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
1.c. 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 1.d.
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 the Policy.
Policy Interest is an amount equal to the total premiums paid by the Company.
(j) "Policy" means the policy or policies 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.
(m) "Termination of Employment" shall have the meaning given it in
Section 1.h. 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 the 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 the Policy. This includes all the rights of "owner" under
the terms of the 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
under Section 3, the Owner shall assign to the Company the following limited
ownership rights in the Policy:
(1) The right to recover its Policy Interest from the cash
value of the 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 the Policy in the event of the Insured's death.
(c) To secure the Company's interest in the 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 the 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 the
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 the Policy in the
Company. Thereafter, Owner shall have no further
interest in the Policy and shall have no further
obligation to the Company.
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6. Funding Upon a Change of Control.
(a) In the event that a Change of Control of the Company occurs, the
Company shall immediately transfer to an irrevocable grantor trust established
by the Company which is substantially identical to the trust attached as Exhibit
C to this Agreement and contains such other supplemental provisions as are
required by the trustee which are not inconsistent with Exhibit C (the "Trust")
an amount equal to the aggregate unpaid premiums required to be paid by 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 the 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.
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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.
IN WITNESS WHEREOF the parties have signed and sealed this Agreement
this ____ day of _________________________, 1999.
In the presence of SNAP-ON INCORPORATED
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By
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Its
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OWNER
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EXHIBIT A
LIFE INSURANCE
Initial Face Insured's Initial
Policy Number Amount Economic Benefit
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EXHIBIT B
COLLATERAL ASSIGNMENT FORM
SNAP-ON INCORPORATED SPLIT-DOLLAR INSURANCE PLAN
Insurer: Northwestern Mutual Life
Insured: ________________
Policy Nos. ________________
FOR VALUE RECEIVED, THIS ASSIGNMENT is made by the undersigned Owner
effective this ____ day of _______________________, 1999.
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 $_________________
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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_________________________, Insured
Acknowledged and Accepted by Snap-on Incorporated.
By:
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Its:
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