INDEMNIFICATION AGREEMENT
This Agreement is entered into and effective this _____ day of
______________, 1997, by and between Snap-on Incorporated, a Delaware
corporation (the "Company"), and _________________ ("Indemnitee").
WHEREAS, highly competent persons are becoming more reluctant to
serve publicly-held corporations as directors or officers unless they are
provided with adequate protection through insurance and adequate indem-
nification against inordinate risks of claims and actions against them
arising out of their service to and activities on behalf of the
corporation;
WHEREAS, Indemnitee is a director or officer of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors and
officers of public companies in today's environment;
WHEREAS, the current impracticability of obtaining adequate
insurance and the uncertainties relating to indemnification have increased
the difficulty of attracting and retaining such persons;
WHEREAS, the Board of Directors of the Company has determined
that the inability to attract and retain such persons would be detrimental
to the best interests of the Company and its stockholders and that the
Company should act to assure such persons that there will be increased
certainty of such protection in the future;
WHEREAS, the By-laws of the Company require the Company to
indemnify and advance expenses to its directors and officers to the
fullest extent permitted by law and the Indemnitee has been serving and
continues to serve as a director or officer of the Company in part in
reliance on such By-laws; and
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability so that Indemnitee may continue to
serve the Company free from undue concern for litigation claims for
damages arising out of or related to the performance of such service, the
increasing difficulty in obtaining satisfactory director and officer
liability insurance coverage, and Indemnitee's reliance on the aforesaid
By-laws, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such By-laws will be available
to Indemnitee (regardless of, among other things, any amendment to or
revocation of such By-laws, or any change in the composition of the
Company's Board of Directors, or any acquisition transaction relating to
the Company), it is reasonable, prudent and necessary for the Company to
provide in this Agreement for the indemnification of and the advancing of
expenses to Indemnitee to the fullest extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, to the extent
insurance is maintained, for the continued coverage of Indemnitee under
the Company's directors' and officers' liability insurance policies.
NOW, THEREFORE, in consideration of the foregoing premises and of
Indemnitee continuing to serve the Company directly or, at its request,
another enterprise, and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
For the purposes of this Agreement, the following terms shall
have the meaning given here:
I.1. "Board" shall mean the Board of Directors of the Company.
1.2. "Change in Control" shall be deemed to have occurred if (i)
any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than a trustee or
other fiduciary holding securities under an employee benefit plan of the
Company or a corporation owned directly or indirectly by the stockholders
of the Company in substantially the same proportions as their ownership of
stock of the Company, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities of the
Company representing 15% or more of the total voting power represented by
the Company's then outstanding Voting Securities, or (ii) during any
period of two consecutive years, individuals who at the beginning of such
period constitute the Board of Directors of the Company and any new
director whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to
constitute a majority thereof, or (iii) the stockholders of the Company
approve a merger or consolidation of the Company with any other
corporation other than a merger or consolidation which would result in the
Voting Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at least 85% of
the total voting power represented by the Voting Securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation, or the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of (in one transaction or a series of trans-
actions) all or substantially all the Company's assets.
1.3. "Corporate Status" describes the status of a person who is
or was a director, officer, employee, trustee, agent or fiduciary of the
Company or of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise which such person is or was
serving at the express written request of the Company.
1.4. "Disinterested Director" means a director of the Company
who is not and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.
1.5. "Enterprise" shall mean the Company and any other corpora-
tion, partnership, joint venture, trust, employee benefit plan or other
enterprise of which Indemnitee is or was serving at the express written
request of the Company as a director, officer, employee, agent or
fiduciary.
1.6. "Expenses" shall include all attorneys' fees, retainers,
court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees, and all other disbursements,
costs, expenses and obligations paid or incurred in connection with
investigating, prosecuting, defending, being a witness in, or partici-
pating in (including on appeal), or preparing to prosecute, defend, be a
witness in, or participate in, any Proceeding relating to any
Indemnifiable Event.
1.7. "Good Faith" shall mean Indemnitee having acted in good
faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any
criminal Proceeding, having had no reasonable cause to believe
Indemnitee's conduct was unlawful.
1.8. "Indemnifiable Event" shall mean any event or occurrence
(including events or occurrences prior to the date hereof) related to the
fact that Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company or another Enterprise, or by reason of anything
done or not done by Indemnitee in any such capacity.
1.9. "Independent Legal Counsel" shall mean an attorney or firm
of attorneys, selected in accordance with the provisions of Section 7.1,
who shall not have otherwise performed services for the Company or
Indemnitee within the last five years (other than with respect to matters
concerning the rights of Indemnitee under this Agreement, or of other
indemnitees under similar indemnity agreements).
1.10. "Potential Change in Control" shall be deemed to have
occurred if (i) the Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control; (ii) any
person (including the Company) publicly announces an intention to take or
to consider taking actions which if consummated would constitute a Change
in Control; or (iii) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
1.11. "Proceeding" includes any action, suit, arbitration,
alternate dispute resolution mechanism, investigation, administrative
hearing or any other actual, threatened or completed proceeding whether
civil, criminal, administrative or investigative.
1.12. "Voting Securities" shall mean any securities of the
Company which vote generally in the election of directors.
ARTICLE II
INDEMNIFICATION
Section II.1. In General. The Company shall indemnify and
advance Expenses to Indemnitee in connection with any Proceeding by reason
of (or arising in part out of) an Indemnifiable Event as provided in this
Agreement and to the fullest extent permitted by applicable law in effect
on the date hereof and to such greater extent as applicable law may
thereafter from time to time permit. Prior to a Change in Control,
Indemnitee shall not be entitled to indemnification (including any
advancement of Expenses) pursuant to this Agreement in connection with any
Proceeding initiated by Indemnitee unless either (i) the Board of
Directors has authorized or consented to the initiation of such Proceeding
or (ii) such Proceeding seeks to enforce Indemnitee's rights under this
Agreement.
Section II.2. Basic Indemnification Arrangement. If Indemnitee
was or is a party or is threatened to be made a party to any Proceeding by
reason of (or arising in part out of) an Indemnifiable Event, the Company
shall indemnify Indemnitee to the fullest extent permitted by law as soon
as practicable but in any event no later than thirty (30) days after
written demand is presented to the Company, against any and all Expenses,
judgments, fines, ERISA excise taxes or penalties, and amounts paid in
settlement (including all interest, assessments, and other charges paid or
payable in connection with or in respect of such Expenses) incurred by or
for him in connection with the investigation, defense, settlement or
appeal of such Proceeding or any claim, issue or matter therein if
Indemnitee acted in Good Faith. If so requested by Indemnitee, the
Company shall advance (within two (2) business days of such request) any
and all Expenses to Indemnitee (an "Expense Advance"). The obligation of
the Company to make an Expense Advance pursuant to this Section 2.2 shall
be subject to the condition that, if, when and to the extent that it is
determined by the forum selected by Indemnitee pursuant to Section 4.3
that Indemnitee would not be permitted to be so indemnified under appli-
cable law, the Company shall be entitled to be reimbursed by Indemnitee
(who hereby agrees to reimburse the Company) for all such amounts
theretofore paid; provided that the Company's obligation to make the
Expense Advances under this Section 2.2 or any advance of Expenses under
Article III shall not be qualified or conditioned in any manner by the
Company on the Indemnitee's ability to reimburse the Company; and pro-
vided, further, that if Indemnitee has commenced or thereafter commences
legal proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under applicable law,
any determination made by such forum that Indemnitee would not be
permitted to be indemnified under applicable law shall not be binding and
Indemnitee shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect thereto
(as to which all rights of appeal therefrom have been exhausted or
lapsed).
Section II.3. Indemnification of a Party Who is Wholly or Partly
Successful. Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee is, by reason of an Indemnifiable Event, a party to
and is successful, on the merits or otherwise, in any Proceeding,
Indemnitee shall be indemnified to the maximum extent permitted by law,
against any and all Expenses and liabilities of any type whatsoever
(including, but not limited to, judgments, fines, ERISA excise taxes or
penalties, and amounts paid in settlement) actually and reasonably
incurred by or for him in connection therewith. If Indemnitee is not
wholly successful in such Proceeding but is successful, on the merits or
otherwise, as to one or more but less than all claims, issues or matters
in such Proceeding, the Company shall indemnify Indemnitee to the maximum
extent permitted by law, against all Expenses and liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA taxes
or penalties, and amounts paid in settlement) actually and reasonably
incurred by or for him in connection with each successfully resolved
claim, issue or matter. For purposes of this Section 2.3 and without
limitation, the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed to be
a successful result as to such claim, issue or matter, so long as there
has been no finding (either adjudicated or pursuant to Article IV) that
Indemnitee did not act in Good Faith.
ARTICLE III
INDEMNIFICATION AND ADVANCEMENT
FOR ADDITIONAL EXPENSES
Notwithstanding any other provision in this Agreement to the
contrary, the Company shall indemnify Indemnitee against any and all
Expenses (including attorney's fees) and, if requested by Indemnitee,
shall (within two (2) business days of such request) advance such Expenses
to Indemnitee, which are incurred by Indemnitee in connection with (i) any
hearing or proceeding under Article IV involving Indemnitee and against
all Expenses incurred by Indemnitee in connection with any other action
between the Company and Indemnitee involving the interpretation or
enforcement of the rights of Indemnitee under this Agreement and/or (ii)
any action brought by Indemnitee for recovery under any directors' and
officers' liability insurance policies maintained by the Company, regard-
less of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance recovery, as the
case may be. The obligation of the Company to make the expense advance
pursuant to this Article III shall be subject to the condition that if,
when and to the extent that a final judicial determination is made that
Indemnitee would not be permitted to be so indemnified under applicable
law, the Company shall be entitled to be reimbursed by Indemnitee (who
hereby agrees to reimburse the Company) for all such amounts theretofore
paid.
ARTICLE IV
DETERMINATION OF RIGHT TO INDEMNIFICATION
Section IV.1. No Determination Necessary when Indemnitee was
Successful. To the extent Indemnitee has been successful on the merits or
otherwise in defense of any Proceeding referred to in Section 2.2 of this
Agreement or in the defense of any claim, issue or matter described
therein, the Company shall indemnify Indemnitee against Expenses incurred
by or for Indemnitee in connection with the investigation, defense, or
appeal of such Proceeding.
Section IV.2. Determination of Good Faith. In the event that
Section 4.1 is inapplicable, the Company shall also indemnify Indemnitee
unless, and only to the extent that, the Company shall prove by clear and
convincing evidence to a forum listed in Section 4.3 below that Indemnitee
did not act in Good Faith.
Section IV.3. Forum for Determination. Indemnitee shall be
entitled to select the forum in which the validity of the Company's claim
under Section 4.2 hereof that Indemnitee is not entitled to
indemnification will be heard from among the following:
(a) A committee of the Disinterested Directors, even
though the Disinterested Directors be less than a quorum;
(b) The stockholders of the Company;
(c) Legal counsel selected by Indemnitee, and reasonably
approved by the Board, which counsel shall make such determination in
a written opinion; or
(d) A panel of three arbitrators, one of whom is selected
by the Company, another of whom is selected by Indemnitee and the last
of whom is selected by the first two arbitrators so selected.
As soon as practicable, and in no event later than thirty (30) days after
written notice of Indemnitee's choice of forum pursuant to this Section
4.3, the Company shall, at its own expense, submit to the selected forum
in such manner as Indemnitee or Indemnitee's counsel may reasonably
request, its claim that Indemnitee is not entitled to indemnification, and
the Company shall act in the utmost Good Faith to assure Indemnitee a
complete opportunity to defend against such claim.
Section IV.4. Right to Appeal. In the case of a determination
by any forum listed in Section 4.3 hereof that Indemnitee is not entitled
to whole or partial indemnification with respect to a specific Proceeding,
or a failure by any such forum to make any determination, Indemnitee shall
have the right to apply to the court in which that Proceeding is or was
pending for the purpose of enforcing Indemnitee's right to indemnification
pursuant to this Agreement or to commence litigation in any court in the
States of Wisconsin or Delaware having subject matter jurisdiction thereof
and in which venue is proper seeking an initial determination by the court
or challenging any such determination by such forum or any aspect thereof,
including the legal or factual bases therefor, and the Company hereby con-
sents to service of process and to appear in any such proceeding. Any
determination such forum otherwise shall be conclusive and binding on the
Company and Indemnitee.
ARTICLE V
PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS
Section V.1. Burden of Proof. In making a determination with
respect to entitlement to indemnification hereunder, the person or persons
or entity making such determination shall presume that Indemnitee is
entitled to indemnification under this Agreement and the Company shall
have the burden of proof to overcome that presumption in connection with
the making by any person, persons or entity of any determination contrary
to that presumption.
Section V.2. Effect of Other Proceedings. The termination of
any Proceeding or of any claim, issue or matter therein, by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not of itself adversely affect the right of Indemnitee
to indemnification or create a presumption that Indemnitee did not act in
Good Faith. In addition, neither the failure of any forum listed in
Section 4.3 to have made a determination as to whether Indemnitee has met
any particular standard of conduct or had any particular belief, nor an
actual determination by any such forum that Indemnitee has not met such
standard of conduct or did not have such belief, prior to the commencement
of legal proceedings by Indemnitee to secure a judicial determination that
Indemnitee should be indemnified under applicable law shall be a defense
to Indemnitee's claim or create a presumption that Indemnitee has not met
any particular standard of conduct or did not have any particular belief.
Section V.3. Reliance as Safe Harbor. For purposes of any
determination of Good Faith, Indemnitee shall be deemed to have acted in
Good Faith if Indemnitee's action is based on the records or books of
account of the Company, including financial statements, or on information
supplied to Indemnitee by the officers of the Company in the course of
their duties, or on the advice of legal counsel for the Company or on
information or records given or reports made to the Company by an
independent certified public accountant or by an appraiser or other expert
selected with reasonable care by the Company. The provisions of this
Section 5.3 shall not be deemed to be exclusive or to limit in any way the
other circumstances in which the Indemnitee may be deemed to have met the
applicable standard of conduct set forth in this Agreement.
Section V.4. Actions of Others. The knowledge and/or actions,
or failure to act, of any director, officer, agent or employee of the
Company shall not be imputed to Indemnitee for purposes of determining the
right to indemnification under this Agreement.
ARTICLE VI
NON-EXCLUSIVITY, INSURANCE,
SUBROGATION, PERIOD OF LIMITATIONS
Section VI.1. Non-Exclusivity. The rights of indemnification
and to receive advances of Expenses as provided by this Agreement shall
not be deemed exclusive of any other rights to which Indemnitee may at any
time be entitled under applicable law, the Articles of Incorporation, the
Bylaws, any agreement, a vote of shareholders or a resolution of
directors, or otherwise.
Section VI.2. Insurance. The Company may maintain an insurance
policy or policies against liability arising out of this Agreement or
otherwise. To the extent that the Company maintains such a policy or
policies, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
Section VI.3. Subrogation. In the event of any payment under
this Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of Indemnitee, who shall execute
all papers required and take all action necessary to secure such rights,
including execution of such documents as are necessary to enable the
Company to bring suit to enforce such rights.
Section VI.4. No Duplicative Payment. The Company shall not be
liable under this Agreement to make any payment of amounts otherwise
indemnifiable hereunder if and to the extent that Indemnitee has otherwise
actually received such payment under any insurance policy, By-law,
contract, agreement or otherwise.
Section 6.5. Period of Limitations. No legal action shall be
brought and no cause of action shall be asserted by or in the right of the
Company against Indemnitee, Indemnitee's spouse, heirs, executors or
personal or legal representatives after the expiration of two years from
the date of the facts which gave rise to such cause of action, and any
claim or cause of action of the Company shall be extinguished and deemed
released unless asserted by the timely filing of a legal action within
such two-year period; provided, however, that if any shorter period of
limitations is otherwise applicable to any such cause of action such
shorter period shall govern.
ARTICLE VII
CHANGE IN CONTROL
Section 7.1. Change in Control. The Company agrees that if
there is a Change in Control of the Company, then with respect to all
matters thereafter arising concerning the rights of Indemnitee to
indemnity payments and advances of any Expenses under this Agreement or
any other agreement or Company By-Law now or hereafter in effect relating
to Proceedings for Indemnifiable Events, the Company shall seek legal
advice only from Independent Legal Counsel selected by Indemnitee and
approved by the Company (which approval shall not be unreasonably with-
held). Such counsel, among other things, shall render its written opinion
to the Company and Indemnitee as to whether and to what extent the
Indemnitee would be permitted to be indemnified under applicable law. The
Company agrees to pay the reasonable fees of the Independent Legal Counsel
referred to above and to indemnify fully such counsel against any and all
expenses (including attorney's fees), claims, liabilities and damages
arising out of or relating to this Agreement or its engagement pursuant
hereto.
Section 7.2. Establishment of Trust. In the event of a
Potential Change in Control, the Company shall, upon written request by
Indemnitee, create a trust for the benefit of Indemnitee and from time to
time upon written request of Indemnitee shall fund such trust in an amount
sufficient to satisfy any and all Expenses reasonably anticipated at the
time of each such request to be incurred in connection with investigating,
preparing for and defending any Claim relating to an Indemnifiable Event,
and any and all judgments, fines, penalties and settlement amounts of any
and all Claims relating to an Indemnifiable Event from time to time
actually paid or claimed, reasonably anticipated or proposed to be paid.
The amount or amounts to be deposited in the trust pursuant to the
foregoing funding obligation shall be determined by the Independent Legal
Counsel referred to in Section 7.1. The terms of the trust shall provide
that upon a Change in Control (i) the trust shall not be revoked or the
principal thereof invaded, without the written consent of the Indemnitee,
(ii) the trustee shall advance, within two business days of a request by
the Indemnitee, any and all Expenses to the Indemnitee (and the Indemnitee
hereby agrees to reimburse the trust under the circumstances under which
the Indemnitee would be required to reimburse the Company under Section
2.2 of this Agreement), (iii) the trust shall continue to be funded by the
Company in accordance with the funding obligation set forth above, (iv)
the trustee shall promptly pay to Indemnitee all amounts for which
Indemnitee shall be entitled to indemnification pursuant to this Agreement
or otherwise, and (v) all unexpended funds in such trust shall revert to
the Company upon a final determination by any forum listed in Section 4.3
or a court of competent jurisdiction, as the case may be, that Indemnitee
has been fully indemnified under the terms of this Agreement. The trustee
shall be chosen by Indemnitee. Nothing in this Section 7.2 shall relieve
the Company of any of its obligations under this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1. Binding Effect, Etc. This Agreement shall be bind-
ing upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all
or substantially all of the business and/or assets of the Company,
spouses, heirs, executors and personal and legal representatives. This
Agreement shall continue in effect regardless of whether Indemnitee
continues to serve as an officer or director of the Company or of any
other enterprise at the Company's request.
Section 8.2. Severability. The provisions of this Agreement
shall be severable in the event that any of the provisions hereof
(including any provision within a single section, paragraph or sentence)
are held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable in any respect, and the validity and
enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired and shall
remain enforceable to the fullest extent permitted by law.
Section 8.3. No Adequate Remedy. The parties declare that it is
impossible to measure in money the damages which will accrue to either
party by reason of a failure to perform any of the obligations under this
Agreement. Therefore, if either party shall institute any action or
proceeding to enforce the provisions hereof, such party against whom such
action or proceeding is brought hereby waives the claim or defense that
such party has an adequate remedy at law, and such party shall not urge in
any such action or proceeding the claim or defense that the other party
has an adequate remedy at law.
Section 8.4. Identical Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall for all purposes
be deemed to be an original but all of which together shall constitute one
and the same Agreement. Only one such counterpart signed by the party
against whom enforceability is sought needs to be produced to evidence the
existence of this Agreement.
Section 8.5. Headings. The headings of the paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction thereof.
Section 8.6. Modification and Waiver. No supplement, modifica-
tion or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the provisions
of this Agreement shall be deemed or shall constitute a waiver of any
other provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
Section 8.7. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have
been duly given if (i) delivered by hand and receipted for by the party to
whom said notice or other communication shall have been directed, or (ii)
mailed by certified or registered mail with postage prepaid, on the third
business day after the date of which it is so mailed:
If to Indemnitee, as shown with Indemnitee's signature below,
If to the Company to:
Snap-on Incorporated
00000 Xxxxxxxxx Xxxxx
Xxxx Xxxxxx Xxx 0000
Xxxxxxx, Xxxxxxxxx 00000-0000
Attention: President
or to such other address as may have been furnished to Indemnitee by the
Company or to the Company by Indemnitee, as the case may be.
Section 8.8. Governing Law. The parties agree that this Agree-
ment shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware without application of the conflict of
laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
THE COMPANY:
By:____________________________
Xxxxxx X. Xxxxxx
Chairman, President and CEO
INDEMNITEE: _______________________
____________
ADDRESS: 00000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
