Exhibit 10(a)
SNAP-ON INCORPORATED
SHARE AND PERFORMANCE Award AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of April 1, 2002
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 January 25, 2002 and March 12, 2002, approved the grant (the
"Grant") to the Key Employee of _______ (the "Grant Number") shares of the
Company's common stock ("Common Stock") and the opportunity to receive cash in
respect of performance units ("Performance Units") pursuant to the Company's
2001 Incentive Stock and Awards Plan (the "Awards Plan"), to be effective April
1, 2002;
WHEREAS, in accordance with the terms of the Grant, the Key Employee
elected to not defer receipt of the percentage, if any, set forth on the
signature page hereto of the Grant Number (the "Share Delivery Percentage") and
the percentage, if any, set forth on the signature page hereto of the cash that
may be received in respect of the Performance Units subject to the Grant (the
"Cash Delivery Percentage") by executing an Election to Defer Compensation (the
"Deferral Election") or by choosing not to execute a Deferral Election; 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. Restricted Shares. Subject to the terms and conditions set forth herein,
as of April 1, 2002, the Company hereby awards to the Key Employee a
number of shares of Common Stock (the "Restricted Shares") equal to the
product of the Grant Number multiplied by the Share Delivery Percentage
which shall be subject to vesting and forfeiture as set forth below.
Except as otherwise provided herein, no Restricted Share may be sold,
transferred or otherwise alienated or hypothecated until such Restricted
Share vests as provided herein.
2. Escrow.
(a) The Company shall cause certificates for Restricted Shares to be
issued as soon as practicable in the name of the Key Employee, but
the Company, as escrow agent, shall hold such shares in escrow. Upon
issuance of such certificates, (i) the
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Company shall give the Key Employee a receipt for the Restricted
Shares held in escrow which will state that the Company holds such
Restricted Shares in escrow for the account of the Key Employee,
subject to the terms of this Agreement, and (ii) the Key Employee
shall give the Company a stock power for such Restricted Shares duly
endorsed in blank which will be held in escrow for use in the event
such Restricted Shares are forfeited in whole or in part.
(b) Unless theretofore forfeited as provided herein, Restricted Shares
and any other property held in escrow pursuant to this Agreement
shall cease to be held in escrow, and the Company shall release such
certificates for such Restricted Shares, and any related property
held in escrow (without interest), to the Key Employee, or in the
case of his death, to his Beneficiary (as hereinafter defined) when
such Restricted Shares vest as provided herein at which time such
shares shall be freely transferable by the Key Employee or his
Beneficiary.
(c) Restricted Shares and any other property held in escrow pursuant to
this Agreement shall cease to be held in escrow, and the Company may
assume possession thereof in its own right, when the Key Employee
forfeits such Restricted Shares as provided herein.
3. Vesting and Forfeiture Based on Performance. Subject to the terms and
conditions set forth herein,
(a) Vesting of the Restricted Shares and payment in respect of
Performance Units is dependent upon performance relative to revenue
growth and RONAEBIT goals during fiscal 2002 and fiscal 2003. The
threshold, target and maximum goals for revenue growth and RONAEBIT
during fiscal 2002 and fiscal 2003 are as shown on Exhibit 1, and
the Restricted Shares will vest, and the Performance Units 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 2002 and fiscal 2003 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 Restricted Shares that
will vest and the number of Performance Units 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
Special Charges (as defined on Exhibit 1) 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 Restricted
Shares, if the position on the matrix reflects a percentage greater
than zero and less than or equal to 100%, then the number of
Restricted Shares that shall vest shall be equal to the product of
such percentage, the Grant Number and the Share Delivery Percentage,
and if the position on the matrix reflects a percentage greater than
100%, then the number of Restricted Shares that shall vest shall be
equal to the product of the Grant Number and the Share Delivery
Percentage. Upon the Committee's determination as provided above,
the Key Employee will forfeit the Restricted Shares that do not
vest.
(c) Unless the Key Employee has previously forfeited the right to earn
Performance Units, if the position on the matrix reflects a
percentage greater than 100%, then the Key Employee will receive
cash in respect of a number of Performance Units equal to the
product of the percentage in excess of 100%, but not greater than
50%, multiplied by the Grant Number and multiplied by the Cash
Delivery Percentage. The amount of the cash payment for each
Performance Unit will be the fair market value of a share of the
Company's common stock on March 12, 2002.
4. Forfeiture Based on Employment Status. Subject to the terms and conditions
set forth herein,
(a) In addition to any rights of the Company under Section 5, the Key
Employee will forfeit any Restricted Shares or any rights associated
with Performance Units as to which the Committee has not made its
vesting determination under Section 3 and not otherwise vested under
Section 6 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
vesting of 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.
(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 Share Delivery Percentage of the
Grant will vest, and the Key Employee's entitlement to cash in
respect of Performance Units 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 3(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 two-year
period that elapsed before the termination of the Key Employee's
employment.
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(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.
(d) As used herein,
(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.
5. Detrimental Activity.
(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 5 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.
(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 5.
(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 assume possession of any
or all property held in escrow in respect of the Grant in its own
right and/or cause the Key Employee to return any cash or property
actually realized by the Key Employee (directly or indirectly) in
respect
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of the Grant, in each case whether or not the Committee has made a
vesting determination under Section 3 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).
(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.
(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 xxxxx the business interests, reputation or
goodwill of the Company and/or its subsidiaries.
6. 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
3(a),
(a) Any unvested Restricted Shares shall be treated as provided in the
Awards Plan, unless the Key Employee has previously forfeited such
Restricted Shares; and
(b) Notwithstanding their treatment under the terms of the Awards Plan,
the Company will immediately make payment in respect of the number
of Performance Units multiplied by the Cash Delivery Percentage
assuming performance at maximum levels for the entire period.
7. Voting Rights; Dividends and Other Distributions.
(a) While the Restricted Shares are subject to restrictions under
Section 1 and prior to any forfeiture thereof, the Key Employee may
exercise full voting rights for the Restricted Shares registered in
his name and held in escrow hereunder.
(b) A Key Employee shall have no voting rights with respect to the
Performance Units.
(c) While the Restricted Shares are subject to the restrictions under
Section 1 and prior to any forfeiture thereof, all dividends and
other distributions paid with
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respect to the Restricted Shares shall be held in escrow pursuant to
Section 2 and shall be subject to the same restrictions as the
Restricted Shares with respect to which they were paid.
(d) There shall be no dividend right associated with the Performance
Units.
(e) Subject to the provisions of this Agreement, the Key Employee shall
have, with respect to the Restricted Shares, all other rights of
holders of Common Stock.
8. Tax Withholding; Repurchase.
(a) It shall be a condition of the obligation of the Company to issue or
release from escrow Restricted Shares 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 Performance Units 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.
(b) At each time the Company is obligated to issue or release from
escrow Restricted 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 Restricted 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 Restricted 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.
9. Beneficiary.
(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 Restricted
Shares that vest and the Performance Units that are earned following
the death of the Key Employee. The Key Employee may from time to
time
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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.
(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 Restricted Shares
that vest and the Performance Units that are earned following the
death of the Key Employee. If the Committee is in doubt as to the
right of any person to receive such Restricted Shares and/or
Performance Units, then the Company may retain such Restricted
Shares and the cash payment associated with the Performance Units,
without liability for any interest thereon, until the Committee
determines the person entitled thereto, or the Company may deliver
such Restricted Shares and the cash payment associated with the
Performance Units to any court of appropriate jurisdiction, and such
delivery shall be a complete discharge of the liability of the
Company therefor.
10. 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 Restricted 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 Restricted Shares granted
under the Awards Plan shall apply automatically to the Restricted Shares
under this Agreement.
11. 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.
12. Certificate Legend. Each certificate for Restricted Shares shall bear the
following legend:
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The sale or other transfer of the shares of stock represented
by this certificate, whether voluntary, or by operation of
law, is subject to certain restrictions set forth in the
Restricted Stock Award Agreement between Snap-on Incorporated
and the registered owner hereof. A copy of such Agreement may
be obtained from the Secretary of Snap-on Incorporated.
When the restrictions imposed by Section 1 terminate, the Key Employee
shall be entitled to have the foregoing legend removed from the
certificates representing such Restricted Shares.
13. 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.
14. Miscellaneous.
(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.
(b) This Agreement may not be amended or modified except by the written
consent of the parties hereto.
(c) The captions of this Agreement are inserted for convenience of
reference only and shall not be taken into account in construing
this Agreement.
(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 00000
Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxx 00000, Attention: Secretary. All
such notices shall be given by first class mail, postage pre-paid,
or by personal delivery.
(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
Restricted Shares prior to the release of the restrictions imposed
by Section 1.
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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.
SNAP-ON INCORPORATED
By:
-----------------------------------
Title:
Key Employee:
Beneficiary:
--------------------------
Address of Beneficiary:
Beneficiary Tax Identification
No.
-----------------------------------
Share Delivery Percentage: ___________
Cash Delivery Percentage: ____________
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Exhibit 2
1. "RONAEBIT" for purposes of the vesting matrix means a fraction expressed
as a percentage where (i) the numerator is 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 Special Charges (as defined below) and
(ii) the denominator is average net assets employed. "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
month during the period as reflected in 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.
2. RONAEBIT for purposes of the vesting matrix will be calculated based upon
the amount described in (a)(i) for the period consisting of fiscal 2002
and fiscal 2003 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 2003 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 points on the matrix.
6. Except to the extent that considering any such charge would cause an award
to fail to qualify for the performance-based exception under Section
162(m) of the Internal Revenue Code and except to the extent that the
committee of the Board that the Board has established to assist in the
administration of the Awards Plan (the "Ad Hoc Committee") in its sole
discretion determines that a charge or other expense that would otherwise
qualify as a Special Charge shall not be considered a Special Charge,
"Special Charges" consist of restructuring reserve charges, non-recurring
charges and non-comparable charges. Restructuring reserve charges include
those costs that can be accrued in accordance with GAAP at the time a
restructuring plan is adopted. Non-recurring charges consist of
restructuring related charges such as the write-off of inventory or
transition costs that are incurred as a result of a restructuring plan and
will benefit future operations, as well as non-restructuring related
charges that are considered
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non-recurring in nature. Non-comparable charges consist of costs that do
not qualify for restructuring reserve or non-recurring charge treatment
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.
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 final budget as of the commencement of the year as presented
to the Company's Board of Directors at its January meeting (the
"Final Budget").
(b) Adjustments to Revenue Goals. If an acquisition occurs in 2002, 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 2003 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 2003, 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 2003, as reflected in the
Pricing Projections for the acquired business, multiplied by a
fraction representing the portion of fiscal 2003 occurring after the
acquisition. If a divestiture occurs in 2002, 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 2003 as reflected in the Final
Budget as of the commencement of fiscal 2002. If a divestiture
occurs in 2003, 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 2003, as reflected in the Final Budget as of
the commencement of fiscal 2003, multiplied by a fraction
representing the portion of fiscal 2003 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 by dividing the adjusted EBIT by the adjusted
net assets (on an annualized basis). The Company's unadjusted EBIT
will be estimated as an amount equal to the
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product obtained by multiplying the net assets as of the close of
fiscal 2001 by the RONAEBIT percentage on the vesting matrix.
For an acquisition, the Company's unadjusted EBIT will be adjusted
upward by an amount determined by the Ad Hoc Committee that is at
least equal to the projected EBIT for the acquired business for the
remaining term of the fiscal 2002 through fiscal 2003 period (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 2001 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 months remaining in the plan
cycle and divided by the total number of months in the plan cycle.
For a divestiture, the Company's unadjusted EBIT will be adjusted
downward by an amount determined by the Ad Hoc Committee that is no
greater than the budgeted EBIT for the divested business for the
year in which the divestiture occurs as reflected in the Final
Budget as of the commencement of such year 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 2001 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 Budget as of
the commencement of such year multiplied by the number of months
remaining in the plan cycle divided by the total number of months in
the plan cycle.
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SNAP-ON INCORPORATED
DEFERRED SHARE AND PERFORMANCE AWARD AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of April 1, 2002
by and between SNAP-ON INCORPORATED, a Delaware corporation (the "Company"), and
_________, an employee of the Company or 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 January 25, 2002 and March 12, 2002, approved the grant (the
"Grant") to the Key Employee of _____ (the "Grant Number") shares of the
Company's common stock ("Common Stock") and the opportunity to receive cash in
respect of performance units ("Performance Units") pursuant to the Company's
2001 Incentive Stock and Awards Plan (the "Awards Plan"), to be effective April
1, 2002;
WHEREAS, in accordance with the terms of the Grant, the Key Employee
elected to defer receipt of the percentage set forth on the signature page
hereto of the Grant Number (the "Share Deferral Percentage") and the percentage
set forth on the signature page hereto of the cash that may be received in
respect of the Performance Units subject to the Grant (the "Cash Deferral
Percentage") by executing an Election to Defer Compensation (the "Deferral
Election") prior to the Grant's effective date, which the Company countersigned
prior to such date;
WHEREAS, the Deferral Election provides that the Grant will also be
subject to the terms of a "Deferred 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 Deferral Election contemplated; and
WHEREAS, the Company has in effect the Snap-on Incorporated Deferred
Compensation Plan, as amended (the "Deferral Plan").
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. Share Units. Subject to the terms and conditions set forth herein,
(a) As of April 1, 2002, the Company shall establish and maintain
bookkeeping accounts for the Key Employee relating to the Grant
under the Deferral Plan consisting of a "Cash Account" and a "Share
Account."
(b) As of April 1, 2002, there shall be credited to the Share Account a
number of Share Units (as defined in the Deferral Plan) equal to the
product of the Grant Number multiplied by the Share Deferral
Percentage. From and after the time of
13
such credit, the Key Employee shall have the rights afforded under
the Deferral Plan in respect of Share Units so credited, except that
such Share Units shall be subject to vesting and forfeiture as set
forth below.
2. Vesting and Forfeiture Based on Performance. Subject to the terms and
conditions set forth herein,
(a) Vesting of the Share Units and payment in respect of Performance
Units is dependent upon performance relative to revenue growth and
RONAEBIT goals during fiscal 2002 and fiscal 2003. The threshold,
target and maximum goals for revenue growth and RONAEBIT during
fiscal 2002 and fiscal 2003 are as shown on Exhibit 1, and the Share
Units will vest, and the Performance Units 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 2002 and fiscal 2003 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 Share Units that will
vest and the number of Performance Units 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 Special Charges
(as defined on Exhibit 1) 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.
(b) Unless the Key Employee has previously forfeited such Share Units,
if the position on the matrix reflects a percentage greater than
zero and less than or equal to 100%, then the number of Share Units
that shall vest shall be equal to the product of such percentage,
the Grant Number and the Share Deferral Percentage, and if the
position on the matrix reflects a percentage greater than 100%, then
the number of Share Units that shall vest shall be equal to the
product of the Grant Number and the Share Deferral Percentage. Upon
the Committee's determination as provided above, the Key Employee
will forfeit Share Units in an amount equal to that portion of the
product of the Grant Number and the Share Deferral Percentage that
does not vest.
(c) Unless the Key Employee has previously forfeited the right to earn
Performance Units, if the position on the matrix reflects a
percentage greater than 100%, then the Key Employee will receive a
credit to the Cash Account, pursuant to Section 6.1(a) of the
Deferral Plan, in respect of a number of Performance Units equal to
the product of the percentage in excess of 100%, but not greater
than 50%,
14
multiplied by the Grant Number and multiplied by the Cash Deferral
Percentage. The amount of the credit to the Cash Account for each
Performance Unit will be the fair market value of a share of the
Company's common stock on March 12, 2002.
3. Forfeiture Based on Employment Status. Subject to the terms and conditions
set forth herein,
(a) In addition to any rights of the Company under Section 9, the Key
Employee will forfeit any Share Units or any rights associated with
the Performance Units as to which the Committee has not made its
vesting determination under Section 2 and not otherwise vested under
Section 11 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
vesting of 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.
(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 Share Deferral Percentage of the
Grant will vest, and the Key Employee's entitlement to receive a
credit to the Cash Account in respect of Performance Units 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 two-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.
(d) As used herein,
(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).
15
(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.
4. Dividends. Dividends on the Common Stock will result in a credit to the
Cash Account pursuant to Section 6.4 of the Deferral Plan. However, the
Key Employee will forfeit such credit and any related Growth Increments
(as defined in the Deferral Plan) upon any forfeiture of the related Share
Units.
5. No Conversion. While Section 6.5 of the Deferral Plan would otherwise
allow the Key Employee to convert Share Units into a cash amount to be
credited to the Cash Account, the Key Employee shall not have any right
under Section 6.5 of the Deferral Plan to convert all or a portion of any
unvested Share Units into an amount to be credited to the Cash Account.
Further, while Section 6.3(a) of the Deferral Plan would otherwise allow
the Key Employee to convert all or a portion of any amount credited to the
Cash Account into an amount to be credited to the Share Account, the Key
Employee shall not have any right under Section 6.3(a) of the Deferral
Plan to convert all or a portion of any amount credited to the Cash
Account in respect of unvested Share Units into an amount to be credited
to the Share Account.
6. Deferral Period. The deferral period with respect to the Grant for
purposes of Section 4.2 of the Deferral Plan shall extend until the
payment commencement date set forth in the Deferral Election.
7. Manner of Payment. Deferred amounts shall be paid in a lump sum or in
installments in accordance with the Deferral Election.
8. Changes in Deferral Period and Manner of Payment. The Key Employee may
change the manner in which the deferred amount will be paid and/or delay
the date such payments are to commence by written election made in
accordance with the Deferral Plan.
9. Detrimental Activity.
(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 9 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.
(b) Activity Following Termination. If, within the three-month period
following the Key Employee's termination of employment with the
Company, the Company
16
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 9.
(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, cancel any (or all) amounts credited to the Key
Employee's Share Account and/or Cash Account in respect of the Grant
and/or 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).
(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.
(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 xxxxx the business interests, reputation or
goodwill of the Company and/or its subsidiaries.
10. Beneficiary. The person whose name appears on the signature page hereof
after the caption "Beneficiary," if any, shall be the beneficiary of the
Key Employee designated pursuant to Section 8 of the Deferral Plan.
11. 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),
(a) Any unvested Share Units shall immediately vest in full, unless the
Key Employee has previously forfeited such Share Units; and
17
(b) Notwithstanding their treatment under the terms of the Awards Plan,
the Company will immediately make a credit to the Cash Account in
respect of a number of Performance Units multiplied by the Cash
Deferral Percentage assuming performance at maximum levels for the
entire period unless the Key Employee has previously forfeited the
right to earn Performance Units.
In each case, the Key Employee shall be entitled to payments in respect of
such amounts in accordance with Section 17.2 of the Deferral Plan.
12. Voting Rights. Until such time, if any, as certificates representing
shares of Common Stock are delivered to the Key Employee in accordance
with the Deferral Plan, the Key Employee shall have no voting rights in
respect of the Share Units.
13. Tax Withholding. The Company and the Key Employee shall have rights with
respect to tax withholding as set forth in Section 14 of the Deferral
Plan. Without limitation, the Company shall be entitled to withhold any
taxes due and payable in accordance with Section 3121(v) of the Internal
Revenue Code from any payments due to the Key Employee.
14. Adjustments in Event of Change in Common 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 Share Units 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 Share Units credited under
the Deferral Plan shall apply automatically to the number of Share Units
under this Agreement.
15. 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.
16. 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, the Awards
Plan or the Deferral Plan and any determination made by the
18
Committee under this Agreement or such plans may be made in the sole
discretion of the Committee and shall be final, binding, and conclusive.
17. Miscellaneous.
(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.
(b) This Agreement may not be amended or modified except by the written
consent of the parties hereto.
(c) The captions of this Agreement are inserted for convenience of
reference only and shall not be taken into account in construing
this Agreement.
(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 00000
Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxx 00000, Attention: Secretary. All
such notices shall be given by first class mail, postage pre-paid,
or by personal delivery.
(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, his beneficiary and the
personal representative(s) and heirs of the Key Employee.
18. Deferral Matters.
(a) The Key Employee understands that (i) as a result of this Agreement,
no restricted stock, cash or other property will be deliverable to
the Key Employee in respect of the Share Deferral Percentage of the
Grant Number or the Cash Deferral Percentage of the cash that may be
received in respect of the Performance Units subject to the Grant
until the date identified pursuant to Section 6, and (ii) all
amounts deferred pursuant to this Agreement shall be reflected in an
unfunded account established for the Key Employee by the Company,
payment of the Company's obligation will be from general funds, and
no special assets (stock, cash or otherwise) have been or will be
set aside as security for this obligation.
(b) The Key Employee understands and agrees that the Key Employee's
rights to payments hereunder are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or garnishment by the Key Employee's creditors or the
creditors of his beneficiaries, whether by operation of law or
otherwise, and any attempted sale, transfer, assignment, pledge, or
encumbrance with respect to such payment shall be null and void, and
shall be without legal effect and shall not be recognized by the
Company.
19
(c) The Key Employee understands and agrees that his right to receive
payments hereunder is that of a general, unsecured creditor of the
Company, and that this Agreement constitutes a mere promise by the
Company to pay such benefits in the future. Further, it is the
intention of the parties hereto that the arrangements hereunder be
unfunded for tax purposes and for purposes of Title I of ERISA.
(d) The Key Employee acknowledges that there will be no matching credit
under Section 5 of the Deferral Plan in respect of compensation
deferred under this Agreement.
20
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.
SNAP-ON INCORPORATED
By:
-----------------------------------
Title:
Key Employee:
Beneficiary:
--------------------------
Address of Beneficiary:
Beneficiary Tax Identification
No.
-----------------------------------
Share Deferral Percentage: ___________
Cash Deferral Percentage: ____________
21
Exhibit 2
1. "RONAEBIT" for purposes of the vesting matrix means a fraction expressed
as a percentage where (i) the numerator is 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 Special Charges (as defined below) and
(ii) the denominator is average net assets employed. "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
month during the period as reflected in 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.
2. RONAEBIT for purposes of the vesting matrix will be calculated based upon
the amount described in (a)(i) for the period consisting of fiscal 2002
and fiscal 2003 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 2003 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 points on the matrix.
6. Except to the extent that considering any such charge would cause an award
to fail to qualify for the performance-based exception under Section
162(m) of the Internal Revenue Code and except to the extent that the
committee of the Board that the Board has established to assist in the
administration of the Awards Plan (the "Ad Hoc Committee") in its sole
discretion determines that a charge or other expense that would otherwise
qualify as a Special Charge shall not be considered a Special Charge,
"Special Charges" consist of restructuring reserve charges, non-recurring
charges and non-comparable charges. Restructuring reserve charges include
those costs that can be accrued in accordance with GAAP at the time a
restructuring plan is adopted. Non-recurring charges consist of
restructuring related charges such as the write-off of inventory or
transition costs that are incurred as a result of a restructuring plan and
will benefit future operations, as well as non-restructuring related
charges that are considered
22
non-recurring in nature. Non-comparable charges consist of costs that do
not qualify for restructuring reserve or non-recurring charge treatment
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.
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 final budget as of the commencement of the year as presented
to the Company's Board of Directors at its January meeting (the
"Final Budget").
(b) Adjustments to Revenue Goals. If an acquisition occurs in 2002, 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 2003 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 2003, 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 2003, as reflected in the
Pricing Projections for the acquired business, multiplied by a
fraction representing the portion of fiscal 2003 occurring after the
acquisition. If a divestiture occurs in 2002, 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 2003 as reflected in the Final
Budget as of the commencement of fiscal 2002. If a divestiture
occurs in 2003, 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 2003, as reflected in the Final Budget as of
the commencement of fiscal 2003, multiplied by a fraction
representing the portion of fiscal 2003 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 by dividing the adjusted EBIT by the adjusted
net assets (on an annualized basis). The Company's unadjusted EBIT
will be estimated as an amount equal to the
23
product obtained by multiplying the net assets as of the close of
fiscal 2001 by the RONAEBIT percentage on the vesting matrix.
For an acquisition, the Company's unadjusted EBIT will be
adjusted upward by an amount determined by the Ad Hoc
Committee that is at least equal to the projected EBIT for the
acquired business for the remaining term of the fiscal 2002
through fiscal 2003 period (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 2001 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 months remaining in the plan cycle and divided by
the total number of months in the plan cycle.
For a divestiture, the Company's unadjusted EBIT will be
adjusted downward by an amount determined by the Ad Hoc
Committee that is no greater than the budgeted EBIT for the
divested business for the year in which the divestiture occurs
as reflected in the Final Budget as of the commencement of
such year 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 2001 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
Budget as of the commencement of such year multiplied by the
number of months remaining in the plan cycle divided by the
total number of months in the plan cycle.
24
