right to receive
subject to the conditions set forth below. Except as otherwise provided herein,
no Performance Share may be sold, transferred or otherwise alienated or pledged. |
| |
Performance
Shares are used solely to calculate the number of actual Shares that the Key Employee may
earn in accordance with this Agreement, and do not create any separate rights or
entitlements. Performance Shares represent the Company’s unfunded and unsecured
promise to issue Shares at a future date, subject to the terms and conditions of this
Agreement and the Awards Plan. The Key Employee has no rights under this Agreement other
than the rights of a general unsecured creditor of the Company. |
| |
Capitalized
terms used but not defined in this Agreement shall have the meanings assigned to them in
the Awards Plan. |
2
| 2. |
Right
to Receive and Forfeiture Based on Performance. Subject to the
terms and conditions set forth herein, |
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(a) |
The
number of Performance Shares earned, and payment of the Incentive Award, is
dependent upon performance relative to revenue growth and RONAEBIT
goals during fiscal 2005, fiscal 2006 and fiscal 2007. The threshold,
target and maximum goals for revenue growth and RONAEBIT during
fiscal 2005, fiscal 2006 and fiscal 2007 are as shown on Exhibit 1,
and the Key Employee will be entitled to Shares subject to
Performance Shares, and the Incentive Award will be earned, in
accordance with the vesting matrix attached hereto as Exhibit 1 based
on actual performance of the Company relative to the goals subject to
the terms attached hereto as Exhibit 2. As soon as practicable
after the Company’s audited financial statements for fiscal
2005, fiscal 2006 and fiscal 2007 are available to the Committee, the
Committee shall calculate the Company’s revenue growth and
RONAEBIT data for such years in accordance with the terms attached
hereto as Exhibit 2. The Committee shall then plot the revenue
growth and RONAEBIT data on the vesting matrix. The resulting
position on the matrix shall determine the percentage of the Grant
Number of Performance Shares and the Incentive Award that the Key
Employee will earn, as set forth below. In the course of calculating
the Company’s revenue growth and RONAEBIT data and plotting the
revenue growth and RONAEBIT data on the vesting matrix, the Committee
shall have the discretion to take action in light of the effects of
Costs for Continuous Improvement Initiatives (as defined on Exhibit 2) that
reduces the resulting percentage in such manner and to such extent as
the Committee determines in its sole discretion. However, the
Committee shall have no discretion to take into account the effects
of Special Charges in a manner that increases the resulting
percentage. The Company shall promptly communicate this information
to the Key Employee. |
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(b) |
Unless
the Key Employee has previously forfeited such Performance Shares and the
Incentive Award, if the position on the matrix reflects a percentage
greater than 25% and less than or equal to 100%, then the number of
Performance Shares that the Key Employee shall earn shall be equal to
the product of such percentage and the Grant Number. In addition, the
Key Employee will earn an Incentive Award equal to the product of the
number of the Performance Shares that the Key Employee earned and
$31.73 (the closing price for a share of the Company’s Common
Stock on March 18, 2005). Upon the Committee’s determination as
provided above, the Key Employee will forfeit any Performance Shares
that the Key Employee has not become entitled to. |
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(c) |
If
the position on the matrix reflects a percentage greater than 100%, then the
Key Employee shall earn the Grant Number of Performance Shares and
cash with respect to the Incentive Award equal to the Grant Number
multiplied by $31.73. Unless the Key Employee has previously
forfeited the right to earn the Incentive Award, if the position on
the matrix reflects a percentage greater than 100%, then the Key
Employee will receive additional cash in respect the Incentive Award
equal to the product of the percentage in excess of 100%, but not greater
than 50%, multiplied by the Grant Number of Performance Shares
multiplied by two multiplied by $31.73. |
3
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(d) |
Following
the Committee’s determination of the number of Performance Shares
that have been earned, such Performance Shares will be converted into
an equivalent number of Shares that will be distributed to the Key
Employee or, in the event of the Key Employee’s death, to the
Beneficiary (as defined below), as soon as practicable. The
distribution to the Key Employee, or in the case of the Key Employee’s
death, to the Beneficiary, of Shares in respect of the Performance
Shares that were earned shall be evidenced by a stock certificate or
other appropriate means as determined by the Company. |
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(e) |
If
any calculation of Shares to be awarded would result in a fraction, any
fraction of 0.5 or greater will be rounded to one, and any fraction
of less than 0.5 will be rounded to zero. |
| 3. |
Forfeiture
Based on Employment Status. Subject to the terms and conditions
set forth herein, |
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(a) |
In
addition to any rights of the Company under Section 4, the Key Employee will
not have a right to any Performance Shares or any Incentive Award
payment as to which the Committee has not made its determination
under Section 2 and not otherwise vested under Section 5 if the Key
Employee’s employment with the Company or its subsidiaries is
terminated for any reason prior to such determination unless in the
case of termination by the Company or a subsidiary the Committee
determines, on such terms and conditions, if any, as the Committee
may impose, that there may nonetheless be the right to receive all or
a portion of the award at the time of such determination or at any
other time. Absence of the Key Employee on leave approved by a duly
elected officer of the Company, other than the Key Employee, shall
not be considered a termination of employment during the period of
such leave. |
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(b) |
Notwithstanding
the foregoing, in the case of termination of employment as a result
of death, Disability (as defined below) or Retirement (as defined below),
the Key Employee will have the right to earn Performance Shares, and
the Key Employee’s entitlement to cash in respect of the
Incentive Award will be determined, based upon the Company’s
actual performance relative to the revenue growth and RONAEBIT goals
over the full performance period, but in lieu of the amounts under
Section 2(b) and (c), the respective amounts, if any, determined
under those subsections shall be reduced by multiplying such amounts
by a fraction representing the portion of the three-year period that
elapsed before the termination of the Key Employee’s employment. |
| |
(c) |
Whether
or not a divestiture of a subsidiary, division or other business unit
(including through the formation of a joint venture) results in
termination of employment with the Company and its subsidiaries will
be at the discretion of the Committee, which discretion the Committee
may exercise on a case by case basis. |
4
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(i) |
“Disability” means a medically-determinable physical or mental
condition that is expected to be permanent and that results in the Key Employee
being unable to perform one or more of the essential duties of the Key
Employee’s occupation or a reasonable alternative offered by the Company or
its subsidiaries, all as determined by the Committee or any successor to such
committee that administers the Awards Plan (as the same may be amended). |
| |
(ii) |
“Retirement” means termination of employment from the Company and its
subsidiaries on or after satisfying the early or normal retirement age and
service conditions specified in the retirement policy or retirement plan of the
Company or one of its subsidiaries applicable to such Key Employee as in effect
at the time of such termination. |
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(a) |
Activity
During Employment. If, prior to termination of the Key Employee’s
employment with the Company or during the one-year period following
termination of the Key Employee’s employment with the Company,
the Company becomes aware that, prior to termination, the Key
Employee had engaged in detrimental activity, then the Committee in
its sole discretion, for purposes of this Agreement, may characterize
or recharacterize termination of the Key Employee’s employment
as a termination to which this Section 4 applies and may determine or
redetermine the date of such termination, and the Key Employee’s
rights with respect to the Grant shall be determined in accordance
with the Committee’s determination. |
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(b) |
Activity
Following Termination. If, within the three-month period
following the Key Employee’s termination of employment with the
Company, the Company becomes aware that the Key Employee has engaged
in detrimental activity subsequent to termination, then the Key
Employee’s rights with respect to the Grant shall be determined
in accordance with any determination by the Committee under this
Section 4. |
| |
(c) |
Remedies.
If the Key Employee has engaged in detrimental activity as described
in subsections (a) and (b), then the Committee may, in its discretion,
declare that the Key Employee has forfeited the Grant in whole or in
part and cause the Company to cause the Key Employee to return any
cash or property actually realized by the Key Employee (directly or
indirectly) in respect of the Grant, in each case whether or not the
Committee has made a vesting determination under Section 2 in respect
thereof before or after the date the Key Employee engaged in the
detrimental activity or before or after the date of termination as
determined or redetermined under subsection (a). |
5
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(d) |
Allegations
of Activity. If an allegation of detrimental activity by the Key
Employee is made to the Committee, then the Committee may suspend the Key
Employee’s rights in respect of the Grant to permit the
investigation of such allegation. |
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(e) |
Definition
of “Detrimental Activity.” For purposes of this
Agreement, “detrimental activity” means activity that is
determined by the Committee in its sole discretion to be detrimental
to the interests of the Company or any of its subsidiaries, including
but not limited to situations where the Key Employee (i) divulges
trade secrets of the Company, proprietary data or other confidential
information relating to the Company or to the business of the Company
or any subsidiaries, (ii) enters into employment with a competitor
under circumstances suggesting that the Key Employee will be using
unique or special knowledge gained as an employee of the Company to
compete with the Company, (iii) uses information obtained during the
course of his prior employment with the Company for his own purposes,
such as for the solicitation of business and competition with the
Company, (iv) is determined to have engaged (whether or not
prior to termination due to retirement) in either gross misconduct or
criminal activity harmful to the Company, or (v) takes any
action that ▇▇▇▇▇ the business interests, reputation or goodwill of
the Company and/or its subsidiaries. |
| 5. |
Change
in Control. In the event of a “Change of Control” (as
defined in the Awards Plan) prior to the Committee’s
determination under Section 2(a), |
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(a) |
Any
Performance Shares shall be treated as provided in the Awards Plan, unless
the Key Employee has previously forfeited the right to receive such
Performance Shares; and |
| |
(b) |
Notwithstanding
their treatment under the terms of the Awards Plan, the Company will
immediately make payment in respect of the Incentive Award assuming
performance at maximum levels for the entire period. |
| 6. |
Voting
Rights; Dividends and Other Distributions. |
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(a) |
Until
the Key Employee receives Shares pursuant to Section 2(d), the Key
Employee will not have any voting rights with respect to the
Performance Shares. |
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(b) |
Until
the Key Employee is entitled to receive Shares pursuant to Section 2(d)
and subject to any forfeiture thereof, all dividends and other
distributions that would be paid with respect to the Performance
Shares shall be subject to the same restrictions as the Performance
Shares with respect to which they were paid. |
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(c) |
There
shall be no dividend right associated with the Incentive Award. |
6
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(d) |
Subject
to the provisions of this Agreement, the Key Employee shall have, with
respect to the Performance Shares, all other rights of holders of
Common Stock. |
| 7. |
Tax
Withholding; Repurchase. |
| |
(a) |
It
shall be a condition of the obligation of the Company to issue Shares subject
to the Performance Share to the Key Employee or the Beneficiary, and
the Key Employee agrees, that the Key Employee shall pay to the
Company, upon its demand, such amount as may be requested by the
Company for the purpose of satisfying its liability to withhold
federal, state, or local income or other taxes incurred by reason of
the award or as a result of the vesting hereunder or shall provide
evidence satisfactory to the Company that the Company has no
liability to withhold. The Company may withhold from cash payable in
respect of the Incentive Award such amount as may be determined by
the Company for the purpose of satisfying its liability to withhold
federal, state, or local income or other taxes incurred by reason of
such payment. |
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(b) |
At
each time the Company is obligated to issue Shares subject to the Performance
Shares to the Key Employee or the Beneficiary, the Key Employee or
the Beneficiary, as the case may be, may elect to have the Company
repurchase up to 40% of the Shares to be so issued or released at a
price equal to the Fair Market Value (as defined below) on the Tax
Date (as defined below). The election must be delivered to the
Company within 30 days after the Tax Date. If the number of shares so
determined shall include a fractional share, then the Company shall
not be obligated to repurchase such fractional share. All elections
shall be made in a form acceptable to the Company. As used herein, (i)
“Tax Date” means the date on which the Key Employee must
include in his gross income tax purposes the fair market value of the
Performance Shares and (ii) “Fair Market Value” means the
per share closing price on the date in question in the principal
market in which the Common Stock is then traded or, if no sales of
Common Stock have taken place on such date, the closing price on the
most recent date on which selling prices were quoted. |
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(a) |
The
person whose name appears on the signature page hereof after the caption
“Beneficiary” or any successor that the Key Employee
designates in accordance herewith (the person who is the Key Employee’s
Beneficiary at the time of his death herein referred to as the “Beneficiary”)
shall be entitled to receive the Shares subject to the Performance
Shares that the Key Employee was entitled to and the Incentive Award
that is earned following the death of the Key Employee. The Key
Employee may from time to time revoke or change his Beneficiary
without the consent of any prior Beneficiary by filing a new
designation with the Committee. The last such designation that the Committee
receives shall be controlling; provided, however, that no
designation, or change or revocation thereof, shall be effective
unless received by the Committee prior to the Key Employee’s
death, and in no event shall any designation be effective as of a
date prior to such receipt. |
7
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(b) |
If
no such Beneficiary designation is in effect at the time of the Key
Employee’s death, or if no designated Beneficiary survives the
Key Employee or if such designation conflicts with law, then the Key
Employee’s estate shall be entitled to receive the Shares
subject to the Performance Shares that the Key Employee was entitled
to and the Incentive Award that is earned following the death of the
Key Employee. If the Committee is in doubt as to the right of any
person to receive such Shares and/or Incentive Award, then the
Company may retain such Performance Shares and the cash payment
associated with the Incentive Award, without liability for any
interest thereon, until the Committee determines the person entitled
thereto, or the Company may deliver such Shares and the cash payment
associated with the Incentive Award to any court of appropriate
jurisdiction, and such delivery shall be a complete discharge of the
liability of the Company therefor. |
| 9. |
Adjustments
in Event of Change in Stock. In the event of any
reclassification, subdivision or combination of shares of Common
Stock, merger or consolidation of the Company or sale by the Company
of all or a portion of its assets, or other event which could, in the
judgment of the Committee, distort the implementation of the Grant or
the realization of its objectives, the Committee may make such
adjustments in the Grant Number and the number of Performance Shares
under this Agreement, or in the terms, conditions or restrictions of
this Agreement, as the Committee deems equitable; provided that in
the absence of express action by the Committee, adjustments that apply
generally to Performance Shares granted under the Awards Plan shall
apply automatically to the Performance Shares under this Agreement. |
| 10. |
Powers
of the Company Not Affected. The existence of the Grant shall not
affect in any way the right or power of the Company or its
stockholders to make or authorize any combination, subdivision or
reclassification of the Common Stock or any reorganization, merger,
consolidation, business combination, exchange of shares, or other
change in the Company’s capital structure or its business, or
any issue of bonds, debentures or stock having rights or preferences
equal, superior or affecting the Common Stock or the rights thereof,
or dissolution or liquidation of the Company, or any sale or transfer
of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
Nothing in this Agreement shall confer upon the Key Employee any
right to continue in the employment of the Company or interfere with
or limit in any way the right of the Company to terminate the Key
Employee’s employment at any time. |
| 11. |
Interpretation
by Committee. The Key Employee agrees that any dispute or
disagreement that may arise in connection with this Agreement shall
be resolved by the Committee, in its sole discretion, and that any
interpretation by the Committee of the terms of this Agreement or the
Awards Plan and any determination made by the Committee under this
Agreement or such plan may be made in the sole discretion of the
Committee and shall be final, binding, and conclusive. |
8
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(a) |
This
Agreement shall be governed and construed in accordance with the laws of
the State of Wisconsin applicable to contracts made and to be
performed therein between residents thereof. |
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(b) |
This
Agreement may not be amended or modified except by the written consent of
the parties hereto. |
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(c) |
The
captions of this Agreement are inserted for convenience of reference only
and shall not be taken into account in construing this Agreement. |
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(d) |
Any
notice, filing or delivery hereunder or with respect to the Grant shall be
given to the Key Employee at either his usual work location or his
home address as indicated in the records of the Company, and shall be
given to the Committee or the Company at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Secretary. All such notices
shall be given by first class mail, postage pre-paid, or by personal
delivery. |
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(e) |
This
Agreement shall be binding upon and inure to the benefit of the Company and
its successors and assigns and shall be binding upon and inure to the
benefit of the Key Employee, the Beneficiary and the personal
representative(s) and heirs of the Key Employee, except that the Key
Employee may not transfer any interest in any Performance Shares. |
9
IN
WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly
authorized officer, and the Key Employee has hereunto affixed his hand, all on the day and
year set forth above.
|
|
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SNAP-ON INCORPORATED |
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By: ______________________________________ |
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Title: |
| |
Key Employee:
__________________________________________ |
| |
Beneficiary: _________________________________ |
| |
Address of Beneficiary:
___________________________________________
___________________________________________ |
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Beneficiary Tax Identification |
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No. _______________________________________ |
10
Exhibit 2
| 1. |
“RONAEBIT” for
purposes of the vesting matrix means a fraction expressed as a percentage
where (i) the numerator is Operating Income (as defined below) and (ii)
the denominator is average net assets employed. “Operating Income” means
earnings from continuing operations before income taxes (including net
finance income) plus interest expense less other income (expense) – net
(i.e., less other income plus other expense) plus Costs for
Continuous Improvement Initiatives (as defined below). “Net assets
employed” means total assets minus cash and cash equivalents and
minus all liabilities excluding short-term and long-term debt. “Average
net assets employed” for a period means the average of net assets
employed at the end of the immediately preceding fiscal period and at the
end of each fiscal quarter during the period as reflected in the Company’s
final consolidated balance sheet for the quarter that is prepared as part
of the financial statements used in the preparation of the Company’s
externally reported financial statements. |
| 2. |
RONAEBIT
for purposes of the vesting matrix will be calculated based upon Operating
Income for the period consisting of fiscal 2005, fiscal 2006 and fiscal
2007 and average net assets employed for the same period. |
| 3. |
Revenue
growth for purposes of the vesting matrix will be calculated by comparing
the Company’s consolidated net sales for fiscal 2007 with the net
sales amounts set forth on the matrix. |
| 4. |
The
amount of each component of a calculation will be determined by reference to
the Company’s audited financial statements for the year(s) in
question or the notes thereto to the extent reflected therein and, if not
reflected therein, by reference to the Company’s unaudited financial
statements or the notes thereto contained in the Company’s periodic
reports filed with the Securities and Exchange Commission to the extent
reflected therein and, if not reflected therein, by reference to the
Company’s publicly disclosed earnings release for the relevant period
and, if not reflected therein, by reference to the Company’s final
consolidated balance sheet for the month that is prepared as part of the
financial statements used in the preparation of the Company’s
externally reported financial statements. |
| 5. |
There
is graduated, proportionate vesting between the threshold and target
goals. There is also graduated, proportionate vesting between the target
and outstanding goals. |
| 6. |
“Costs
for Continuous Improvement Initiatives” consist of costs associated
with exit or disposal activities (as defined by Statement of Financial
Accounting Standards (“SFAS”) No. 146), non-recurring charges
and non-comparable charges. Costs or charges will not be Cost for
Continuous Improvement Initiatives if: (i) the cost or charge would cause
an award to fail to qualify for the performance-based exception under
Section 162(m) of the Internal Revenue Code or (ii) the
committee of the Board that the Board has established to assist in the
administration of the Plan (the “Ad Hoc Committee”) in its sole
discretion determines that a charge or other expense shall not be
considered a Cost for Continuous Improvement Initiatives (regardless of
whether the cost or charge would otherwise qualify as a Cost for
Continuous Improvement Initiatives). Non-recurring charges consist of
charges related to exit or disposal activities that do not meet the
requirements of SFAS No. 146, such as the write-off of inventory or
transition costs that are incurred as a result of exit or disposal
activities and will benefit future operations, as well as non-exit or
disposal activity related charges that are considered non-recurring in
nature. Non-comparable charges consist of costs that do not qualify to be
included in one of the two proceeding categories but are considered
one-time, unusual charges and are reflected as such in the Company’s
publicly disclosed earnings release for the relevant period. To the extent
terms used above have meanings under U.S. GAAP, such meanings shall
control. |
11
| 7. |
Except
to the extent that doing so would cause an award to fail to qualify for
the performance-based exception under Section 162(m) of the Internal
Revenue Code, the threshold, target and maximum goals for revenue growth
and RONAEBIT will be adjusted upward or downward as appropriate to
eliminate the effects of acquisitions and divestitures subject to the
following. |
| |
(a) |
There will be adjustments only where there is an acquisition or divestiture (or
a combination of multiple acquisitions or divestitures) of a subsidiary,
division or other business unit that had revenues during its last full fiscal
year equal to 1% or more of the Company’s budgeted consolidated net sales
during the year the acquisition or divestiture occurs as reflected in the
Company’s overall annual operating plan as of the commencement of the year
as presented to the Company’s Board of Directors at its February meeting
(the “Final AOP”). |
| |
(b) |
Adjustments to Revenue Goals. If an acquisition occurs in 2005 or 2006,
then the Ad Hoc Committee will adjust the net sales amounts set forth on the
vesting matrix upward by an amount that is at least equal to the projected
revenue for the acquired business in 2007 as reflected in the financial
projections for the acquired business used as the basis for approval of the
Company’s acquisition purchase price decision by the Company’s Board
of Directors or the highest authority within the Company approving that decision
(the “Pricing Projections”). If an acquisition occurs in 2007, then
the Ad Hoc Committee will adjust the net sales amounts set forth on the vesting
matrix upward by an amount that is at least equal to the projected revenue for
the acquired business in 2007, as reflected in the Pricing Projections for the
acquired business, multiplied by a fraction representing the portion of fiscal
2007 occurring after the acquisition. If a divestiture occurs in 2005 or 2006,
then the Ad Hoc Committee will adjust the net sales amounts set forth on the
vesting matrix downward by an amount that is no greater than the budgeted
revenue for the divested business in the last Final AOP for which the divested
business was included. If a divestiture occurs in 2007, then the Ad Hoc
Committee will adjust the net sales amounts set forth on the vesting matrix
downward on a pro rata basis by an amount that is no greater than the budgeted
revenue for the divested business in 2007, as reflected in the Final AOP as of
the commencement of fiscal 2007, multiplied by a fraction representing the
portion of fiscal 2007 occurring after the divestiture. |
| |
(c) |
Adjustments to RONAEBIT Goals. If there is an acquisition or divestiture,
then the RONAEBIT percentages on the vesting matrix will be recalculated as set
forth below. |
12
| |
“Unadjusted
Operating Income” will be estimated as the product obtained by multiplying the
RONAEBIT percentage on the vesting matrix by $1,291,800,000 (which is the net assets of
the close of fiscal 2004). |
| |
For
an acquisition, the Company’s Unadjusted Operating Income will be adjusted upward by
an amount determined by the Ad Hoc Committee that is at least equal to the projected
Operating Income for the acquired business for the remaining term of the plan cycle, as
reflected in the Pricing Projections for the acquired business, divided by the total
number of years in the plan cycle. For an acquisition, the Company’s net assets as of
the close of fiscal 2004 will be adjusted upward by an amount determined by the Ad Hoc
Committee that is no greater than the projected average net assets of the acquired
business for the remaining term of the plan cycle, as reflected in the Pricing Projections
for the acquired business, multiplied by the number of quarter ends remaining in the plan
cycle and divided by thirteen. |
| |
For
a divestiture, the Company’s Unadjusted Operating Income will be adjusted downward by
an amount determined by the Ad Hoc Committee that is no greater than the budgeted
Operating Income for the divested business for the year in which the divestiture occurs as
reflected in the Final AOP as of the commencement of such year divided by twelve and
multiplied by the number of months remaining in the plan cycle divided by the total number
of months in the plan cycle. For a divestiture, the Company’s net assets as of the
close of fiscal 2004 will be adjusted downward by an amount determined by the Ad Hoc
Committee that is at least equal to the budgeted net assets for the divested business for
the year in which the divestiture occurs as reflected in the Final AOP as of the
commencement of such year multiplied by the number of quarter ends remaining in the plan
cycle divided by thirteen. |
| |
The
RONAEBIT percentages on the vesting matrix will be recalculated by dividing the adjusted
Operating Income by the adjusted net assets (on an annualized basis). |
13
