Amended and Restated
Snap-on Incorporated
Directors' 1993 Fee Plan
(as amended through October 22, 1999)
1. Purpose. The Amended and Restated Snap-on Incorporated Directors'
1993 Fee Plan (the "Plan") is intended to provide an incentive to members of the
Board of Directors (the "Board") of Snap-on Incorporated, a Delaware corporation
(the "Company"), who are not employees of the Company ("Directors"), to remain
in the service of the Company and increase their efforts for the success of the
Company and to encourage such Directors to own shares of the Company's stock or
participate in a Company phantom stock account, thereby aligning their interests
more closely with the interests of stockholders.
2. Definitions.
(a) "Board" means the Board of Directors of the Company.
(b) "Committee" means a committee consisting of members of the
Board authorized to administer the Plan.
(c) "Common Stock" means the common stock, par value $1.00 per
share, of the Company.
(d) "Deferral Election" means an election pursuant to Section 6
hereof to defer receipt of Fees and/or shares of Common Stock which would
otherwise be received pursuant to Minimum Grants and Elective Grants.
(e) "Deferred Amounts" mean the amounts credited to a Director's
Share Account or Cash Account pursuant to a Deferral Election.
(f) "Director" means a member of the Board or an appointed
Director Emeritus, who is not an employee of the Company.
(g) "Elective Grants" shall have the meaning set forth in Section
5(b) hereof.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "Fair Market Value" means the closing price of the Common
Stock on the New York Stock Exchange on any particular date; provided, however,
that for purposes of Section 8, Fair Market Value shall mean the closing price
of Common Stock on the New York Stock Exchange on the date of the Change of
Control (as defined therein) or, if higher, the highest price per share of
Common Stock paid in the transaction giving rise to the Change of Control.
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(j) "Fees" mean the annual retainer scheduled to be paid to a
Director for the calendar year plus any additional fees (including meeting and
committee fees) earned by a Director for his or her services on the Board during
the calendar year.
(k) "Grants" mean Minimum Grants and Elective Grants.
(l) "Minimum Grants" shall have the meaning set forth in Section
5(a) hereof.
(m) "Share Election" shall have the meaning set forth in Section
5(b) hereof.
3. Administration of the Plan.
(a) Member of the Committee. The Plan shall be administered by the
Committee. Members of the Committee shall be appointed from time to time by the
Board, shall serve at the pleasure of the Board and may resign at any time upon
written notice to the Board.
(b) Authority of the Committee. The Committee shall adopt such
rules as it may deem appropriate in order to carry out the purpose of the Plan.
All questions of interpretation, administration, and application of the Plan
shall be determined by a majority of the members of the Committee then in
office, except that the Committee may authorize any one or more of its members,
or any officer of the Company, to execute and deliver documents on behalf of the
Committee. The determination of such majority shall be final and binding in all
matters relating to the Plan. No member of the Committee shall be liable for any
act done or omitted to be done by such member or by any other member of the
Committee in connection with the Plan, except for such member's own willful
misconduct or as expressly provided by statute.
4. Stock Reserved for the Plan. The number of shares of Common Stock
authorized for issuance under the Plan is 300,000, subject to adjustment
pursuant to Section 7 hereof. Shares of Common Stock delivered hereunder may be
either authorized but unissued shares or previously issued shares reacquired and
held by the Company.
5. Terms and Conditions of Grants.
(a) Minimum Grant. Subject to Section 5(e) hereof, each Director
shall automatically receive (subject to a Deferral Election) a number of whole
shares of Common Stock equal in value to fifty percent (50%) of his or her Fees
earned in each calendar year (the "Minimum Grants"). Such shares of Common Stock
(and cash in lieu of fractional shares) shall be transferred in accordance with
Section 5(c) hereof.
(b) Elective Grant. Subject to Section 5(e) hereof, each Director
may make an election (the "Share Election") to receive (subject to a Deferral
Election) any or all of his or her remaining Fees earned in each calendar year
in the form of Common Stock (the "Elective Grants"). The shares of Common Stock
(and cash in lieu of fractional shares) issuable pursuant to a Share Election
shall be transferred in accordance with Section 5(c) hereof. The Share
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Election (i) must be in writing and delivered to the Secretary of the Company,
(ii) shall be effective commencing on the date the Secretary receives the Share
Election or such later date as may be specified in the Share Election, and (iii)
shall remain in effect unless modified or revoked by a subsequent Share Election
in accordance with the provisions hereof.
(c) Transfer of Shares. Shares of Common Stock issuable to a
Director with respect to Minimum Grants and Elective Grants shall be transferred
to such Director as of the last business day of each calendar month. The total
number of shares of Common Stock to be so transferred (1) in respect of a
Minimum Grant, shall be determined by dividing (a) an amount equal to fifty
percent (50%) of the Director's Fees payable during the applicable calendar
month, by (b) the Fair Market Value of a share of Common Stock on the last
business day of such calendar month, and (2) in respect of an Elective Grant,
shall be determined by dividing (x) the dollar amount of the Director's Fees
payable during the applicable calendar month to which the Share Election
applies, by (y) the Fair Market Value of a share of Common Stock on the last
business day of such calendar month. In no event, shall the Company be required
to issue fractional shares. Whenever under the terms of this Section 5 a
fractional share of Common Stock would otherwise be required to be issued to a
Director, an amount in lieu thereof shall be paid in cash based upon the Fair
Market Value of such fractional share.
(d) Termination of Services. If a Director's services as a Board
member are terminated before the end of a calendar quarter, the Director shall
receive in cash the Fees such Director would otherwise have been entitled to
receive for such quarter in the absence of this Plan.
(e) Commencement of Grants. Notwithstanding anything in this Plan
to the contrary, no Grants shall be effective with respect to Fees to be paid
prior to the requisite approval of this Plan by the stockholders of the Company.
6. Deferral Election.
(a) In General. Each Director may irrevocably elect annually (a
"Deferral Election") to defer receiving all or a portion of the shares of Common
Stock (that would otherwise be transferred upon a Grant) or such Director's Fees
in respect of a calendar year that are not subject to a Grant. Deferral
Elections shall be made in multiples of ten percent. A Director who makes a
Deferral Election with respect to Grants shall have the amount of deferred
shares of Common Stock credited to a "Share Account" in the form of "Share
Units." A Director who makes a Deferral Election with respect to Fees that are
not subject to a Grant shall have the amount of Deferred Fees credited to a
"Cash Account." Collectively, the amounts deferred in a Director's Share Account
and Cash Account shall hereafter be the "Deferred Amounts."
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(b) Timing of Deferral Election. The Deferral Election shall be in
writing and delivered to the Secretary of the Company on or prior to December 31
of the calendar year immediately preceding the calendar year in which the
applicable Fees are to be earned; provided, however, that a New Director may
make a Deferral Election with respect to Fees earned subsequent to such election
during the thirty-day period immediately following the commencement of his or
her directorship. A Deferral Election, once made, shall be irrevocable for the
calendar year with respect to which it is made and shall remain in effect for
future calendar years unless modified or revoked by a subsequent Deferral
Election in accordance with the provisions hereof. A Deferral Election may be
changed only with respect to fees earned subsequent to the effective date of
such Election; provided, however, until December 31, 1999, Directors may execute
a new Deferral Election to change the payment commencement date and/or manner of
payments for previously Deferred Amounts.
(c) Cash Dividends and Share Accounts. Whenever cash dividends are
paid by the Company on outstanding Common Stock, there shall be credited to the
Director's Share Account additional Share Units equal to (i) the aggregate
dividend that would be payable on outstanding Shares of Common Stock equal to
the number of Share Units in such Share Account on the record date for the
dividend, divided by (ii) the Fair Market Value of the Common Stock on the last
trading business day immediately preceding the date of payment of the dividend.
(d) Cash Accounts. At the election of a Director, a Director's
Cash Account shall be credited or debited with (i) interest at an annual rate
equal to the sum of the daily interest earned at a rate specified by the
Committee and compounded monthly or (ii) the annual investment return relating
to such investment vehicle or vehicles that the Director chooses from those the
Committee determines to make available, or such combination of (i) and (ii) as
the Director designates at the time of a Deferral Election or a modification
thereof.
(e) Commencement of Payments. Except as otherwise provided in
Sections 6(h) and 8(b), a Director's Deferred Amounts shall become payable as
soon as practicable following the earlier to occur of (a) the date the Director
terminates service as a Director or (b) the Director's attainment of age 70
years or such later date designated by the Director in the Deferral Election.
(f) Form of Payments. Subject to a Director's right to convert a
Share Account balance to a Cash Account, all payments from a Share Account shall
be made in shares of Common Stock by converting Share Units into Common Stock on
a one-for-one basis, with payment of fractional shares to be made in cash. All
payments from a Cash Account shall be made in cash.
(g) Manner of Payments. In his or her Deferral Election, each
Director shall elect to receive payment of his or her Deferred Amounts either in
a lump sum or in two to fifteen substantially equal annual installments. In the
event of a Director's death, payment of the remaining portion of the Director's
Deferred Amounts will be made to the Director's beneficiary in a lump sum as
soon as practicable following the Director's death.
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(h) Hardship Distribution. Notwithstanding any Deferral Election,
in the event of severe financial hardship to a Director resulting from a sudden
and unexpected illness, accident or disability of the Director or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Director, all as determined by the Committee, a
Director may withdraw any portion of the Share Units in his or her Share Account
or cash in his or her Cash Account by providing written notice to the Secretary
of the Company. All payments resulting from such a hardship shall be made in the
form provided in Section 6(f) above.
(i) Designation of Beneficiary. Each Director or former Director
entitled to payment of deferred amounts hereunder from time to time may
designate any beneficiary or beneficiaries (who may be designated concurrently,
contingently or successively) to whom any such deferred amounts are to be paid
in case of the Director's death before receipt of any or all of such deferred
amounts. Each designation will revoke all prior designations by the Director or
former Director, shall be in a form prescribed by the Company, and will be
effective only when filed by the Director or former Director, during his or her
lifetime, in writing with the Secretary of the Company. Reference in this Plan
to a Director's "beneficiary" at any date shall include such persons designated
as concurrent beneficiaries on the Director's beneficiary designation form then
in effect. In the absence of any such designation, any balance remaining in a
Director's or former Director's Share Account at the time of the Director's
death shall be paid to such Director's estate in a lump sum.
(j) Account Transfers. Subject to any applicable corporate
policies, from time to time a Director may convert all or a portion of any Cash
Account balance of the Director into deferred shares of Common Stock credited to
the Director's corresponding Share Account by written notice to the Company. In
such event, and effective as of the date the Company receives such a notice, (i)
there shall be credited to the Director's Share Account a number of Share Units
equal to the number of Share Units specified in the notice or, if such notice
specifies a dollar amount, a number of Share Units equal to such dollar amount
divided by the Fair Market Value on the last trading business day immediately
preceding the date the Company receives such notice and (ii) the Director's Cash
Account shall be debited in an amount equal to the number of Share Units
credited to the Share Account multiplied by the Fair Market Value on the same
trading business day. Subject to any applicable corporate policies, from time to
time a Director with a credit balance in a Share Account may convert all or a
portion of such balance into an amount to be credited to the Director's
corresponding Cash Account by giving written notice to the Company. In such
event, and effective as of the date the Company receives such a notice, (i)
there shall be credited to the Director's Cash Account an amount equal to the
number of Share Units specified in the notice multiplied by the Fair Market
Value on the last trading business day immediately preceding the date the
Company receives such notice and (ii) the Director's Share Account shall be
debited by the number of Share Units specified in the notice.
7. Effect of Certain Changes in Capitalization. If there is any
change in the number or class of shares of Common Stock through the declaration
of stock dividends, or recapitalization resulting in stock splits, or
combinations or exchanges of such shares or similar
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corporate transactions, the maximum number or class of shares available under
the Plan, the number or class of shares of Common Stock to be delivered
hereunder and each Director's Share Account shall be proportionately adjusted by
the Committee to reflect any such change in the number or class of issued shares
of Common Stock; provided, however, that the number or class of shares of Common
Stock to be delivered and each Director's Share Account shall be subject to only
such adjustment as shall be necessary to maintain the proportionate interest of
the Director and preserve, without exceeding, the value reflected by the
Director's Share Account.
8. Change of Control.
(a) A "Change of Control" of the Company shall be deemed to have
occurred if:
(1) any "Person" (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as modified and used in Sections 13(d) and 14(d) thereof, except
that for purposes of this Section 8, the term "Person" shall not
include (A) the Company or any of its subsidiaries, (B) a trustee
or other fiduciary holding securities under an employee benefit
plan of the Company or any of its subsidiaries, (C) an
underwriter temporarily holding securities pursuant to an
offering of such securities, or (D) a corporation owned, directly
or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock in
the Company) is or becomes the "Beneficial Owner"(as defined in
Rule 13d-3 under the Exchange Act), 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
(2) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals
who, on January 1,1996, 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 January 1, 1996 or whose appointment, election
or nomination for election was previously so approved; or
(3) 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
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any direct or indirect subsidiary of the Company) pursuant to
applicable stock exchange requirements, other than (1) 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 (2) 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
(4) 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.
(b) Upon the occurrence of a Change of Control:
(i) All Share Units credited to a Share Account shall be
converted into cash in an amount equal to the number of Share Units multiplied
by the Fair Market Value, and together with all Deferred Amounts credited to a
Cash Account shall be transferred as soon as practicable to each Director; and
(ii) Notwithstanding anything herein to the contrary, Fees earned
in respect of the calendar quarter in which the Change of Control occurs, shall
be paid in cash as soon as practicable.
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9. Term of Plan. This Plan shall become effective as of the date of
approval of the Plan by the stockholders of the Company, and shall remain in
effect until a Change of Control, unless sooner terminated by the Board;
provided, however, that, except as provided in Section 8(b) hereof, Deferred
Amounts may be delivered pursuant to any Deferral Election, in accordance with
such election, after the Plan's termination. Prior to the effective date of the
Plan, Directors may make the elections provided for herein, but the
effectiveness of such elections shall be contingent upon the receipt of
stockholder approval of the Plan. No transfer of shares of Common Stock may be
made to any Director or any other person under the Plan until such time as
stockholder approval of the Plan is obtained pursuant to this Section 9. In the
event stockholder approval is not obtained, Fees that were not subject to
Deferral Elections shall be paid to the Directors in cash and Fees that were
subject to Deferral Elections shall be deferred pursuant to the Prior Plan.
10. Amendment; Termination. The Board or the Committee may at any time
and from time to time alter, amend, suspend, or terminate the Plan in whole or
in part; provided, however, that (a) no amendment which requires stockholder
approval in order for the exemptions available under Rule 16b-3 of the Exchange
Act, as amended from time to time ("Rule 16b-3"), to be applicable to the Plan
and the Directors shall be effective unless the same shall be approved by the
stockholders of the Company entitled to vote thereon; (b) the provisions of
Section 5(a) hereof shall not be amended more than once every six months, other
than to comport with changes in the Internal Revenue Code of 1986, as amended,
the Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder; and (c) action by the Board shall be required to amend the first
sentence of Section 5(a) hereof. Notwithstanding the foregoing, no amendment
shall affect adversely any of the rights of any Director, without such
Director's consent, under any election theretofore in effect under the Plan.
11. Rights of Directors.
(a) Retention as Director. Nothing contained in the Plan or with
respect to any Grant shall interfere with or limit in any way the right of the
stockholders of the Company to remove any Director from the Board pursuant to
the bylaws of the Company, nor confer upon any Director any right to continue in
the service of the Company as a Director.
(b) Nontransferability. No right or interest of any Director in
Deferred Amounts shall be assignable or transferable during the lifetime of the
Director, either voluntarily or involuntarily, or subjected to any lien,
directly or indirectly, by operation of law, or otherwise, including execution,
levy, garnishment, attachment, pledge or bankruptcy. In the event of a
Director's death, a Director's rights and interests in his or her Deferred
Amounts shall be transferable by testamentary will or the laws of descent and
distribution. If in the opinion of the Committee a person entitled to payments
or to exercise rights with respect to the Plan is disabled from caring for his
or her affairs because of mental condition, physical condition or age, payment
due such person may be made to, and such rights shall be exercised by, such
person's guardian, conservator or other legal personal representative upon
furnishing the Committee with evidence satisfactory to the Committee of such
status.
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12. General Restrictions.
(a) Investment Representations. The Company may require any
director to whom Common Stock is granted, as a condition of receiving such
Common Stock, to give written assurances in substance and form satisfactory to
the Company and its counsel to the effect that such person is acquiring the
Common Stock for his own account for investment and not with any present
intention of selling or otherwise distributing the same, and to such other
effects as the Company deems necessary or appropriate in order to comply with
Federal and applicable state securities laws.
(b) Compliance with Securities Laws. Each Grant shall be subject
to the requirement that, if at any time counsel to the Company shall determine
that the listing, registration or qualification of the shares subject to such
Grant upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, is necessary as a
condition of, or in connection with, the issuance of shares thereunder, such
Grant may not be accepted or exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained on conditions acceptable to the Committee. Nothing herein shall be
deemed to require the Company to apply for or to obtain such listing,
registration or qualification.
13. Withholding. The Company may defer making payments under the Plan
until satisfactory arrangements have been made for the payment of any federal,
state or local income taxes required to be withheld with respect to such payment
or delivery. Each Director shall be entitled to irrevocably elect to have the
Company withhold shares of Common Stock having an aggregate value equal to the
amount required to be withheld. The value of fractional shares remaining after
payment of the withholding taxes shall be paid to the Director in cash. Shares
so withheld shall be valued at Fair Market Value on the regular business day
immediately preceding the date such shares would otherwise be transferred
hereunder.
14. Governing Law. This Plan and all rights hereunder shall be
construed in accordance with and governed by the laws of the State of Delaware.
15. Headings. The headings of sections and subsections herein are
included solely for convenience of reference and shall not affect the meaning of
any of the provisions of the Plan.
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