SNAP-ON INCORPORATED
SPLIT-DOLLAR INSURANCE PLAN
AGREEMENT FOR _________________
1. Introduction. This Agreement is a component of the Snap-on
Incorporated Split-Dollar Insurance Plan ("Plan"). Snap-on Incorporated, as an
inducement to continued employment of executives designated to participate in
the Plan, wishes to assist them with their personal life insurance program. The
Plan is intended to qualify as a life insurance employee benefit as described in
Revenue Ruling 64-328.
2. Definitions.
(a) "Change of Control" shall have the meaning given it in
Section ____ of the ___________ Agreement.
(b) "Company" means Snap-on Incorporated, a Delaware corporation,
with offices in Kenosha, Wisconsin.
(c) "Early Retirement" shall have the meaning given it in the
Company's Retirement Plan for Administrative and Field Employees except that the
Insured shall only have to satisfy the age requirements of such term.
(d) "Effective Date" shall have the meaning given it in Section
____ of the __________ Agreement.
(e) "Insured" means ____________.
(f) "Insurer" means Northwestern Mutual Life.
(g) "Owner" means ______________, who may or may not be the same
person as the Insured.
(h) "Permanent Disability" shall have the meaning given it in the
Company's Health Benefit Plan for Administrative and Field Employees.
(i) "Policy Interest" means the interest of the Company in a
Policy. Policy Interest is an amount equal to the total premiums paid by the
Company with respect to that Policy.
(j) "Policy" means a policy of insurance on the life of the
Insured issued by the Insurer and listed on Exhibit A attached hereto together
with any supplementary contracts issued by the Insurer in conjunction therewith.
(k) "Retirement" shall have the meaning given it in the Company's
Retirement Plan for Administrative and Field Employees.
(l) "___________ Agreement" means the __________ Agreement dated
_____________, between the Company and the Insured, including any amendments
thereto or successor agreements.
(m) "Termination of Employment" shall have the meaning given it
in Section ______ of the ___________ Agreement without regard for any time
limits specified in such definition.
3. Premium Payments.
(a) Commencing with the date of this Agreement, the Company
agrees to pay successive annual premium payments on each Policy as listed on
Exhibit A as they become due.
(b) The Company's obligation to make future premium payments
under Section 3(a) shall terminate if the Insured's employment is terminated
prior to the Effective Date for any reason other than (i) Retirement at normal
retirement age, (ii) Early Retirement or (iii) Permanent Disability.
(c) The Company's obligation to make future premium payments
under Section 3(a) shall terminate if the Insured's employment is terminated
after the Effective Date for any reason other than (i) Retirement at normal
retirement age, (ii) Early Retirement, (iii) Permanent Disability or (iv)
Termination of Employment.
(d) Policy dividends shall be applied to purchase paid-up
additional insurance protection.
(e) The Insured shall, as a condition of Owner's participation in
this Plan, execute a limited waiver of participation in the Company's group term
life insurance plan, evidenced by filing with the Company a waiver in
substantially the form attached hereto.
4. Policy Ownership.
(a) Except as provided in Section 4(b), the Owner shall be the
sole and exclusive owner of each Policy. This includes all the rights of "owner"
under the terms of each Policy, including but not limited to the right to
designate beneficiaries and select settlement options.
(b) In exchange for the Company's payment of its premium
contribution for a Policy under Section 3, the Owner shall assign to the Company
the following limited ownership rights in that Policy:
(1) The right to recover its Policy Interest from the cash
value of a Policy in the event of the termination of
this Agreement as provided in Section 5.
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(2) The right to recover its Policy Interest from the
proceeds of a Policy in the event of the Insured's
death.
(c) To secure the Company's interest in a Policy the Owner shall
execute an Assignment of the Policy to the Company in substantially the form
attached hereto as Exhibit B.
(d) It is agreed that benefits will be paid under a Policy by the
Insurer only by separate checks to the parties entitled thereto.
5. Termination of Plan.
(a) This Agreement shall be terminated upon the first to occur
of:
(1) The death of the Insured.
(2) The sixteenth (16th) anniversary of the issuance of a
Policy (but the Agreement shall only terminate with
respect to that Policy).
(3) The date on which the Owner gives notice in writing to
the Company of the termination.
(4) Termination of the Company's premium payment obligation
under Section 3(a) pursuant to Section 3(b) or 3(c).
(b) In the event of termination of this Agreement the Owner
shall, at its election:
(1) Repay to the Company within 60 days of the date of
termination an amount equal to the Company's Policy
Interest. Or,
(2) Execute any and all instruments that may be required to
vest ownership of Policy in the Company. Thereafter,
Owner shall have no further interest in the Policy and
shall have no further obligation to the Company.
6. Funding Upon a Change of Control.
(a) In the event that a Change of Control of the Company occurs
and a Rating Event has not occurred, the Company shall immediately transfer to
the Snap-on Incorporated Master Split-Dollar Insurance Plan Trust dated August
1, 2000, or any successor thereto (the "Trust") an amount equal to the aggregate
unpaid premiums required to be paid by
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the Company under Section 3(a) assuming no termination of the Agreement under
Sections 3(c), 5(a)(1) or 5(a)(3).
(b) The Trust is an administrative and funding vehicle for the
Company's general assets contributed to the Trust for the purpose of ultimately
satisfying obligations under this Agreement. In the event that the Company
transfers assets to the Trust for the express purpose of ultimately satisfying
its obligations under this Agreement then, subject to the terms of the Trust and
limited by assets available and held by the Trustees of the Trust for the
purpose of funding the benefits provided by this Agreement, payments may be made
from such Trust in satisfaction of Company's obligations hereunder. The transfer
of assets by the Company to the Trust for this purpose shall not increase,
decrease or vary in any way the rights and obligations of the parties to this
Agreement, nor shall the Insured or the Owner have any ownership rights with
respect to such assets nor shall the assets be treated as a trust fund of any
kind for the benefit of any such person; provided that as and when any such
payment is required to be made hereunder, the Owner may, subject to the terms of
the Trust and limited by the terms of this Agreement, require such payments to
be made from the Trust. The Owner may enforce and obtain satisfaction of such
payment rights against the assets held by the Trust for the purpose of
satisfying such obligations of the Company.
7. The Insurer shall be bound only by the provisions of and
endorsements on a Policy, and any payments made or action taken by it in
accordance therewith shall fully discharge it from all claims, suits and demands
of all persons whatsoever. It shall in no way be bound by or be deemed to have
notice of the provisions of this Agreement.
8. This Agreement may be amended at any time by the Owner and the
Company. Such amendment shall be in writing and signed by the Chairman of the
Organization and Executive Compensation Committee on behalf of the Company and
by the Owner.
9. This Agreement shall bind and inure to the benefit of the Company
and its successors and assigns; Owner and its successor trustees and
beneficiaries; and any Policy beneficiary.
10. Funding Upon a Rating Event.
(a) In the event that a Rating Event (as defined below) occurs,
the Company shall immediately transfer to the Snap-on Incorporated Delaware
Benefits Trust dated February 1, 2000, or any successor thereto, an amount equal
to the aggregate unpaid premiums required to be paid by the Company under
Section 3(a) of this Agreement.
(b) The term "Rating Event" means the date on which the Company's
debt rating drops below an Investment Grade Rating. "Investment Grade Rating"
means a rating at or above Baa3 by Xxxxx'x Investors Service, 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
Company to have an Investment Grade Rating for purposes of this Section. If
either or both of these ratings cease to be available then an
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equivalent rating from a nationally prominent rating agency shall be substituted
by the Company.
(c) The Company's satisfaction of its obligation under Section
10(a) in the event that a Rating Event occurs shall completely discharge its
payment obligations under Sections 3 and 4 of this Agreement.
IN WITNESS WHEREOF the parties have signed and sealed this Agreement
this ____ day of ___________, 2002.
In the presence of SNAP-ON INCORPORATED
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By
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Its
OWNER
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EXHIBIT A
EXHIBIT B
COLLATERAL ASSIGNMENT FORM
SNAP-ON INCORPORATED SPLIT-DOLLAR INSURANCE PLAN
Insurer: Northwestern Mutual Life
Insured: ______________________
Policy No. ______________________
FOR VALUE RECEIVED, THIS ASSIGNMENT is made by the undersigned Owner
effective this ____ day of __________________, 2002.
1. Definitions.
(a) "Assignee" means Snap-on Incorporated, a Delaware
corporation, of Kenosha, Wisconsin.
(b) "Insured" means _______________.
(c) "Insurer" means Northwestern Mutual Life.
(d) "Owner" means _______________.
(e) "Policy" means the following policy or policies of insurance
issued by the Insurer on the life of the Insured, together with any
supplementary contracts issued in conjunction therewith:
Policy Number _________ Face Amount $_________________
(f) "Policy Interest" means the Assignee's "Policy Interest" as
set forth in the Split-Dollar Plan. The Insurer shall be entitled to rely on the
Assignee's certification of the amount of its Policy Interest.
(g) "Split-Dollar Plan" means that certain plan of even date
herewith, between the Owner and the Assignee. The Insurer is not bound by nor
deemed to have notice of the provisions of the Split-Dollar Plan.
2. Introduction. Under the Split-Dollar Plan, the Assignee has agreed
to assist the Owner in payment of premiums on the Policy. In consideration of
such premium payments by the Assignee, the Owner grants herein to the Assignee
certain limited interests in the Policy.
3. Assignment. The Owner hereby assigns, transfers and sets over to
the Assignee, its successors and assigns, the following specific rights in the
Policy and subject to the following terms and conditions:
(a) The right to obtain one or more loans or advances on the
Policy to the extent of its Policy Interest, and to pledge or assign the Policy
for such loans and advances.
(b) The right to recover its Policy Interest from the cash value
of the Policy in the event of the Policy's surrender by the Owner.
(c) The right to recover its Policy Interest from the proceeds of
the Policy in the event of the Insured's death.
4. Insurer. The Insurer is hereby authorized to recognize, and is
fully protected in recognizing:
(a) The claims of the Assignee to rights hereunder, without
investigating the reasons for such action by the Assignee, or the validity or
the amount of such claims.
(b) The Owner's request for surrender of the Policy with or
without the consent of the Assignee. Upon surrender, the Policy shall be
terminated and of no further force or effect.
5. Release of Assignment. Upon payment to the Assignee of its policy
interest, the Assignee shall execute a written release of this assignment.
IN WITNESS WHEREOF the Owner has executed this assignment on the date
first above written.
In the presence of
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GROUP TERM LIFE PLAN WAIVER
I, the undersigned Insured under the Snap-on Incorporated
Split-Dollar Insurance Plan, waive participation in the Snap-on Incorporated
group term life insurance plan with regard to all coverage in excess of the
dollar amount set forth in Internal Revenue Code section 79(a)(1) ($50,000 as of
the date of this Agreement). This waiver is not effective until the life
insurance applied for by me under the Split-Dollar Insurance Plan is issued and
effective.
In addition, this waiver shall no longer be effective if the
Split-Dollar Insurance Plan, as to my coverage and benefits, is terminated by
the Company. In such event, my coverage under the Snap-on group term life
insurance plan shall be immediately reinstated.
In the presence of
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Acknowledged and Accepted by Snap-on Incorporated.
By:
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Its:
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