EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of July 15, 2001, by and between Snap-on
Incorporated (the "Company"), a Delaware corporation, and Xxxxxxxxx X. Xxx (the
"Executive").
W I T N E S S E T H
WHEREAS, the Executive has been employed by the Company for many years
in a key capacity, and he possesses an intimate knowledge of the business and
affairs of the Company, its policies, methods, and personnel;
WHEREAS, the Executive's services are valuable to the conduct of the
business of the Company;
NOW, THEREFORE, in consideration of the covenants and agreements of
the parties herein contained, the parties hereto agree as follows:
1. Employment and Duties.
(a) The Company hereby agrees to employ the Executive on the terms and
conditions set forth herein, and the Executive hereby agrees to remain in the
employment of the Company on such terms and conditions. The Executive shall
serve in such additional offices of the Company to which the Executive may be
duly appointed or elected. The Executive shall perform such duties as shall be
assigned to him from time to time by its President, or by such other officers of
the Company, if any, to whom the Board of Directors provides the Executive shall
report. The Executive agrees to devote his full business time and effort to the
diligent and faithful performance of such duties. The Executive's duties are
described in more detail in Attachment (1) to this Agreement. During the term of
the Executive's employment hereunder, he shall continue as an officer of the
Company and be entitled to such benefits and participation in such compensation
plans as are consistent with his position with the Company and the terms of this
Agreement. His services will be provided at the Company's headquarters in
Kenosha, Wisconsin or at such other place as may be mutually agreed upon by the
parties.
2. Term.
(a) The term of Executive's employment hereunder shall commence on the
date hereof and shall continue until February 1, 2002 ("Termination Date").
Executive's last day of active employment is estimated to be October 1, 2001.
(b) In the event of termination of Executive's employment without
cause (including termination by reason of death or disability) by the Company
during the term, Executive's salary and benefits shall continue to the end of
the term and he shall be entitled to the payments and rights set forth in
Paragraph 3(b).
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(c) The parties agree that at the termination of Executive's
employment on the Termination Date, he will be considered as being retired for
purposes of the Company's Deferred Compensation and subject to the retirement
eligibility requirements of all other plans and will not be entitled to any
further severance payments from the Company except as provided herein and in
accordance with the terms of those plans.
3. Compensation.
(a) As compensation for his performance of services as an employee
hereunder, Executive shall be entitled to receive an annual base salary at the
rate of Four Hundred Thirty-Four Thousand Dollars ($434,000.00) payable in
accordance with the Company's standard payroll practices. During the term
hereof, Executive shall be eligible to continue to participate in the 2001
Officer Incentive Compensation Plan. Executive shall not be entitled to
participate in the Intermediate Officer Incentive Compensation Plan.
(b) Upon satisfactory completion of the duties listed in Attachment
(1), Executive shall be given the option to:
(i) receive as additional compensation a payment from the
Company in the amount of Five Hundred Thousand Dollars ($500,000.00)
("Additional Compensation")payable prior to February 2, 2002,
(ii) Executive hereby elects to have the Additional
Compensation when payable, credited into a cash account under the
Snap-on Incorporated Deferred Compensation Plan, as amended,
("Deferred Comp Plan").
(c) Upon execution of an agreement in the form attached as Exhibit A
releasing all claims against Company ("Release Agreement"), on or about February
1, 2002, Executive shall:
(i) receive as additional compensation a payment from the
Company in the amount of Sixty Thousand Dollars ($60,000.00) ("Release
Payment") payable within 14 days from execution of the Release
Agreement,
(ii) Executive hereby elects to have the Release Payment,
when payable, credited into a cash account under the Deferred Comp
Plan prior to February 2, 2002.
(d) Executive shall be given the opportunity to exercise his current
incentive stock options for a period of 3 months from the Termination Date.
(e) Executive shall be given the opportunity to exercise non-qualified
stock options for a period of up to 3 years from Termination Date.
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(f) The payments provided in paragraphs (b) and (c) above shall
constitute Other Compensation under the Company's Deferred Comp Plan.
4. Termination of Employment.
(a) The Executive's employment shall terminate, or be subject to
termination, prior to the term specified in Paragraph 2 hereof, as follows:
(i) Death. The Executive's employment hereunder shall
terminate upon his death.
(ii) Disability. In the event the Executive becomes totally
physically or mentally disabled (as determined by the Company) the
Company may, at its option, terminate the Executive's employment
hereunder upon not less than ten (10) days' written notice.
(iii) Cause. The Company may, at any time, terminate the
Executive's employment hereunder for Cause. For the purposes of this
Agreement, the term "Cause" shall mean (1) the commission of a felony
or a crime involving moral turpitude or the commission of any other
act or omission involving dishonesty, disloyalty or fraud with respect
to the Company or any of its affiliates or any of their customers or
suppliers, (2) conduct tending to bring the Company or any of its
affiliates into substantial public disgrace or disrepute, (3)
substantial and repeated failure to perform duties as reasonably
directed by the Company, or (4) gross negligence or willful misconduct
with respect to the Company or any of its affiliates.
(b) Cessation of Salary and Benefits After Termination. In the event
of the termination of the Executive's employment for Cause all payments of
salary and benefits under Paragraph 3 hereof shall cease.
5. Restrictive Covenants
(a) Non-Competition. For a period 24 months from Termination,
Executive shall not, directly or indirectly, engage, whether as an employee,
employer, consultant, advisor or director, or as an owner, investor, partner or
stockholder (unless Executive's interest is insubstantial), in any business in
an area or region in which the Company or any subsidiary or affiliate then
conducts business, which business is directly in competition with a business
then conducted by the Company or a subsidiary or affiliate. For purposes of this
section, Executive's interest as a stockholder shall be considered insubstantial
if such interest represents beneficial ownership of less than five percent of
the outstanding class of stock, and Executive's interest as an owner, investor
or partner shall be considered insubstantial if such interest represents
ownership of less than five percent of the outstanding equity of the entity.
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(b) Non-Solicitation. For a period of 24 months from termination,
Executive shall not, directly or indirectly, whether as employee, employer,
consultant, advisor or director, or as an owner, investor, partner, stockholder
or otherwise, (i) solicit or induce any client or customer of the Company or a
subsidiary or affiliate, or entity with which the Company or a subsidiary or
affiliate has a business relationship, to curtail, cancel, not renew or not
continue his or her or its business with the Company or any subsidiary or
affiliate, (ii) hire any person who is then an employee of or a consultant or
independent contractor to, the Company or a subsidiary or affiliate or (iii)
solicit or induce any person who is an employee of, or a consultant or
independent contractor to, the Company or a subsidiary or affiliate to curtail,
cancel, not renew or not continue his or her or its employment, consulting or
other relationship with the Company or any subsidiary or affiliate.
(c) Confidentiality. Except pursuant to the performance of Executive's
duties to the Company prior to Termination Date or with the consent of the
Company, Executive shall not take, disclose, use, sell or otherwise transfer any
confidential or proprietary information of the Company or any subsidiary or
affiliate, including but not limited to information regarding the negotiation of
this Agreement, current and potential customers, clients, counterparts,
organization, employees, finances and financial results, and methods of
operation, transactions and investments, so long as such information has not
otherwise been disclosed to the public or is not otherwise in the public domain,
except as required by law or pursuant to legal process; and Executive shall
return to the Company, promptly following termination of employment, any
information, documents, materials, data, manuals, computer programs or device
containing information relating to the Company or any subsidiary or affiliate,
and each of their customers, clients and counterparts, which came into
Executive's possession or control during Executive's employment.
(d) Cooperation with the Company. Executive shall cooperate fully with
the Company in the defense or prosecution of any claims or actions now in
existence or which may be brought in the future against or on behalf of the
Company or its subsidiaries or affiliates which relate to events or occurrences
that transpired while Executive was employed by the Company. Executive's full
cooperation in connection with such claims or actions shall include, but not be
limited to, being available to meet with counsel to prepare for discovery or
trial and to act as a witness on behalf of the Company and its subsidiaries and
affiliates at mutually convenient times. Subsequent to the Terminate Date, the
Company shall reimburse Executive at a rate of $125 per hour, plus any
reasonable out-of-pocket expenses, incurred in connection with Executive's
performance of obligations pursuant to this Section 5(d). To the maximum extent
permitted by law, Executive agrees that Executive will notify me or, following
termination of employment, the General Counsel of the Company if Executive is
contacted by any government agency relating to a matter involving the Company,
by any other person contemplating or maintaining any claim or legal action
against the Company or its subsidiaries and affiliates, or by any agent or
attorney of such person.
(e) Prior Approval. If Executive intends to enter into employment or
otherwise provide services to any entity or undertake any other activities that
Executive believes may be in conflict with Executive's duties and obligations
under either Section 5(a) or 5(b), Executive may
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request that the Company consider whether such services or activities would
violate such provisions. Any such request must be in writing, must identify the
entity or entities for which services would be performed (or any entities that
may be implicated in any such other activities) and when Executive would propose
to commence such services (or undertake such activities), and include a brief
description of the principal business conducted by such entity and the reason
that Executive believes such services or activities might be in conflict with
the requirements of Section 5(a) or 5(b). The Company shall make a reasonable,
good faith effort to review and assess such request and respond to Executive
within a reasonable period of time after receipt thereof, and promptly upon
reaching any conclusion with respect thereto, shall advise Executive in writing
whether it will consider any such services to violate any such provision.
Notwithstanding the foregoing, (i) this Section 5(e) shall not be construed to
obligate the Company to respond to any such request within any specific time
period and (ii) the absence of any response from the Company with respect to
such a request shall not be construed as affirming or denying the application of
the covenants contained in Section 5(a) or 5(b) to such services or activities.
6. Ownership of Developments .
(a) Due to the competitive environment within which the Company
operates, new Ideas and Inventions are critical to its continued success. It is
important that the Company maintain ownership of such Ideas and Inventions
generated during employment. Executive shall promptly disclose such Ideas and
Inventions to the Company. Executive agrees that he shall, and does hereby,
assign to the Company all rights and interests in and to all Ideas and
Inventions (as defined herein) made or conceived by Executive during the course
of his employment. Ideas and Inventions shall become the sole, exclusive and
absolute property of the Company and are considered by the Company to be
Confidential Information. Ideas and Inventions include all creative work
product; including, but not limited to, ideas, concepts, processes,
improvements, developments, discoveries, designs, business programs, computer
programs, software, data, data analysis, data compilations, etc. Ideas and
Inventions are limited to those which relate to current activities of the
Company or reasonable extensions or expansions of the Company's activities.
(b) Executive acknowledges that Ideas and Inventions do not always
become fully recognized in a short period of time. Thus, to provide the Company
the full benefit of Executive's activities during employment with the Company,
Executive agrees to treat post-employment Ideas and Inventions the same as Ideas
and Inventions made or conceived during employment, that is, in accordance with
Paragraphs 6 (a) and (c). Post-employment Ideas and Inventions are limited to
those made or conceived by Executive within nine (9) months after termination of
Executive's employment with the Company.
(c) Executive further agrees to disclose and deliver to the Company
any and all drawings, notes, specifications, memoranda, computer programs,
software, data, data analysis, data compilations and other writings contained in
any information media relating to such Ideas and Inventions, to cooperate fully
during Executive's employment and thereafter in securing patent rights in any
and all countries, and to give evidence and testimony and execute and deliver to
the
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Company all papers requested by it in connection herewith. The provisions of
this Paragraph remain valid beyond the termination of Executive's employment
with the Company.
(d) The assignment of Ideas and Inventions provisions contained in
Paragraphs 6 (a), (b) and (c) does NOT apply to Ideas and Inventions which were
developed entirely on Executive's own time without using the Company's
equipment, supplies, facilities or trade secret information; however such Ideas
or Inventions are to be assigned as in Paragraphs 6 (a), (b) and (c) if either
of the following is true:
(i) the Idea or Invention relates, at the time of conception
or reduction to practice, to the Company's business, or to actual or
demonstrated anticipated research or development of the Company; or
(ii) the Idea or Invention results from any work performed
by Executive for the Company.
7. Notices. For the purposes of this Agreement, notices and all other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given when delivered personally or by a recognized overnight mail
service or mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: Xxxxxxxxx X. Xxx
--------------------------
--------------------------
If to the Company: Snap-on Incorporated
00000 Xxxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, President & C.E.O.
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
8. Miscellaneous.
(a) No provisions of this Agreement may be amended unless such
amendment is agreed to in writing signed by the parties hereto.
(b) No waiver by any party hereto of any breach of, or compliance
with, any condition or provision of this Agreement by the other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time. No such
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waiver shall be enforceable unless expressed in a written instrument executed by
the party against whom enforcement is sought.
(c) This Agreement constitutes the entire agreement of the parties on
the subject matter hereof and no agreements or representations, oral or
otherwise, expressed or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
This Agreement supercedes Executive's Severance Agreement dated October 27,
2000, which is hereby null and void. Executive's Restated Senior Officer
Agreement dated February 1, 1996, will become null and void, without further
notice, on his Termination Date.
(d) This Agreement shall be binding upon and inure to the benefit of
the Company, its successors and assigns, and Executive and his heirs, executors,
administrators and legal representatives.
(e) The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Wisconsin applicable to
contracts made and to be performed therein between residents thereof.
(f) This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
(g) This Agreement has been jointly drafted by the respective
representatives of the Company and Executive and no party shall be considered as
being responsible for such drafting for the purpose of applying any rule
construing ambiguities against the drafter or otherwise. No draft of this
Agreement shall be taken into account in construing this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
EXECUTIVE
/s/ Xxxxxxxxx X. Xxx
----------------------------------------
Date: August 20, 2001
-----------------------------------
COMPANY
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Xxxx X. Xxxxxxx
Title: President and CEO
--------------------------------
Date: August 16, 2001
--------------------------------
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Attachment #1
PRIORITIES FOR X. XXX
---------------------
2001
----
--------------------------------------------------------------------------------
Objective
--------------------------------------------------------------------------------
1.) Completion of the worldwide mechanics tools strategy:
A.) Proposed manufacturing footprint and decision process.
B.) Develop distribution based brand strategy, worldwide.
C.) Define clear principals on cost accounting between units.
D.) Create support structure for third party sourcing activities.
E.) Create time schedule and plan for any necessary realignment.
--------------------------------------------------------------------------------
2.) Develop plan for transition of X. Xxxx and OE business.
A.) Develop search criteria and begin process.
B.) Facilitate introductions to key Ford Personnel.
--------------------------------------------------------------------------------
3.) Complete special charge actions as defined.
--------------------------------------------------------------------------------
4.) Ensure that NA Bahco - Snap-on project continues on schedule.
--------------------------------------------------------------------------------
5.) Continue to monitor inventory reduction program.
--------------------------------------------------------------------------------
6.) Finalize WMS productivity solution.
--------------------------------------------------------------------------------
7.) Finalize corporate quality, standards organization.
A.) Xxxxx job description.
B.) Quality organization.
--------------------------------------------------------------------------------
8.) Facilitate transition of responsibility to new person.
--------------------------------------------------------------------------------
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RELEASE AGREEMENT
-----------------
THIS RELEASE AGREEMENT ("Agreement") is entered into as of this ____ day of
____________, 2002, ("Agreement Date") by and between Snap-on Incorporated, a
Delaware corporation, (the "Company") and Xxxxxxxxx X. Xxx ("Executive").
For and in consideration of the mutual covenants and agreements set forth
herein, the Company and Executive agree as follows:
1. Consideration and Benefits.
(a) Consideration. In consideration for this Release Agreement, Company
agrees to pay Executive Sixty Thousand Dollars ($60,000), approximately 14 days
from the execution of this Release Agreement ("Release Payment"). The Release
Payment is eligible for deferral in accordance with the terms of the Executive
Employment Agreement dated July 15, 2001 between the Company and Executive.
(b) Vacation. Executive affirms that he has used all of his accrued
vacation time prior to execution of this Agreement.
(c) Retirement Benefits. Nothing in this Agreement shall be deemed to
affect any rights Executive may have under the Company's Qualified Pension Plan
for Administrative Field Employees and the Snap-on Incorporated Supplemental
Retirement Plan for Officers.
(d) Employee Stock Ownership Plan. Executive shall not be eligible to
participate in the Company's 2001-2002 Employee Stock Ownership Plan ("ESOP").
Executive shall be refunded any contributions he made to the ESOP in accordance
with the terms of the ESOP.
2. Release of the Company by Executive. Executive with the intention of
binding himself, his heirs, executors, administrators and assigns, does hereby
release, acquit and forever
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discharge the Company and all of their past, present and future officers,
directors, employees, shareholders, agents, successors, assigns, attorneys, and
employee benefit plans and programs, of and from all manner of actions, causes
of action, arbitrations, suits, debts, sums of money, accounts, reckonings,
bonds, covenants, controversies, agreements, promises, damages, judgments,
charges, claims and demands whatsoever that Executive now has or may have for
actions, inactions or omissions of the Company on or prior to the date of his
execution of this Agreement, both known and unknown, including, but not limited
to, any claims of employment discrimination under federal, state or local laws,
claims under the Age Discrimination in Employment Act, claims under the Employee
Retirement Income Security Act, claims under the Fair Employment Laws, any
claimed violations of statute, any violations of public policy, and any tort,
contract, quasi-contract or other common law claims; provided, however, that the
foregoing release shall not apply to: (i) any breach by the Company of this
Agreement; (ii) Executive's rights to any accrued benefits under any employee
benefit plans (including retirement plans, deferred compensation and/or split
dollar insurance plans); (iii) any claims which may arise after the date this
Agreement is signed; (iv) any claim Executive may have for indemnification
pursuant to the Bylaws of the Company; (v) any vacation pay that is accrued and
unpaid; or (vi) Executive's rights under the Executive Employment Agreement
dated July 15, 2001. Executive expressly gives up any and all rights to any
benefits otherwise payable under any of the Company's severance plans or
policies. The Company understands and agrees that the releases set forth herein
do not in any way affect the rights of Executive to take whatever steps may be
necessary to enforce the terms of this Agreement or to obtain relief in the
event of the breach of the terms of this Agreement. The parties acknowledge that
this release only applies to matters which arose on or prior to the date on
which this agreement is signed.
3. Confidentiality of Terms; No Disparagement.
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(a) Executive and the Company expressly acknowledge that this Agreement and
all matters relating to or leading up to the negotiation and effectuation of
this Agreement, are confidential and shall be accorded the utmost
confidentiality and shall not be disclosed to any third party except to
Executive's wife, his legal, actuarial, pension, accounting and tax advisors and
to the executives and administrative personnel of the Company with a need to
know (including the Audit Committee) to the extent necessary to perform services
or as required by law, rule or regulation. Executive and the Company also agree
that if any disclosure is made as permitted under this paragraph, then such
persons or entities shall be cautioned about the confidentiality obligations
imposed by this Agreement and required to abide by the terms of this
confidential undertaking. The parties have agreed upon the language attached
hereto as Exhibit 1, as the only announcement or communication that may be made
to the employees of the Company and the public.
(b) Executive agrees that he will conduct himself in a professional manner
and not make any disparaging, negative or other statements regarding the
Company, its affiliates or any of the Company's or its affiliates' officers,
directors or employees which could reasonably be believed in any way to have an
adverse effect on the business or affairs of the Company or its affiliates or
otherwise be injurious to or not be in the best interests of the Company, its
affiliates or any such other persons. The Company agrees that it will conduct
itself in a professional manner and not make any disparaging, negative or other
statements regarding Executive which could in any way have an adverse affect on
Executive or his reputation or otherwise be injurious to Executive. The parties
agree that truthful testimony in legal proceedings of any nature whatsoever
shall not, and cannot, constitute disparagement under this paragraph.
4. Advice of Counsel. Executive represents and warrants that he has read
this Agreement, that he has had adequate time to consider it, that he had been
advised by the Company
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to consult with an attorney and has consulted with an attorney prior to
executing this Agreement, that he understands the meaning and application of
this Agreement and that he has signed this Agreement knowingly, voluntarily and
of his own free will with the intent of being bound by it.
5. Right of Revocation. Executive will have the right to revoke this
Agreement for a period of seven days after he has signed it. Any revocation
should be communicated in writing by personal delivery or by first-class mail
to:
Xxxxxx X. Xxxxx
Corporate Counsel
Snap-on Incorporated
P. O. Box 1410
2810 - 00xx Xxxxxx
Xxxxxxx, XX 00000-0000
If Executive does not exercise his right to revoke this Agreement, it will
become effective on the eighth day after he has signed it.
EXECUTIVE ACKNOWLEDGES THAT HE WAS GIVEN, PRIOR TO SIGNING THIS AGREEMENT, A
PERIOD OF AT LEAST 45 DAYS FROM DELIVERY TO HIM OF THIS AGREEMENT WITHIN WHICH
TO CONSIDER THIS AGREEMENT.
PLEASE READ CAREFULLY. THIS AGREEMENT CONTAINS A RELEASE OF KNOWN AND UNKNOWN
CLAIMS.
6. Severability; Modification of Agreement. If any provision of this
Agreement shall be found invalid or unenforceable in whole or in part, then such
provisions shall be deemed to be modified or restricted to the extent and in the
manner necessary to render the same valid and enforceable or shall be deemed
excised from this Agreement as such circumstances may require, and this
Agreement shall be construed and enforced to the maximum extent permitted by law
as if such provision had been originally incorporated herein as so modified or
restricted or as if such provision had not been originally incorporated herein,
as the case may be.
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7. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and assigns. Notwithstanding the foregoing, neither this Agreement
nor any rights hereunder may be assigned to any party by the Company or
Executive without the prior written consent of the other party hereto.
8. Assisting Litigation. Executive shall assist the Company in connection
with its litigation matters (or the litigation matters of its parent companies,
subsidiaries and/or joint ventures), that are now pending or that may be filed
in the future. Executive shall be paid $125.00 per hour and be reimbursed for
travel and other reasonable out-of-pocket expenses related to assisting the
Company in litigation. Executive's services in connection with this paragraph
shall include, but not shall not be limited to: attending meetings with the
Company's lawyers; attending interviews, depositions, hearings and trials;
reviewing documents; and performing such other services in connection with such
matters as may be reasonably requested by the Company and its lawyers. Executive
agrees not to aid in, assist in, or encourage the pursuit of, litigation against
Snap-on by any other person or entity.
9. Return of Property. Executive represents and warrants that (i) on or
before the expiration of the revocation period in Paragraph 5 above, he returned
to the President and Chief Executive Officer or his designee any and all files
or other property of the Company including, but not limited to, any and all
financial records and data, personnel information, personal files that contain
Company files, personal equipment (including pagers, personal computers),
business strategies and plans, product development information, computer
programs (including the software and data used in all such programs), research
projects, and business information concerning the Company's products,
production, developments, costs, purchasing, pricing, profits, markets, sales,
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accounts, customers, financing, expansions, and other information relating to
Company's or any of its affiliates' business practices, strategies or policies
(all hereinafter referred to as the "Company Property"); and (ii) other than his
attorney he has neither given to any third party nor any longer has in his
possession any Company Property. Executive agrees that he will promptly deliver
to the Company any Company Property coming into his possession hereafter.
10. Entire Agreement. Executive and the Company each represent and warrant
that no promise or inducement has been offered or made except as set forth
herein and that the consideration stated herein is the sole consideration for
this Agreement. The parties agree that it is their intent that this Agreement be
fair and reasonable to both parties, and both parties further agree that the
provisions of this Agreement shall be construed and enforced in accordance with
the laws of the State of Wisconsin.
Executive Snap-on Incorporated
______________________________ By: __________________________________
Xxxx X. Xxxxxxx
Title: President and CEO
---------------------------------
Date: ________________________ Date: ____________________________
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