Exhibit 10(b)
SNAP-ON INCORPORATED
2001 INCENTIVE STOCK AND AWARDS PLAN
(Amended and Restated as of January 25, 2002)
1. Purpose and Construction.
(a) Purpose. The Snap-on Incorporated 2001 Incentive Stock and Awards
Plan has two complementary purposes: (i) to attract and retain outstanding
people as officers, directors, employees, consultants and advisors and (ii)
to increase shareholder value. The Plan will provide participants
incentives to increase shareholder value by offering the opportunity to
acquire shares of the Company's common stock, receive monetary payments
based on the value of such common stock, or receive other incentive
compensation, on the potentially favorable terms that this Plan provides.
(b) Definitions. All capitalized terms used in this Plan have the
meanings given in Section 14.
2. Administration.
(a) Committee Administration. The Committee has full authority to
administer this Plan, including the authority to (i) interpret the
provisions of this Plan, (ii) prescribe, amend and rescind rules and
regulations relating to this Plan, (iii) correct any defect, supply any
omission, or reconcile any inconsistency in any Award or agreement covering
an Award in the manner and to the extent it deems desirable to carry this
Plan into effect, and (iv) make all other determinations necessary or
advisable for the administration of this Plan. A majority of the members of
the Committee will constitute a quorum, and a majority of the Committee's
members must make all determinations of the Committee. The Committee may
make any determination under this Plan without notice or meeting of the
Committee by a writing that a majority of the Committee members have
signed. All Committee determinations are final and binding.
(b) Delegation to Other Committees or Officers. To the extent
applicable law permits, the Board may delegate to another committee of the
Board or to one or more officers of the Company any or all of the authority
and responsibility of the Committee. However, no such delegation is
permitted with respect to individuals who are Section 16 Participants at
the time any such delegated authority or responsibility is exercised. The
Board also may delegate to another committee of the Board consisting
entirely of Non-Employee Directors any or all of the authority and
responsibility of the Committee with respect to individuals who are Section
16 Participants. If the Board has made such a delegation, then all
references to the Committee in this Plan include such other committee or
one or more officers to the extent of such delegation.
(c) No Liability. No member of the Committee, and no officer to whom a
delegation under subsection (b) has been made, will be liable for any act
done, or determination made, by the individual in good faith with respect
to the Plan or any Award. The Company will indemnify and hold harmless such
individual to the maximum extent that the law and the Company's bylaws
permit.
3. Eligibility. (a) The Committee may designate from time to time the
Participants to receive Awards under this Plan. The Committee's designation of a
Participant in any year will not require the Committee to designate such person
to receive an Award in any other year. The Committee may consider such factors
as it deems pertinent in selecting a Participant and in determining the types
and amounts of Awards. In making such selection and determination, factors the
Committee may consider include: (a) the Company's financial condition; (b)
anticipated profits for the current or future years; (c) the Participant's
contributions to the profitability and development of the Company; and (d) other
compensation provided to the Participant. Non-Employee Directors automatically
receive Options under Section 6(d), without action of the Committee, and are not
eligible to receive any other Awards.
4. Types of Awards.
(a) Discretionary Grants of Awards. Subject to the terms of this Plan,
the Committee has full power and authority to: (i) determine the type or
types of Awards to be granted to each Participant; (ii) determine the
number of Shares with respect to which an Award is granted to a
Participant, if applicable; and (iii) determine any terms and conditions of
any Award granted to a Participant. Awards under this Plan may be granted
either alone or in addition to, in tandem with, or in substitution for any
other Award (or any other award granted under another plan of the Company
or any Affiliate). Tandem Awards may be granted either at the same time as,
or at different times from, the grant of the other Awards (or awards) to
which they relate.
(b) Automatic Grants to Non-Employee Directors. Each Non-Employee
Director will automatically receive Options under this Plan as provided in
Section 6(d).
5. Shares Reserved under this Plan.
(a) Plan Reserve. An aggregate of 5,000,000 Shares are reserved for
issuance under this Plan. However, not more than 5,000,000 of the reserved
Shares may be issued pursuant to incentive stock options. The number of
Shares reserved for issuance under this Plan shall be reduced only by the
number of Shares delivered in payment or settlement of Awards. As to Awards
that are (i) Restricted Stock, (ii) Performance Shares, or (iii)
Performance Units that are paid in Shares or the value of which is based on
the Fair Market Value of Shares, the Company may not issue, or make
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payments as to more than 1,000,000 Shares in the aggregate. The limitations
of this subsection are subject to adjustments as provided in Section 12.
(b) Replenishment of Shares Under this Plan. If an Award lapses,
expires, terminates or is cancelled without the issuance of Shares or
payment of cash under the Award, then the Shares subject to, reserved for
or delivered in payment in respect of such Award may again be used for new
Awards under this Plan as determined under subsection (a), including
issuance as Restricted Stock or pursuant to incentive stock options. If
Shares are issued under any Award and the Company subsequently reacquires
them pursuant to rights reserved upon the issuance of the Shares, or if
previously owned Shares are delivered to the Company in payment of the
exercise price of an Award, then the Shares subject to, reserved for or
delivered in payment in respect of such Award may again be used for new
Awards under this Plan as determined under subsection (a), including
issuance as Restricted Stock, but such shares may not be issued pursuant to
incentive stock options.
(c) Addition of Shares from Predecessor Plan. After the Effective Date
of this Plan, if any Shares subject to awards granted under the Amended and
Restated Snap-on Incorporated 1986 Incentive Stock Program would again
become available for new grants under the terms of such prior plan if the
prior plan were still in effect, then those Shares will be available for
the purpose of granting Awards under this Plan, thereby increasing the
Shares available under this Plan as determined under the first sentence of
subsection (a). Any such Shares will not be available for future awards
under the terms of the Amended and Restated Snap-on Incorporated 1986
Incentive Stock Program.
(d) Participant Limitations. Subject to adjustment as provided in
Section 12, no Participant may be granted Awards under this Plan that could
result in such Participant: (i) receiving in any single fiscal year of the
Company Options for more than 1,000,000 Shares, (ii) receiving Awards of
Restricted Stock in any single fiscal year of the Company relating to more
than 200,000 Shares, (iii) receiving Performance Shares in any single
fiscal year of the Company relating to more than 40,000 Shares; (iv)
receiving Awards of Performance Units in any single fiscal year of the
Company with a designated dollar value that exceeds $1,000,000 and/or
receiving Awards of Performance Units in any single fiscal year of the
Company, the value of which is based on the Fair Market Value of Shares,
relating to more than 40,000 Shares; or (v) receiving an annual incentive
award in any single fiscal year of the Company that is more than
$3,000,000. In all cases, determinations under this Section 5 should be
made in a manner that is consistent with the exemption for
performance-based compensation that Code Section 162(m) provides.
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6. Options.
(a) Eligibility. The Committee may grant Options to any Participant it
selects. The Committee must specify whether the Option is an incentive
stock option or a nonqualified stock option, but only employees of the
Company or a Subsidiary may receive grants of incentive stock options.
Director Options are automatic grants as specified in subsection (d).
(b) Exercise Price. For each Option other than Director Options, the
Committee will establish the exercise price, which may not be less than the
Fair Market Value of the Shares subject to the Option as determined on the
date of grant.
(c) Terms and Conditions of Options. An option will be exercisable at
such times and subject to such conditions as the Committee specifies,
except that the Option must terminate no later than 10 years after the date
of grant. In all other respects, the terms of any incentive stock option
should comply with the provisions of Code section 422 except to the extent
the Committee determines otherwise.
(d) Terms and Conditions of Non-Employee Director Options. On the date
of each annual meeting of shareholders of the Company during the term of
this Plan, each Non-Employee Director (including members of the Committee)
will automatically be granted on such meeting date a nonqualified stock
option for the purchase of 3,000 Shares at a purchase price equal to the
Fair Market Value of the Shares on such date ("Director Options"). Each
Director Option will be immediately exercisable and, except as the
Committee may otherwise provide, will terminate upon the earliest of: (i)
10 years from the date of grant; (ii) if the Director is at least age 65 or
has completed six years of service, three years after the Director ceases
to serve on the Board for any reason other than death; (iii) if the
Director is not age 65 and has not completed six years of service, six
months after the Director ceases to serve on the Board for any reason other
than death of the Director; or (iv) 12 months after the date of death if
the Director should die while serving, or within any period after
termination of his or her service during which the Director Option was
exercisable. Non-Employee Directors will not be eligible for any other
Award under this Plan.
7. Performance and Stock Awards.
(a) Eligibility for Performance and Stock Awards. The Committee may
grant awards of Restricted Stock, Performance Shares or Performance Units
to Participants the Committee selects.
(b) Terms and Conditions. Each award of Restricted Stock, Performance
Shares or Performance Units may be subject to such terms and
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conditions as the Committee determines appropriate, including, without
limitation, a condition that one or more Performance Goals be achieved for
the Participant to realize all or a portion of the benefit provided under
the Award. However, an award of Restricted Stock that requires the
achievement of Performance Goals must have a restriction period of at least
one year, and an award of Restricted Stock that is not subject to
Performance Goals must have a restriction period of at least three years.
Notwithstanding the foregoing, the Committee may provide that the
restrictions imposed on Restricted Stock are accelerated, and that all or a
portion of the Performance Goals subject to an Award are deemed achieved,
upon a Participant's death, disability or retirement. The Committee may
determine to pay Performance Units in cash, in Shares, or in a combination
of cash and Shares.
8. Annual Management Incentive Awards. The Committee may grant annual
incentive awards each year to such executive officers of the Company as it
selects. The Committee will determine all terms and conditions of the annual
incentive award. However, the Committee must require that payment of all or any
portion of the amount subject to the annual incentive award is contingent on the
achievement or partial achievement of one or more Performance Goals during the
period the Committee specifies. An annual incentive award must relate to a
period of at least one year except that, if the award is made at the time of
commencement of employment with the Company or on the occasion of a promotion,
then the award may relate to a period shorter than one year.
9. Transferability. Each Award granted under this Plan is not transferable
other than by will or the laws of descent and distribution, except that a
Participant or Non-Employee Director may, to the extent the Committee allows and
in a manner the Committee specifies: (a) designate in writing a beneficiary to
exercise the Award after the Participant's or Non-Employee Director's death; or
(b) transfer any award.
10. Termination and Amendment of Plan; Amendment, Modification or
Cancellation of Awards.
(a) Term of Plan. This Plan will terminate, and no Award may be
granted, more than ten (10) years after the Effective Date, unless the
Board earlier terminates this Plan pursuant to subsection (b).
(b) Termination and Amendment. The Board may amend, alter, suspend,
discontinue or terminate this Plan at any time, subject to the following
limitations:
(i) the provisions of Section 6(d) may not be amended more than
once every six (6) months other than to comport with changes in the
Code, the Employee Retirement Income Security Act of 1974, as amended,
or the rules promulgated thereunder;
(ii) shareholders must approve any amendment of this Plan if
required by: (A) the rules and/or regulations promulgated under
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Section 16 of the Exchange Act (for this Plan to remain qualified
under Rule 16b-3), (B) the Code or any rules promulgated thereunder
(to allow for incentive stock options to be granted under this Plan or
to enable the Company to comply with the provisions of Section 162(m)
of the Code so that the Company can deduct compensation in excess of
the limitation set forth in that section), or (C) the listing
requirements of the New York Stock Exchange or any principal
securities exchange or market on which the Shares are then traded (to
maintain the listing or quotation of the Shares on that exchange); and
(iii) shareholders must approve any of the following Plan
amendments: (A) an amendment to materially increase any number of
Shares specified in Section 5(a) or 5(d) (except as permitted by
Section 12); (B) an amendment to shorten the restriction periods
specified in Section 7(b); or (C) an amendment to the provisions of
Section 10(e).
(c) Amendment, Modification or Cancellation of Awards. Except as
provided in subsection (e) and subject to the requirements of this Plan,
the Committee may modify or amend any Award or waive any restrictions or
conditions applicable to any Award or the exercise of the Award, and the
terms and conditions applicable to any Awards may at any time be amended,
modified or canceled by mutual agreement between the Committee and the
Participant or any other persons as may then have an interest in the
Agreement, so long as any amendment or modification does not increase the
number of Shares issuable under this Plan (except as permitted by Section
12).
(d) Survival of Committee Authority and Awards. Notwithstanding the
foregoing, the authority of the Committee to administer this Plan and
modify or amend an Award may extend beyond the date of this Plan's
termination. In addition, termination of this Plan will not affect the
rights of Participants or Non-Employee Directors with respect to Awards
previously granted to them, and all unexpired Awards will continue in force
and effect after termination of this Plan except as they may lapse or be
terminated by their own terms and conditions.
(e) Repricing Prohibited. Notwithstanding anything in this Plan to the
contrary, and except for the adjustments provided in Section 12, neither
the Committee nor any other person may decrease the exercise price for any
outstanding Option granted under this Plan after the date of grant nor
allow a Participant or Non-Employee Director to surrender an outstanding
Option granted under this Plan to the Company as consideration for the
grant of a new Option with a lower exercise price.
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(f) Foreign Participation. To assure the viability of Awards granted
to Participants employed in foreign countries, the Committee may provide
for such special terms as it may consider necessary or appropriate to
accommodate differences in local law, tax policy or custom. Moreover, the
Committee may approve such supplements to, or amendments, restatements or
alternative versions of this Plan as it determines is necessary or
appropriate for such purposes. Any such amendment, restatement or
alternative versions that the Committee approves for purposes of using this
Plan in a foreign country will not affect the terms of this Plan for any
other country. In addition, all such supplements, amendments, restatements
or alternative versions must comply with the provisions of Section
10(b)(iii).
11. Taxes. The Company is entitled to withhold the amount of any tax
attributable to any amount payable or Shares deliverable under this Plan after
giving the person entitled to receive such amount or Shares notice as far in
advance as practicable, and the Company may defer making payment or delivery if
any such tax may be pending unless and until indemnified to its satisfaction.
The Committee may permit a Participant to pay all or a portion of the federal,
state and local withholding taxes arising in connection with (a) the exercise of
a nonqualified stock option, (b) a disqualifying disposition of Shares received
upon the exercise of an incentive stock option, or (c) the lapse of restrictions
on Restricted Stock, by electing to (i) have the Company withhold Shares
otherwise issuable under the Award, (ii) tender back Shares received in
connection with such Award or (iii) deliver other previously owned Shares, in
each case having a Fair Market Value equal to the amount to be withheld.
However, the amount to be withheld may not exceed the total minimum federal,
state and local tax withholding obligations associated with the transaction. The
election must be made on or before the date as of which the amount of tax to be
withheld is determined and otherwise as the Committee requires. The Fair Market
Value of fractional Shares remaining after payment of the withholding taxes may
be paid to the Participant in cash.
12. Adjustment Provisions; Change of Control.
(a) Adjustment of Shares. In the event of any Change in
Capitalization, a proportionate substitution or adjustment may be made in
(i) the aggregate number and/or kind of shares or other property reserved
for issuance under the Plan and (ii) the number, kind and/or exercise price
of shares or other property to be delivered under the Plan, in each case as
may be determined by the Committee in its sole discretion. Such other
proportionate substitutions or adjustments may be made as shall be
determined by the Committee in its sole discretion. "Change in
Capitalization" means any increase, reduction, change or exchange of shares
of Common Stock for a different number or kind of shares or other
securities or property by reason of a reclassification, recapitalization,
merger, consolidation, reorganization, issuance of warrants or rights,
stock dividend, stock split or reverse stock split, combination or exchange
of shares, repurchase of shares, change in corporate structure or
otherwise; or any other
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corporate action, such as declaration of a special dividend, that affects
the capitalization of the Company.
(b) Issuance or Assumption. Notwithstanding any other provision of
this Plan, and without affecting the number of Shares otherwise reserved or
available under this Plan, in connection with any merger, consolidation,
acquisition of property or stock, or reorganization, the Committee may
authorize the issuance or assumption of awards upon such terms and
conditions as it may deem appropriate.
(c) Change of Control. Except to the extent the Committee provides a
result more favorable to holders of Awards, upon the occurrence of a Change
of Control,
(i) all outstanding Options shall vest automatically and within
ten days following the Change of Control, the Company shall pay each
holder of an Option, in exchange for the surrender of such Option, an
amount equal to the excess, if any, of the per-Share Change of Control
Price over the per-Share exercise price of such Option, multiplied by
the number of Shares covered by such Option, which amount shall be
denominated in (A) such form of consideration as the Participant would
have received had the Participant been the owner of record of such
Shares at the time of such Change of Control, in the case of a "Change
of Control With Consideration" or (B) cash, in the case of a "Change
of Control Without Consideration" (such relevant form, the
"Denominated Form");
(ii) the restrictions on Restricted Stock shall lapse and within
ten days following the Change of Control, the Company shall pay each
holder of a share of Restricted Stock, in exchange for the surrender
of such share of Restricted Stock, an amount equal to the Change of
Control Price of such share of Restricted Stock, which amount shall be
denominated in the Denominated Form;
(iii) within ten days following the Change of Control, the
Company shall pay each holder of a Performance Share and/or
Performance Unit for which the performance period has not expired, in
exchange for the surrender of such Performance Share and/or
Performance Unit, an amount equal to the product of the value of the
Performance Share and/or Performance Unit and a fraction, the
numerator of which is the number of whole months which have elapsed
from the beginning of the performance period to the date of the Change
of Control and the denominator of which is the number of whole months
in the performance period, which amount shall be paid in the
Denominated Form;
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(iv) within ten days following the Change of Control, the Company
shall pay each holder of a Performance Share and/or Performance Unit
that has been earned but not yet paid, in exchange for the surrender
of such Performance Share and/or Performance Unit, an amount equal to
the value of such Performance Share and/or Performance Unit, which
amount shall be paid in the Denominated Form;
(v) each annual incentive award which has not yet been earned as
of the Change of Control shall be deemed to have been earned pro rata
as if the Performance Goals were attained as of the Change of Control,
by taking the product of (A) the Participant's maximum award
opportunity for the fiscal year and (B) a fraction, the numerator of
which is the number of full or partial months that have elapsed from
the beginning of the fiscal year to the date of the Change of Control
and the denominator of which is 12, and within ten days following the
Change of Control, the Company shall pay each holder of such an annual
incentive award, in full settlement thereof, an amount in cash equal
to the value of such pro rata award;
(vi) within ten days following the Change of Control, the Company
shall pay to each holder of an annual incentive award that has been
earned but not yet paid, in full settlement thereof, an amount in cash
equal to the value of such award; and
(vii) within ten days following the Change in Control, the
Company shall pay to each holder of an Award with respect to which
dividend equivalents or similar amounts have been credited and not yet
paid pursuant to any other provision of this Section 12(c), a cash
payment equal to the value of such dividend equivalents or similar
amounts.
For purposes of this Section 12(c), the "value" of a Performance Share shall be
equal to, and the "value" of a Performance Unit, the value of which is equal to
the Fair Market Value of one or more Shares, shall be based on, the Change of
Control Price.
For purposes of this Section 12(c), "Change of Control With Consideration" shall
mean a Change of Control in which Shares are exchanged or surrendered for
shares, cash or other property. "Change of Control Without Consideration" shall
mean a Change of Control pursuant to which Shares are not exchanged or
surrendered for shares, cash or other property.
13. Miscellaneous.
(a) Other Terms and Conditions. The grant of any Award under this Plan
may also be subject to other provisions (whether or not applicable to
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the Award awarded to any other Participant) as the Committee determines
appropriate, including, without limitation, provisions for:
(i) one or more means to enable Participants or Non-Employee
Directors to defer the delivery of Shares or recognition of taxable
income relating to Awards or cash payments derived from the Awards on
such terms and conditions as the Committee determines, including, by
way of example, the form and manner of the deferral election, the
treatment of dividends paid on the Shares during the deferral period
or a means for providing a return to a Participant or Non-Employee
Director on amounts deferred, and the permitted distribution dates or
events (provided that no such deferral means may result in an increase
in the number of Shares issuable under this Plan);
(ii) the purchase of Shares under Options in installments;
(iii) the payment of the purchase price of Options by delivery of
cash or other Shares or other securities of the Company (including by
attestation) having a then Fair Market Value equal to the purchase
price of such Shares, or by delivery (including by fax) to the Company
or its designated agent of an executed irrevocable option exercise
form together with irrevocable instructions to a broker-dealer to sell
or margin a sufficient portion of the Shares and deliver the sale or
margin loan proceeds directly to the Company to pay for the exercise
price;
(iv) provisions giving the Participant the right to receive
dividend payments or dividend equivalent payments with respect to the
Shares subject to the Award (both before and after the Shares subject
to the Award are earned, vested or acquired), which payments may be
either made currently or credited to an account for the Participant,
and may be settled in cash or Shares, as the Committee determines;
(v) restrictions on resale or other disposition; and
(vi) compliance with federal or state securities laws and stock
exchange requirements.
In any event, to the extent Rule 16b-3 so requires, Director Options are
automatic, and the amount and terms of such Director Options will be determined
as provided in Section 6(d).
(b) No Fractional Shares. No fractional Shares or other securities may
be issued or delivered pursuant to this Plan, and the Committee may
determine whether cash, other securities or other property will be paid or
transferred in lieu of any fractional Shares or other securities, or
whether such
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fractional Shares or other securities or any rights to fractional Shares or
other securities will be canceled, terminated or otherwise eliminated.
(c) Unfunded Plan. This Plan is unfunded and does not create, and
should not be construed to create, a trust or separate fund with respect to
this Plan's benefits. This Plan does not establish any fiduciary
relationship between the Company and any Participant, Non-Employee Director
or other person. To the extent any person holds any rights by virtue of an
Award granted under this Plan, such rights are no greater than the rights
of the Company's general unsecured creditors.
(d) Requirements of Law. The granting of Awards under this Plan and
the issuance of Shares in connection with an Award are subject to all
applicable laws, rules and regulations and to such approvals by any
governmental agencies or national securities exchanges as may be required.
Notwithstanding any other provision of this Plan or any award agreement,
the Company has no liability to deliver any Shares under this Plan or make
any payment unless such delivery or payment would comply with all
applicable laws and the applicable requirements of any securities exchange
or similar entity.
(e) Governing Law. This Plan, and all agreements under this Plan,
should be construed in accordance with and governed by the laws of the
State of Wisconsin, without reference to any conflict of law principles,
except for corporate law matters which are governed by the laws of the
State of Delaware. Any legal action or proceeding with respect to this
Plan, any Award or any award agreement, or for recognition and enforcement
of any judgment in respect of this Plan, any Award or any award agreement,
may only be brought and determined in a court sitting in the County of
Kenosha, or the Federal District Court for the Eastern District of
Wisconsin sitting in the County of Milwaukee, in the State of Wisconsin.
(f) Severability. If any provision of this Plan or any award agreement
or any Award (i) is or becomes or is deemed to be invalid, illegal or
unenforceable in any jurisdiction, or as to any person or Award, or (ii)
would disqualify this Plan, any award agreement or any Award under any law
the Committee deems applicable, then such provision should be construed or
deemed amended to conform to applicable laws, or if it cannot be so
construed or deemed amended without, in the determination of the Committee,
materially altering the intent of this Plan, award agreement or Award, then
such provision should be stricken as to such jurisdiction, person or Award,
and the remainder of this Plan, such award agreement and such Award will
remain in full force and effect.
14. Definitions. Capitalized terms used in this Plan have the following
meanings:
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(a) "Affiliates" means any corporation, partnership, joint venture, or
other entity during any period in which the Company owns, directly or
indirectly, at least twenty percent (20%) of the equity, voting or profits
interest, and any other business venture that the Committee designates in
which the Company has a significant interest, as the Committee determines
in its discretion.
(b) "Award" means grants of Options, Performance Shares, Performance
Units, Restricted Stock or an annual incentive award under this Plan.
(c) "Board" means the Board of Directors of the Company.
(d) For purposes of this Plan, a "Change of Control" shall be deemed
to have occurred on the first to occur of any one of the events set forth
in the following paragraphs:
(i) any 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 COC 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, excluding any Person who becomes such a Beneficial
Owner in connection with a transaction described in clause (A) of
paragraph (iii) below; or
(ii) the following individuals cease for any reason to constitute
a majority of the number of directors then serving: individuals who,
on January 25, 2002, 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 shareholders
was approved or recommended by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors on
January 25, 2002 or whose appointment, election or nomination for
election was previously so approved or recommended; or
(iii) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any
other corporation, other than (A) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
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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 (B) 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 COC 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 shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated 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 shareholders of the Company 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.
For purposes of this definition of Change of Control, "COC Affiliate" shall have
the meaning of "affiliate," as set forth in Rule 12b-2 promulgated under Section
12 of the Exchange Act; "Beneficial Owner" shall have the meaning set forth in
Rule 13d-3 under the Exchange Act; and "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 COC Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, (iv) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as their
ownership of stock of the Company or (v) any individual, entity or group which
is permitted to, and actually does, report its Beneficial Ownership on Schedule
13G (or any successor schedule); provided that if
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any such individual, entity or group subsequently becomes required to or does
report its Beneficial Ownership on Schedule 13D (or any successor schedule),
such individual, entity or group shall be deemed to be a Person for purposes
hereof on the first date on which such individual, entity or group becomes
required to or does so report Beneficial Ownership of all of the voting
securities of the Company Beneficially Owned by it on such date.
(e) "Change of Control Price" means the higher of (i) the Fair Market Value
of the Shares, as determined on the date of the Change of Control; or (ii) the
highest price per Share paid in the Change of Control transaction.
(f) "Code" means the Internal Revenue Code of 1986, as amended. Any
reference to a specific provision of the Code includes any successor provision
and the regulations promulgated under such provision.
(g) "Committee" means the Organization and Executive Compensation Committee
of the Board (or such successor committee with the same or similar authority),
which must be composed of not less than two Directors, each of whom must qualify
as an "outside director" within the meaning of Code Section 162(m) and as a
"non-employee director" within the meaning of Rule 16b-3.
(h) "Common Stock" means the common stock of the Company.
(i) "Company" means Snap-on Incorporated, a Delaware corporation, or any
successor to Snap-on Incorporated, a Delaware corporation.
(j) "Director" means a member of the Board, and "Non-Employee Director"
means a member of the Board who is not also an employee of the Company or its
Affiliates.
(k) "Effective Date" means the date the Company's shareholders approve this
Plan.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
Any reference to a specific provision of the Exchange Act includes any successor
provision and the regulations and rules promulgated under such provision.
(m) "Fair Market Value" means, per Share on a particular date, the last
sales price on such date on the national securities exchange on which the Common
Stock is then traded, as reported in The Wall Street Journal, or if no sales of
Common Stock occur on the date in question, on the last preceding date on which
there was a sale on such exchange. If the Shares are not listed on a national
securities exchange, but are traded in an over-the-counter market, the last
sales price (or, if there is no last sales price reported, the average of the
closing bid and asked prices) for the Shares on the particular
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date, or on the last preceding date on which there was a sale of Shares on that
market, will be used. If the Shares are neither listed on a national securities
exchange nor traded in an over-the-counter market, the price determined by the
Committee, in its discretion, will be used.
(n) "Option" means the right to purchase Shares at a stated price.
"Options" may either be "incentive stock options" which meet the requirements of
Code section 422, or "nonqualified stock options" which do not meet the
requirements of Code section 422.
(o) "Participant" means an officer or other employee of the Company or its
Affiliates, or an individual that the Company or an Affiliate has engaged to
become an officer or employee, or a consultant or advisor who provides services
to the Company or its Affiliates, who the Committee designates to receive an
Award under this Plan.
(p) "Performance Goals" means any goals the Committee establishes that
relate to one or more of the following with respect to the Company or any one or
more Subsidiaries or other business units: revenue; cash flow; net cash provided
by operating activities; net cash provided by operating activities less net cash
used in investing activities; cost of goods sold; ratio of debt to debt plus
equity; profit before tax; gross profit; net profit; net sales; earnings before
interest and taxes; earnings before interest, taxes, depreciation and
amortization; Fair Market Value of Shares; basic earnings per share; diluted
earnings per share; return on shareholder equity; average accounts receivable
(calculated by taking the average of accounts receivable at the end of each
month); average inventories (calculated by taking the average of inventories at
the end of each month); return on average total capital employed; return on net
assets employed before interest and taxes; economic value added; return on
year-end equity; and/or in the case of Awards that the Committee determines will
not be considered "performance-based compensation" under Code section 162(m),
such other goals as the Committee may establish in its discretion.
(q) "Performance Shares" means the right to receive Shares to the extent
the Company or Participant achieves certain goals that the Committee establishes
over a period of time the Committee designates consisting of one or more full
fiscal years of the Company, but not in any event more than five years.
(r) "Performance Units" means the right to receive monetary units with a
designated dollar value or monetary units the value of which is equal to the
Fair Market Value of one or more Shares, to the extent the Company or
Participant achieves certain goals that the Committee establishes over a period
of time the Committee designates consisting of one or more full fiscal years of
the Company, but in any event not more than five years.
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(s) "Plan" means this Snap-on Incorporated 2001 Incentive Stock and Awards
Plan, as amended from time to time.
(t) "Restricted Stock" means Shares that are subject to a risk of
forfeiture and/or restrictions on transfer, which may lapse upon the achievement
or partial achievement of Performance Goals during the period specified by the
Committee and/or upon the completion of a period of service, as determined by
the Committee.
(u) "Section 16 Participants" means Participants who are subject to the
provisions of Section 16 of the Exchange Act.
(v) "Share" means a share of Common Stock.
(w) "Subsidiary" means any corporation in an unbroken chain of corporations
beginning with the Company if each of the corporations (other than the last
corporation in the chain) owns stock possessing more than fifty percent (50%) of
the total combined voting power of all classes of stock in one of the other
corporations in the chain.
*****
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