Document:

Exhibit 10.1

 

PROMISSORY NOTE

 

	
  Principal

  	
   

  	
  Loan Date

  	
   

  	
  Maturity

  	
   

  	
  Loan No

  	
   

  	
  Call/Coll

  	
   

  	
  Account

  	
   

  	
  Officer

  	
   

  	
  Initials

  	
   

  
	
  $

  	
  4,000,000.00

  	
   

  	
  01-31-2008

  	
   

  	
  01-01-2010

  	
   

  	
  1001234

  	
   

  	
  4A
  415

  	
   

  	
   

  	
   

  	
  JJP

  	
   

  	
   

  	
   

  
	
  References
  in the boxes above are for Lender’s use only and do not limit the
  applicability of this document to any particular loan or item. Any item above
  containing <***> has been omitted due to text length limitations.

  	
   

  
																		

 

	
  Borrower:

  	
  Advanced Life Sciences, Inc.

  	
  Lender:

  	
  THE LEADERS BANK

  
	
   

  	
  1440 Davey Road

  	
   

  	
  2001 YORK ROAD, SUITE 150

  
	
   

  	
  Woodridge, IL 60517

  	
   

  	
  OAK BROOK, IL 60523

  
	
   

  	
   

  

 

	
  Principal Amount:  $4,000,000.00

  	
  Initial
  Rate: 6.250%

  	
  Date of
  Note:  January 31, 2008

  

 

PROMISE
TO PAY. Advanced Life Sciences, Inc. (“Borrower”) promises to pay to THE
LEADERS BANK (“Lender”), or order, in lawful money of the United States of
America, the principal amount of Four Million & 00/100 Dollars
($4,000,000.00) or so much as may be outstanding, together with interest on the
unpaid outstanding principal balance of each advance. Interest shall be calculated
from the date of each advance until repayment of each advance.

 

PAYMENT. Borrower will pay this
loan in one payment of all outstanding principal plus all accrued unpaid interest
on January 1, 2010. In addition, Borrower will pay regular monthly payments
of all accrued unpaid interest due as of each payment date, beginning March 1,
2008, with all subsequent interest payments to be due on the same day of each
month after that. Unless otherwise agreed or required by applicable law,
payments will be applied first to any accrued unpaid interest; then to
principal; then to any unpaid collection costs; and then to any late charges.
The annual interest rate for this Note is computed on a 365/360 basis; that is,
by applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding.  Borrower will pay Lender at Lender’s address
shown above or at such other place as Lender may designate in writing.

 

VARIABLE
INTEREST RATE. The
interest rate on this Note is subject to change from time to time based on
changes in an index which is the Leaders Bank Index Rate as periodically
announced by The Leaders Bank (the “Index”). The Index is not necessarily the
lowest rate charged by Lender on its loans and is set by Lender in its sole
discretion. If the Index becomes unavailable during the term of this loan,
Lender may designate a substitute Index after notifying Borrower. Lender will
tell Borrower the current Index rate upon Borrower’s request. The interest rate
change will not occur more often than each day. Borrower understands that
Lender may make loans based on other rates as well. The Index
currently is 6.500% per annum. The interest rate to be applied to
the unpaid principal balance during this Note will be at a rate of 0.750
percentage points under the Index, adjusted if necessary for any minimum and
maximum rate limitations described below, resulting in an initial rate of
6.250% per annum. NOTICE: Under no circumstances will the interest rate on this
Note be less than 6.250% per annum or more than (except for any higher default
rate shown below) the lesser of 8.000% per annum or the maximum rate allowed by
applicable law.

 

PREPAYMENT. Borrower may pay without penalty all or
a portion of the amount owed earlier than it is due. Early payments will not,
unless agreed to by Lender in writing, relieve Borrower of Borrower’s
obligation to continue to make payments of accrued unpaid interest. Rather,
early payments will reduce the principal balance due. Borrower agrees not to
send Lender payments marked “paid in full”, “without recourse”, or similar
language. If Borrower sends such a payment, Lender may accept it without losing
any of Lender’s rights under this Note, and Borrower will remain obligated to
pay any further amount owed to Lender. All written communications concerning
disputed amounts, including any check or other payment instrument that
indicates that the payment constitutes “payment in full” of the amount owed or
that is tendered with other conditions or limitations or as full satisfaction
of a disputed amount must be mailed or delivered to: The Leaders Bank, Post
Office Box 3516 Oak Brook, IL 60522-3516.

 

LATE
CHARGE. If a
payment is 10 days or more late, Borrower will be charged 5.000% of
the regularly scheduled payment or $10.00, whichever is greater.

 

INTEREST
AFTER DEFAULT.
Upon default, including failure to pay upon final maturity, the interest rate on
this Note shall be increased by adding a 4.000 percentage point margin (“Default
Rate Margin”). The Default Rate Margin shall also apply to each succeeding
interest rate change that would have applied had there been no default.
However, in no event will the interest rate exceed the maximum Interest rate
limitations under applicable law.

 

DEFAULT. Each of the following shall constitute
an event of default (“Event of Default”) under this Note:

 

Payment
Default. Borrower
fails to make any payment when due under this Note.

 

Other
Defaults. Borrower
fails to comply with or to perform any other term, obligation, covenant or
condition contained in this Note or in any of the related documents or to
comply with or to perform any term, obligation, covenant or condition contained
in any other agreement between Lender and Borrower, and such failure shall
continue for a period of 15 days.

 

Default
in Favor of Third Parties. Borrower or any Grantor defaults under any loan,
extension of credit, security agreement, purchase or sales agreement, or any
other agreement, in favor of any other creditor or person that may materially
affect any of Borrower’s property or Borrower’s ability to repay this Note or
perform Borrower’s obligations under this Note or any of the related documents.

 

False
Statements. Any warranty,
representation or statement made or furnished to Lender by Borrower or on
Borrower’s behalf under this Note or the related documents is false or
misleading in any material respect, either now or at the time made or furnished
or becomes false or misleading at any time thereafter.

 

Insolvency. The dissolution or termination of
Borrower’s existence as a going business, the insolvency of Borrower, the
appointment of a receiver for any part of Borrower’s property, any assignment
for the benefit of creditors, any type of creditor workout, or the commencement
of any proceeding under any bankruptcy or insolvency laws by or against
Borrower.

 

 

Creditor
or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or by any governmental agency against
any collateral securing the loan. This includes a garnishment of any of
Borrower’s accounts, including deposit accounts, with Lender. However, this
Event of Default shall not apply if there is a good faith dispute by Borrower
as to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Lender written notice
of the creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.

 

Insufficient
Market Value of Securities. Failure to satisfy Lender’s requirement set forth in
the Insufficient Market Value of Securities section of the Pledge Agreement.

 

Events
Affecting Guarantor.
Any of the preceding events occurs with respect to any guarantor, endorser, surety,
or accommodation party of any of the indebtedness or any guarantor, endorser,
surety, or accommodation party dies or becomes incompetent, or revokes or
disputes the validity of, or liability under, any guaranty of the indebtedness
evidenced by this Note.

 

Change in
Ownership. Any
change in ownership of fifty-one percent (51%) or more of the common stock or Borrower.

 

 

Adverse
Change. A
material adverse change occurs in Borrower’s financial condition.

 

LENDER’S RIGHTS. Upon default, Lender may declare the
entire unpaid principal balance under this Note and all accrued unpaid interest
immediately due, and then Borrower will pay that amount.

 

ATTORNEY’S FEES; EXPENSES. Lender may hire or pay someone else to
help collect this Note if Borrower does not pay. Borrower will pay Lender that
amount. This includes, subject to any limits under applicable law, Lender’s
attorneys’ fees and Lender’s legal expenses, whether or not there is a lawsuit,
including attorneys’ fees, expenses for bankruptcy proceedings (including
efforts to modify or vacate any automatic stay or injunction), and appeals. If
not prohibited by applicable law, Borrower also will pay any court costs, in
addition to all other sums provided by law.

 

JURY WAIVER. Lender and Borrower
hereby waive the right to any jury trial in any action, proceeding, or
counterclaim brought by either Lender or Borrower against the other.

 

GOVERNING LAW. This Note will be
governed by federal law applicable to Lender and, to the extent not preempted
by federal law, the laws of the State of Illinois without regard to its
conflicts of law provisions. This Note has been accepted by Lender in the State
of Illinois.

 

CHOICE OF VENUE. If there is a lawsuit, Borrower agrees
upon Lender’s request to submit to the jurisdiction of the courts of DU PAGE
County, State of Illinois.

 

CONFESSION OF JUDGMENT. Borrower hereby irrevocably authorizes
and empowers any attorney-at-law to appear in any court of record and to
confess judgment against Borrower for the unpaid amount of this Note as
evidenced by an affidavit signed by an officer of Lender setting forth the
amount then due, attorneys’ fees plus costs of suit, and to release all errors,
and waive all rights of appeal. If a copy of this Note, verified by an
affidavit, shall have been filed in the proceeding, it will not be necessary to
file the original as a warrant of attorney. Borrower waives the right to any
stay of execution and the benefit of all exemption laws now or hereafter in
effect. No single exercise of the foregoing warrant and power to confess
judgment will be deemed to exhaust the power, whether or not any such exercise
shall be held by any court to be invalid, voidable, or void; but the power will
continue undiminished and may be exercised from time to time as Lender may
elect until all amounts owing on this Note have been paid in full. Borrower
hereby waives and releases any and all claims or causes of action which
Borrower might have against any attorney acting under the terms of authority
which Borrower has granted herein arising out of or connected with the
confession of judgment hereunder.

 

RIGHT OF SETOFF. To the extent permitted by applicable
law, Lender reserves a right of setoff in all Borrower’s accounts with Lender
(whether checking, savings, or some other account). This includes all accounts
Borrower holds jointly with someone else and all accounts Borrower may open in
the future. However, this does not include any IRA or Keogh accounts, or any
trust accounts for which setoff would be prohibited by law. Borrower authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all sums
owing on the indebtedness against any and all such accounts, and, at Lender’s
option, to administratively freeze all such accounts to allow Lender to protect
Lender’s charge and setoff rights provided in this paragraph.

 

COLLATERAL. Borrower acknowledges this Note is
secured by a Commercial Security Agreement dated April 18, 2006, from
Borrower to Lender, pledging all business assets; a Commercial Pledge Agreement
dated April 18, 2006, from ALS Ventures, LLC to Lender, pledging 2,540,000
shares of Advanced Life Sciences Holdings, Inc. common stock.

 

LINE OF CREDIT. This Note evidences a revolving line of
credit. Advances under this Note may be requested orally by Borrower or as
provided in this paragraph. All oral requests shall be confirmed in writing on the
day of the request. All communications, instructions, or directions by
telephone or otherwise to Lender are to be directed to Lender’s office shown
above. The following person or persons are authorized to request advances and
authorize payments under the line of credit until Lender receives from
Borrower, at Lender’s address shown above, written notice of revocation of such
authority: John L. Flavin; Michael T Flavin: Michael
Cogan. Borrower agrees to be liable for all sums either: (A) advanced
in accordance with the instructions of an authorized person or (B) credited
to any of Borrower’s accounts with Lender. The unpaid principal balance owing
on this Note at any time may be evidenced by endorsements on this Note or by
Lender’s internal records, including daily computer print-outs.

 

USA PATRIOT ACT NOTICE. Lender hereby notifies Borrower that
pursuant to the requirments of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the “Patriot Act”), it is required to
obtain, verify and record information that identifies Borrower, which
information includes the name and address of Borrower and other information
that will allow Lender to identify Borrower in accordance with the Patriot Act.

 

RENEWAL AND EXTENSION. This Note is given in replacement,
renewal, and/or extension of, but not extinguishing the indebtedness evidenced
by, the promissory note dated April 18, 2006, executed by Borrower and payable
to the order of Lender, in the original principal amount of $4,000,000.00, including
previous renewals, changes or modifications thereof, if any (the “Prior Note”).
The indebtedness evidenced by the Prior Note is continuing indebtedness evidenced
by this Note, and nothing contained herein shall be deemed to constitute a
repayment, settlement or novation of the Prior Note, or to release or otherwise
adversely affect any lien, mortgage or security interest securing such indebtedness
or any rights of the Lender against any guarantor, surety or other party
primarily or secondarily liable for such indebtedness.

 

LOAN FEES, CHARGES AND EXPENSES. In addition to all other agreed upon
fees, charges, and expenses, in order to extend the term of the loan, Borrower
will pay Lender a loan fee in the amount of $10,000.00.

 

SUCCESSOR INTERESTS. The terms of this Note shall be binding
upon Borrower, and upon Borrower’s heirs, personal representatives, successors
and assigns, and shall inure to the benefit of Lender and its successors and
assigns.

 

NOTIFY US OF INACCURATE
INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES. Please notify us if we report any
inaccurate information about your account(s) to a consumer reporting
agency. Your written notice describing the specific inaccuracy(ies) should be
sent to us at the following address: The Leaders Bank P.O. Box 3516 Oak
Brook, IL 60522-3516.

 

GENERAL PROVISIONS. If any part of this Note cannot be
enforced, this fact will not affect the rest of the Note. Lender may delay or
forgo enforcing any of its rights or remedies under this Note without losing
them. Borrower and any other person who signs, guarantees or endorses this
Note, to the extent allowed by law, waive presentment, demand for payment, and
notice of dishonor. Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note, whether as
maker, guarantor, accommodation maker or endorser, shall be released from
liability. All such parties agree that Lender may renew or extend 

 

(repeatedly and for any
length of time) this loan or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender’s security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the
party with whom the modification is made. The obligations under this Note are joint
and several.

 

ILLINOIS INSURANCE NOTICE.  Unless Borrower provides
Lender with evidence of the insurance coverage required by Borrower’s agreement
with Lender, Lender may purchase Insurance at Borrower’s expense to protect
Lender’s interests in the collateral. This insurance may, but need not, protect
Borrower’s interests. The coverage that Lender purchases may not pay any claim
that Borrower makes or any claim that is made against Borrower in connection
with the collateral. Borrower may later cancel any insurance purchased by
Lender, but only after providing Lender with evidence that Borrower has
obtained Insurance as required by their agreement. If Lender purchases insurance
for the

 

2

 

PROMISSORY NOTE

(Continued)

 

Collateral,
Borrower will be responsible for the costs of that insurance, including
interest and any other charges Lender may impose in connection with the
placement of the insurance, until the effective date of the cancellation or
expiration of the insurance. The costs of the insurance may be added to
Borrower’s total outstanding balance or obligation. The costs of the Insurance
may be more than the cost of insurance Borrower may be able to obtain on
Borrower’s own.

 

PRIOR TO
SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE
TERMS OF THE NOTE.

 

BORROWER
ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

 

	
  BORROWER:

  	 

	
   

  	 

	
   

  	 

	
  ADVANCED LIFE SCIENCES, INC.

  	 

	
   

  	 

	
   

  	 

	
  BY:

  	
    /s/ John L.
  Flavin

  	
   

  
	
   

  	
  John L. Flavin,
  President of Advanced Life

  Sciences, Inc.

  	
   

  	 

						

 

3Exhibit 10.1

 

 

RESTATED EXECUTIVE AGREEMENT*

 

 

THIS EXECUTIVE AGREEMENT (“Agreement”) is entered
into as of February 1, 2008 (the “Effective Date”), by and between SNAP-ON
INCORPORATED, a Delaware corporation (the “Company”), and [EXECUTIVE] , an
executive of the Company or of a subsidiary of the Company (the “Executive”).

 

WHEREAS, the Company and the Executive had entered
into a [Restated Senior Officer Agreement] [Senior Officer Agreement] [Restated
Executive Agreement] effective as of [DATE] (the “Existing Agreement”);

 

WHEREAS, pursuant to Section 5 of the Existing
Agreement, the Company has provided written notice to the Executive not to
extend the term of the Existing Agreement beyond January 31, 2008;

 

WHEREAS, the Board of Directors of the Company (the “Board”)
has determined that the Executive has made, and is expected to continue to
make, an essential contribution to the profitability, growth and financial
strength of the Company;

 

WHEREAS, the Company wishes to continue to encourage
the Executive to devote his/her entire time and attention to the pursuit of
Company matters without distractions relating to his/her employment security by
providing the Executive with this Agreement;

 

 

*    Appropriate
deletions to be made for Kassouf (who is not currently a party an Existing
Agreement)

 

 

1

 

 

WHEREAS,
the Company intends that this Agreement will provide the Executive with certain
minimum compensation rights in the event of the termination of his/her employment
under the circumstances set forth herein; and

 

WHEREAS,
effective as of the Effective Date, this Agreement shall replace the Existing
Agreement.

 

NOW, THEREFORE, in consideration of the respective
terms and conditions set forth herein, the Company and the Executive hereby
agree as follows:

 

	
  1.

  	
  Definitions. As used in this Agreement, the following terms
  shall have the following meanings when used herein:

  
	
   

  	
   

  	
   

  
	
   

  	
  a.

  	
  Cause.
  The term “Cause” shall mean that the Executive shall, prior to any
  Termination of Employment  

  

(as that term is hereafter defined), have:

(i)                                     engaged in any act of fraud, embezzlement, or theft in
connection with his/her duties as an executive or in the course of employment
with the Company or its subsidiaries;

(ii)                                  wrongfully disclosed any secret process or confidential
information of the Company or its subsidiaries;

(iii)                               engaged in any Competitive Activity (as that term is
hereafter defined); or

(iv)                              failed to comply with a lawful instruction from the Board;

 

and in any such case the act or failure to act shall have been
determined by the Board to have been materially harmful to the Company,
financially or otherwise.

 

The
Executive may not be terminated for Cause prior to the receipt by the Executive
of a copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of 

 

2

 

the entire membership of the Board at a meeting of
the Board called and held for the purpose of considering such termination
(after reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive’s counsel, to be heard before the Board) finding
that the Executive was guilty of conduct set forth in the definition of Cause
herein, and specifying the particulars thereof in detail. In the event of a
dispute regarding whether the Executive’s employment has been terminated for
Cause, no claim by the Company that Cause exists shall be given effect unless
the Company establishes by clear and convincing evidence that Cause exists.

b.                                      Competitive Activity.
The term “Competitive Activity” shall mean the Executive’s participation
without the written consent of the Board in the management of any business
enterprise which manufactures or sells any product or service competitive with
any product or service of the Company or its subsidiaries. Competitive Activity
shall not include the ownership of less than five (5) percent of the
securities in any enterprise and exercise of any ownership rights related
thereto.

 

c.                                       Change of Control. A “Change
of Control” shall be deemed to have occurred on the first to occur of any one
of the events set forth in of the following paragraphs:

 

(i)                                     any Person is or becomes the Beneficial Owner (as defined in Rule 13d-3
under the Exchange Act), 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 (as defined in Rule 12b-2
promulgated under Section 12 of the Exchange Act)) representing 25% or
more of either the then outstanding shares of common stock of the Company or
the combined voting power of the Company’s then outstanding voting securities,
excluding any Person who becomes such a Beneficial Owner in connection with a
transaction described in clause (A) of paragraph (iii) below; or

 

3

 

(ii)                                  the following individuals cease for any
reason to constitute a majority of the number of directors then serving: individuals
who, on the Effective Date , 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 stockholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors on the Effective Date or whose appointment, election or nomination
for election was previously so approved or recommended; or

 

(iii)                               there is consummated a merger or
consolidation of the Company or any direct or indirect subsidiary of the
Company with any other corporation, other than (A) 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) more than 50% of the
combined voting power of the voting securities of the Company or such surviving
entity or any parent thereof outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person is
or becomes 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 of the
Company or the combined voting power of the Company’s then outstanding voting
securities; or

 

4

 

(iv)                              the stockholders of the Company approve a
plan of complete liquidation or dissolution of the Company or there is
consummated 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, more than 50% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in substantially
the same proportions as their ownership of the Company immediately prior to
such sale.

 

Notwithstanding the foregoing, no “Change of Control”
shall be deemed to have occurred if there is consummated any transaction or
series of integrated transactions immediately following which the record
holders of the common stock of the Company 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.

d.             Change
of Control Date. The term “Change of Control Date” shall mean the first
date, on or following the Effective Date, 
on which a Change of Control of the Company occurs. Anything in this
Agreement to the contrary notwithstanding, if (1) a Change of Control of
the Company occurs on or following the Effective Date, whether or not during
the initial or extended term of this Agreement, (2) the Executive’s
employment with the Employer terminates on or after the Effective Date and
within six months prior to the Change of Control of the Company and (3) it
is reasonably demonstrated by the Executive that (A) any such termination
of employment by the Employer (i) was at the request of a third party who
has taken steps reasonably calculated to effect a Change of Control of the
Company or (ii) otherwise arose in 

 

5

 

connection with or in anticipation of a Change of Control of
the Company, or (B) any such termination of employment by the Executive
took place within two years subsequent to the occurrence of an event or
circumstance described in clause (A), (B), (C) or (D) of paragraph h.(ii) of
this Section 1 (and otherwise in accordance with the conditions of said
paragraph h.(ii)) which event (i) occurred at the request of a third party
who has taken steps reasonably calculated to effect a Change of Control of the
Company or (ii) otherwise occurred in connection with or in anticipation
of a Change of Control of the Company, then for all purposes of this Agreement
the term “Change of Control” Date shall mean the day immediately prior to the
date of such termination of employment.

 

e.                                       Employer. The term “Employer”
shall mean the Company and/or a subsidiary of the Company that employs the
Executive.

 

f.                                         Exchange Act. The term “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended from time to
time.

 

g.                                      Person. 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 Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, (iv) 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 or (v) any individual, entity or group which is permitted to, and
actually does, report its Beneficial Ownership on Schedule 13G (or any
successor schedule); provided that if any such individual, entity or group
subsequently becomes required to or does report its Beneficial Ownership on
Schedule 13D (or any successor 

 

6

 

schedule), such individual, entity or group shall be deemed
to be a Person for purposes hereof on the first date on which such individual,
entity or group becomes required to or does so report Beneficial Ownership of
all of the voting securities of the Company Beneficially Owned by it on such
date.

 

h.                                      Termination of Employment.
The term “Termination of Employment” shall mean:

 

(i)            any termination by the Employer of
the employment of the Executive for any reason other than for Cause within a
period of two (2) years following the Change of Control Date (as that term
is defined in paragraph d. of this Section 1); or (ii) voluntary
termination by the Executive of his/her employment within a period of two (2) years
following the Change of Control Date and subsequent to the occurrence without
the Executive’s written consent, of  (A) a
material and adverse change in the Executive’s status, authority, duties,
functions, or benefits relative to those most favorable to the Executive in
effect at any time during the 180-day period prior to the Change of Control
Date or, to the extent more favorable to the Executive, those in effect after
the Change of Control Date, (B) any reduction in the Executive’s base
salary or percentage of base salary available as an incentive compensation or
bonus opportunity relative to those most favorable to the Executive in effect
at any time during the 180-day period prior to the Change of Control Date or,
to the extent more favorable to the Executive, those in effect after the Change
of Control Date, or the failure to pay the Executive’s base salary or earned
incentive compensation or bonus when due, (C) the relocation of the
Executive’s principal place of employment to a location more than 50 miles from
the Executive’s principal place of employment immediately prior to the Change
of Control Date, (D) the Employer’s requiring the Executive to travel on
Employer business to a materially greater extent 

 

7

 

than was required
immediately prior to the Change of Control Date, or (E) the failure of the
company to obtain from a successor the assumption and agreement to perform this
Agreement (as described in Section 6.a.) prior to the effectiveness of any
such succession provided that (1) any such event occurs following the
Change of Control Date or (2) in the case of an event set forth in clause
(A), (B), (C) or (D) above, such event occurs on or prior to the
Change of Control Date and the Executive reasonably demonstrates that such
event occurs under circumstances described in clause (i) or (ii) of Section 1.d.(3)(B) hereof;
provided, that the Executive shall have given written notice to the Company of
the occurrence of an event or circumstance described in clause (A)-(E) above
within ninety (90) days following such occurrence and the Company shall have
failed to remedy such event or circumstances within thirty (30) days following
its receipt of such notice. Notwithstanding the foregoing, a Termination of
Employment shall not be deemed to have occurred unless the Executive shall have
incurred a “Separation from Service,” within the meaning of Code Section 409A
and applicable guidance issued thereunder.

 

                Any
election by the Executive to terminate his/her employment as contemplated by
this Section shall not be deemed a voluntary termination of employment by
the Executive for the purpose of any other employee benefit or other plan.

 

2.                                       Compensation
and Benefits. In the event of a Termination of Employment, the
Company shall provide the Executive with the following compensation and
benefits:

 

a.                                       General Compensation and Benefits.  Within five (5) days
following the date of Termination of Employment (or such later date provided
for in Section 2.g. hereof), the Company shall pay to the Executive in a
lump sum the Executive’s full salary through the date of Termination of
Employment at the rate in effect at the time notice of termination is given
(disregarding any reduction in base salary described in clause (B) of Section 1
h.(ii) hereof) and 

 

8

 

shall also pay to the Executive all compensation and benefits
payable to the Executive through the date of Termination of Employment under
the terms of any compensation or benefit plan, program or arrangement
maintained by the Employer, such compensation and benefits to be paid at the
times prescribed by the applicable plan, program or arrangement. The Company
shall also pay the Executive’s normal post-termination compensation and
benefits to the Executive as such payments become due. Such post termination
compensation and benefits shall be determined under, and paid in accordance
with, the Employer’s retirement, insurance and other compensation or benefit
plans, programs and arrangements most favorable to the Executive in effect at
any time during the 180-day period immediately preceding the Change of Control
Date or, if more favorable to the Executive, those provided generally at any
time after the Change of Control Date to executives of the Company of
comparable status and position to the Executive.

 

b.                                      Incentive Compensation.
Notwithstanding any provision of any annual cash bonus or annual cash incentive
compensation plan of the Employer, the Company shall pay to the Executive,
within five (5) days after the Executive’s Termination of Employment (or
at such later date provided for in Section 2.g. hereof), a lump sum
amount, in cash, equal to a pro rata portion to the date of Termination of
Employment of the aggregate value of all annual cash bonus or annual cash
incentive compensation awards to the Executive for all uncompleted periods
under the plan calculated as to each such award as if the “target” with respect
to such bonus or incentive compensation award had been attained; provided,
however, that if the date of Termination of Employment occurs in the same
uncompleted period under the plan as the Change of Control, the lump sum amount
payable hereunder shall be reduced (but not below zero) by the amount payable
under the plan in respect of such uncompleted period.  The rights of the Executive in respect of all
other incentive compensation awards shall be governed by the 

 

9

 

terms and conditions of the plans under which such awards
were granted and the agreements evidencing such awards.

 

c.                                       Compensation. The
Company shall pay to the Executive a lump sum (subject to the succeeding
sentence hereof) equal to two (2) times the sum of (a) the Executive’s
per annum rate of base salary in effect with respect to the Executive
immediately prior to the Termination of Employment (disregarding any reduction
in base salary described in clause (B) of Section 1 h.(ii) hereof)
plus (b) the Executive’s bonus or incentive compensation “target” for the
fiscal year in which the Termination of Employment occurs (or, if higher, for
the fiscal year in which the Change of Control of the Company occurs).  The lump sum shall be paid to the Executive
not later than five (5) days after the Termination of Employment (or at
such later date provided for in Section 2.g. hereof); provided, however,
that if (1) the Change of Control does not constitute a “change in the
ownership or effective control of the corporation, or in the ownership of a
substantial portion of the assets of the corporation” (within the meaning of Section 409A(a)(2)(A)(v) of
the Code and applicable guidance issued thereunder), or (2) the Executive’s
termination of employment occurs under circumstances described in the second
sentence of Section 1.d. hereof, then the payments under this Section 2.c.
shall be made in twenty-four (24) substantially equal monthly installments,
except as provided in Section 2.g.

 

d.                                      Benefits. Subject
to Section 2.e. and 2.g. hereof, for a two (2)-year period following
Termination of Employment, the Company shall provide the Executive with health,
disability, life and other insurance benefits substantially similar to the
benefits received by the Executive pursuant to the Company’s (or the Employer’s)
benefit programs as in effect immediately during the 180 days preceding the
Change of Control Date (or, if more favorable to the Executive, as in effect at
any time thereafter until the Termination of Employment);

 

10

provided,
however, that no compensation or benefits provided hereunder shall be treated
as compensation for purposes of any of the programs or shall result in the
crediting of additional service thereunder.

 

e.                                       New Employment. If the Executive secures new employment
during the two (2)-year period following Termination of Employment, the level
of any benefit being provided pursuant to Section 2.d. hereof shall be
reduced to the extent that any such benefit is being provided by the Executive’s
new employer. The Executive, however, shall be under no obligation to seek new
employment and, in any event, no other amounts payable pursuant to this
Agreement shall be reduced or offset by any compensation received from new
employment or by any amounts claimed to be owed by the Executive to the Company
or the Employer.

f.                                         Retirement Benefit.

 

(i)                                     Defined Benefit Pension Plan.  
If the Executive is a participant in a DB Pension Plan (as defined
below), then in addition to the retirement benefits to which the Executive is
entitled under each DB Pension Plan (as defined below), the Company shall pay
the Executive, not later than five (5) days after the Termination of
Employment (or at such later date provided for in Section 2.g. hereof), a
lump sum amount, in cash, equal to the excess of (A) the actuarial
equivalent of the aggregate retirement pension (taking into account any early
retirement subsidies associated therewith and determined as a straight life
annuity commencing at the date (but in no event earlier than the second
anniversary of the date of Termination of Employment) as of which the actuarial
equivalent of such annuity is greatest) which the Executive would have accrued
under the terms of all DB Pension Plans (without regard to any amendment to any
DB Pension Plan made subsequent to a Change of Control and on or prior to the
date of Termination of Employment, which amendment adversely affects in any
manner the computation of

 

 

11

 

retirement benefits thereunder), determined as if the
Executive were fully vested thereunder and had accumulated (after the date of
Termination of Employment) twenty-four (24) additional months of service credit
thereunder and had been credited under each DB Pension Plan during such period
with annual compensation equal to the Executive’s compensation (as defined in
such DB Pension Plan) during the twelve (12) months immediately preceding date
of Termination of Employment or, if higher, during the twelve months
immediately prior to the first occurrence of an event or circumstance described
in clause (A), (B), (C), (D) or (E) of Section 1  h.(ii) hereof, over (B) the
actuarial equivalent of the aggregate retirement pension (taking into account
any early retirement subsidies associated therewith and determined as a
straight life annuity commencing at the date (but in no event earlier than the
date of Termination of Employment) as of which the actuarial equivalent of such
annuity is greatest) which the Executive had accrued pursuant to the provisions
of the DB Pension Plans as of the date of Termination of Employment. For
purposes of this Section 2.f., “actuarial equivalent” shall be determined
using the same assumptions utilized under the Snap-on Incorporated Retirement
Plan (or any successor plan) immediately prior to the date of Termination of
Employment or, if more favorable to the Executive, immediately prior to the
first occurrence of an event or circumstance described in clause (A), (B), (C),
(D) or (E) of Section 1.h.(ii) hereof.

 

(ii)                                  Cash Balance Plan. 
If the Executive is a participant in a Cash Balance Plan (as defined
below), then in addition to the benefits to which the Executive is entitled
under each Cash Balance Plan, the Company shall pay the Executive, not later
than five (5) days after the Termination of Employment (or at such later
date provided for in Section 2.g. hereof), a lump sum amount, in cash,
equal to the sum of (A) the amount that would have been credited to the
Executive’s account thereunder (whether as pay credits, interest credits, or 

 

 

12

 

 

otherwise) during the two years immediately following
the date of Termination of Employment, determined (x) as if the Executive
earned compensation during such period at an annual rate equal to the Executive’s
compensation (as defined in the Cash Balance Plan) during the twelve (12)
months immediately preceding the date of Termination of Employment or, if
higher, during the twelve months immediately prior to the first occurrence of
an event or circumstance described in clause (A), (B), (C), (D) or (E) of
Section 1 h.(ii) hereof and (y) without regard to any amendment
to the Cash Balance Plan made subsequent to a Change of Control and on or prior
to the date of Termination of Employment, which amendment adversely affects in
any manner the computation of benefits thereunder and (B) the excess, if
any, of (x) the Executive’s account balance under the Cash Balance Plan as
of the Date of Termination over (y) the portion of such account balance
that is nonforfeitable under the terms of the Cash Balance Plan as of the date
of Termination of Employment.

 

(iii)                               401(k) Savings Plan. 
If the Executive is a participant in [the Company’s 401(k) Savings
Plan] [a Cash Balance Plan], then in addition to the benefits to which the
Executive is entitled under [such plan] [the Company’s 401(k) Savings
Plan], the Company shall pay the Executive, not later than five (5) days
after the Termination of Employment (or at 

such later date provided under Section 2.g.
hereof) a lump sum amount, in cash, equal to the amount of matching
contributions that would have been credited to the Executive’s account
thereunder during the two years immediately following the date of Termination
of Employment, determined (x) as if, during such period, Executive had
made the maximum elective contribution eligible for a matching contribution and
(y) without regard to any amendment to such plan made subsequent to a
Change of Control and on or prior to the date of Termination of Employment,

 

13

 

which amendment adversely affects in any manner the
basis upon which matching contributions are determined.

 

(iv)                              Definitions. “DB Pension Plan” shall mean any
tax-qualified, supplemental or excess defined benefit pension plan maintained
by the Company and any other defined benefit plan or agreement entered into
between the Executive and the Company which is designed to provide the
Executive with supplemental retirement benefits, other than any plan (or
portion thereof) that is a Cash Balance Plan. “Cash Balance Plan” shall mean
any tax qualified pension plan (or portion thereof) maintained by the Company
of the type commonly referred to as a “cash balance plan”

 

g.                                      Delayed Payment. 
To the extent required to comply with Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), and applicable guidance issued
thereunder, payment to Executive of amounts set forth in Sections 2.a., 2.b.,
2.c., and 2.f. (and/or the provision of benefits under Section 2.d.) shall
be delayed until the first business day following the expiration of six months
from the date of Termination of Employment. 
In such event, then if amounts under Section 2.c. are not payable
in a lump sum, the amounts thereunder which would have otherwise been paid
within the six-month period following the date of Termination of Employment
shall be added to and paid with the first monthly installment payable after the
expiration of such six-month period.

 

3.                                       Reduction
in Payments. Notwithstanding any other provisions of this Agreement,
whether or not there occurs a Termination of Employment, in the event it shall
be determined that any payment or benefit received or to be received by the
Executive in connection with a Change of Control of the Company or the
termination of the Executive’s employment, whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the 

 

14

Company, any entity whose actions result in a Change of Control of the
Company or any entity affiliated with the Company or such entity (any such
payment or benefit being hereinafter called a “Payment,” and all such payments
and benefits being hereinafter called “Total Payments”), would be subject (in
whole or part) to the excise tax under Section 4999 of the Code of 1986,
or any interest or penalties incurred with respect to such excise tax (such
excise tax, together with such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then the payments hereunder (or,
if no payments are being made hereunder, payments and benefits pursuant to
other plan and arrangements) shall be reduced to the extent necessary so that
no portion of the Total Payments is subject to the Excise Tax but only if (A) the
net amount of such Total Payments, as so reduced (and after subtracting the net
amount of federal, state and local income taxes on such reduced Total Payments
and after taking into account the phase out of itemized deductions and personal
exemptions attributable to such reduced Total Payments) is greater than or
equal to (B) the net amount of such Total Payments without such reduction
(but after subtracting the net amount of federal, state and local income taxes
on such Total Payments and the amount of Excise Tax to which the Executive
would be subject in respect of such unreduced Total Payments and after taking
into account the phase out of itemized deductions and personal exemptions
attributable to such unreduced Total Payments).

 

Subject to
the provisions of this Section 3, all determinations required to be made
under this Section 3, including whether and the extent to which the Total
Payments will be subject to the Excise Tax and the assumptions to be utilized
in arriving at such determination, shall be made by a nationally recognized
accounting firm selected by the Executive that is not then serving as
accountant or auditor for the individual, entity or group effecting the Change
of Control of the Company (the “Accounting Firm”), which shall provide detailed
supporting 

 

15

 

calculations both to the Company and the Executive within 15 business
days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company. All fees and expenses of
the Accounting Firm shall be borne solely by the Company.

 

                For
purposes of determining whether and the extent to which the Total Payments will
be subject to the Excise Tax under this Section 3, (i) no portion of
the Total Payments the receipt or enjoyment of which the Executive shall have
effectively waived in writing shall be taken into account, (ii) no portion
of the Total Payments shall be taken into account which in the opinion of the
Auditor (or tax counsel selected by the Auditor) does not constitute a “parachute
payment” within the meaning of Section 280G(b) (2) of the Code
(including by reason of Section 280G(b) (4) (A) of the
Code), and in calculating the Excise Tax, no portion of such Total Payments
shall be taken into account which constitutes reasonable compensation for
services actually rendered, within the meaning of Section 280G(b) (4) (B) of
the Code, in excess of the “base amount” (as defined in Section 280G(b) (3) of
the Code) allocable to such reasonable compensation, and (iii) the value
of any noncash benefit or any deferred payment or benefit included in the Total
Payments shall be determined by the Auditor in accordance with the principles
of Sections 280G(d) (3) and (4) of the Code.  For purposes of this Section 3, the
Executive shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the applicable
Payment is to be made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of the Executive’s residence in the
calendar year in which the applicable Payment is to be made, net of the maximum
reduction in federal income taxes that could be obtained from deduction of such
state and local taxes.

 

16

 

The Executive
and the Company shall each reasonably cooperate with the other in connection
with any administrative or judicial proceedings concerning the existence or
amount of liability for Excise Tax with respect to the Total Payments.

 

4.                                       Legal
Fees. The Company shall also pay to the Executive all reasonable legal fees
and expenses incurred by the Executive in seeking in good faith to obtain or
enforce any benefit or right provided by this Agreement or in connection with
any tax audit or proceeding to the extent attributable to the application of Section 4999
of the Code. Such payments shall be made within five (5) business days
after delivery of the Executive’s written requests for payment accompanied with
such evidence of fees and expenses incurred as the Company reasonably may
require.

 

5.                                       Term.
This Agreement shall commence on the Effective Date and shall continue in
effect through January 31, 2009; provided, however, that commencing on January 31,
2009 and each January 31 thereafter, the term of this Agreement shall
automatically be extended for one (1) additional year unless, not later
than October 31 of the preceding year, the Company or the Executive shall
have given written notice not to extend this Agreement; provided, further,
however, if a Change of Control of the Company shall have occurred during the
initial or extended term of this Agreement, this Agreement shall continue in
effect for a period of 24 months beyond the month in which such Change of
Control of the Company occurred. Notwithstanding anything herein to the
contrary this Agreement shall terminate upon the Executive ceasing to be an
executive of the Company prior to a Change of Control of the Company (other
than any such cessation which the Executive reasonably demonstrates occurred
under circumstances described in clause (i) or (ii) of Section 1.d.(3)(B) hereof).

 

6.    Successors
and Binding Agreements.

 

17

 

a.                                       The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business and/or
assets of the Company expressly to assume and to agree to perform this
Agreement in the same manner and to the same extent the Company would be
required to perform if no succession had taken place. This Agreement shall be
binding upon and inure to the benefit of the Company and any such successor,
and such successor shall thereafter be deemed the “Company” for the purposes of
this Agreement.

 

b.                                      This Agreement shall inure to the
benefit of and be enforceable by the Executive’s respective personal or legal
representative, executor, administrator, successor, heirs, distributees and/or
legatees.

 

c.                                       Neither the Company nor the
Executive may assign, transfer or delegate this Agreement or any rights or
obligations hereunder except as expressly provided in this Section. Without
limiting the generality of the foregoing, the Executive’s right to receive
payments hereunder shall not be assignable or transferable, whether by pledge,
creation of a security interest or otherwise, other than by a transfer by will
or the laws of descent and distribution. In the event the Executive attempts
any assignment or transfer contrary to this Section, the Company shall have no
liability to pay any amount so attempted to be assigned or transferred.

 

7.                                       Notices.
All communications provided for herein shall be in writing and shall be deemed
to have been duly given when delivered or five (5) business days after
having been mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed to the Company (to the attention
of the Secretary of the Company) at its principal executive office and to the
Executive at his/her principal residence, or to such other address as 

 

18

any parry may have furnished to the other in writing in accordance
herewith, except that notices of a change of address shall be effective only
upon receipt.

 

8.             Governing
Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Wisconsin without
giving effect to the principles of conflict of laws of such state, except that Section 9
shall be construed in accordance with the Federal Arbitration Act if
arbitration is chosen by the Executive as the method of dispute resolution.

 

9.             Settlement
of Disputes; Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled, at the Executive’s election,
either by arbitration in Chicago, Illinois in accordance with the rules of
the American Arbitration Association then in effect or by litigation; provided,
however, that in the event of a dispute regarding whether the Executive’s
employment has been terminated for Cause, the evidentiary standard set forth in
this Agreement shall apply. Judgment may be entered on the arbitrator’s award
in any court having jurisdiction.

 

10.           Validity.
The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement
which shall remain in full force and effect.

 

11.           Entire
Agreement. This Agreement constitutes the entire understanding and
agreement of the parties with respect to the matters discussed herein and
supersedes all other prior agreements and understandings, written or oral,
between the parties with respect thereto, including but not limited to the
Existing Agreement, which shall be null and void and of no force and effect as
of the Effective Date. There are no representations, warranties or agreements
of any kind relating thereto that are not set forth in this Agreement.

 

19

 

12.           Withholding.
The Company may withhold from any amounts payable under this Agreement all
federal, state and other taxes as shall be legally required.

 

13.           Certain
Limitations. Nothing in this Agreement shall grant the Executive any right
to remain an executive, director or employee of the Company or of any of its
subsidiaries for any period of time.

 

* * *

 

IN WITNESS
WHEREOF, the parties have executed this Agreement on the day and date first
written above.

 

 

	
   

  	
  SNAP-ON INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   Its:

  	
   

  
	
   

  	
   

  
	
   

  	
  [EXECUTIVE NAME]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Executive

  

 

20

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