EXHIBIT 10.1
SNAP-ON INCORPORATED
DEFERRED COMPENSATION PLAN
(as amended through August 21, 2003)
Section 1. Establishment and Purposes
1.1 Establishment. Snap-on Incorporated established effective as of April
1, 1986, a deferred compensation plan for executives as described herein, known
as the "SNAP-ON INCORPORATED DEFERRED COMPENSATION PLAN" (hereinafter called the
"Plan"). Snap-on Incorporated hereby amends the Plan effective August 21, 2003.
1.2 Purposes. The purposes of this Plan are to (i) enable the Corporation
to attract and retain persons of outstanding competence, (ii) provide a means
whereby certain amounts payable by the Corporation to selected executives may be
deferred to some future period and to provide such executives with a means to
have deferred amounts treated as if invested in the Corporation's stock, thereby
aligning their interests more closely with the interests of shareholders and
(iii) effective July 1, 2001, provide a matching credit by the Corporation to
certain elected officers of the Corporation and to provide such elected officers
with alternatives as to the manner in which annual adjustments are made to their
credited matching accounts. The Plan is intended to constitute an unfunded plan
primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees.
Section 2. Definitions
2.1 Definitions. Whenever used herein, the following terms shall have the
meanings set forth below:
(a) "Board" means the Board of Directors of the Corporation.
(b) "Cause" means that prior to a Participant's Termination of Employment,
he shall have (i) engaged in any act of fraud, embezzlement or theft in
connection with his duties as an executive or in the course of employment with
the Corporation or its subsidiaries; (ii) wrongfully disclosed any secret
process or confidential information of the Corporation or its subsidiaries; or
(iii) engaged in any Competitive Activity; and in any such case the act shall
have been determined to have been materially harmful to the Corporation. A
Participant's employment may not be terminated for Cause prior to the receipt by
the Participant of a copy of a resolution duly adopted by the affirmative vote
of not less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board called and held for the purpose of considering such
termination (after reasonable notice to the Participant and an opportunity for
the Participant, together with the Participant's counsel, to be heard before the
Board) finding that the Participant was guilty of conduct set forth in the
definition of Cause, and specifying the particulars thereof in detail. In the
event of a dispute regarding whether the Participant's employment has been
terminated for Cause, no claim by the Corporation that Cause exists shall be
given effect unless the Corporation establishes by clear and convincing evidence
that Cause exists.
(c) "Committee" means the Organization and Executive Compensation Committee
of the Board or, as to compensation matters in respect of which it has
authority, any other committee of the Board or director or officer of the
Corporation that has authority of the Organization and Executive Compensation
Committee of the Board relating to compensation matters.
(d) "Common Stock" means the common stock, par value $1.00 per share, of
the Corporation.
(e) "Compensation" means the gross Salary and Incentive Compensation
payable to a Participant during a given Year and Other Compensation payable to a
Participant during a given Year.
(i) Salary. "Salary" means all regular, basic compensation, before
reduction for amounts deferred pursuant to this Plan or any other plan of
the Corporation, payable in cash to a Participant for services during the
Year in question, exclusive of any bonuses or incentive compensation,
special fees or awards, allowances, or amounts designated by the
Corporation as payments toward or reimbursement of expenses.
(ii) Incentive Compensation. "Incentive Compensation" means the annual
Incentive Compensation Plan payable in cash by the Corporation to a
Participant in the Year in question.
(iii) Other Compensation. "Other Compensation" means other
compensation payable in cash and/or Common Stock or other property by the
Corporation to a Participant in the Year in question, including without
limitation compensation payable under the Amended and Restated Snap-on
Incorporated 2001 Incentive Stock and Awards Plan, as amended, if the award
of such compensation provides that the Participant may defer the
compensation.
(iv) Match Compensation. "Match Compensation" means Salary and
Incentive Compensation that a Participant eligible to receive matching
credits under Section 5 would have otherwise received in the Year in
question, but for such amounts being deferred pursuant to this Plan.
(f) "Competitive Activity" shall mean the Participant's participation
without the written consent of the Board in the management of any business
enterprise which manufactures or sells any product or service competitive with
any product or service of the Corporation or its subsidiaries. Competitive
Activity shall not include the ownership of less than five (5) percent of the
securities in any enterprise and exercise of any ownership rights related
thereto.
(g) "Corporation" means Snap-on Incorporated, a Delaware corporation.
(h) "Fair Market Value" means the closing price of Common Stock on the New
York Stock Exchange on any particular date or, if no closing price is available
on that date, then the closing price on the immediately succeeding business day
on which there is a closing price; provided, however, that for purposes of
Section 17, Fair Market Value shall mean the closing price of the Common Stock
on the New York Stock Exchange on the date of the Change of
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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.
(i) "Growth Increment" means the amount of interest earned on a
Participant's deferred amounts in the Participant's Cash Account (as defined in
Section 6.1(a)).
(j) "Participant" means an individual eligible to participate in the Plan
pursuant to Section 3.1.
(k) "Retirement" means that (1) a Participant retires or is retired from
the employ of the Corporation and its subsidiaries (i) on or after attaining age
sixty-five (65) years or (ii) on or after attaining age fifty (50) years if the
Participant has completed ten or more years of continuous employment, as defined
in the Snap-on Incorporated Retirement Plan; (2) a Participant retires or is
retired from the employ of the Corporation and its subsidiaries because of total
and permanent disability; or (3) the Committee determines by resolution that a
Participant shall be deemed to have retired from the employ of the Corporation
and its subsidiaries for purposes of the Plan
(l) "Termination of Employment" means (i) that a Participant has terminated
the Participant's employment with the Corporation and its subsidiaries for any
reason other than Retirement or Death; or (2) that the Corporation and its
subsidiaries have terminated the Participant's employment with the Corporation
and its subsidiaries for any reason other than Retirement or Death. Termination
of Employment does not include a Participant's change in status from full-time
employment to part-time employment.
(m) "Year" means a calendar year.
2.2 Gender and Number. Except when otherwise indicated by the context, any
masculine terminology used herein also shall include the feminine gender, and
the definition of any term herein in the singular also shall include the plural.
Section 3. Eligibility and Participation
3.1 Eligibility. The Plan is primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees. Subject to the preceding sentence, the following persons shall be
eligible to participate in the Plan:
(a) the elected officers and appointed officers of the Corporation;
(b) the elected officers and appointed officers of Snap-on Tools Company
LLC;
(c) any other U.S. employee of the Corporation or any direct or indirect
subsidiary of the Corporation whose employment grade is Grade 37 or higher (or
the equivalent of Grade 37 or higher, as determined by the Chief Executive
Officer); and
(d) any other employee of the Corporation or any direct or indirect
subsidiary of the Corporation designated by the Chair of the Committee or by the
Chief Executive Officer of the Corporation from time to time.
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3.2 Ceasing Eligibility. In the event a Participant no longer meets the
requirements for participation in this Plan, he shall become an inactive
Participant. An inactive Participant shall retain all rights described under
this Plan, except the right to make any further deferrals and the right to
receive any further matching credits, until the time that he again meets the
eligibility requirements of Section 3.1 (and, if applicable, Section 5.1).
Section 4. Election to Defer
4.1 Deferral Election. (a) Subject to the following provisions, a
Participant irrevocably may elect, by written notice to the Corporation, to
defer all or a percentage of annual Salary, Incentive Compensation, or both
Salary and Incentive Compensation.
(i) With respect to Salary deferrals, the deferral percentage elected
shall be applied to the Participant's Salary for each pay period of the
Year to which the deferral election applies, and the deferral election must
be made before the last business day of the Year immediately preceding the
Year for which such deferral election applies.
(ii) With respect to Incentive Compensation deferrals, the deferral
percentage elected shall apply only to the Participant's Incentive
Compensation payable with respect to service performed in the Year in which
the deferral election is made, and the deferral election must be made
before the last business day of such Year.
(b) An individual who becomes a Participant at or after the beginning of
the Year may irrevocably elect, by written notice to the Corporation, to defer
all or a percentage of (i) the annual Salary earned by such Participant for such
Year after such election, if such election is made within thirty (30) days after
becoming a Participant, and (ii) the pro rata share of the Participant's
Incentive Compensation, if any, payable with respect to service performed during
such Year, if such election is made before the last business day of such Year.
(c) If so provided in an award of Other Compensation, and subject to such
restrictions and conditions as may be set forth in the award or imposed by the
Corporation, a Participant irrevocably may elect, by written notice to the
Corporation, to defer all or a percentage of such Other Compensation.
(d) In connection with a Participant's deferral election pursuant to this
Section 4.1 relating to Compensation that the Participant would have otherwise
received in a given Year, and thereafter from time to time during that Year as
determined by the Participant subject to any rules established by the Committee
pursuant to Section 11.1, the Participant shall provide written direction to the
Corporation indicating the portion of the Participant's Compensation that the
Participant would have otherwise received in that Year that should be (1)
credited to the Participant's Cash Account, except to the extent Section 6.5
would require a credit of some or all of the Compensation to the Participant's
Share Account (as defined in Section 6.1(a)); (2) credited to the Participant's
Share Account; or (3) for deferral elections made on or after September 1, 2003,
credited to the Participant's Mutual Fund Account (as defined in Section
6.1(a)), except to the extent Section 6.5 would require a credit of some or all
of the Compensation to the Participant's Share Account. Each written direction
shall become effective immediately upon receipt by the Corporation for
Compensation otherwise payable after such
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date subject to rules that the Committee establishes pursuant to Section 11.1. A
Participant who has elected to defer any of the Participant's Compensation to
the Mutual Fund Account shall further elect which one or more of the investment
funds, from those designated from time to time by the Committee as available to
Participants under the Plan (each a "Reference Fund" and, collectively, the
"Reference Funds"), shall be used for purposes of crediting hypothetical
investment gains or losses to the Participant's Mutual Fund Account, and the
Participant shall elect the percentage of the Participant's Compensation that is
to be deemed invested in each elected Reference Fund. To the extent a
Participant fails to elect an account to which to credit Compensation for a Year
pursuant to this Section 4.1(d), the Participant's Compensation for such Year
shall be credited to the Participant's Cash Account, except to the extent
Section 6.5 would require a credit of some or all of the Compensation to the
Participant's Share Account.
4.2 Deferral Period (a) The first time a Participant makes an election
pursuant to this Section 4.1 relating to Compensation that the Participant would
have otherwise received in a given Year, the Participant irrevocably shall
select a single deferral period for all Compensation that the Participant would
have otherwise received in that Year ("Year Deferred Amounts"). The deferral
period shall be for a specified number of Years or until a specified date. The
earliest a deferral period may end is the first January 1 following the Year in
which the Participant would have otherwise received the Compensation.
Respecting deferral elections made prior to September 1, 2003, a
Participant shall modify any such prior elections to ensure that going forward
all Year Deferred Amounts subject to such prior elections have a single deferral
period for Year Deferred Amounts for each Year in question. The Committee shall
establish the appropriate procedures and time frame to effect the required
modifications.
(b) However, notwithstanding the deferral period specified, payments of
Year Deferred Amounts shall begin following the earliest to occur of:
(i) Death,
(ii) Subject to subsection (c), Retirement, or
(iii) Subject to subsection (d), Termination of Employment.
(c) A Participant may elect to have the deferral period for Year Deferred
Amounts continue beyond termination of employment due to Retirement by so
indicating when the Participant selects, or modifies pursuant to Section 4.4,
the Participant's deferral period for a the Year Deferred Amounts. At such time,
the Participant may elect one or more successive post -retirement deferral
periods of up to one (1) Year each, but in no event may the aggregate of these
successive post-retirement deferral periods and any annual installments elected
pursuant to Section 4.3 exceed twenty-five (25) years beyond termination of
employment due to Retirement.
(d) Effective January 1, 2001, a Participant may elect to have the deferral
period for Year Deferred Amounts continue beyond Termination of Employment with
the Corporation, but only if such employment was terminated at the initiative of
the Corporation for reasons other than for Cause. A Participant may exercise
this one-time election by so indicating when the Participant selects, or
modifies pursuant to Section 4.4, the Participant's deferral period for the
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Year Deferred Amounts. At such time, the Participant may elect one or more
post-termination deferral periods of up to one (1) Year each, but in no event
may the aggregate of these successive post-retirement deferral periods and any
annual installments elected pursuant to Section 4.3 exceed twenty-five (25)
years beyond Termination of Employment initiated by the Corporation for reasons
other than Cause.
4.3 Manner of Payment Election. At the same time as an election is made
pursuant to Section 4.1, or is modified pursuant to Section 4.4, the Participant
also may elect to have Year Deferred Amounts paid either in a lump sum or in up
to twenty-five (25) substantially equal annual installments; provided, however,
at such time a Participant that elects to receive payments in substantially
equal annual installments may also specify a date within the installment period
to receive all then remaining Year Deferred Amounts in a lump sum.
4.4 Modification. A Participant may change the manner in which Year
Deferred Amounts will be paid and/or the date such payments are to commence by
written election made prior to the Year in which such payments are to commence.
A Participant may not make any modification pursuant to this Section 4.4 in or
after the Year payments commence respecting the deferral election in question.
Section 5. Matching Credits
5.1 Effective Date and Eligibility. Effective July 1, 2001, the Corporation
shall credit matching credits under this Plan only to Participants described in
this Section at such time and in such amounts as provided in Section 5.2.
Notwithstanding anything to the contrary in the Plan, only those Participants
who are also actively participating in the cash balance formula in the Snap-on
Incorporated Supplemental Retirement Plan for Officers, as amended from time to
time, and are making deferrals under this Plan, or into the Snap-on Incorporated
Savings Plan, for the Year shall be eligible for a matching credit by the
Corporation for a Year for their benefit under this Plan.
5.2 Time and Amount of Matching Contributions. The Corporation shall credit
matching credits under this Plan during each calendar quarter for the benefit of
each eligible Participant. The amount of the matching credit for each calendar
quarter for the benefit of an eligible Participant will be an amount equal to
the excess of:
(a) the lesser of (i) the product of the Participant's Match Compensation
for the calendar quarter multiplied by fifty percent (50%), or (ii) three
percent (3%) of the Participant's Compensation (other than Other Compensation)
for such calendar quarter, over
(b) the actual matching contribution made by the Corporation for the
benefit of such Participant for such calendar quarter under the Snap-on 401(k)
Plan.
5.3 Deferral Period.
(a) The deferral period selected for Year Deferred Amounts by a Participant
under Section 4.2 shall also apply to the matching credits credited under
Section 5 with respect to those Year Deferred Amounts.
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(b) However, notwithstanding the deferral period specified, payments of
matching credits shall begin following the earliest to occur of:
(i) Death,
(ii) Subject to Section 4.2(c), Retirement, or
(iii) Subject to section 4.2(d), Termination of Employment.
5.4 Manner of Payment Election. A Participant's elected manner of payment
for Year Deferred Amounts under Section 4.3 shall also apply to the matching
credits credited under Section 5 with respect to those Year Deferred Amounts.
5.5 Modification. A Participant's change in the manner in which Year
Deferred Amounts will be paid and/or the date such payments are to commence
under Section 4.4 will apply to the associated matching credits.
Section 6. Accounts
6.1 Participant Accounts.
(a) Deferred Compensation Accounts. The Corporation shall establish and
maintain individual bookkeeping accounts in respect of deferrals made by a
Participant consisting of a "Cash Account", a "Share Account" and a "Mutual Fund
Account". A Participant shall have separate accounts for Year Deferred Amounts
with different deferral periods under Section 4.2 and/or manners of payment
under Section 4.3.
(i) If a Participant has elected pursuant to Section 4.1(d) to have
any portion of the Participant's Year Deferred Amounts credited to the
Participant's Cash Account, then the Participant's Cash Account shall be
credited with the dollar amount of any amount deferred and to be credited
to the Participant's Cash Account as of the date the amount deferred
otherwise would have become due and payable.
(ii) If a Participant has elected pursuant to Section 4.1(d) to have
any portion of the Participant's Year Deferred Amounts credited to the
Participant's Share Account, then the dollar amount deferred and to be
credited to the Participant's Share Account shall be converted into
deferred shares of Common Stock to be credited to the Participant's Share
Account as of the date the amount deferred otherwise would have become due
and payable. In such event, there shall be credited to the Participant's
Share Account as of such date a number of units ("Share Units") equal to
the dollar amount of any amount deferred divided by the Fair Market Value
as of the payroll date.
(iii) If a Participant has elected pursuant to Section 4.1(d) to have
any portion of the Participant's Year Deferred Amounts credited to the
Participant's Mutual Fund Account, then based on the dollar amount deferred
shares (including fractional shares) of the appropriate Reference Fund(s)
shall be credited to the Participant's Mutual Fund Account ("Mutual Fund
Shares"), with the number of Mutual Fund Shares to be credited determined
in accordance with administrative procedures and regulations that the
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Committee establishes from time to time. A Participant's Mutual Fund
Account may consist of any one or more of the Reference Funds, in such
proportion as the Participant has elected pursuant to 4.1(d) in connection
with the first deferral election made respecting a given Year, and this
proportion may not be modified, except as permitted by the Committee.
(b) Matching Credits Accounts. The Corporation shall establish and maintain
an individual bookkeeping account in respect of matching credits by the
Corporation for the benefit of an eligible Participant to be known as a
"Matching Account". A Participant's Matching Account shall be credited with a
number of Share Units equal to the dollar amount of matching credits under
Section 5 for the Participant's benefit divided by the Fair Market Value on the
date the Corporation credits the matching credits.
6.2 Growth Increments on Cash Accounts. The Corporation will provide the
opportunity for Growth Increments to be earned on the balance of a Participant's
Cash Accounts. The Committee will have the authority to select, from time to
time, the appropriate interest rate to apply to such amounts. Each Cash Account
shall be credited on the first day of each month with a Growth Increment
computed on the daily balance in the Cash Account during the immediately
preceding month. The Growth Increment shall be the sum of the daily interest
earned, compounded monthly by the interest rate selected by the Committee.
6.3 Changing Accounts.
(a) Subject to applicable corporate policies and Section 6.3(g), from time
to time a Participant may convert all or a portion of any Cash Account balance
of the Participant into deferred shares of Common Stock credited to the
Participant's corresponding Share Account by written notice to the Corporation.
In such event, and effective as of the close of business on the trading day on
the date that the Corporation receives such notice, if the notice is received
before the close of trading on that day, otherwise as of the close of business
on the immediately succeeding trading day (the "Effective Date"), (i) there
shall be credited to the Participant'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 as of the Effective Date; and (ii) the
Participant'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 as
of the Effective Date.
(b) Subject to applicable corporate policies, from time to time a
Participant may convert all or a portion of any Cash Account balance of the
Participant into an amount to be credited to the Participant's corresponding
Mutual Fund Account by giving written notice to the Corporation, which notice
shall specify the dollar amount to be credited to each of the Reference Funds.
In such event, and effective as of the Effective Date, (i) there shall be
credited to the Participant's Mutual Fund Account Mutual Fund Shares for the
applicable Reference Funds equal to the dollar amount being converted divided by
the net asset value of the applicable Mutual Fund Shares as of the close of
trading on the Effective Date ("Effective Date Fund Shares Value"); and (ii) the
Participant's Cash Account shall be debited in an amount equal to the dollar
amount being converted.
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(c) Subject to applicable corporate policies and Section 6.3(g), from time
to time a Participant with a credit balance in a Mutual Fund Account may convert
all or a portion of any Mutual Fund Shares credited to the Participant's
corresponding Mutual Fund Account into deferred shares of Common Stock credited
to the Participant's corresponding Share Account by written notice to the
Corporation, which notice shall specify the number of Mutual Fund Shares to be
converted and the Reference Fund(s) to which such Mutual Fund Shares correspond
or a dollar amount and the Reference Fund(s) to which such dollar amount
corresponds. In such event, and effective as of the Effective Date, (i) there
shall be credited to the Participant's Share Account a number of Share Units
equal to (A) the Effective Date Fund Shares Value of the Mutual Fund Shares
specified in the notice divided by the Fair Market Value as of the Effective
Date or (B) the dollar amount specified in the notice divided by the Fair Market
Value as of the Effective Date; and (ii) the Participant's Mutual Fund Account
shall be debited by the number of Mutual Fund Shares specified in the notice or,
as the case may be, by the number of Mutual Fund Shares having an Effective Date
Fund Shares Value equal to the dollar amount specified in the notice.
(d) Subject to applicable corporate policies, from time to time a
Participant with a credit balance in a Mutual Fund Account may convert all or a
portion of any Mutual Fund Shares credited to the Participant's corresponding
Mutual Fund Account into an amount to be credited to the Participant's
corresponding Cash Account by giving written notice to the Corporation, which
notice shall specify the number of Mutual Fund Shares to be converted and the
Reference Fund(s) to which such Mutual Fund Shares correspond or a dollar amount
and the Reference Fund(s) to which such dollar amount corresponds. In such
event, and effective as of the Effective Date, (i) there shall be credited to
the Participant's Cash Account an amount equal to (A) the Effective Date Fund
Shares Value of the Mutual Fund Shares specified in the notice or (B) the dollar
amount specified in the notice; and (ii) the Participant's Mutual Fund Account
shall be debited by the number of Mutual Fund Shares specified in the notice or,
as the case may be, by the number of Mutual Fund Shares having a Effective Date
Fund Shares Value equal to the dollar amount specified in the notice.
(e) Subject to applicable corporate policies and Section 6.3(g), from time
to time a Participant 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 Participant's
corresponding Cash Account by giving written notice to the Corporation, which
notice shall specify the number of Share Units to be converted or a dollar
amount. In such event, and effective as of the Effective Date, (i) there shall
be credited to the Participant's Cash Account an amount equal to (A) the number
of Share Units specified in the notice multiplied by the Fair Market Value as of
the Effective Date or (B) the dollar amount specified in the notice; and (ii)
the Participant's Share Account shall be debited by the number of Share Units
specified in the notice, or, as the case may be, by the number of Share Units
having a Fair Market Value as of the Effective Date equal to the dollar amount
specified in the notice.
(f) Subject to applicable corporate policies and Section 6.3(g), from time
to time a Participant 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 Participant's
corresponding Mutual Fund Account by giving written notice to the Corporation,
which notice shall specify the number of Share Units to be converted or a dollar
amount and the Share Units or dollar amounts to be credited to each
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of the Reference Funds. In such event, and effective as of the Effective Date,
(i) there shall be credited to the Participant's Mutual Fund Account a number of
Mutual Fund Shares for the applicable Reference Funds equal to (A) the Fair
Market Value of the Share Units as of the Effective Date divided by the
Effective Date Fund Shares Value or (B) the dollar amount specified in the
notice divided by the Effective Date Fund Shares Value; and (ii) the
Participant's Share Account shall be debited by the number of Share Units
specified in the notice, or, as the case may be, by the number of Share Units
having a Fair Market Value as of the Effective Date equal to the dollar amount
specified in the notice.
(g) A Participant who is subject to Section 16 of the Securities Exchange
Act of 1934, as amended, may make transfers of existing balances pursuant to
Sections 6.3(a), (c), (e) or (f) if the transfer is effected pursuant to an
election made at least six (6) months after the date of the Participant's most
recent opposite-way election making a transfer of existing balances pursuant to
Sections 6.3(a), (c), (e) or (f) or existing account balances out of or into a
Common Stock fund under any other Corporation plan, or more frequently as
permitted by the Committee.
6.4 Cash Dividends. Whenever cash dividends are paid by the Corporation on
outstanding Common Stock, as of the payment date for the dividend, there shall
be credited between a Participant's Share Account and Matching Account (if any,
and then only to the extent then maintained in Share Units), as appropriate,
additional Share Units equal to the amount per share of the cash dividend on the
Common Stock multiplied by the number of Share Units credited to the
Participant's Share Account, if any, and Matching Account (if any, and then only
to the extent then maintained in Share Units) as of the close of business on the
record date for the dividend divided by the Fair Market Value of the Common
Stock on the date of payment of the dividend.
6.5 Deferral of Other Compensation. Subject to the authority of the
Committee, the Corporation's Chief Executive Officer may approve the terms of
any agreements between the Corporation and any Participant relating to the
deferral of Other Compensation where, but for the Participant's deferral, the
Participant would have received shares of Common Stock if such officer
determines that such terms are appropriate to carry out the purposes of this
Plan and the award of Other Compensation. Without limitation, the Corporation
may enter into an agreement with a Participant relating to such a deferral under
which (i)(A) there shall be credited to the Participant's Share Account a number
of Share Units equal to the number of shares of Common Stock the receipt of
which the Participant has deferred which credit shall be made as of the date the
Other Compensation deferred otherwise would have become due and payable or (B)
Share Units shall be credited to the Participant's Share Account only at a
future date, such as the date that one or more conditions to vesting have been
satisfied; (ii) a credit of Share Units may be made subject to such restrictions
as are imposed under the terms of the award of Other Compensation (or
restrictions substantially equivalent to those to which shares of Common Stock
would have been subject but for the deferral), including without limitation
forfeiture under certain circumstances and restrictions on the Participant's
rights to convert such Share Units pursuant to this Section 6.5; and (iii) if
the terms of the award of Other Compensation require a Participant to deliver
cash and/or shares of Common Stock to the Corporation to exercise or otherwise
receive the benefit of such Other Compensation, then in lieu of delivering such
cash and/or Common Stock, there may be a debit to the Participant's Cash Account
in an amount equal to the amount of cash that the Participant otherwise would
have delivered and/or a debit to
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the Participant's Share Account in an amount equal to the number of shares of
Common Stock that the Participant otherwise would have delivered, in each case
to the extent of any credit balance in such account.
6.6 Earnings Adjustments to Matching Accounts.
(a) Except as provided in Section 6.6(b), a Participant's Matching Account
will be adjusted (in the manner provided in Section 6.6(c)) at the end of each
Year in an amount which is equal to the net increase (or net decrease as
appropriate) in Fair Market Value for the same Year.
(b) Diversification Election. Unless elected by a Participant to the
contrary under and subject to this Section 6.6(b), annual earnings adjustments
to the Participant's Matching Account shall be determined with reference to Fair
Market Value pursuant to Section 6.6(a). A Participant may elect to have the
annual earnings adjustments to the Participant's Matching Account be determined
with reference to a measure other than Fair Market Value, including the Cash
Account, the Mutual Fund Account and any other alternative earnings measure that
the Committee approves. Once an election is made under this Section 6.6(b), the
Participant's Matching Account balance shall be converted out of Share Units
(using Fair Market Value on the date the election is effective) and shall not be
maintained in Share Units again.
For purposes of this Section 6.6(b), a change to the measure used to
determine adjustments to a Matching Account of a Participant shall be made at
the election of the Participant, but only at the same times, under the same
conditions and subject to the same limitations as are allowed or imposed under
the Snap-on 401(k) Plan for diversifying the Corporation's matching contribution
under such plan out of shares of Common Stock to other permissible investments
available under the Snap-on 401(k) Plan. The election provided in this Section
6.6(b) shall be made in writing as directed by the Committee. Earnings
adjustments to Matching Accounts after the effective date of an election under
this Section 6.6(b) shall be calculated for the Participant's Matching Account
with reference to the Participant's duly elected alternative earnings measure.
(c) An eligible Participant's Matching Account shall be credited, or
debited, as appropriate, at the end of each Year with (i) a number of Share
Units equal to the dollar amount of adjustments determined under Section 6.6(a)
divided by the Fair Market Value on the date the Corporation credits such
adjustments to the Participant's Matching Account, or (ii) an earnings
adjustment calculated as provided in Section 6.6(b) if a qualified election has
been made under Section 6.6(b).
6.7 Charges Against Accounts. There shall be charged against a
Participant's Cash Account any cash payments (excluding payments for fractional
shares) made to the Participant or to his beneficiary in accordance with Section
7. There shall be charged against a Participant's Share Account any
distributions made to the Participant or to his beneficiary in respect of the
Participant's Share Account in accordance with Section 7. There shall be charged
against a Participant's Mutual Fund Account any distributions made to the
Participant or to his beneficiary in respect of the Participant's Mutual Fund
Account in accordance with Section 7. There shall be charged against a
Participant's Matching Account any distributions made to the
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Participant or to his beneficiary in respect of the Participant's Matching
Account in accordance with Section 7.
6.8 Terminated Reference Fund. In the event a Reference Fund shall for any
reason no longer be available or otherwise appropriate for use under the Plan,
including but not limited to considerations of administrative feasibility, the
Committee shall determine the aggregate net asset value of the Mutual Fund
Shares of the affected Reference Fund in a Participant's Mutual Fund Account.
Based on the aggregate net asset value of the Mutual Fund Shares of the affected
Reference Fund in the Participant's Mutual Fund Account, the Participant shall
redesignate all such amounts to another Reference Fund(s), or to the
Participant's Cash Account, to be credited to the Participant's Cash Account in
accordance with Section 6.1(a).
Section 7. Payment of Deferred and Matching Amounts
7.1 Payment of Deferred and Matching Amounts.
(a) Payment of a Participant's Cash Account balance, including accumulated
Growth Increments attributable thereto and dividend credits under Section 6.4,
shall be paid in cash commencing within thirty (30) calendar days after the
commencement date referred to in Section 4.2 (as may be modified pursuant to
Section 4.4). The payments shall be made in the manner selected by the
Participant under Section 4.3 or, in the absence thereof, in a lump sum. The
amount of each payment shall be equal to a Participant's then distributable Cash
Account balance multiplied by a fraction, the numerator of which is one and the
denominator of which is the number of installment payments remaining.
(b) Payment of a Participant's Share Account balance shall be paid
commencing within thirty (30) calendar days after the commencement date referred
to in Section 4.2 (as may be modified pursuant to Section 4.4). Payments in
respect of a Share Account balance shall be made in cash in an amount equal to
the number of Share Units then payable multiplied by the Fair Market Value on
the date of payment; provided, however, that at the election of a Participant,
made by written notice to the Corporation delivered not less than five business
days before a payment due date, payments in respect of a Share Account may be
made solely in 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 based
upon the Fair Market Value on the date of payment. The payments shall be made in
the manner selected by the Participant under Section 4.3 or, in the absence
thereof, in a lump sum. The number of Share Units payable at the time of a
payment shall be equal to a Participant's then distributable Share Account
balance multiplied by a fraction, the numerator of which is one and the
denominator of which is the number of installment payments remaining.
(c) Payment of a Participant's Mutual Fund Account balance shall be paid
commencing within thirty (30) calendar days after the commencement date referred
to in Section 4.2 (as may be modified pursuant to Section 4.4). Payments in
respect of a Mutual Fund Account shall be made in cash as set forth below. The
payments shall be made in the manner selected by the Participant under Section
4.3 or, in the absence thereof, in a lump sum. The amount of cash payable shall
be equal to the aggregate net asset value of the Mutual Fund Shares credited to
the Participant's Mutual Fund Account as of the payment date multiplied by a
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fraction, the numerator of which is one and the denominator of which is the
number of installment payments remaining.
(d) Payment of a Participant's Matching Account balance shall be paid
commencing within thirty (30) calendar days after the commencement date referred
to in Section 5.3 (as may be modified pursuant to Section 5.5). Payments in
respect of a Matching Account balance maintained in Share Units at the time
shall be made in cash in an amount equal to the number of Share Units then
payable multiplied by the Fair Market Value on the date of payment; provided,
however, that at the election of a Participant, made by written notice to the
Corporation delivered not less than five (5) business days before a payment due
date, payments in respect of a Matching Account maintained in Share Units at the
time may be made solely in 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 based upon the Fair Market Value on the date of payment. Payments of a
Participant's Matching Account balance that is no longer maintained in Share
Units shall be in cash in an amount equal to the Matching Account balance plus
accumulated adjustments under Sections 6.6(b) and 6.6(c) and dividend credits
under Section 6.4. The payments shall be made in the manner selected by the
Participant under Section 5.4 or, in the absence thereof, in a lump sum. The
number of Share Units payable at the time of a payment shall be equal to a
Participant's then distributable Matching Account balance maintained in Share
Units multiplied by a fraction, the numerator of which is one and the
denominator of which is the number of installment payments remaining.
7.2 Acceleration of Payments. If a Participant dies prior to the payment of
all or a portion of his Cash Account, Share Account, Mutual Fund Account and/or
Matching Account balances, the balance of any amounts payable shall be paid in a
lump sum to the beneficiaries designated under Section 8.
7.3 Financial Emergency. The Committee, in its sole discretion, may alter
the timing or manner of payment of Year Deferred Amounts and/or matching amounts
in the event that the Participant establishes, to the satisfaction of the
Committee, severe financial hardship. In such event, the Committee may:
(a) provide that all, or a portion of, the amount previously deferred by
the Participant immediately shall be paid in a lump sum payment,
(b) provide that all, or a portion of, the installments payable over a
period of time immediately shall be paid in a lump sum, or
(c) provide for such other installment payment schedules as it deems
appropriate under the circumstances, as long as the amount distributed shall not
be in excess of that amount which is necessary for the Participant to meet the
financial hardship.
Severe financial hardship will be deemed to have occurred in the event of
the Participant's impending bankruptcy, a dependent's long and serious illness,
or other events of similar magnitude. The Committee's decision in passing on the
severe financial hardship of the Participant and the manner in which, if at all,
the payment of Year Deferred Amounts or matching credits shall be altered or
modified shall be final, conclusive, and not subject to appeal.
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Section 8. Beneficiary Designation
8.1 Designation of Beneficiary. A Participant shall designate a beneficiary
or beneficiaries who, upon the Participant's death, are to receive the amounts
that otherwise would have been paid to the Participant. All designations shall
be in writing to the Corporation in such form as it requires or accepts and
signed by the Participant. The designation shall be effective only if and when
delivered to the Corporation during the lifetime of the Participant. The
Participant also may change his beneficiary or beneficiaries by a signed,
written instrument delivered to the Corporation. If a Participant is married and
names someone other than (or in addition to) the Participant's spouse as a
beneficiary, then the Participant's spouse must provide a written consent to
this beneficiary designation that has been witnessed by a notary public. The
payment of amounts shall be in accordance with the last unrevoked written
designation of beneficiary that has been signed and delivered to the
Corporation.
8.2 Death of Beneficiary. In the event that all of the beneficiaries named
in Section 8.1 predecease the Participant, the amounts that otherwise would have
been paid to the Participant shall be paid to the Participant's estate, and in
such event, the term "beneficiary" shall include his estate.
8.3 Ineffective Designation. In the event the Participant does not
designate a beneficiary, or if for any reason such designation is ineffective,
in whole or in part, the amounts that otherwise would have been paid to the
Participant shall be paid to the Participant's estate, and in such event, the
term "beneficiary" shall include his estate.
Section 9. Rights of Participants
9.1 Contractual Obligation. It is intended that the Corporation is under a
contractual obligation to make payments from a Participant's account when due.
Payment of account balances payable in cash shall be made out of the general
funds of the Corporation as determined by the Board.
9.2 Unsecured Interest. No Participant or beneficiary shall have any
interest whatsoever in any specific asset of the Corporation. To the extent that
any person acquires a right to receive payments under this Plan, such receipt
shall be no greater than the right of any unsecured general creditor of the
Corporation.
9.3 Employment. Nothing in the Plan shall interfere with or limit in any
way the rights of the Corporation to terminate any Participant's employment at
any time, nor confer upon any Participant any right to continue in the employ of
the Corporation.
9.4 Participation. No employee shall have a right to be selected as a
Participant or, having been so selected, to be selected again as a Participant.
Section 10. Nontransferability
10.1 Nontransferability. In no event shall the Corporation make any payment
under this Plan to any assignee or creditor of a Participant or a beneficiary.
Prior to the time of a payment hereunder, a Participant or a beneficiary shall
have no rights by way of anticipation or
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otherwise to assign or otherwise dispose of any interest under this Plan nor
shall such rights be assigned or transferred by operation of law.
Section 11. Administration
11.1 Administration. This Plan shall be administered by the Committee. The
Committee may from time to time establish rules for the administration of this
Plan that are not inconsistent with the provisions of this Plan.
11.2 Finality of Determination. The Committee has sole discretion in
interpreting the provisions of the Plan. The determination of the Committee as
to any disputed questions arising under this Plan, including questions of
construction and interpretation, shall be final, binding, and conclusive upon
all persons.
11.3 Expenses. The cost of payments from this Plan and the expenses of
administering the Plan shall be borne by the Corporation.
11.4 Action by the Corporation. Any action required or permitted to be
taken under this Plan by the Corporation shall be by resolution of the Board, by
the duly authorized Committee of the Board, or by a person or persons authorized
by resolution of the Board or the Committee.
Section 12. Amendment and Termination
12.1 Amendment and Termination. The Corporation expects the Plan to be
permanent but, since future conditions affecting the Corporation cannot be
anticipated or foreseen, the Corporation necessarily must and does hereby
reserve the right to amend, modify, or terminate the Plan at any time by action
of the Board. Notwithstanding the foregoing, upon the occurrence of a Potential
Change of Control (as hereinafter defined) and for a period of six (6) months
thereafter, the Plan may not be terminated or amended in a manner adverse to
Participants. For purposes of this Section, a "Potential Change of Control"
shall be deemed to have occurred if an event set forth in any one of the
following shall have occurred:
(i) The Corporation enters into an agreement, the consummation of
which would result in the occurrence of a Change of Control;
(ii) The Corporation or any other Person publicly announces an
intention to take or consider taking actions that, if consummated, would
constitute a Change of Control;
(iii) Any Person becomes the Beneficial Owner, directly or indirectly,
of securities of the Corporation representing fifteen percent (15%) or more
of either the then outstanding shares of Common Stock or the combined
voting power of the Corporation's then outstanding voting securities; or
(iv) The Board adopts a resolution to the effect that, for purposes of
this Plan, a Potential Change of Control has occurred.
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Each of "Change of Control," "Person" and "Beneficial Owner" shall have the
meaning set forth in Section 17.1.
Section 13. Applicable Law
13.1 Applicable Law. This Plan shall be governed and construed in
accordance with the laws of the State of Wisconsin.
Section 14. Withholding of Taxes
14.1 Tax Withholding. The Corporation shall have the right to deduct from
all contributions made to, or payments made from, the Plan any federal, state,
or local taxes required by law to be withheld with respect to such contributions
or payments. The Corporation may defer making payments in the form of Common
Stock under the Plan until satisfactory arrangements have been made for the
payment of any federal, state or local taxes required to be withheld with
respect to such payment or delivery. Each Participant shall be entitled to
irrevocably elect, prior to the date shares of Common Stock would otherwise be
delivered hereunder, to have the Corporation 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 Participant in cash. Shares so withheld shall be valued at Fair
Market Value on the date such shares would have otherwise been transferred
hereunder.
Section 15. Notice
15.1 Notice. Any notice required or permitted to be given under the Plan
shall be sufficient if in writing and hand-delivered, or sent by a registered or
certified mail, and if given to the Corporation, delivered to the principal
office of the Corporation. Such notice shall be deemed given as of the date of
delivery or, if delivery is made by mail, as of the date shown on the postmark
or the receipt for registration or certification.
Section 16. Common Stock Matters
16.1 Stock Reserved for the Plan. The Corporation shall make available as
and when required a sufficient number of shares of Common Stock to meet the
needs of the Plan. Shares of Common Stock issued hereunder shall be previously
issued shares reacquired and held by the Corporation.
16.2 General Restrictions.
(a) Investment Representations. The Corporation may require any
Participant, as a condition of receiving Common Stock under this Plan, to give
written assurances in substance and form satisfactory to the Corporation 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 Corporation
deems necessary or appropriate in order to comply with federal and applicable
state securities laws.
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(b) Compliance with Securities Laws. Delivery of Common Stock under the
Plan shall be subject to the requirement that, if at any time counsel to the
Corporation shall determine that the listing, registration or qualification of
the shares of Common Stock 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 shares may not be delivered 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 Corporation to apply for or to obtain such
listing, registration or qualification.
16.3 Effect of Certain Changes in Capitalization. In the event of any
Change in Capitalization, a proportionate substitution or adjustment may be made
in (a) the aggregate number and/or kind of shares or other property reserved for
issuance under the Plan, (b) the number and kind of shares or other property to
be delivered under the Plan and (c) the number and kind of shares or other
property held in each Participant's Share Account and Matching Account (if any),
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 corporate action, such as
declaration of a special dividend, that affects the capitalization of the
Corporation.
Section 17. Change of Control
17.1 Change of Control. 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:
(a) any Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Corporation (not including in the securities Beneficially
Owned by such Person any securities acquired directly from the Corporation or
its Affiliates) representing 25% or more of either the then outstanding shares
of Common Stock or the combined voting power of the Corporation's then
outstanding voting securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction described in clause (i) of
paragraph (c) below; or
(b) 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 Corporation 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 Corporation's stockholders 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
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January 25, 2002 or whose appointment, election or nomination for election was
previously so approved or recommended; or
(c) there is consummated a merger or consolidation of the Corporation or
any direct or indirect subsidiary of the Corporation with any other corporation,
other than (i) a merger or consolidation which would result in the voting
securities of the Corporation 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 Corporation or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of the Corporation (or
similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation (not including in the
securities Beneficially Owned by such Person any securities acquired directly
from the Corporation or its Affiliates) representing 25% or more of either the
then outstanding shares of Common Stock or the combined voting power of the
Corporation's then outstanding voting securities; or
(d) the stockholders of the Corporation approve a plan of complete
liquidation or dissolution of the Corporation or there is consummated an
agreement for the sale or disposition by the Corporation of all or substantially
all of the Corporation'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 Corporation of all or substantially all of the Corporation's
assets to an entity, at least 75% of the combined voting power of the voting
securities of which are owned by stockholders of the Corporation in
substantially the same proportions as their ownership of the Corporation
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
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 Corporation immediately following such
transaction or series of transactions.
For purposes of the definitions of Change of Control and Potential Change
of Control, "Affiliate" shall have the meaning 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; "Exchange Act" shall
mean the Securities Exchange Act of 1934, as amended; 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 Corporation or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation or any of
its 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 Corporation in substantially the same
proportions as their ownership of stock of the Corporation 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 any such individual, entity or group subsequently becomes required to or does
report its Beneficial Ownership on Schedule 13D (or any successor
18
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 Corporation Beneficially Owned by it on such date.
17.2 Payments. Upon the occurrence of a Change of Control, and
notwithstanding Section 7,
(a) payment of a Participant's Cash Account balance and Matching Account
balance (if any, and then only to the extent not then maintained in Share Units)
shall be made immediately in cash in a lump sum; and
(b) payment of a Participant's Mutual Fund Account balance shall be made
immediately in cash in a lump sum in an amount equal to the aggregate net asset
value of the Mutual Fund Shares credited to the Participant's Mutual Fund
Account as of the date of the Change of Control; and
(c) all Share Units credited to a Participant's Share Account and Matching
Account (if any) shall be converted into an amount equal to the number of Share
Units multiplied by the Fair Market Value, which amount shall be (i) paid as
soon as possible to such Participant and (ii) denominated in (A) such form of
consideration as the Participant would have received had the Participant been
the owner of record of such shares of Common Stock 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". For purposes of this
Section 17.2(b), (I) "Change of Control With Consideration" shall mean a Change
of Control in which shares of Common Stock are exchanged or surrendered for
shares, cash or other property and (II) "Change of Control Without
Consideration" shall mean a Change of Control pursuant to which shares of Common
Stock are not exchanged or surrendered for shares, cash or other property.
Section 18. Rating Event
18.1 Rating Event. The term "Rating Event" means the date on which the
Corporation's debt rating drops below an Investment Grade Rating. "Investment
Grade Rating" means a rating at or above Baa3 by Moody's Investors Services,
Inc. (or its successors) or a rating at or above BBB by Standard & Poor's
Corporation (or its successors). Only one such rating at the required level is
necessary for the Corporation to have an Investment Grade Rating for purposes of
this Section. If either or both of these ratings cease to be available then an
equivalent rating from a nationally prominent rating agency shall be substituted
by the Corporation.
18.2 Payment. Upon the occurrence of a Rating Event, and notwithstanding
Section 7:
(a) a Participant's Cash Account balance and Matching Account balance (if
any, and then only to the extent not then maintained in Share Units) shall be
paid immediately in cash in a lump sum; and
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(b) payment of a Participant's Mutual Fund Account balance shall be made
immediately in cash in a lump sum in an amount equal to the aggregate net asset
value of the Mutual Fund Shares credited to the Participant's Mutual Fund
Account as of the payment date; and
(c) payments in respect of a Share Account balance shall be made
immediately in cash in an amount equal to the number of Share Units then payable
multiplied by the Fair Market Value on the date of payment; provided, however,
that at the election of a Participant, made by written notice to the Corporation
prior to delivery of such cash, payments in respect of a Share Account may be
made solely in 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 based
upon the Fair Market Value the date of payment; and
(d) payments in respect of a Matching Account balance (if any, and then
only to the extent then maintained in Share Units) shall be made immediately in
cash in an amount equal to the number of Share Units then payable multiplied by
the Fair Market Value on the date of payment; provided, however, that at the
election of a Participant, made by written notice to the Corporation prior to
delivery of such cash, payments in respect of a Share Account may be made solely
in 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 based upon the Fair
Market Value on the date of payment; and
(e) In addition to payment of the Participant's Cash Account balance as
described above, the Corporation shall pay the Participant an amount equal to
the interest that would have been earned on the Accelerated Tax Amount from the
date of the Rating Event to the date payment of Year Deferred Amounts was then
scheduled to commence, calculated at the interest rate determined under Section
6.2, compounded monthly, which interest amount shall then be discounted to the
date of payment at a discount rate equal to the rate determined under Section
6.2. The "Accelerated Tax Amount" means the Participant's Cash Account balance
multiplied by the Assumed Tax Rate. The "Assumed Tax Rate" means a percentage
which reflects the highest stated federal and state income tax rates imposed on
residents of Wisconsin after giving effect to the deductibility of state income
taxes.
18.3 Revocation of Election. Upon the occurrence of a Rating Event, all
deferral elections made prior thereto are revoked.
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