RESTATED EXECUTIVE AGREEMENT
THIS RESTATED EXECUTIVE AGREEMENT ("Agreement") is entered into this
____ day of January, 1996, by and between SNAP-ON INCORPORATED, a Delaware
corporation (the "Company"), and _______________, an executive of the
Company or of a subsidiary of the Company (the "Executive").
WHEREAS, the Company and the Executive had entered into an Executive
Agreement effective as of January 4, 1991, and amended and restated this
Agreement effective as of January 22, 1993 and as of January 28, 1994;
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that the Executive has made, and is expected to continue to
make, an essential contribution to the profitability, growth and financial
strength of the Company;
WHEREAS, the Company wishes to amend and restate the Restated
Executive Agreement to continue to encourage the Executive to devote
his/her entire time and attention to the pursuit of Company matters
without distractions relating to his/her employment security;
WHEREAS, the Company intends that this Agreement will provide the
Executive with certain minimum compensation rights in the event of the
termination of his/her employment under the circumstances set forth
herein.
NOW, THEREFORE, in consideration of the respective terms and
conditions set forth herein, the Company and the Executive hereby agree as
follows:
1. Definitions. As used in this Agreement, the following terms
shall have the following meanings when used herein:
a. Cause. The term "Cause" shall mean that the Executive
shall, prior to any Termination of Employment (as that term is hereafter
defined), have:
(i) engaged in any act of fraud, embezzlement, or theft in
connection with his/her duties as an executive or in the course of
employment with the Company or its subsidiaries;
(ii) wrongfully disclosed any secret process or
confidential information of the Company or its subsidiaries; or
(iii) engaged in any Competitive Activity (as that term
is hereafter defined);
and in any such case the act shall have been determined by the Board to
have been materially harmful to the Company.
The Executive may not be terminated for Cause prior to the
receipt by the Executive of a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire
membership of the Board at a meeting of the Board called and held for the
purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with the
Executive's counsel, to be heard before the Board) finding that the
Executive was guilty of conduct set forth in the definition of Cause
herein, and specifying the particulars thereof in detail. In the event of
a dispute regarding whether the Executive's employment has been terminated
for Cause, no claim by the Company that Cause exists shall be given effect
unless the Company establishes by clear and convincing evidence that Cause
exists.
b. Competitive Activity. The term "Competitive Activity"
shall mean the Executive's participation without the written consent of
the Board in the management of any business enterprise which manufactures
or sells any product or service competitive with any product or service of
the Company or its subsidiaries. Competitive Activity shall not include
the ownership of less than five (5) percent of the securities in any
enterprise and exercise of any ownership rights related thereto.
c. Change of Control. A "Change of Control" of the Company
shall be deemed to have occurred if the event set forth in any one of the
following paragraphs shall have occurred:
(i) any Person is or becomes the beneficial owner, as
defined in Rule 13d-3 under the Exchange Act (the "Beneficial
Owner"), directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its affiliates)
representing 25% or more of either the then outstanding shares of
common stock of the Company or the combined voting power of the
Company's then outstanding voting securities; or
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is
in connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to the
election of directors of the Company, as such terms are used in Rule
14a-11 of Regulation 14A under the Exchange Act) whose appointment or
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors on the
date hereof or whose appointment, election or nomination for election
was previously so approved; or
(iii) the stockholders of the Company approve a merger
or consolidation of the Company with any other corporation or approve
the issuance of voting securities of the Company in connection with a
merger or consolidation of the Company (or any direct or indirect
subsidiary of the Company) pursuant to applicable stock exchange
requirements, other than (i) a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof) at
least 60% of the combined voting power of the voting securities of
the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no Person is or becomes
the Beneficial Owner, directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by such
Person any securities acquired directly from the Company or its
affiliates) representing 25% or more of either the then outstanding
shares of common stock of the Company or the combined voting power of
the Company's then outstanding voting securities; or
(iv) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or an agreement
for the sale or disposition by the Company of all or substantially
all of the Company's assets (in one transaction or a series of
related transactions within any period of 24 consecutive months),
other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, at least 75%
of the combined voting power of the voting securities of which are
owned by Persons in substantially the same proportions as their
ownership of the Company immediately prior to such sale.
Notwithstanding the foregoing, no "Change of Control" shall be
deemed to have occurred if there is consummated any transaction or series
of integrated transactions immediately following which the record holders
of the common stock of the Company immediately prior to such transaction
or series of transactions continue to have substantially the same
proportionate ownership in an entity which owns all or substantially all
of the assets of the Company immediately following such transaction or
series of transactions.
d. Effective Date. The term "Effective Date" shall mean the
first date on which a Change of Control of the Company occurs. Anything
in this Agreement to the contrary notwithstanding, if (1) a Change of
Control of the Company occurs, whether or not during the initial or
extended term of this Agreement, (2) the Executive's employment with the
Employer terminates within six months prior to the Change of Control of
the Company and (3) it is reasonably demonstrated by the Executive that
(A) any such termination of employment by the Employer (i) was at the
request of a third party who has taken steps reasonably calculated to
effect a Change of Control of the Company or (ii) otherwise arose in
connection with or in anticipation of a Change of Control of the Company,
or (B) any such termination of employment by the Executive took place
subsequent to the occurrence of an event described in clause (A), (B), (C)
or (D) of paragraph (h)(ii) of this Section 1 which event (i) occurred at
the request of a third party who has taken steps reasonably calculated to
effect a Change of Control of the Company or (ii) otherwise occurred in
connection with or in anticipation of a Change of Control of the Company,
then for all purposes of this Agreement the term "Effective Date" shall
mean the day immediately prior to the date of such termination of
employment.
e. Employer. The term "Employer" shall mean the Company
and/or a subsidiary of the Company that employs the Executive.
f. Exchange Act. The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended from time to time.
g. Person. The term "Person" shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof, except that such term shall not include (i) the
Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of
its subsidiaries, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation owned,
directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company.
h. Termination of Employment. The term "Termination of
Employment" shall mean:
(i) any termination by the Employer of the employment of
the Executive for any reason other than for Cause within a period of
two (2) years following the Effective Date (as that term is defined
in paragraph d. of this Section 1);
(ii) voluntary termination by the Executive of his/her
employment within a period of two (2) years following the Effective
Date and subsequent to the occurrence, without the Executive's
written consent, of (A) a material and adverse change in the
Executive's status, authority, duties, functions, or benefits
relative to those most favorable to the Executive in effect at any
time during the 180-day period prior to the Effective Date or, to the
extent more favorable to the Executive, those in effect after the
Effective Date, (B) any reduction in the Executive's base salary or
percentage of base salary available as an incentive compensation or
bonus opportunity relative to those most favorable to the Executive
in effect at any time during the 180-day period prior to the
Effective Date or, to the extent more favorable to the Executive,
those in effect after the Effective Date, or the failure to pay the
Executive's base salary or earned incentive compensation or bonus
when due, (C) the relocation of the Executive's principal place of
employment to a location more than 35 miles from the Executive's
principal place of employment immediately prior to the Effective
Date, (D) the Employer's requiring the Executive to travel on
Employer business to a materially greater extent than was required
immediately prior to the Effective Date, or (E) the failure of the
Company to obtain from a successor the assumption and agreement to
perform this Agreement (as described in Section 6.a.) prior to the
effectiveness of any such succession provided that (1) any such event
occurs following the Effective Date or (2) in the case of an event
set forth in clause (A), (B), (C) or (D) above, such event occurs on
or prior to the Effective Date and the Executive reasonably
demonstrates that such event occurs under circumstances described in
clause (i) or (ii) of Section 1.d.(3)(B) hereof; or
(iii) voluntary termination by the Executive of his/her
employment following completion of one year of service after a Change
of Control of the Company; provided that the voluntary termination
must be effected by the Executive within six (6) months after the
completion of that one year of service.
In the event of a dispute regarding whether the Executive's
voluntary termination qualifies as a "Termination of Employment" for
purposes of clause (ii) above, no claim by the Company that such
termination does not constitute a Termination of Employment shall be given
effect unless the Company establishes by clear and convincing evidence
that such termination does not constitute a Termination of Employment.
Any election by the Executive to terminate his/her
employment as contemplated by this Section shall not be deemed a voluntary
termination of employment by the Executive for the purpose of any other
employee benefit or other plan.
2. Compensation and Benefits. In the event of a Termination of
Employment, the Company shall provide the Executive with the following
compensation and benefits:
a. General Compensation and Benefits. The Company shall pay
the Executive's full salary to the Executive through the date of
Termination of Employment at the rate in effect at the time notice of
termination is given or, if higher, at an annual rate not less than twelve
times the Executive's highest monthly base salary for the 12-month period
immediately preceding the month in which the Effective Date occurs,
together with all compensation and benefits payable to the Executive
through the date of Termination of Employment under the terms of any
compensation or benefit plan, program or arrangement maintained by the
Employer during such period. Such payments shall be made in a lump sum
not later than five (5) days after such termination. The Company shall
also pay the Executive's normal post-termination compensation and benefits
to the Executive as such payments become due. Such post-termination
compensation and benefits shall be determined under, and paid in
accordance with, the Employer's retirement, insurance and other
compensation or benefit plans, programs and arrangements most favorable to
the Executive in effect at any time during the 180-day period immediately
preceding the Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to executives of
the Company of comparable status and position to the Executive.
b. Incentive Compensation. Notwithstanding any provision of
any cash bonus or incentive compensation plan of the Employer, the Company
shall pay to the Executive, within five (5) days after the Executive's
Termination of Employment, a lump sum amount, in cash, equal to the sum of
(i) any bonus or incentive compensation which has been allocated or
awarded to the Executive for a fiscal year or other measuring period under
the plan that ends prior to the date of Termination of Employment, but
which has not yet been paid (pursuant to Section 2.a. hereof or
otherwise), and (ii) a pro rata portion to the date of Termination of
Employment of the aggregate value of all contingent bonus or incentive
compensation awards to the Executive for all uncompleted periods under the
plan calculated as to each such award as if the "target" with respect to
such bonus or incentive compensation award had been attained.
c. Compensation. The Company shall pay to the Executive a
lump sum equal to two (2) times the sum of (a) the highest per annum base
rate of salary in effect with respect to the Executive during the 3-year
period immediately prior to the Termination of Employment plus (b) the
highest of (i) the highest annual bonus or incentive compensation earned
by the Executive under any cash bonus or incentive compensation plan of
the Company during the three (3) complete fiscal years of the Company
immediately preceding the Termination of Employment or, if more favorable
to the Executive, during the three (3) complete fiscal years of the
Company immediately preceding the Change of Control of the Company; (ii)
the Executive's bonus or incentive compensation "target" for the fiscal
year in which the Termination of Employment occurs; or (iii) the highest
average annual bonus and/or incentive compensation earned during the three
(3) complete fiscal years of the Company immediately preceding the
Termination of Employment (or, if more favorable to the Executive, during
the three (3) complete fiscal years of the Company immediately preceding
the Change of Control of the Company) under any cash bonus or incentive
compensation plan of the Company by the group of executives of the Company
participating under such plan during such fiscal years at the level at
which the Executive participated or would have participated pursuant to
his/her most senior position at any time during the 180 days preceding the
Effective Date or thereafter until the Termination of Employment. The
lump sum shall be paid to the Executive not later than five (5) days after
the Termination of Employment.
d. Benefits. Subject to Section 2.e. hereof, for a three (3)-
year period following Termination of Employment, the Company shall provide
the Executive with health, disability, life and other insurance benefits
substantially similar to the benefits received by the Executive pursuant
to the Company's (or the Employer's) benefit programs as in effect
immediately during the 180 days preceding the Effective Date (or, if more
favorable to the Executive, as in effect at any time thereafter until the
Termination of Employment); provided, however, that no compensation or
benefits provided hereunder shall be treated as compensation for purposes
of any of the programs or shall result in the crediting of additional
service thereunder.
e. New Employment. If the Executive secures new employment
during the three (3)-year period following Termination of Employment, the
level of any benefit being provided pursuant to Section 2.d. hereof shall
be reduced to the extent that any such benefit is being provided by the
Executive's new employer. The Executive, however, shall be under no
obligation to seek new employment and, in any event, no other amounts
payable pursuant to this Agreement shall be reduced or offset by any
compensation received from new employment or by any amounts claimed to be
owed by the Executive to the Company or the Employer.
3. Additional Payments. Notwithstanding any other provisions of
this Agreement, whether or not there occurs a Termination of Employment,
in the event it shall be determined that any payment or benefit received
or to be received by the Executive in connection with a Change of Control
of the Company or the termination of the Executive's employment, whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Company, any entity whose actions result in a Change of
Control of the Company or any entity affiliated with the Company or such
entity (any such payment or benefit being hereinafter called a "Payment,"
and all such payments and benefits being hereinafter called "Total
Payments"), would be subject (in whole or part) to the excise tax under
Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any interest or penalties incurred with respect to such excise
tax (such excise tax, together with such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the
Company shall pay to the Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on the Total Payments and any federal, state
and local income tax, FICA and Excise Tax upon the payment provided for by
this Section 3, shall be equal to the Total Payments.
Subject to the provisions of this Section 3, all
determinations required to be made under this Section 3, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by a nationally recognized accounting firm
selected by the Executive that is not then serving as accountant or
auditor for the individual, entity or group effecting the Change of
Control of the Company (the "Accounting Firm"), which shall provide
detailed supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the Executive that
there has been a Payment, or such earlier time as is requested by the
Company. All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 3, shall be paid by the Company to the Executive within 10
days of the receipt of the Accounting Firm's determination. Subject to
the following provisions of this Section 3, any determination by the
Accounting Firm shall be binding upon the Company and the Executive.
In the event that the Excise Tax is subsequently determined
to be less than the amount taken into account hereunder, the Executive
shall repay to the Company, at the time that the amount of such reduction
in Excise Tax is finally determined, the portion of the Gross-Up Payment
attributable to such reduction (plus that portion of the Gross-Up Payment
attributable to the Excise Tax, FICA and federal, state and local income
tax imposed on the Gross-Up Payment being repaid by the Executive to the
extent that such repayment results in a reduction in Excise Tax, FICA
and/or a federal, state or local income tax deduction) plus interest on
the amount of such repayment at the rate provided in Section 1274(b)(2)(B)
of the Code. In the event that the Excise Tax is determined to exceed the
amount taken into account hereunder (including by reason of any payment
the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional Gross-Up Payment
in respect of such excess (plus any interest, penalties or additions
payable by the Executive with respect to such excess) at the time that the
amount of such excess is finally determined.
For purposes of determining whether and the extent to which
the Total Payments will be subject to the Excise Tax under this Section 3,
(i) no portion of the Total Payments the receipt or enjoyment of which the
Executive shall have effectively waived in writing shall be taken into
account, (ii) no portion of the Total Payments shall be taken into account
which in the opinion of the Auditor (or tax counsel selected by the
Auditor) does not constitute a "parachute payment" within the meaning of
Section 280G(b) (2) of the Code (including by reason of Section 280G(b)
(4) (A) of the Code), and in calculating the Excise Tax, no portion of
such Total Payments shall be taken into account which constitutes
reasonable compensation for services actually rendered, within the meaning
of Section 280G(b) (4) (B) of the Code, in excess of the "base amount" (as
defined in Section 280G(b) (3) of the Code) allocable to such reasonable
compensation, and (iii) the value of any noncash benefit or any deferred
payment or benefit included in the Total Payments shall be determined by
the Auditor in accordance with the principles of Sections 280G(d) (3) and
(4) of the Code. For purposes of determining the amount of the Gross-Up
Payment, the Executive shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes
at the highest marginal rate of taxation in the state and locality of the
Executive's residence on the date of payment of the Gross-Up Payment to
the Executive, net of the maximum reduction in federal income taxes that
could be obtained from deduction of such state and local taxes.
The Executive and the Company shall each reasonably
cooperate with the other in connection with any administrative or judicial
proceedings concerning the existence or amount of liability for Excise Tax
with respect to the Total Payments.
4. Legal Fees. The Company shall also pay to the Executive all
reasonable legal fees and expenses incurred by the Executive in seeking in
good faith to obtain or enforce any benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code. Such
payments shall be made within five (5) business days after delivery of the
Executive's written requests for payment accompanied with such evidence of
fees and expenses incurred as the Company reasonably may require.
5. Term. This Agreement shall commence on the date hereof and
shall continue in effect through January 31, 1997; provided, however, that
commencing on January 31, 1997 and each January 31 thereafter, the term of
this Agreement shall automatically be extended for one (1) additional year
unless, not later than October 31 of the preceding year, the Company or
the Executive shall have given written notice not to extend this
Agreement; provided, further, however, if a Change of Control of the
Company shall have occurred during the initial or extended term of this
Agreement, this Agreement shall continue in effect for a period of 24
months beyond the month in which such Change of Control of the Company
occurred. Notwithstanding anything herein to the contrary, this Agreement
shall terminate upon the Executive ceasing to be an officer of the Company
prior to a Change of Control of the Company (other than any such cessation
which the Executive reasonably demonstrates occurred under circumstances
described in clause (i) or (ii) of Section 1.d.(3)(B) hereof).
6. Successors and Binding Agreements.
a. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or otherwise)
to all or substantially all of the business and/or assets of the Company
expressly to assume and to agree to perform this Agreement in the same
manner and to the same extent the Company would be required to perform if
no succession had taken place. This Agreement shall be binding upon and
inure to the benefit of the Company and any such successor, and such
successor shall thereafter be deemed the "Company" for the purposes of
this Agreement.
b. This Agreement shall inure to the benefit of and be
enforceable by the Executive's respective personal or legal
representative, executor, administrator, successor, heirs, distributees
and/or legatees.
c. Neither the Company nor the Executive may assign, transfer
or delegate this Agreement or any rights or obligations hereunder except
as expressly provided in this Section. Without limiting the generality of
the foregoing, the Executive's right to receive payments hereunder shall
not be assignable or transferable, whether by pledge, creation of a
security interest or otherwise, other than by a transfer by will or the
laws of descent and distribution. In the event the Executive attempts any
assignment or transfer contrary to this Section, the Company shall have no
liability to pay any amount so attempted to be assigned or transferred.
7. Notices. All communications provided for herein shall be in
writing and shall be deemed to have been duly given when delivered or five
(5) business days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed to
the Company (to the attention of the Secretary of the Company) at its
principal executive office and to the Executive at his/her principal
residence, or to such other address as any party may have furnished to the
other in writing in accordance herewith, except that notices of a change
of address shall be effective only upon receipt.
8. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State
of Wisconsin without giving effect to the principles of conflict of laws
of such state, except that Section 9 shall be construed in accordance with
the Federal Arbitration Act if arbitration is chosen by the Executive as
the method of dispute resolution.
9. Settlement of Disputes; Arbitration. Any dispute or controversy
arising under or in connection with this Agreement shall be settled, at
the Executive's election, either by arbitration in Chicago, Illinois in
accordance with the rules of the American Arbitration Association then in
effect or by litigation; provided, however, that in the event of a dispute
regarding whether the Executive's employment has been terminated for Cause
or whether the Executive's voluntary termination qualifies as a
"Termination of Employment" under Section 1.h.(ii), the evidentiary
standards set forth in this Agreement shall apply. Judgment may be
entered on the arbitrator's award in any court having jurisdiction;
provided, however, that the Executive shall be entitled, during the
pendency of any such dispute or controversy, to continue to receive
compensation and benefits as an active employee.
10. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement which shall remain in full force and
effect.
11. Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties with respect to the matters
discussed herein and supersedes all other prior agreements and
understandings, written or oral, between the parties with respect thereto.
There are no representations, warranties or agreements of any kind
relating thereto that are not set forth in this Agreement.
12. Withholding. The Company may withhold from any amounts payable
under this Agreement all federal, state and other taxes as shall be
legally required.
13. Certain Limitations. Nothing in this Agreement shall grant the
Executive any right to remain an executive, director or employee of the
Company or of any of its subsidiaries for any period of time.
* * *
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and date first written above.
SNAP-ON INCORPORATED
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Chairman, President and Chief Executive
Officer
Executive
