SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): July 2, 1998
SNAP-ON INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 1-7724 39-0622040
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
2801 80th Street
Kenosha, Wisconsin 53141-1410
(Address of principal executive offices) (Zip Code)
(414) 656-5200
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Item 5. Other Events.
Snap-on Incorporated (the "Company") is filing this Form 8-K
to provide information which is supplementary to the Company's Current
Report on Form 8-K dated July 2, 1998 and filed with the Commission on
July 9, 1998. Accordingly, (i) the Benefit Trust Agreement, dated July
2, 1998, between the Company and The Northern Trust Company, (ii) the
Stock Purchase Agreement, dated July 2, 1998, between the Company and
The Northern Trust Company and (iii) the related Trust Note, dated
July 2, 1998, issued by The Northern Trust Company and payable to the
Company, are filed herewith as exhibits. The foregoing description
does not purport to be complete and is qualified by reference to the
Benefit Trust Agreement, the Stock Purchase Agreement, the Trust Note,
and the Company's Current Report on Form 8-K dated July 2, 1998 and
filed with the Commission on July 9, 1998.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Description
99.1 Benefit Trust Agreement, dated July 2, 1998, between
Snap-on Incorporated and The Northern Trust Company.
99.2 Stock Purchase Agreement, dated July 2, 1998, between
Snap-on Incorporated and The Northern Trust Company.
99.3 Trust Note, dated July 2, 1998, issued by The Northern Trust
Company and payable to Snap-on Incorporated.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.
SNAP-ON INCORPORATED
(Registrant)
By: /s/ Susan F. Marrinan
_________________________
Susan F. Marrinan
General Counsel
Dated: July 14, 1998
INDEX TO EXHIBITS
Exhibit No. Description Page No.
99.1 Benefit Trust Agreement, dated July 2, 1998,
between Snap-on Incorporated and The
Northern Trust Company, as Trustee. 6
99.2 Stock Purchase Agreement, dated July 2, 1998,
between Snap-on Incorporated and The Northern
Trust Company. 32
99.3 Trust Note, dated July 2, 1998, issued by
The Northern Trust Company and payable to
Snap-on Incorporated. 43
SNAP-ON INCORPORATED
BENEFIT TRUST AGREEMENT
BENEFIT TRUST AGREEMENT ("Trust Agreement"), dated July 2, 1998,
by and between Snap-on Incorporated, a Delaware corporation (the "Company"),
and The Northern Trust Company, as trustee of the Trust created
hereby (the "Trustee").
WHEREAS, the Company is or may become obligated in respect of its
existing compensation and benefit plans, agreements, programs, arrangements
and practices listed on Exhibit A attached hereto and such existing and
future plans, agreements, programs, arrangements and practices as may
hereafter be listed on said Exhibit A (the plans, agreements, programs,
arrangements and practices listed on said Exhibit A from time to time being
collectively referred to herein as the "Plans") to make payments to or
contributions on behalf of its past, present or future employees and
franchise dealers or their beneficiaries; and
WHEREAS, for purposes of providing a source for the satisfaction,
in whole or in part, of the contractual obligations of the Company under
the Plans, the Company desires to establish a trust (the "Trust"), which is
intended to constitute a grantor trust within the meaning of Section 671 of
the Internal Revenue Code of 1986, as amended (the "Code"), the assets of
which shall be subject to the claims of the Company's existing or future
creditors;
WHEREAS, the Company desires that the assets to be held in the
Trust should be principally or exclusively securities of the Company and,
therefore, expressly waives any diversification of investments that might
otherwise be necessary, appropriate or required pursuant to applicable law.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and for other good and valuable consideration, the parties
hereto agree as follows:
ARTICLE I
PURPOSE OF THE TRUST
SECTION 1.1 Purpose. (a) The purpose of the Trust is to hold
shares of Common Stock of the Company, par value $1.00 per share ("Common
Stock"), or other property as herein provided as a source to satisfy the
Company's contractual obligations under the Plans.
(b) The Company shall continue to be liable to make all payments
and deliver shares of Common Stock as required of the Company under the
terms of the Plans to the extent such payments have not been made or such
shares of Common Stock have not been delivered pursuant to this Trust
Agreement. Distributions made from the Trust in respect of the Plans
pursuant to Section 3.1 shall, to the extent of such distributions, satisfy
the Company's contractual obligations under the Plans.
ARTICLE II
TRUST AND THE TRUST CORPUS
SECTION 2.1 Delivery of Funds and Common Stock. (a)
Concurrently with the execution of this Trust Agreement, the Company is
selling to the Trustee from the Company's treasury stock an aggregate of
7,100,000 shares (the "Acquired Shares") of Common Stock, pursuant to the
terms of a Stock Purchase Agreement, dated the date hereof, between the
Company and the Trustee (the "Stock Purchase Agreement"), such Acquired
Shares (including earnings thereon and proceeds realized from the sale,
exchange or other disposition of such Acquired Shares) to constitute
collateral for the repayment of the Note (as defined below) until released
from collateral as provided herein and otherwise to be held, administered
and disposed of by the Trustee as provided herein. Concurrently with the
execution of this Trust Agreement, and pursuant to the terms of the Stock
Purchase Agreement, the Trustee is delivering to the Company, on behalf of
the Trust, a Note (the "Note") of the Trust in the original principal
amount of $260,037,500, in payment of the purchase price for the Acquired
Shares, such purchase price having been determined by the Company based on
the closing price per share of Common Stock on the New York Stock Exchange
on the business day immediately preceding the sale of the Acquired Shares
to the Trustee.
(b) The Company may sell or otherwise deliver to the Trustee
additional shares of Common Stock, to be held in trust hereunder.
(c) Except as otherwise provided herein, all cash dividends paid
in respect of shares of Common Stock held in the Trust shall be invested in
Cash Equivalents.
SECTION 2.2 Contributions to Repay Trust Indebtedness. The
Company shall contribute to the Trust in cash an amount which, when added
to cash dividends and other proceeds received by the Trust in respect of
Acquired Shares (or other shares of Common Stock) held in the Trust and not
previously applied under this Section 2.2, shall enable the Trustee to make
payments of principal and interest due under the Note on a timely basis or
to make mandatory or optional prepayments of such principal or interest.
The Trustee shall promptly apply all cash dividends paid in respect of
Acquired Shares (or other shares of Common Stock held in the Trust) and all
cash contributions to the payment of principal and interest under the Note,
whether mandatory or optional in nature. To the extent the Company fails to
make any contribution required under this Section 2.2 when due, such
contribution shall be deemed to have been made in the form of forgiveness
of principal and interest then due and owing on the Note (or forgiveness of
principal and interest to the extent of any mandatory or optional
prepayment, as the case may be). The Trustee shall be accountable for all
contributions received by it, but shall have no duty to require any
contributions to be made to it. The Committee (as hereinafter defined)
shall provide timely notice to the Trustee regarding each dividend payment
and each contribution to be made (or deemed to be made) pursuant to this
Section 2.2.
SECTION 2.3 Trust Corpus. As used herein, the term "Trust
Corpus" shall mean any cash, Cash Equivalents or shares of Common Stock
delivered, sold or otherwise contributed to the Trustee as described in
Section 2.1 or 2.2 hereof, together with any dividends or earnings thereon
or any proceeds from the disposition thereof, plus any cash or Cash
Equivalents or shares of Common Stock sold or otherwise delivered
thereafter pursuant to Section 2.1 or 2.2 hereof, together with any
earnings thereon or any proceeds from the disposition thereof (and less
such amounts distributed from the Trust pursuant to the terms hereof). As
used herein, the term "Cash Equivalents" shall mean securities issued or
directly and fully guaranteed by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the
United States is pledged in support thereof) having maturities of less than
one year from the date of acquisition or money market portfolios of
registered mutual funds, including those for which the Trustee or its
affiliates acts as investment advisor. The Trust Corpus shall at all times
be limited to shares of Common Stock and cash or Cash Equivalents.
ARTICLE III
RELEASE OF THE TRUST CORPUS
SECTION 3.1 Use of Assets. In accordance with the provisions
hereof and subject to Section 3.3 hereof, the Trustee shall apply the Trust
Corpus (1) to the payment of outstanding principal and interest on the
Note, in accordance with the terms thereof, (2) on behalf of the Company to
the satisfaction of the Company's contractual obligations under the Plans
in accordance with Section 3.2 hereof, (3) to the acquisition of additional
shares of Common Stock pursuant to Section 2.1(b) hereof, or (4) otherwise
as provided in Section 6.1 upon termination of the Trust.
SECTION 3.2 Release from Collateral. (a) On each date on
which payment is made (or deemed to have been made) of any principal amount
of the Note (a "Principal Payment Date"), the following number of Acquired
Shares (and related collateral) shall be released from collateral: the
number of Acquired Shares held in the Trust as collateral immediately prior
to the Principal Payment Date multiplied by a fraction, the numerator of
which is the amount of the principal payment made (or deemed to have been
made) on such date and the denominator of which is the principal amount of
the Note outstanding immediately prior to such principal payment. The
Trustee may confirm with the Committee the number of Acquired Shares to be
released, and if it does so, it may rely upon such confirmation. The
shares of Common Stock and related collateral released pursuant to this
Section 3.2 shall thereafter be available for application by the Trustee
for the purposes specified in Section 3.1 above. Any shares of Common
Stock subsequently acquired by the Trust which do not constitute collateral
for any borrowing of the Trust shall become available for use under Section
3.2(b) in the same proportion as the Acquired Shares are released from
collateral, as described above.
(b) The shares of Common Stock released from collateral (or
otherwise becoming available for use hereunder) at any time (1) first,
shall be transferred to the Administrator (as hereinafter defined) of the
Stock Purchase Plans (as defined in Section 4.4(a) hereof) to the extent
necessary to satisfy the Company's obligations under the Stock Purchase
Plans, (2) second, to the extent such shares of Common Stock remain after
the transfer provided for in clause (1), shall be transferred to the
Administrator of the Stock Option Plan (as defined in Section 4.4(a)
hereof) to the extent necessary to satisfy the Company's obligations under
the Stock Option Plan, and (3) thereafter, to the extent such shares of
Common Stock remain after the transfers provided for in clauses (1) and
(2), shall be transferred to the Director (as hereinafter defined) or
Administrators to satisfy the Company's obligations under such Plans as
determined by the Committee (as hereinafter defined), taking into account
the best interests of a broad cross-section of Participants.
(c) The Committee shall inform the Trustee in writing of
how many shares are required to fund the obligations referred to in clauses
(1),(2) and (3) of Section 3.2(b) above. The Trustee may rely upon written
instructions received from the Committee to carry out the provisions
contained in Section 3.2(b) above and shall have no responsibility to
verify, review or monitor the determinations made by the Committee.
(d) For purposes of this Trust Agreement, (1) the term
"Committee" shall mean a committee comprised of the Chief Financial
Officer, Chief Legal Officer and Director-Corporate Benefits of the Company
(the members of the Committee shall be certified to the Trustee by the
Secretary or Assistant Secretary of the Company); (2) the term
"Administrator" shall refer to the committee, Company official(s) or other
persons listed on Exhibit A charged with responsibility for overseeing and
administering the particular Plan or the designee thereof (as disclosed in
writing to the Trustee); and (3) the term "Director" shall mean the
Director-Corporate Benefits of the Company.
SECTION 3.3 Deliveries to Creditors of the Corporation. It is
the intent of the parties hereto that the Trust Corpus is and shall remain
at all times subject to the claims of the general creditors of the Company.
Accordingly, neither the Trustee nor the Company shall create a security
interest in the Trust Corpus in favor of the Plans, any participant therein
(each, a "Participant"), any beneficiary of such Participant (each, a
"Beneficiary") or any creditor. If the Trustee receives the notice
provided for in Section 3.4, or if the Trustee otherwise receives actual
notice that the Company is insolvent or bankrupt as defined in Section 3.4,
the Trustee shall make no further distributions of the Trust Corpus but
shall deliver the entire amount of the Trust Corpus only as a court of
competent jurisdiction, or duly appointed receiver or other person
authorized to act by such a court, may direct. The Trustee shall resume
distribution of the Trust Corpus under the terms hereof, upon no less than
30 days' advance notice to the Company, if the Trustee determines that the
Company was not, or is no longer, bankrupt or insolvent. Such
determination shall be made in a timely fashion, and shall be based upon a
decision of a court of competent jurisdiction, a report of a nationally
recognized appraisal firm or a certification by the Chief Executive Officer
of the Company or a determination of the Board of Directors of the Company
(the "Board"). The Trustee may conclusively rely upon any such decision,
report or certification. Unless the Trustee has actual knowledge of the
Company's bankruptcy or insolvency, the Trustee shall have no duty to
inquire whether the Company is bankrupt or insolvent. In no event shall
"actual knowledge" be deemed to include knowledge of the Company's credit
status held by banking officers or banking employees of The Northern Trust
Company which has not been communicated to the trust department of the
Trustee.
SECTION 3.4 Notification of Bankruptcy or Insolvency. The
Company shall advise the Trustee promptly in writing of the Company's
bankruptcy or insolvency. The Company shall be deemed to be bankrupt or
insolvent upon the occurrence of any of the following:
(i) the Company shall make an assignment for the
benefit of creditors; file a petition in bankruptcy; petition or
apply to any tribunal for the appointment of a custodian,
receiver, liquidator, sequestrator, or any trustee for it or a
substantial part of its assets; commence any case under any
bankruptcy, insolvency, reorganization, arrangement, readjustment
of debt, dissolution, liquidation or similar law or statute of
any jurisdiction (federal or state), whether now or hereafter in
effect; or if there shall have been filed any such petition or
application, or any such case shall have been commenced against
it, in which an order for relief is entered or which remains
undismissed for a period of 120 days; or the Company by any act
or omission shall indicate its consent to, approval of or
acquiescence in any such petition, application or case or order
for relief or to the appointment of a custodian, receiver or any
trustee for it or any substantial part of any of its property, or
shall suffer any such custodianship, receivership or trusteeship
to continue undischarged for a period of 120 days; or
(ii) the Company shall generally not pay its
debts as such debts become due or shall cease to pay its debts
generally in the ordinary course of business.
ARTICLE IV
ADMINISTRATION OF TRUST FUND
SECTION 4.1 Trustee. (a) The duties and responsibilities of
the Trustee shall be limited to those expressly set forth in this Trust
Agreement and the Stock Purchase Agreement, and no implied covenants or
obligations shall be read into this Trust Agreement against the Trustee.
(b) If, under circumstances described in Section 3.4 or
otherwise, all or any part of the Trust Corpus is at any time attached,
garnished, or levied upon by any court order, or in case the payment,
assignment, transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court order, or in case any order, judgment or
decree shall be made or entered by a court affecting such property or any
part thereof, then and in any of such events the Trustee is authorized, in
its sole discretion, to rely upon and comply with any such order, writ,
judgment or decree, and it shall not be liable to the Company, any Plan or
any Participant or Beneficiary by reason of such compliance even though
such order, writ, judgment or decree subsequently may be reversed,
modified, annulled, set aside or vacated.
(c) The Trustee or its agent shall maintain such books,
records and accounts as may be necessary for the proper administration of
the Trust Corpus (and agreed to from time to time between the Company and
the Trustee), and shall render to the Committee, within 30 days of the end
of each fiscal quarter of the Company, commencing with the fiscal quarter
ending October 3, 1998, until the termination of the Trust (and on the date
of such termination or as promptly as practicable thereafter), an
accounting with respect to the Trust Corpus as of the end of the then most
recent fiscal quarter (and as of the date of such termination).
(d) The Trustee shall not be liable for any act taken or
omitted to be taken hereunder if taken or omitted to be taken by it in good
faith. The Trustee shall also be fully protected in relying upon any
notice or instruction given hereunder which it in good faith believes to be
genuine and executed and delivered in accordance with this Trust.
(e) The Trustee may consult with legal counsel to be
selected by it, including counsel to the Company, and the Trustee shall not
be liable for any action taken or omitted to be taken by it in good faith
in accordance with the advice of such counsel.
(f) The Trustee shall be reimbursed by the Company for its
reasonable expenses incurred in connection with the performance of its
duties hereunder and shall be paid reasonable fees for the performance of
such duties. Any amounts payable to the Trustee under this paragraph (f)
may be payable from the Trust Corpus if not paid by the Company.
(g) Except for any damages, losses, claims or expenses
resulting from the Trustee's gross negligence or willful misconduct, the
Company agrees to indemnify and hold harmless the Trustee from and against
any and all damages, losses, claims or expenses as incurred (including
reasonable expenses of investigation and reasonable fees, charges and
disbursements of counsel to the Trustee and any taxes imposed on the Trust
Corpus or income of the Trust) arising out of or in connection with the
performance by the Trustee of its duties hereunder, including (except as
otherwise provided in Section 4.4 hereof) the failure of the Trustee to act
in the absence of direction from the person or entity responsible for such
direction. Without limiting the generality of the foregoing, the Trustee
shall be under no liability to any person for (and the Company shall
indemnify and hold the Trustee harmless from and against) any loss of any
kind which may result by reason of any action taken by it pursuant to
Section 4.4 or by reason of its exercising any power or authority under
Section 4.4 or by reason of the purchase or retention of Common Stock.
(h) Subject to the provisions of this Trust Agreement, the
Trustee shall have the following additional powers and authority, in
furtherance of the purpose of the Trust as described in Section 1.1(a),
with respect to property constituting a part or all of the Trust Corpus:
(i) To acquire and hold shares of Common Stock
and cash or Cash Equivalents, and, subject to Section 4.3 hereof,
to sell, exchange or transfer any such property at public or
private sale for cash or on credit and grant options for the
purchase or exchange thereof;
(ii) To exercise any conversion privilege or
subscription right available in connection with any such
property; subject to Sections 4.3 and 4.4 hereof, to oppose or to
consent to the reorganization, consolidation, merger or
readjustment of the finances of any corporation, company or
association, or to the sale, mortgage, pledge or lease of the
property of any corporation, company or association, any of the
securities of which may at any time be held in the Trust and to
do any act with reference thereto, including the exercise of
options, the making of agreements or subscriptions and the
payment of expenses, assessments or subscriptions, which may be
deemed necessary or advisable in connection therewith, and to
hold and retain any securities or other property which it may so
acquire;
(iii) To commence or defend suits or legal
proceedings and to represent the Trust in all suits or legal
proceedings; to settle, compromise or submit to arbitration, any
claims, debts or damages, due or owing to or from the Trust;
(iv) Subject to Sections 4.3 and 4.4 hereof, to
exercise, personally or by general or limited power of attorney,
any right, including the right to vote, appurtenant to any shares
of Common Stock or other property;
(v) To engage legal counsel, including counsel to
the Company, or any other suitable agents, to consult with such
counsel or agents with respect to the construction of this Trust
Agreement, the duties of the Trustee hereunder, the transactions
contemplated by this Trust Agreement or any act which the Trustee
proposes to take or omit to take, to rely upon the advice of such
counsel or agents, and to pay its reasonable fees, expenses and
compensation;
(vi) To register any securities held by it in its
own name or in the name of any custodian of such property or of
its nominee, including the nominee of any system for the central
handling of securities, with or without the addition of words
indicating that such securities are held in a fiduciary capacity,
to deposit or arrange for the deposit of any such securities with
such a system and to hold any securities in bearer form;
(vii) To make, execute and deliver, as Trustee,
any and all deeds, leases, notes, bonds, guarantees, mortgages,
conveyances, contracts, waivers, proxies, releases or other
instruments in writing necessary or proper for the exercise of
any of the foregoing powers; and
(viii) To take any other action necessary or
advisable in furtherance of the foregoing powers and the purposes
of this Trust.
SECTION 4.2 Successor Trustee. The Trustee may resign and be
discharged from its duties hereunder at any time by giving to the Company
notice in writing of such resignation specifying a date (not less than 30
days after the giving of such notice) when such resignation shall take
effect. Promptly after such notice, the Company shall appoint an
independent financial institution as successor trustee, such trustee to
become Trustee hereunder upon the resignation date specified in such
notice. The Trustee shall continue to serve until its successor accepts
the trust and receives delivery of the Trust Corpus. The Company may at
any time substitute an independent financial institution as successor
trustee by giving 15 days' notice thereof to the Trustee then acting. In
the event of such removal or resignation, the Trustee shall duly file with
the Committee a written statement or statements of account as provided in
Section 4.1(c) for the period since the last previous accounting of the
Trust, and if written objection to such account is not filed within 90
days, the Trustee shall to the maximum extent permitted by applicable law
be forever released and discharged from all liability and accountability
with respect to the propriety of its acts and transactions shown in such
account.
SECTION 4.3 Limitations on Sales and Borrowings. Except as
otherwise provided in Sections 3.2, 3.3, 4.4 and 6.1 hereof, the Trustee
shall not sell, exchange or transfer any shares of Common Stock or grant
any option for the purchase or exchange of any shares of Common Stock.
Except as contemplated by Section 2.1(a) hereof, the Trustee shall not
incur any indebtedness in connection with the acquisition of shares of
Common Stock.
SECTION 4.4 Voting and Tendering of Common Stock.
(a) Voting of Common Stock. The Trustee shall vote (or act by
written consent with respect to) the shares of Common Stock held by the
Trust in accordance with the provisions of this Section 4.4(a). As soon as
practicable following the record date in question, the Company shall
deliver to the Trustee a schedule (the "Eligible Participant Schedule")
listing Eligible Participants (as hereinafter defined) as of such record
date and the number of Directed Shares (as hereinafter defined) with
respect to which each Eligible Participant is entitled to direct the
voting. Each Eligible Participant listed on such Eligible Participant
Schedule shall have the right to direct the vote (or written consent) with
respect to that number of shares of Common Stock held by the Trust as of
such record date which is equal to the product (such product being
hereinafter referred to as the "Directed Shares") of (1) the sum of (a) the
number of shares of Common Stock purchased pursuant to the Company's
Employee Stock Ownership Plan or Franchised Dealer Stock Ownership Plan,
including any successor or substitute stock purchase plans as may be listed
on Exhibit A from time to time (collectively, the "Stock Purchase Plans"),
by the Eligible Participant during the immediately preceding 12 months and
(b) the total number of shares of Common Stock subject to stock options
granted pursuant to the Company's Amended and Restated Snap-On Incorporated
1986 Incentive Stock Program, as amended from time to time, including any
successor or substitute stock incentive or option plans as may be listed on
Exhibit A from time to time (such plans, the "Stock Option Plan") held by
the Eligible Participant which are then exercisable, multiplied by (2) a
fraction (not to exceed one) the numerator of which is the number of shares
of Common Stock held by the Trust as of such record date and the
denominator of which is the sum of (c) the number of shares of Common stock
purchased pursuant to the Stock Purchase Plans by all Eligible Participants
during the immediately preceding 12 months and (d) the total number of
shares of Common Stock subject to stock options granted pursuant to the
Stock Option Plan held by all Eligible Participants which are then
exercisable. If an Eligible Participant provides directions to the Trustee
with respect to the voting of (or action by written consent with respect
to) his or her Directed Shares, the Trustee shall vote (or act by written
consent with respect to), or abstain or withhold authority with respect to,
as applicable, shares of Common Stock held by the Trust as of such record
date which are equal in number to such Directed Shares in accordance with
the directions of such Eligible Participant. With respect to (1) shares of
Common Stock held by the Trust as of such record date equal to the
aggregate number of Directed Shares with respect to which the Trustee has
not received directions from Eligible Participants and (2) shares of Common
Stock held in the Trust as of such record date which are in excess of the
aggregate number of Directed Shares (the shares referred to in (1) and (2)
being collectively referred to as the "Mirrored Shares"), the Trustee shall
vote (or act by written consent with respect to), or abstain or withhold
authority with respect to, as applicable, the Mirrored Shares in the same
proportion as the Directed Shares with respect to which the Trustee has
received voting (or written consent) directions from Eligible Participants.
The Trustee shall devise and implement a procedure to assure
confidentiality of any directions given by Eligible Participants in respect
of votes. All actions taken by Eligible Participants pursuant to this
Section 4.4(a) shall be held confidential by the Trustee and shall not be
divulged or released to any person, other than (i) agents of the Trustee
who are not affiliated with the Company or its affiliates, (ii) by virtue
of the execution by the Trustee of any proxy, consent or letter of
transmittal for the shares of Common Stock held in the Trust, (iii) as may
be required by court order or (iv) as otherwise necessary for the Trustee
to carry out its responsibilities under this Agreement. For purposes of
this Agreement, "Eligible Participant" shall mean a Participant who, as of
the date of determination, (a) is actively employed by (or is a franchise
dealer with respect to) the Company, (b) is not a member of the Board of
Directors of the Company, and (c) either (1) holds an exercisable option
with respect to Common Stock granted to him or her pursuant to the Stock
Option Plan or (2) on whose behalf Common Stock was purchased pursuant to
either of the Stock Purchase Plans within the 12-month period immediately
preceding such date.
(b) Tender or Exchange of Common Stock. If any person shall
commence a tender or exchange offer with respect to the Common Stock, the
Trustee shall tender or exchange the shares of Common Stock held by the
Trust in accordance with the provisions of this Section 4.4(b). As soon as
practicable following the commencement of such tender or exchange offer,
the Company shall deliver to the Trustee an Eligible Participant Schedule
listing the Eligible Participants as of the commencement of such tender or
exchange offer and the number of Directed Shares with respect to which each
Eligible Participant is entitled to direct the tender or exchange. Each
Eligible Participant listed on such Eligible Participant Schedule shall
have the right to direct the tender or exchange of that number of shares of
Company Stock held by the Trust equal to the number of Directed Shares (as
defined in Section 4.4(a) above); and if an Eligible Participant provides
directions to the Trustee with respect to the tender or exchange of his or
her Directed Shares, the Trustee shall tender or exchange shares of Common
Stock held by the Trust which are equal in number to such Directed Shares
in accordance with the directions of such Eligible Participant. The
Trustee shall tender or exchange the Mirrored Shares (as defined in Section
4.4(a) above) in the same proportion as the Directed Shares with respect to
which the Trustee has received tender or exchange directions from Eligible
Participants. The Trustee shall devise and implement a procedure to assure
the confidentiality of any directions given by Eligible Participants in
response to such offers. All actions taken by Eligible Participants
pursuant to this Section 4.4(b) shall be held confidential by the Trustee
and shall not be divulged or released to any person, other than (i) agents
of the Trustee who are not affiliated with the Company or its affiliates,
(ii) by virtue of the execution by the Trustee of any proxy, consent or
letter of transmittal for the shares of Common stock held in the Trust,
(iii) as may be required by court order or (iv) as otherwise necessary for
the Trustee to carry out its responsibilities under this Agreement.
(c) Notices and Information Statements. In addition to the
information required to be provided by the Committee pursuant to Sections
4.4(a) and 4.4(b) hereof, the Committee shall provide the Trustee in a
timely manner with notices and information statements (including proxy
statements) when voting rights are to be exercised, and with respect to
tender, exchange or similar offers, notices and offer materials, at the
same time and in the same manner (except to the extent the Securities
Exchange Act of 1934, as amended (the "Exchange Act") requires otherwise)
as such notices, information statements and offer materials are provided to
shareholders of the Company generally. The Trustee shall, in turn, provide
to Eligible Participants all material received from the Committee pursuant
to this Section 4.4(c).
ARTICLE V
CERTAIN ADMINISTRATIVE PROVISIONS
SECTION 5.1 Form of Participant Schedule. The Trustee may,
from time to time, request the Committee to prepare and deliver to the
Trustee in accordance with Subsection 5.2 hereof, a schedule (the
"Participant Schedule") that sets forth the name of each Participant or
such group of Participants and all such other information that the Trustee
may need to know in order to carry out the provisions of this Trust
Agreement.
SECTION 5.2 Maintaining the Participant Schedule. At the
request of the Trustee, the Committee shall from time to time update the
Participant Schedule. Each Participant Schedule shall state the date as of
which it applies, and the Trustee shall be entitled to rely upon such
Participant Schedule, without a duty of further inquiry, until it receives
an updated Participant Schedule bearing a later date. Each Participant
Schedule shall contain all information concerning a Participant and all
such other information which the Trustee will need to complete its
responsibilities under this Trust Agreement.
ARTICLE VI
TERMINATION AND AMENDMENT
SECTION 6.1 Termination. The Trust shall be terminated on the
earlier of the fifteenth anniversary of the date hereof or the date on
which any of the following events occurs (the "Termination Date"): (a) the
Company's contractual obligations under the Plans are satisfied in full;
(b) the Trust Corpus is exhausted; (c) the Department of Labor or a court
of competent jurisdiction has determined that the assets of the Trust are
subject to Part 4 of Subtitle B of Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"); (d) the Internal Revenue
Service or a court of competent jurisdiction has determined that any
portion of the Trust Corpus is presently taxable to any Participant or
Beneficiary; or (e) the date of occurrence of a Change in Control (as
defined in Section 6.2(c) hereof). Upon termination of the Trust, any
remaining portion of the Trust Corpus shall be applied as expeditiously as
possible as follows: first, to satisfy any outstanding principal and
interest on the Note (and the Trustee shall dispose of a sufficient number
of shares of Common Stock (or, if applicable, property received in exchange
for Common Stock in connection with a Change in Control), either on the
open market or in privately negotiated transactions with one or more third
parties (other than the Company), so that, when added to any cash and Cash
Equivalents then held in the Trust, will enable the Trustee to satisfy such
principal and interest); second, the remaining shares of Common Stock and
other assets constituting the Trust Corpus shall be transferred to the
Administrator or Director to be distributed in the form of Common Stock or
cash (as provided pursuant to the terms of a particular Plan) to
Participants as provided in, and in the order set forth in, Section 3.2(b)
hereof; and thereafter, any remaining shares of Common Stock or other
assets constituting the Trust Corpus shall be transferred to the Director
to fund contractual obligations of the Company, or otherwise provide
benefits to current employees of the Company, under one or more employee
benefit plans, agreements, programs, arrangements or practices of the
Company (other than Plans) as determined by the Committee, taking into
account the best interests of a broad cross-section of employees of the
Company. In no event shall the Company receive any distribution of the
Trust Corpus upon termination of the Trust, except in repayment of unpaid
principal and interest due under the Note.
SECTIONS 6.2 Amendment. (a) The Company may amend this Trust
Agreement, by written instrument executed and duly authorized by the
Company; provided however, that a revision to Exhibit A hereto which adds
Plans thereto or deletes Plans therefrom, may be made only if (1) at least
one Plan does not constitute an employee benefit plan (within the meaning
of ERISA) and (2) in making any such revision the Company acts in good
faith, taking into account the best interests of a broad cross-section of
employees of the Company; and provided, further, however, that no such
amendment shall accelerate the Termination Date, materially alter the
provisions of Sections 2.2, 3.1, 3.2, 4.3, 4.4 or 6.1 hereof or this
Section 6.2 or permit the Company to receive any distribution of the Trust
Corpus except in repayment of unpaid principal and interest due under the
Note or any subsequent indebtedness incurred by the Trustee; and provided,
further, however, that no amendment to this Trust Agreement pursuant to
this Section 6.2(a) or Section 6.2(b) hereof shall modify the
responsibilities or duties of the Trustee without its written consent.
(b) Notwithstanding Section 6.2(a) hereof, (1) the Company may
amend this Trust Agreement from time to time in such a manner as may be
necessary, in the opinion of independent counsel, to prevent this Trust
Agreement or the Trust from becoming subject to ERISA or to prevent the
current taxation of the Trust Fund to any Participant or Beneficiary; (2)
the Company may amend this Trust Agreement to authorize the Trustee to
undertake future borrowings to acquire additional shares of Common Stock;
provided, however, that such borrowings are on terms and are subject to
limitations and restrictions consistent in all material respects with those
applicable to the borrowing evidenced by the Note; (3) the Company may
amend the provisions of Section 4.4 to include as Eligible Participants
those participants in one or more tax-qualified defined contribution plans
maintained by the Company and to have the shares of Common Stock allocated
to the accounts of such participants in such plans taken into account for
purposes of applying the provisions of said Section 4.4; and (4) this Trust
Agreement may be amended in any respect (other than to permit the Company
to receive any distribution of the Trust Corpus except in repayment of
unpaid principal and interest due under the Note or any subsequent
indebtedness incurred by the Trustee), so long as such amendment has been
approved by the affirmative vote of Eligible Participants who, as of a date
not earlier than thirty (30) days prior to the date of such amendment, have
the right to direct the Trustee with respect to more than fifty percent
(50%) of the aggregate number of Directed Shares. To the maximum extent
practicable, the procedures implemented in connection with obtaining the
approval referred to in clause (4) of the preceding sentence shall be
consistent with the procedures set forth in Section 4.4 hereof.
(c) For purposes of this Trust Agreement, a "Change in Control"
shall be deemed to have occurred if the event set forth in any one of the
following paragraphs shall have occurred:
(i) any Person is or becomes the beneficial owner, as
defined in Rule 13d-3 under the Exchange Act (the "Beneficial
Owner"), directly or indirectly, of securities of the Company
(not including in the securities beneficially owned by such
Person any securities acquired directly from the Company or its
affiliates) representing 25% or more of either the then
outstanding shares of Common Stock or the combined voting power
of the Company's then outstanding voting securities; or
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any
new director (other than a director whose initial assumption of
office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company, as such
terms are used in Rule 14a-11 of Regulation 14A under the
Exchange Act) whose appointment or election by the Board or
nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors on the date hereof
or whose appointment, election or nomination for election was
previously so approved; or
(iii) the shareholders of the Company approve a merger
or consolidation of the Company with any other corporation or
approve the issuance of voting securities of the Company in
connection with a merger or consolidation of the Company (or any
direct or indirect subsidiary of the Company) pursuant to
applicable stock exchange requirements, other than (1) a merger
or consolidation which would result in the voting securities of
the Company 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 Company or
such surviving entity or any parent hereof outstanding
immediately after such merger or consolidation, or (2) a merger
or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or become
the Beneficial Owner, directly or indirectly, of securities of
the Company (not including in the securities beneficially owned
by such Person any securities acquired directly from the Company
or its affiliates) representing 25% or more of either the then
outstanding shares of Common Stock or the combined voting power
of the Company's then outstanding voting securities; or
(iv) the shareholders of the Company approve a plan of
complete liquidation or dissolution of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets (in one transaction or
a series of related transactions within any period of 24
consecutive months), other than a sale or disposition by the
Company of all or substantially all of the Company's assets to an
entity, at least 75% of the combined voting power of the voting
securities of which are owned by Persons in substantially the
same proportions as their ownership of the Company immediately
prior to such sale.
Notwithstanding the foregoing, no "Change in 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 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 Company immediately following such transaction or series of
transactions.
The Committee shall notify the Trustee promptly in writing upon
any Change in Control; the Trustee may conclusively rely upon such notice,
and the Trustee shall have no responsibility for independently determining
whether any such event has occurred.
(d) For purposes of Section 6.2(c) hereof, the term "Person"
shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its subsidiaries, (ii) an underwriter
temporarily holding securities pursuant to an offering of such securities,
(iv) a corporation owned, directly or indirectly, by the shareholders of
the Company in substantially the same proportions as their ownership of
stock of the Company, or (v) the Trustee, in its capacity as Trustee of the
Trust created hereby.
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.1 Certain Provisions Relating to This Trust Agreement.
(a) This Trust Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and legal representatives.
(b) This Trust Agreement shall be governed by and construed
in accordance with the laws of Delaware, without reference to any
provisions of such laws regarding choice of laws or conflict of laws.
(c) In the event that any provision of this Trust Agreement
or the application thereof to any person or circumstances shall be
determined by a court of proper jurisdiction to be invalid or unenforceable
to any extent, the remainder of this Trust Agreement, or the application of
such provision to persons or circumstances other than those as to which it
is held invalid or unenforceable, shall not be affected thereby, and each
other provision of this Trust Agreement shall be valid and enforced to the
fullest extent permitted by law.
SECTION 7.2 Notices. Any notice, report, demand or waiver
required or permitted hereunder shall be in writing and shall be given
personally, delivered by overnight delivery service or sent by telecopier,
addressed as follows:
If to the Company:
Snap-On Incorporated
P.O. Box 1410
Kenosha, Wisconsin 53141-1410
Attention: General Counsel
If to the Trustee:
The Northern Trust Company
50 S. LaSalle Street
Chicago, Illinois 60675
Attention: Mr. John Malusa
Notices shall be effective only upon receipt.
The Company or Trustee may change the address to which notices,
requests and other communications are to be sent to it by giving written
notice of such address change to the other parties in conformity with this
Section 7.2.
SECTION 7.3 Gender and Number. Wherever any words are used
herein in the masculine gender, they shall be construed as though they were
also used in the feminine gender in all cases where they would so apply,
and wherever any words are used herein in the singular form, they shall be
construed as though they were also used in the plural form in all cases
where they would so apply. Likewise, wherever any words are used herein in
the plural form, they shall be construed as though they were also used in
the singular form in all cases where they would so apply.
SECTION 7.4 Headings. The headings and subheadings of this
Agreement have been inserted for convenience of reference and are to be
ignored in any construction of the provisions hereof.
SECTION 7.5 No Third Party Beneficiaries. Nothing in this
Trust, express or implied, is intended to or shall confer on any particular
person, other than the Company and the Trustee, any right, benefit or
remedy of any nature whatsoever under or by reason of this Trust, and no
such person shall have any right, title or interest in or any claim to the
Trust Corpus except as expressly provided herein. In particular, it is the
express intent of the parties that (i) this Trust shall not form part of
any of the Plans, (ii) neither any Plan nor any Participant in any of the
Plans (nor any Beneficiary of such Participant) shall have any right, title
or beneficial ownership or other interest in or any claim (preferred or
otherwise) to the Trust Corpus, nor, except as otherwise expressly provided
herein, shall any such participant have any right to compel, restrain or
otherwise direct the exercise of the respective powers of Trustee and the
Company hereunder, it being understood that the rights of each such
Participant (and Beneficiary) shall be determined in accordance with the
provisions of the Plans and (iii) except as otherwise expressly provided
herein, the Trust Corpus shall not be deemed to be held under any trust for
the benefit of any such Participant (or Beneficiary) or to be collateral
security for the performance of the obligations of the Company.
SECTION 7.6 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original,
but all of which together constitute but one instrument, which may be
sufficiently evidenced by any counterpart.
SECTION 7.7 Successors. Effective upon consolidation of the
Company with, or merger of the Company with or into, any corporation or
corporations or other entity or entities, or any sale or conveyance of all
or substantially all of the assets of the Company, the Trustee shall deal
with the corporation formed by such consolidation, or with or into which
the Company is merged, or the person that acquires the assets of the
Company, on the same basis as it dealt with the Company prior to such
transactions and, in such event, the term "Company" within this Agreement
shall mean such corporation or person.
SECTION 7.8 Grantor Trust. The Trust shall be treated as a
grantor trust of the Company under the Code, and the Company shall take
into account in computing its tax liability, those items of income,
deductions and credits against tax attributable to assets held in the Trust
to which the Company would have been entitled had the Trust not been in
existence. The Trustee shall notify the Company promptly after it becomes
aware of any tax liability assessed against, or imposed upon, the Trust or
the Trustee in its capacity as Trustee of the Trust. The Company shall be
responsible for all matters in respect of such assessment or imposition,
and shall have sole responsibility for any defense in connection therewith.
Payments in respect of any tax liability of the Company arising in
connection with earnings, gains or activities relating to the Trust,
including, without limitation interest and penalties, shall be made by the
Company. The Company shall also be responsible for directing the Trustee
with respect to any tax withholding and filing applicable to any
distributions from the Trust.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in their respective names by their duly authorized officers on the
day and year first above written.
SNAP-ON INCORPORATED
By: /s/ Susan F. Marrinan
-----------------------------
Name: Susan F. Marrinan
Title: Vice President, Secretary
and General Counsel
THE NORTHERN TRUST COMPANY,
solely in its capacity as
trustee under this Trust
Agreement
By: /s/ John J. Malusa
-----------------------------
Name: John J. Malusa
Title: Vice President
EXHIBIT A
PLANS/ADMINISTRATOR
Plan Administrator
Snap-on Incorporated 401(k) Personal The Company
Savings Plan
Snap-on Incorporated 401(k) Personal The Company
Savings Plan for Collective Bargained
Employees
Snap-on Tools Company 401(k) Matching The Company
Plan
Snap-on Incorporated 401(k) Savings Plan The Company
for Subsidiaries
Snap-on Incorporated Employee Stock President of the Company
Ownership Plan
Snap-on Incorporated Franchised Dealer President of the Company
Stock Ownership Plan
Snap-on Incorporated Deferred A Committee consisting of
Compensation Plan the Organization & Executive
Compensation Committee
Amended and Restated Snap-on Incorporated A Committee of the Board of
1986 Incentive Stock Option Plan Directors (the President
and the Chairman of the O&E
Committee)
Snap-on Incorporated Supplemental The Company
Retirement Plan for Officers
Snap-on Incorporated Retirement Plan The Company
for Administrative and Field Employees
Snap-on Incorporated Retirement Plan The Company
for Hourly Employees
Snap-on Incorporated Comprehensive The Company
Health Benefits Program for Retirement
Employees (Plan 546)
Snap-on Incorporated Comprehensive The Company
Health Benefits Program for Active
Employees (Plan 545)
All compensation, bonus and other The Company
pay-related programs sponsored by Snap-on
Incorporated and/or its Subsidiaries for
employees generally
All other Health and Welfare and The Company
Retirement* Benefit Plans sponsored by
Snap-on Incorporated and/or its
Subsidiaries for employees generally
------------------------------
* As used herein, these terms have the meaning ascribed to them under ERISA.
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated July 2, 1998,
between Snap-On Incorporated, a Delaware corporation (the "Seller"), and
The Northern Trust Company, not in its individual or corporate capacity,
but solely in its capacity as trustee (the "Trustee") of the Trust (the
"Trust", which is hereinafter sometimes referred to as the "Purchaser")
under a trust agreement between the Seller and the Trustee dated July 2,
1998 (the "Trust Agreement").
WHEREAS, as contemplated by the Trust Agreement, the Purchaser is
to purchase from the Seller, and the Seller is to issue and sell to the
Purchaser from Seller's treasury, an aggregate of 7,100,000 shares (the
"Acquired Shares") of the common stock, par value $1.00 per share, of
Seller ("Common Stock"), all as more specifically provided herein;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and
conditions herein set forth, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
SECTION 1.1 Purchase and Sale. Subject to the terms and
conditions set forth herein, at the Closing (as defined below) the Seller
will issue and sell to the Purchaser, and the Purchaser will purchase from
the Seller, the Acquired Shares and, in consideration for the Acquired
Shares, the Purchaser will deliver to the Seller a note substantially in
the form of Appendix I to this Agreement in the principal amount of
$260,037,500 (the "Note"). The Seller has determined such principal amount
based on the closing price per share of Common Stock on the New York Stock
Exchange on the business day immediately preceding the Closing (as
hereinafter defined).
SECTION 1.2 Closing. The closing of the sale and purchase of
the Acquired Shares hereunder (the "Closing") will be held at the offices
of the Seller on the date of execution and delivery of this Agreement by
the Seller and the Purchaser, or at such other date and place as may be
mutually agreed upon by the Seller and the Purchaser.
SECTION 1.3 Delivery and Payment. At the Closing, the Seller
will deliver to the Purchaser a certificate representing the Acquired
Shares, which certificate shall be registered in the name of the Trustee,
or the name of its nominee, against payment by the Purchaser to the Seller
of the aggregate consideration set forth in Section 1.1 therefor. The
Seller will pay all stamp and other transfer taxes, if any, that may be
payable in respect of the sale and delivery of the Acquired Shares.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser, as of the
date of this Agreement, as follows:
SECTION 2.1 Corporate Existence and Authority. The Seller (a) is
a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, (b) has all requisite corporate power to
execute, deliver and perform this Agreement and (c) has taken all necessary
corporate action to authorize the execution, delivery and performance of
this Agreement.
SECTION 2.2 No Conflict. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby
will violate, conflict with or constitute a default under (a) the Seller's
certificate of incorporation or bylaws, (b) any agreement, indenture or
other instrument to which the Seller is a party or by which the Seller or
its assets may be bound or (c) any law, regulation, order, arbitration,
award, judgment or decree applicable to the Seller.
SECTION 2.3 Validity. This Agreement has been duly executed and
delivered by the Seller and is a valid and binding agreement of the Seller
enforceable against the Seller in accordance with its terms, except as the
enforceability thereof may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other laws
affecting the enforcement of creditors' rights generally, and by general
principles of equity.
SECTION 2.4 The Acquired Shares. The Acquired Shares have been
duly authorized and when sold as contemplated hereby will be validly
issued, fully-paid and nonassessable shares of the Seller. No stockholder
of the Seller has any preemptive or other subscription right to acquire any
Acquired Shares. The Seller will convey to the Purchaser, on the date of
Closing, good and valid title to the Common Shares, free and clear of any
liens, claims, security interests and encumbrances, except for those liens,
claims, security interests and encumbrances described in the Note and
subject to Section 3.3 of the Trust Agreement (relating to the delivery of
trust assets to general creditors of the Company).
SECTION 2.5 Litigation. There are no actions, suits,
proceedings, arbitrations or investigations pending, or to the Seller's
knowledge, threatened in any court or before any governmental agency or
instrumentality or arbitration panel or otherwise against or by the Seller
which seek to or could restrain, prohibit, rescind or declare unlawful, or
result in substantial damages in respect of, this Agreement or the
performance hereof by the Seller (including, without limitation, the
delivery of the Acquired Shares).
SECTION 2.6 Business and Financial Information. Seller has
previously delivered to Purchaser copies of (a) the consolidated balance
sheets of Seller and its subsidiaries, as of January 3, 1998 and December
28, 1996, and the related consolidated statements of operations,
stockholders' equity and cash flows for the fiscal years then ended, as
reported in Seller's Annual Report on Form 10-K for the fiscal year ended
January 3, 1998, filed with the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934, as amended (the "1934
Act"), and (b) the unaudited consolidated balance sheet of Seller and its
subsidiaries as of March 29, 1997, and March 28, 1998, and the related
unaudited consolidated statements of operations, stockholders' equity and
cash flows for the quarterly periods then ended as reported in Seller's
Quarterly Report on Form 10-Q for the period ended March 28, 1998, filed
with the SEC under the Exchange Act. The January 3, 1998 consolidated
balance sheet of Seller (including the related notes, where applicable)
fairly presents the consolidated financial position of Seller and its
subsidiaries as of the date thereof, and the other financial statements
referred to in this Section 2.6 (including the related notes, where
applicable) fairly present (subject, in the case of the unaudited
statements, to recurring audit adjustments normal in nature and amount) the
results of the consolidated operations and changes in stockholders' equity
and consolidated financial position of Seller and its subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth.
Since January 3, 1998, Seller has filed with the SEC all forms, reports and
documents required pursuant to the Securities Act of 1933, as amended (the
"1933 Act"), and the 1934 Act, to be filed by it (the "Disclosure
Documents"). At the time filed, all of the Disclosure Documents complied
as to form in all material respects with all applicable requirements of
such Acts. None of the Disclosure Documents, at the time filed, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller as
follows:
SECTION 3.1 Authority; Validity. The Purchaser has full power
and authority under the Trust to execute and deliver this Agreement and the
Note and to consummate the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Trustee
on behalf of the Trust and is a valid and binding agreement of the
Purchaser enforceable in accordance with its terms, except as the
enforceability thereof may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other laws
affecting the enforcement of creditors' rights generally, and by general
principles of equity. The Note has been duly authorized by the Trustee on
behalf of the Trust and, upon the execution and delivery by the Trustee on
behalf of the Trust, the Note will be a valid and binding agreement of the
Purchaser enforceable in accordance with its terms, except as the
enforceability thereof may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other laws
affecting the enforcement of creditors' rights generally, and by general
principles of equity.
SECTION 3.2 No Conflict. To the best of the Purchaser's
knowledge, none of the execution and delivery of this Agreement, the
execution and delivery of the Note, and the consummation of the
transactions contemplated hereby and thereby will violate, conflict with or
constitute a default under (a) the terms of the Trust, (b) any agreement,
indenture or other instrument to which the Trust is a party or by which the
Trust or its assets may be bound or subject or (c) any law, regulation,
order, arbitration award, judgment or decree applicable to the Trust.
ARTICLE IV
RESTRICTIONS ON DISPOSITION OF THE COMMON SHARES
SECTION 4.1 Restricted Securities. The Purchaser acknowledges
that the Purchaser is acquiring the Acquired Shares pursuant to a
transaction exempt from registration under the 1933 Act. The Purchaser
represents, warrants and agrees that all Acquired Shares acquired by the
Purchaser pursuant to this Agreement are being acquired for investment
without any intention of making a distribution thereof, or of making any
sale or other disposition thereof which would be in violation of the 1933
Act or any applicable state securities law, and that the Purchaser will not
dispose of any of the Acquired Shares, except that the Trustee may, from
time to time, convey a portion of the Acquired Shares pursuant to the terms
of the Trust Agreement.
SECTION 4.2 Legend. Until such time as the Acquired Shares are
registered pursuant to the provisions of the 1933 Act, any certificate or
certificates representing the Acquired Shares delivered pursuant to Section
1.3 will bear a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may
not be sold, transferred or otherwise disposed of unless they
have first been registered under such Act or unless an exemption
from registration is available."
The Seller may place stop transfer orders against the registration of
transfer of any share evidenced by such a certificate or certificates until
such time as the requirements of the foregoing are satisfied.
ARTICLE V
COVENANTS OF SELLER
The Seller agrees that:
SECTION 5.1 Financial Statements, Reports and Documents.
Subsequent to the Closing, and for as long as any of the Acquired Shares
are held by the Trust (unless the Trustee shall otherwise consent in
writing), the Seller shall deliver to the Trustee each of the following:
(a) Annual Statements. As soon as available and in any
event within one hundred twenty (120) days after the close of each fiscal
year of the Seller, copies of the consolidated balance sheet of the Seller
and its subsidiaries as of the close of such fiscal year and the
consolidated statement of operations, consolidated statement of changes in
stockholders' equity and consolidated statement of cash flow of the Seller
and its subsidiaries for such fiscal year, in each case setting forth in
comparative form the figures for the preceding fiscal year, all in
reasonable detail and accompanied by an opinion thereon of Arthur Anderson
LLP, or of other independent public accountants of recognized national
standing, to the effect that such financial statements have been prepared
in accordance with generally accepted accounting principles and that the
examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards and, accordingly, include such tests of the accounting records
and such other auditing procedures as were considered necessary in the
circumstances;
(b) SEC and Other Reports. Promptly upon their becoming
available, one copy of each financial statement, report, notice or proxy
statement sent by the Seller to stockholders generally and of each regular
or periodic report, registration statement or prospectus (other than any
registration statement on Form S-8 and its related prospectus) filed by the
Seller with the Securities and Exchange Commission or any successor agency;
and
SECTION 5.2 Registration. The Seller shall take all actions
necessary or appropriate, at its own expense, to ensure that prior to any
disposition of Acquired Shares by the Trustee in accordance with the Trust
Agreement, a registration statement has been filed with the Securities and
Exchange Commission (and remains effective) with respect to the Acquired
Shares being so disposed. The Seller shall also use its commercially
reasonable efforts to register or qualify such Acquired Shares under the
securities blue sky laws of such jurisdictions within the United States as
the Trustee may reasonably request, within seventy-five (75) days of such
request; provided, however, that the Seller shall not be required to
consent to general service of process for all purposes in any jurisdiction
where it is not then qualified.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Expenses. The Seller shall pay all of its expenses,
and it shall pay the Purchaser's expenses, in connection with the
authorization, preparation, execution and performance of this Agreement,
including without limitation the reasonable fees and expenses of the
Trustee, its agents, representatives, counsel, financial advisors and
consultants.
SECTION 6.2 Notices. All notices, requests, or other
communications required or permitted to be delivered hereunder shall be in
writing, delivered by registered or certified mail, return receipt
requested, as follows:
(a) To the Seller:
Snap-On Incorporated
P.O. Box 1410
Kenosha, Wisconsin 53141-1410
Attention: General Counsel
(b) To the Purchaser:
The Northern Trust Company
50 S. LaSalle Street
Chicago, Illinois 60675
Attention: Mr. John Malusa
Any party hereto may from time to time, by written notice given as
aforesaid, designate any other address to which notices, requests or other
communications addressed to it shall be sent.
SECTION 6.3 Specific Performance. The parties hereto
acknowledge that damages would be an inadequate remedy for any breach of
the provisions of this Agreement and agree that the obligations of the
parties hereunder shall be specifically enforceable, and neither party will
take any action to impede the other from seeking to enforce such rights of
specific performance.
SECTION 6.4 Successors and Assigns; Integration; Assignment.
This Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective legal
representatives, successors and assigns. This Agreement (a) constitutes,
together with the Note, the Trust Agreement and any other written
agreements between the Purchaser and the Seller executed and delivered on
the date hereof, the entire agreement between the parties hereto and
supersedes all other prior agreements and understandings, both written and
oral, among the parties, with respect to the subject matter hereof, (b)
shall not confer upon any person other than the parties hereto any rights
or remedies hereunder and (c) shall not be assignable by operation of law
or otherwise, except that the Trustee may assign all its rights hereunder
to any corporation or other institution exercising trust powers in
connection with any such institution assuming the duties of a trustee under
the Trust.
SECTION 6.5 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
regard to its conflicts of law doctrine.
SECTION 6.6 Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement.
SECTION 6.7 Amendment and Waiver. No amendment or waiver of any
provision of this Agreement or consent to departure therefrom shall be
effective unless in writing and signed by the Purchaser and the Seller.
SECTION 6.8 Counterparts. This Agreement may be executed in any
number of counterparts with the same effect as if the signatures thereto
were upon one instrument.
SECTION 6.9 Certain Limitations. The execution, delivery and
performance by the Trustee of this Agreement have been, and will be,
effected by the Trustee, solely in its capacity as Trustee under the terms
of the Trust and not in its individual or corporate capacity. Nothing in
this Agreement shall be interpreted to increase, decrease or modify in any
manner any liability of the Trustee to the Seller or to any trustee,
representative or other claimant by right of the Seller resulting from the
Trustee's performance of its duties under the constituent instruments of
the Trust.
SECTION 6.10 Incorporation. The terms and conditions of the
Trust Agreement relating to the nature of the responsibilities of the
Trustee and the indemnification of the Trustee by the Seller are
incorporated herein by reference and made applicable to this Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement on the date and year first above written.
SNAP-ON INCORPORATED
By: /s/ Susan F. Marrinan
------------------------------
Name: Susan F. Marrinan
Title: Vice President, Secretary
and General Counsel
THE NORTHERN TRUST COMPANY,
solely in its capacity as
trustee under the Trust
Agreement
By: /s/ John J. Malusa
-----------------------------
Name: John J. Malusa
Title: Vice President
TRUST NOTE
THE NORTHERN TRUST COMPANY, AS TRUSTEE
$260,037,500.00 July 2, 1998
FOR VALUE RECEIVED, the undersigned, THE NORTHERN TRUST COMPANY,
solely in its capacity as trustee (the "Trustee"), under the Benefit Trust
Agreement dated July 2, 1998 (the "Trust Agreement") between the Trustee
and Snap-On Incorporated (the "Company"), hereby unconditionally promises
to pay to the order of the Company the principal amount of Two Hundred
Sixty Million Thirty Seven Thousand Five Hundred Dollars ($260,037,500.00)
(the "Original Principal Amount"), with interest (computed on the basis of
the actual number of days elapsed over a year of 365 days) on the unpaid
principal balance at the rate of 5.80% per annum from and including the
date hereof, until the principal hereof shall be paid in full.
This Note is issued by the Trustee pursuant to the Stock Purchase
Agreement, dated the date hereof, between the Company and the Trustee (the
"Stock Purchase Agreement") as payment for the Acquired Shares, as defined
in the Stock Purchase Agreement, and is the Note referred to in Section
2.1(a) of the Trust Agreement. This Note is entitled to the benefits, and
shall be subject to the applicable provisions, of the Stock Purchase
Agreement and the Trust Agreement, including, but not limited to, the
provisions of Section 2.2 of the Trust Agreement. The Trustee is executing
this Note solely in its capacity as trustee under the Trust Agreement. The
Trustee shall have no liability or obligation of any kind in its individual
capacity to the Company or its successors as a result of the execution or
issuance of this Note.
The unpaid principal balance and accrued and unpaid interest
hereunder shall be due and payable in accordance with the following
schedule, if not sooner paid:
accrued and unpaid interest shall be due and payable on each
payment date for the payment of a quarterly cash dividend by the
Company, but only to the extent of cash dividends paid on
Acquired Shares and other shares of Common Stock (as defined in
the Trust Agreement) held in the Trust (as defined in the Trust
Agreement) on the record date for the payment of such dividend;
2.5% of the Original Principal Amount plus accrued and unpaid
interest, on or before June 30, 1999;
2.5% of the Original Principal Amount plus accrued and unpaid
interest, on or before June 30, 2000;
2.5% of the Original Principal Amount plus accrued and unpaid
interest, on or before June 30, 2001;
2.5% of the Original Principal Amount plus accrued and unpaid
interest, on or before June 30, 2002;
23.33% of the Original Principal Amount plus accrued and unpaid
interest, on or before June 30, 2003;
2.5% of the Original Principal Amount plus accrued and unpaid
interest, on or before June 30, 2004;
2.5% of the Original Principal Amount plus accrued and unpaid
interest, on or before June 30, 2005;
2.5% of the Original Principal Amount plus accrued and unpaid
interest, on or before June 30, 2006;
2.5% of the Original Principal Amount plus accrued and unpaid
interest, on or before June 30, 2007;
23.33% of the Original Principal Amount plus accrued and unpaid
interest, on or before June 30, 2008;
2.5% of the Original Principal Amount plus accrued and unpaid
interest, on or before June 30, 2009;
2.5% of the Original Principal Amount plus accrued and unpaid
interest, on or before June 30, 2010;
2.5% of the Original Principal Amount plus accrued and unpaid
interest, on or before June 30, 2011;
2.5% of the Original Principal Amount plus accrued and unpaid
interest, on or before June 30, 2012; and
the remainder of the Original Principal Amount plus accrued and
unpaid interest, on or before June 30, 2013.
The Trustee shall have the right to prepay principal or interest owed by
the Trustee under this Note in whole or in part at any time without penalty
and shall be obligated to prepay principal and interest under this Note
(without penalty) to the extent necessary to release from collateral
(pursuant to Section 3.2 of the Trust Agreement) a sufficient number of
Acquired Shares to satisfy the Company's obligations to issue shares of its
common stock upon the exercise of stock options issued to employees under
the Stock Option Plan (as defined in the` Trust Agreement). To the extent
of any such prepayment of principal, principal amounts due under the
foregoing schedule shall be reduced in the order of their maturity. Upon
termination of the Trust, the unpaid principal balance and accrued and
unpaid interest hereunder shall become due and payable in full. If any
payment of principal or interest owed by the Trustee under this Note
becomes due and payable on a day other than a business day in the State of
Wisconsin, the maturity thereof shall be extended to the next succeeding
business day.
The Trustee hereby waives presentment, demand, protest and notice
of dishonor.
The Trustee hereby pledges to the Company, subject to Section 3.3
of the Trust Agreement (relating to the delivery of assets to creditors of
the Company), (i) the Acquired Shares and (ii) any earnings thereon and any
proceeds realized from the sale, exchange or other disposition of such
Acquired Shares ("Pledged Proceeds"; and collectively, the "Collateral").
The Acquired Shares and Pledged Proceeds shall cease to constitute
Collateral at the times and to the extent set forth in the Trust Agreement.
The Trustee shall be entitled to exercise any and all voting, conversion
and other rights pertaining to the Acquired Shares or any part thereof in
the manner prescribed in the Trust Agreement.
The Trustee shall be obligated to make the payments indicated as
aforesaid only from (i) cash dividends received by the Trustee in respect
of the Acquired Shares and other shares of Common Stock held in the Trust,
which dividends have not previously been applied for such purpose, (ii)
cash contributions made for such purpose by the Company or any corporation
affiliated therewith and earnings thereon, and (iii) other Pledged Proceeds
then constituting Collateral.
Any failure by the Company to exercise any right, remedy or
recourse shall not be deemed a waiver or release of same, such waiver or
release or any other modification of any such right, remedy or recourse to
be effective only if set forth in a written document executed by the
Company and then only to the extent specifically recited therein. A waiver
or release with reference to one event shall not be construed as
continuing, as a bar to or as a waiver or release of any subsequent event.
The acceptance by the Company of payment hereunder that is less than
payment in full of all amounts due and payable at the time of such payment
shall not constitute a waiver of the right to exercise any right, remedy or
recourse at that time or at any subsequent time, or nullify any prior
exercise of any such right, remedy or recourse without the express written
consent of the Company.
Subject to the provisions hereof, and to the extent not
inconsistent with applicable law, in the event of default hereunder, the
Trustee agrees to pay from Trust assets all reasonable costs of collection
hereof when billed therefore, including reasonable attorneys' fees, whether
or not any action shall be instituted to enforce this Note.
All of the terms of this Note shall be binding upon the Trustee
and the Trustee's successors and assigns (including without limitation any
successor trustee under the Trust Agreement), and all references herein to
the "Trustee" shall refer to such successors and assigns.
This Note shall be construed in accordance with and shall be
governed by the law of the State of Delaware without regard to its
conflicts of law doctrine.
THE NORTHERN TRUST COMPANY,
solely in its
capacity as trustee
under the Trust Agreement
By: /s/ John J. Malusa
____________________________
Name: John J. Malusa
Title: Vice President
