COLUMBUS McKINNON CORPORATION

                   MANAGEMENT EVA(R) INCENTIVE COMPENSATION PLAN

                                December 10, 1997

                                    ARTICLE I

                              STATEMENT OF PURPOSE

1.1     The   purpose  of  the  Plan  is  to  provide  a  system  of   incentive
        compensation,  which will promote the  maximization of EVA over the long
        term.  In  order  to  align   management   incentives  with  shareholder
        interests,  incentive  compensation  will reward the  creation of value.
        This  Plan will tie  incentive  compensation  to  Economic  Value  Added
        (AEVA@) and, thereby,  reward management for creating value and penalize
        management for destroying value.

1.2     EVA is the performance  measure of value creation for Columbus  McKinnon
        Corporation.  EVA reflects the benefits and costs of capital employment.
        Managers  create  value when they  employ  capital in an  endeavor  that
        generates  a  return  that  exceeds  the cost of the  capital  employed.
        Managers  destroy  value when they employ  capital in an  endeavor  that
        generates  a return that is less than the cost of capital  employed.  By
        imputing the cost of capital upon the operating  profits  generated by a
        business  group,  EVA measures the total value created (or destroyed) by
        management. The Plan will reward increases in EVA and penalize decreases
        over time.

              EVA = NET OPERATING PROFIT AFTER TAX - CAPITAL CHARGE

1.3     Each Plan Participant is placed in a classification. Each classification
        has a prescribed target bonus. The bonus acquired in any one year is the
        result  of   multiplying   the  Actual   Bonus   Percentage   times  the
        Participant's  base pay.  Bonus  Bank  participant  bonuses  are  banked
        forward in the Participant's  Bonus Bank, a prescribed  distribution (as
        specified in Article IV) of the net positive balance is distributed each
        year through the payroll system.
                                                          
                                   ARTICLE II

                   DEFINITION OF EVA AND THE COMPONENTS OF EVA

Unless the context provides a different meaning,  the following terms shall have
the following meanings.

2.1     "PARTICIPATING  GROUP"  means a group  of  business  divisions  that are
        uniquely  identified  for the purpose of  calculating  EVA and EVA based
        bonus awards.

2.2     "PARTICIPATING  UNIT" means a single business  division that is uniquely
        identified  for the  purpose  of  calculating  EVA and EVA  based  bonus
        awards.

2.3     "CAPITAL" means the investment  made by shareholders  and lenders in the
        operation  of the  business.  Operating  capital  includes  Net  Working
        Capital, Net Fixed Assets, Goodwill, and other Operating Assets.

        Each  component  of Capital  will be  measured by  computing  an average
        balance based on the beginning  monthly balance for the twelve months of
        the Fiscal Year.

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2.4     "COST  OF  CAPITAL"  or "C"  means  the  expected  return  on a  typical
        investment of equivalent  risk. It is not really a cash cost,  rather it
        is an opportunity  cost, equal to the return investors would expect from
        an equally risky investment.

        The Cost of Capital will be reviewed annually and revised by EXCOM if it
        has changed  significantly.  Calculations will be carried to one decimal
        point.

2.5     "CAPITAL CHARGE" means the deemed  opportunity cost of employing Capital
        in the  business of each  Participating  Group.  The  Capital  Charge is
        computed as follows:

               Capital Charge = Capital x Cost of Capital (C)

2.6     "NOPAT"  represents  the  after-tax  economic  operating  profit  of the
        business.  NOPAT is  calculated  by  adjusting  pre-tax  profit  from an
        accounting  to  an  economic  basis.  (Adjustments  are  listed  in  the
        technical manual on pages 10 through 12)

2.7     "EVA" means  Economic  Value Added as described in Article I, EVA may be
        positive or negative.

2.8     "PARTICIPANT"  means an individual that has been selected to participate
        in the Plan.

2.9     "EXCOM" means the Executive Committee of Columbus McKinnon Corporation.

                                   ARTICLE III

                DEFINITION AND COMPUTATION OF TARGET BONUS VALUE

3.1     "ACTUAL  EVA"  means  the  EVA  as  calculated  for  the  Company,  each
        Participating  Group,  and  each  Participating  Unit  for  the  year in
        question.

3.2     "TARGET  EVA" means the level of EVA that is  expected  in order for the
        Participating Group to receive the Target Bonus.

        The  Target  EVA for the first  year is set at the Budget EVA + Expected
        Improvement  in EVA.  After the first  year,  the  Target EVA is revised
        according to the following formula:
 
        Target EVA = (Last Year Actual EVA + Last Year Target  EVA)/2 + Expected
        Improvement in EVA
 
3.3     "EXPECTED IMPROVEMENT IN EVA" means the constant EVA improvement that is
        added to shift  the  target  up each  year.  This is  determined  by the
        expected growth in EVA per year.

3.4     "TARGET BONUS" means the "Target Bonus Percentage" times a Participant's
        Base Pay.

3.5     "BASE PAY" means a  Participant's  annual  salary as of the beginning of
        the fiscal year.

3.6     "TARGET   BONUS   PERCENTAGE"   is   determined   by   a   Participant's
        Classification.

3.7     "DECLARED BONUS" means the bonus earned by a Participant and is computed
        as the Actual Bonus Multiple times a Participant's Target Bonus.

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3.8     "ACTUAL BONUS  MULTIPLE" is calculated by taking the difference  between
        the Actual EVA and the Target EVA  divided by the  Leverage  Factor plus
        1.0.

           Actual Bonus Multiple     =      [Actual EVA - Target EVA] + 1
                                             -----------------------
                                                 Leverage Factor

3.9     "LEVERAGE FACTOR" is the negative  (positive)  deviation from Target EVA
        necessary before a zero (two times Target) bonus is earned.  See Exhibit
        B for the Leverage Factor of each Participating Group.

3.10    "RETIREMENT" is defined in the terms of the Monthly  Retirement  Benefit
        Pension Plan or succeeding Plan.

3.11    "PARTICIPANT'S  CLASSIFICATION"  each  Participating  Unit  manager will
        establish a Participant's classification,  Participant's shall generally
        be direct reports. All classifications are subject to approval by EXCOM.

                                   ARTICLE IV

                           DESCRIPTION OF BONUS BANKS

4.1     ESTABLISHMENT  OF A BONUS BANK.  To encourage a long-term  commitment by
        Participants to the Company,  a portion of the declared bonuses shall be
        credited to "at risk" deferred amounts ("Bonus Banks") with the level of
        distribution  contingent on sustained high  performance and improvements
        and continued employment as provided herein.

4.2     NEGATIVE BONUS BANK.  Although a Bonus Bank may, as a result of negative
        EVA, have a deficit, no Plan Participant shall be required, at any time,
        to reimburse his/her Bonus Bank.

4.3     "BONUS BANK"  means,  with respect to each  Participant,  a  bookkeeping
        record of an account to which  amounts are  credited,  or debited as the
        case may be,  from  time to time  under  the Plan and from  which  bonus
        payments to such Participant are debited.

4.4     "BANK  BALANCE"  means with respect to each  Participant,  a bookkeeping
        record of the net balance of the amounts credited to and debited against
        such  Participant's  Bonus Bank.  A  Participant's  Bank  Balance  shall
        initially be equal to zero.

4.5     DISTRIBUTION  RULE: Add the Declared Bonus (including  negative bonuses)
        to the Bonus Bank.  Pay out (The lesser of Target Bonus or Bank Balance)
        + 1/3 of the  remaining  Bonus Bank.  Carry the  remaining  Bank Balance
        (positive or negative) forward to the next year.

                                    ARTICLE V

                             BONUS DISTRIBUTION DATE

5.1     Bonus  distributions  for the  preceding  fiscal year will be paid on or
        before June 16th of the following fiscal year.

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                                   ARTICLE VI

                 PLAN PARTICIPATION, TRANSFERS AND TERMINATIONS

6.1     PARTICIPANT:  The EXCOM will have sole  discretion  in  determining  who
        shall participate in the EVA Incentive Plan.

6.2     TRANSFERS.   A  Participant   who  transfers  his  employment  from  one
        Participating Unit of the Company to another shall retain his Bonus Bank
        and will be  eligible to receive  future EVA Plan  awards in  accordance
        with  the  provisions  of the EVA  Incentive  Plan.  During  the year of
        transfer  the  awards  shall  be pro rata  based  on time  spent in each
        Participating Unit.

6.3     RETIREMENT OR DISABILITY.  A Participant who terminates  employment with
        the Company by virtue of  retirement or suffers a  "disability"  as such
        term is defined in the Company's long-term  disability benefits program,
        while in the  Company's  employ shall be eligible to receive the balance
        of his/her Bonus Bank. The  Participant  will receive his/her balance as
        soon as  practical  after  qualifying  for  benefit  payments  under the
        Company's long-term disability benefits program.

6.4     INVOLUNTARY  TERMINATION  WITHOUT CAUSE OR DEATH:  A participant  who is
        terminated  without cause or who dies shall  receive any positive  Bonus
        Bank balance. Such payments will be made as soon as is practical.

6.5     VOLUNTARY  TERMINATION:  In the  event  that a  Participant  voluntarily
        terminates  employment  with the  Company,  they  shall be  eligible  to
        receive the balance of their  Bonus Bank  subject to a (5) year  vesting
        period in the EVA Incentive Plan.

6.6     INVOLUNTARY  TERMINATION  FOR  CAUSE.  In the  event of  termination  of
        employment  for cause,  the right of the  Participant  to the Bonus Bank
        shall be forfeited.

        "Cause" Shall mean: 
        (i)   any act or acts of the Participant constituting a felony under the
              laws of the United States of America,  or any state thereof or any
              jurisdiction;
        (ii)  any material breach by the Participant of any employment agreement
              with the Company or the policies of the Company or the willful and
              persistent  (after written notice to the  Participant)  failure or
              refusal of the Participant to comply with any lawful directives of
              the Board;
        (iii) a course of conduct amounting to gross neglect, willful misconduct
              or dishonesty; or
        (iv)  any  misappropriation  of material  property of the Company by the
              Participant  or any  misappropriation  of a corporate  or business
              opportunity of the Company by the Participant.

6.7     BREACH OF AGREEMENT.  Notwithstanding any other provision of the Plan or
        any other  agreement,  in the event that a Participant  shall breach any
        non-competition agreement with the Company or breach any agreement, with
        respect to the  post-employment  conduct of such Participant,  the Bonus
        Bank held by such Participant shall be forfeited.

6.8     NO GUARANTEE:  Selection as a Participant  is no guarantee that payments
        under the Plan will be paid or that selection,  as a Participant will be
        made in any subsequent fiscal year.

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                                   ARTICLE VII

                               GENERAL PROVISIONS

7.1     WITHHOLDING  OF TAXES.  The Company shall have the right to withhold the
        amount of taxes which, in the determination of the Company, are required
        under law with respect to any amount due or paid under the Plan.

7.2     EXPENSES.  All  expenses and costs in  connection  with the adoption and
        administration of the Plan shall be borne by the Company.

7.3     NO PRIOR RIGHT OR OFFER.  Except and until expressly granted pursuant to
        the Plan,  nothing in the Plan shall be deemed to give any  employee any
        contractual or other right to participate in the benefits of the Plan.

7.4     CLAIMS FOR BENEFITS.  In the event a Participant (a "Claimant")  desires
        to make a claim with respect to any of the benefits provided  hereunder,
        the Claimant shall submit  evidence  satisfactory  to the EXCOM of facts
        establishing his entitlement to a payment under the Plan. Any claim with
        respect to any of the benefits  provided under the Plan shall be made in
        writing within ninety (90) days of the event which the Claimant  asserts
        entitles  him to  benefits.  Failure by the Claimant to submit his claim
        within such ninety (90) day period shall bar the Claimant from any claim
        for benefits under the Plan.

7.5     In the event  that a claim,  which is made by a  Claimant,  is wholly or
        partially  denied,  the  Claimant  will receive from the EXCOM a written
        explanation  of  the  reason  for  denial.  The  Claimant  or  his  duly
        authorized  representative  may  appeal  the  denial of the claim to the
        EXCOM at any time  within  ninety  (90) days  after the  receipt  by the
        Claimant of written notice from the EXCOM of the denial of the claim. In
        connection therewith, the Claimant or his duly authorized representative
        may  request  a  review  of  the  denied  claim;  may  review  pertinent
        documents;  and may submit  issues and comments in writing.  EXCOM shall
        make a decision  with respect to an appeal no later than sixty (60) days
        after receipt of a request for review.  EXCOM shall furnish the Claimant
        with a decision on review in writing, including the specific reasons for
        the decision.  The decision shall be written in a manner  designed to be
        understood  by the  Claimant,  as  well  as  specific  reference  to the
        pertinent  provisions  of the Plan upon which the decision is based.  In
        reaching  its  decision,  the EXCOM  shall have  complete  discretionary
        authority to determine all questions arising in the  interpretation  and
        administration  of the  Plan and to  construe  the  terms  of the  Plan,
        including  any  doubtful  or  disputed  terms and the  eligibility  of a
        Participant for benefits.

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7.6     ACTION  TAKEN IN GOOD  FAITH:  INDEMNIFICATION.  The  EXCOM  may  employ
        attorneys,  consultants,  accountants or other persons and the Company's
        directors  and  officers  shall be  entitled  to rely  upon the  advice,
        opinions or valuations  of any such  persons.  All actions taken and all
        interpretations and determinations made by the EXCOM in good faith shall
        be final  and  binding  upon all  employees  who have  received  awards,
        Claimants,  the Company and all other interested  parties.  No member of
        the EXCOM, nor any officer, director,  employee or representative of the
        Company,  or any of its affiliates acting on behalf of or in conjunction
        with  the  EXCOM,   shall  be   personally   liable   for  any   action,
        determination,  or  interpretation,  whether of  commission or omission,
        taken or made with  respect to the Plan,  except in  indemnification  as
        they may have as members of the Company's Board of Directors, as members
        of the EXCOM or as officers or employees of the Company.  All members of
        the EXCOM and any officer,  employee or representative of the Company or
        any  of  its  subsidiaries   acting  on  their  behalf  shall  be  fully
        indemnified  and  protected  by the  Company  with  respect  to any such
        action, determination or interpretation against the reasonable expenses,
        including  attorneys  fees  actually  and  necessarily  incurred  in the
        connection  with the  defense of any civil or criminal  action,  suit or
        proceeding,  or in connection with any appeal therein,  to which they or
        any of them may be a party by reason of any  action  taken or failure to
        act under or in connection with the Plan or an award granted thereunder,
        and against all amounts  paid by them in  settlement  thereof  (provided
        such  settlement is approved by  independent  legal counsel  selected by
        Company)  or paid by them in  satisfaction  of a judgment in any action,
        suit or  proceeding,  except in relation to matters as to which it shall
        be  adjudged  in such  action,  suit or  proceeding,  that  such  person
        claiming   indemnification  shall  in  writing  offer  the  Company  the
        opportunity, at its own expense, to handle and defend the same. Expenses
        (including  attorneys  fees)  incurred in  defending a civil or criminal
        action,  suit or  proceeding  shall be paid by the Company in advance of
        the final disposition of such action,  suit or proceeding if such person
        claiming  indemnification  is entitled to be  indemnified as provided in
        this Section.

7.7     RIGHTS  PERSONAL TO EMPLOYEE.  Any rights  provided to an employee under
        the Plan shall be personal to such employee,  shall not be  transferable
        (except by will or pursuant to the laws of descent or distribution), and
        shall be exercisable, during his lifetime, only by such employee.

7.8     TERMINATION OF THE PLAN. Upon  termination of the Plan or suspension for
        a period  of more than 90 days,  the Bank  Balance  of each  Participant
        shall be distributed  as soon as practicable  but in no event later than
        90 days  from  such  event.  The  EXCOM,  in its  sole  discretion,  may
        accelerate distribution of the Bank Balance, in whole or in part, at any
        time without penalty.

7.9     NON-ALLOCATION OF AWARD: In the event of a suspension of the Plan in any
        Plan Year, as provided  herein at Article  VIII,  Section 8, the current
        bonus for the subject Plan year shall be deemed forfeited and no portion
        thereof shall be allocated to  Participants.  Any such forfeiture  shall
        not affect the calculation of EVA in any subsequent year.

                                  ARTICLE VIII

                                   LIMITATIONS

8.1     NO CONTINUED EMPLOYMENT:  Neither the establishment of the Plan, nor the
        grant  of an award  hereunder,  nor  anything  contained  herein,  shall
        provide any employee with any right to continued  employment or shall be
        deemed to  constitute an express or implied  contract of employment  for
        any period of time or in any way  abridge  the rights of the Company and
        its  Participating  Units to  determine  the  terms  and  conditions  of
        employment or whether to terminate  the  employment of any employee with
        or without cause at any time.

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8.2     NO VESTED RIGHTS:  Except as otherwise  provided herein,  no employee or
        other  person  shall  have  any  claim of right  (legal,  equitable,  or
        otherwise)  to any  award,  allocation,  or  distribution  or any right,
        title,  or vested  interest  in any  amounts  in his  Bonus  Bank and no
        officer or employee of the Company or any Participating Unit or Group or
        any other person shall have any  authority  to make  representations  or
        agreements  to  the  contrary.   No  interest   conferred  herein  to  a
        Participant  shall be  assigned  or  subject  to claim by  Participant's
        creditors.  The  right of the  Participant  to  receive  a  distribution
        thereunder shall be an unsecured claim against the general assets of the
        Company  and the  Participant  shall  have no rights in or  against  any
        specific assets of the Company as the result of Participation hereunder.

8.3     NOT PART OF OTHER BENEFITS: The benefits provided in this Plan shall not
        be deemed a part of any other  benefit  provided  by the  Company to its
        employees. The Company assumes no obligation to Plan Participants except
        as  specified  herein.  This is a  complete  statement,  along  with the
        exhibits attached hereto, of the terms and conditions of the Plan.

8.4     OTHER PLANS:  Nothing  contained herein shall limit the Company's or the
        Board of Directors'  power to grant bonuses to employees of the Company,
        whether or not Participants in this Plan.

8.5     UNFUNDED PLAN: This Plan is unfunded and is maintained by the Company in
        part to provide  deferred  compensation  to a select group of management
        and highly  compensated  employees.  Nothing  herein  shall create or be
        construed  to create a trust of any kind,  or a  fiduciary  relationship
        between the Company and any Participant.

                                   ARTICLE IX

                                    AUTHORITY

9.1     EXCOM AUTHORITY:  Except as otherwise  expressly  provided herein,  full
        power and  authority  to  interpret  and  administer  this Plan shall be
        vested in the EXCOM. The EXCOM may from time to time make such decisions
        and adopt such rules and  regulations for  implementing  the Plan, as it
        deems appropriate for any Participant under the Plan. Any decision taken
        by the EXCOM  arising  out of or in  connection  with the  construction,
        administration,  interpretation  and  effect of the Plan shall be final,
        conclusive  and binding upon all  Participants  and any person  claiming
        under or through them.

9.2     BOARD OF DIRECTORS AUTHORITY:  The Board shall be ultimately responsible
        for  administration  of the Plan.  References made herein to the "EXCOM"
        assume that the Board of  Directors  approved  EXCOM to  administer  the
        Plan.  In the  event  EXCOM  is  not  so  designated,  the  Board  shall
        administer the Plan. The Board or EXCOM, as appropriate, shall work with
        the CEO of the Company in all aspects of the administration of the Plan.

                                    ARTICLE X

                                     NOTICE

10.1    Any notice to be given  pursuant to the  provisions of the Plan shall be
        in writing and  directed  to the  appropriate  recipient  thereof at his
        business address or office location.

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                                   ARTICLE XI

                                 EFFECTIVE DATE

11.1    This Plan shall be effective  April 01, 1997 and will be administered on
        a fiscal year basis, consistent with the Company's March 31 year end.

                                   ARTICLE XII

                                   AMENDMENTS

12.1    This Plan may be amended,  suspended  or  terminated  at any time at the
        sole discretion of the Board of Directors.  Provided,  however,  that no
        such change in the Plan shall be  effective to eliminate or diminish any
        award that has been allocated to the Bank of a Participant  prior to the
        date of such amendment,  suspension or  termination.  Notice of any such
        amendment,  suspension of  termination  shall be given  promptly to each
        Participant.

                                  ARTICLE XIII

                                 APPLICABLE LAW

13.1    This Plan shall be  construed in  accordance  with the State of New York
        law.

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