SNAP-ON INCORPORATED

                      SHARE AND PERFORMANCE AWARD AGREEMENT

     THIS AGREEMENT ("Agreement") is made and entered into as of March 14, 2003
by and between SNAP-ON INCORPORATED, a Delaware corporation (the "Company"), and
_________, an employee of the Company or of a subsidiary of the Company (the
"Key Employee").

                              W I T N E S S E T H :

     WHEREAS, the Organization and Executive Compensation Committee of the Board
of Directors of the Company (such committee, whether acting as such or through
the ad hoc committee of the Board to which such committee delegated its
authority in connection with this Agreement, the "Committee"), by actions of the
Committee on January 24, 2003, approved the grant (the "Grant") to the Key
Employee of _______ (the "Grant Number") shares of the Company's common stock
("Common Stock") and the opportunity to receive cash in respect of performance
units ("Performance Units") pursuant to the Company's 2001 Incentive Stock and
Awards Plan (the "Awards Plan"), to be effective March 14, 2003;

     WHEREAS, in accordance with the terms of the Grant, the Key Employee
elected to not defer receipt of the percentage, if any, set forth on the
signature page hereto of the Grant Number (the "Share Delivery Percentage") and
the percentage, if any, set forth on the signature page hereto of the cash that
may be received in respect of the Performance Units subject to the Grant (the
"Cash Delivery Percentage") by executing an Election to Defer Compensation (the
"Deferral Election") or by choosing not to execute a Deferral Election; and

     WHEREAS, the Grant contemplated that the Grant will also be subject to the
terms of an award agreement, the form of which is to be determined by the
Company, and this Agreement is intended to serve as the additional agreement
that the Grant contemplated.

     NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements herein set forth, the parties hereby mutually covenant and agree as
follows:

1.   Restricted Shares. Subject to the terms and conditions set forth herein, as
     of March 14, 2003, the Company hereby awards to the Key Employee a number
     of shares of Common Stock (the "Restricted Shares") equal to the product of
     the Grant Number multiplied by the Share Delivery Percentage which shall be
     subject to vesting and forfeiture as set forth below. Except as otherwise
     provided herein, no Restricted Share may be sold, transferred or otherwise
     alienated or hypothecated until such Restricted Share vests as provided
     herein.

2.   Escrow.

     (a)  The Company shall cause certificates for Restricted Shares to be
          issued as soon as practicable in the name of the Key Employee, but the
          Company, as escrow agent, shall hold such shares in escrow. Upon
          issuance of such certificates, (i) the

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<PAGE>

          Company shall give the Key Employee a receipt for the Restricted
          Shares held in escrow which will state that the Company holds such
          Restricted Shares in escrow for the account of the Key Employee,
          subject to the terms of this Agreement, and (ii) the Key Employee
          shall give the Company a stock power for such Restricted Shares duly
          endorsed in blank which will be held in escrow for use in the event
          such Restricted Shares are forfeited in whole or in part.

     (b)  Unless theretofore forfeited as provided herein, Restricted Shares and
          any other property held in escrow pursuant to this Agreement shall
          cease to be held in escrow, and the Company shall release such
          certificates for such Restricted Shares, and any related property held
          in escrow (without interest), to the Key Employee, or in the case of
          his death, to his Beneficiary (as hereinafter defined) when such
          Restricted Shares vest as provided herein at which time such shares
          shall be freely transferable by the Key Employee or his Beneficiary.

     (c)  Restricted Shares and any other property held in escrow pursuant to
          this Agreement shall cease to be held in escrow, and the Company may
          assume possession thereof in its own right, when the Key Employee
          forfeits such Restricted Shares as provided herein.

3.   Vesting and Forfeiture Based on Performance. Subject to the terms and
     conditions set forth herein,

     (a)  Vesting of the Restricted Shares and payment in respect of Performance
          Units is dependent upon performance relative to revenue growth and
          RONAEBIT goals during fiscal 2003, fiscal 2004 and fiscal 2005. The
          threshold, target and maximum goals for revenue growth and RONAEBIT
          during fiscal 2003, fiscal 2004 and fiscal 2005 are as shown on
          Exhibit 1, and the Restricted Shares will vest, and the Performance
          Units will be earned, in accordance with the vesting matrix attached
          hereto as Exhibit 1 based on actual performance of the Company
          relative to the goals subject to the terms attached hereto as Exhibit
          2. As soon as practicable after the Company's audited financial
          statements for fiscal 2003, fiscal 2004 and fiscal 2005 are available
          to the Committee, the Committee shall calculate the Company's revenue
          growth and RONAEBIT data for such years in accordance with the terms
          attached hereto as Exhibit 2. The Committee shall then plot the
          revenue growth and RONAEBIT data on the vesting matrix. The resulting
          position on the matrix shall determine the percentage of the
          Restricted Shares that will vest and the number of Performance Units
          that the Key Employee will earn as set forth below. In the course of
          calculating the Company's revenue growth and RONAEBIT data and
          plotting the revenue growth and RONAEBIT data on the vesting matrix,
          the Committee shall have the discretion to take action in light of the
          effects of Special Charges (as defined on Exhibit 1) that reduces the
          resulting percentage in such manner and to such extent as the
          Committee determines in its sole discretion. However, the Committee
          shall have no discretion to take into account the effects of Special
          Charges in a manner that increases the resulting percentage. The
          Company shall promptly communicate this information to the Key
          Employee.

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<PAGE>

     (b)  Unless the Key Employee has previously forfeited such Restricted
          Shares, if the position on the matrix reflects a percentage greater
          than zero and less than or equal to 100%, then the number of
          Restricted Shares that shall vest shall be equal to the product of
          such percentage, the Grant Number and the Share Delivery Percentage,
          and if the position on the matrix reflects a percentage greater than
          100%, then the number of Restricted Shares that shall vest shall be
          equal to the product of the Grant Number and the Share Delivery
          Percentage. Upon the Committee's determination as provided above, the
          Key Employee will forfeit the Restricted Shares that do not vest.

     (c)  Unless the Key Employee has previously forfeited the right to earn
          Performance Units, if the position on the matrix reflects a percentage
          greater than 100%, then the Key Employee will receive cash in respect
          of a number of Performance Units equal to the product of the
          percentage in excess of 100%, but not greater than 50%, multiplied by
          the Grant Number and multiplied by the Cash Delivery Percentage. The
          amount of the cash payment for each Performance Unit will be the fair
          market value of a share of the Company's common stock on March 14,
          2003.

4.   Forfeiture Based on Employment Status. Subject to the terms and conditions
     set forth herein,

     (a)  In addition to any rights of the Company under Section 5, the Key
          Employee will forfeit any Restricted Shares or any rights associated
          with Performance Units as to which the Committee has not made its
          vesting determination under Section 3 and not otherwise vested under
          Section 6 if the Key Employee's employment with the Company or its
          subsidiaries is terminated for any reason prior to such determination
          unless in the case of termination by the Company or a subsidiary the
          Committee determines, on such terms and conditions, if any, as the
          Committee may impose, that there may nonetheless be vesting of all or
          a portion of the award at the time of such determination or at any
          other time. Absence of the Key Employee on leave approved by a duly
          elected officer of the Company, other than the Key Employee, shall not
          be considered a termination of employment during the period of such
          leave.

     (b)  Notwithstanding the foregoing, in the case of termination of
          employment as a result of death, Disability (as defined below) or
          Retirement (as defined below), the Share Delivery Percentage of the
          Grant will vest, and the Key Employee's entitlement to cash in respect
          of Performance Units will be determined, based upon the Company's
          actual performance relative to the revenue growth and RONAEBIT goals
          over the full performance period, but in lieu of the amounts under
          Section 3(b) and (c), the respective amounts, if any, determined under
          those subsections shall be reduced by multiplying such amounts by a
          fraction representing the portion of the two-year period that elapsed
          before the termination of the Key Employee's employment.

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<PAGE>

     (c)  Whether or not a divestiture of a subsidiary, division or other
          business unit (including through the formation of a joint venture)
          results in termination of employment with the Company and its
          subsidiaries will be at the discretion of the Committee, which
          discretion the Committee may exercise on a case by case basis.

     (d)  As used herein,

          (i)  "Disability" means a medically-determinable physical or mental
               condition that is expected to be permanent and that results in
               the Key Employee being unable to perform one or more of the
               essential duties of the Key Employee's occupation or a reasonable
               alternative offered by the Company or its subsidiaries, all as
               determined by the Committee or any successor to such committee
               that administers the Awards Plan (as the same may be amended).

          (ii) "Retirement" means termination of employment from the Company and
               its subsidiaries on or after satisfying the early or normal
               retirement age and service conditions specified in the retirement
               policy or retirement plan of the Company or one of its
               subsidiaries applicable to such Key Employee as in effect at the
               time of such termination.

5.   Detrimental Activity.

     (a)  Activity During Employment. If, prior to termination of the Key
          Employee's employment with the Company or during the one-year period
          following termination of the Key Employee's employment with the
          Company, the Company becomes aware that, prior to termination, the Key
          Employee had engaged in detrimental activity, then the Committee in
          its sole discretion, for purposes of this Agreement, may characterize
          or recharacterize termination of the Key Employee's employment as a
          termination to which this Section 5 applies and may determine or
          redetermine the date of such termination, and the Key Employee's
          rights with respect to the Grant shall be determined in accordance
          with the Committee's determination.

     (b)  Activity Following Termination. If, within the three-month period
          following the Key Employee's termination of employment with the
          Company, the Company becomes aware that the Key Employee has engaged
          in detrimental activity subsequent to termination, then the Key
          Employee's rights with respect to the Grant shall be determined in
          accordance with any determination by the Committee under this Section
          5.

     (c)  Remedies. If the Key Employee has engaged in detrimental activity as
          described in subsections (a) and (b), then the Committee may, in its
          discretion, declare that the Key Employee has forfeited the Grant in
          whole or in part and cause the Company to assume possession of any or
          all property held in escrow in respect of the Grant in its own right
          and/or cause the Key Employee to return any cash or property actually
          realized by the Key Employee (directly or indirectly) in respect

                                       4
<PAGE>

          of the Grant, in each case whether or not the Committee has made a
          vesting determination under Section 3 in respect thereof before or
          after the date the Key Employee engaged in the detrimental activity or
          before or after the date of termination as determined or redetermined
          under subsection (a).

     (d)  Allegations of Activity. If an allegation of detrimental activity by
          the Key Employee is made to the Committee, then the Committee may
          suspend the Key Employee's rights in respect of the Grant to permit
          the investigation of such allegation.

     (e)  Definition of "Detrimental Activity." For purposes of this Agreement,
          "detrimental activity" means activity that is determined by the
          Committee in its sole discretion to be detrimental to the interests of
          the Company or any of its subsidiaries, including but not limited to
          situations where the Key Employee (i) divulges trade secrets of the
          Company, proprietary data or other confidential information relating
          to the Company or to the business of the Company or any subsidiaries,
          (ii) enters into employment with a competitor under circumstances
          suggesting that the Key Employee will be using unique or special
          knowledge gained as an employee of the Company to compete with the
          Company, (iii) uses information obtained during the course of his
          prior employment with the Company for his own purposes, such as for
          the solicitation of business and competition with the Company, (iv) is
          determined to have engaged (whether or not prior to termination due to
          retirement) in either gross misconduct or criminal activity harmful to
          the Company, or (v) takes any action that harms the business
          interests, reputation or goodwill of the Company and/or its
          subsidiaries.

6.   Change in Control. In the event of a "Change of Control" (as defined in the
     Awards Plan) prior to the Committee's determination under Section 3(a),

     (a)  Any unvested Restricted Shares shall be treated as provided in the
          Awards Plan, unless the Key Employee has previously forfeited such
          Restricted Shares; and

     (b)  Notwithstanding their treatment under the terms of the Awards Plan,
          the Company will immediately make payment in respect of the number of
          Performance Units multiplied by the Cash Delivery Percentage assuming
          performance at maximum levels for the entire period.

7.   Voting Rights; Dividends and Other Distributions.

     (a)  While the Restricted Shares are subject to restrictions under Section
          1 and prior to any forfeiture thereof, the Key Employee may exercise
          full voting rights for the Restricted Shares registered in his name
          and held in escrow hereunder.

     (b)  A Key Employee shall have no voting rights with respect to the
          Performance Units.

     (c)  While the Restricted Shares are subject to the restrictions under
          Section 1 and prior to any forfeiture thereof, all dividends and other
          distributions paid with

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<PAGE>

          respect to the Restricted Shares shall be held in escrow pursuant to
          Section 2 and shall be subject to the same restrictions as the
          Restricted Shares with respect to which they were paid.

     (d)  There shall be no dividend right associated with the Performance
          Units.

     (e)  Subject to the provisions of this Agreement, the Key Employee shall
          have, with respect to the Restricted Shares, all other rights of
          holders of Common Stock.

8.   Tax Withholding; Repurchase.

     (a)  It shall be a condition of the obligation of the Company to issue or
          release from escrow Restricted Shares to the Key Employee or the
          Beneficiary, and the Key Employee agrees, that the Key Employee shall
          pay to the Company, upon its demand, such amount as may be requested
          by the Company for the purpose of satisfying its liability to withhold
          federal, state, or local income or other taxes incurred by reason of
          the award or as a result of the vesting hereunder or shall provide
          evidence satisfactory to the Company that the Company has no liability
          to withhold. The Company may withhold from cash payable in respect of
          Performance Units such amount as may be determined by the Company for
          the purpose of satisfying its liability to withhold federal, state, or
          local income or other taxes incurred by reason of such payment.

     (b)  At each time the Company is obligated to issue or release from escrow
          Restricted Shares to the Key Employee or the Beneficiary, the Key
          Employee or the Beneficiary, as the case may be, may elect to have the
          Company repurchase up to 40% of the Restricted Shares to be so issued
          or released at a price equal to the Fair Market Value (as defined
          below) on the Tax Date (as defined below). The election must be
          delivered to the Company within 30 days after the Tax Date. If the
          number of shares so determined shall include a fractional share, then
          the Company shall not be obligated to repurchase such fractional
          share. All elections shall be made in a form acceptable to the
          Company. As used herein, (i) "Tax Date" means the date on which the
          Key Employee must include in his gross income tax purposes the fair
          market value of the Restricted Shares and (ii) "Fair Market Value"
          means the per share closing price on the date in question in the
          principal market in which the Common Stock is then traded or, if no
          sales of Common Stock have taken place on such date, the closing price
          on the most recent date on which selling prices were quoted.

9.   Beneficiary.

     (a)  The person whose name appears on the signature page hereof after the
          caption "Beneficiary" or any successor that the Key Employee
          designates in accordance herewith (the person who is the Key
          Employee's Beneficiary at the time of his death herein referred to as
          the "Beneficiary") shall be entitled to receive the Restricted Shares
          that vest and the Performance Units that are earned following the
          death of the Key Employee. The Key Employee may from time to time

                                       6
<PAGE>

          revoke or change his Beneficiary without the consent of any prior
          Beneficiary by filing a new designation with the Committee. The last
          such designation that the Committee receives shall be controlling;
          provided, however, that no designation, or change or revocation
          thereof, shall be effective unless received by the Committee prior to
          the Key Employee's death, and in no event shall any designation be
          effective as of a date prior to such receipt.

     (b)  If no such Beneficiary designation is in effect at the time of the Key
          Employee's death, or if no designated Beneficiary survives the Key
          Employee or if such designation conflicts with law, then the Key
          Employee's estate shall be entitled to receive the Restricted Shares
          that vest and the Performance Units that are earned following the
          death of the Key Employee. If the Committee is in doubt as to the
          right of any person to receive such Restricted Shares and/or
          Performance Units, then the Company may retain such Restricted Shares
          and the cash payment associated with the Performance Units, without
          liability for any interest thereon, until the Committee determines the
          person entitled thereto, or the Company may deliver such Restricted
          Shares and the cash payment associated with the Performance Units to
          any court of appropriate jurisdiction, and such delivery shall be a
          complete discharge of the liability of the Company therefor.

10.  Adjustments in Event of Change in Stock. In the event of any
     reclassification, subdivision or combination of shares of Common Stock,
     merger or consolidation of the Company or sale by the Company of all or a
     portion of its assets, or other event which could, in the judgment of the
     Committee, distort the implementation of the Grant or the realization of
     its objectives, the Committee may make such adjustments in the Grant Number
     and the number of Restricted Shares under this Agreement, or in the terms,
     conditions or restrictions of this Agreement, as the Committee deems
     equitable; provided that in the absence of express action by the Committee,
     adjustments that apply generally to Restricted Shares granted under the
     Awards Plan shall apply automatically to the Restricted Shares under this
     Agreement.

11.  Powers of the Company Not Affected. The existence of the Grant shall not
     affect in any way the right or power of the Company or its stockholders to
     make or authorize any combination, subdivision or reclassification of the
     Common Stock or any reorganization, merger, consolidation, business
     combination, exchange of shares, or other change in the Company's capital
     structure or its business, or any issue of bonds, debentures or stock
     having rights or preferences equal, superior or affecting the Common Stock
     or the rights thereof, or dissolution or liquidation of the Company, or any
     sale or transfer of all or any part of its assets or business, or any other
     corporate act or proceeding, whether of a similar character or otherwise.
     Nothing in this Agreement shall confer upon the Key Employee any right to
     continue in the employment of the Company or interfere with or limit in any
     way the right of the Company to terminate the Key Employee's employment at
     any time.

12.  Certificate Legend. Each certificate for Restricted Shares shall bear the
     following legend:

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<PAGE>

          The sale or other transfer of the shares of stock represented by this
          certificate, whether voluntary, or by operation of law, is subject to
          certain restrictions set forth in the Restricted Stock Award Agreement
          between Snap-on Incorporated and the registered owner hereof. A copy
          of such Agreement may be obtained from the Secretary of Snap-on
          Incorporated.

     When the restrictions imposed by Section 1 terminate, the Key Employee
     shall be entitled to have the foregoing legend removed from the
     certificates representing such Restricted Shares.

13.  Interpretation by Committee. The Key Employee agrees that any dispute or
     disagreement that may arise in connection with this Agreement shall be
     resolved by the Committee, in its sole discretion, and that any
     interpretation by the Committee of the terms of this Agreement or the
     Awards Plan and any determination made by the Committee under this
     Agreement or such plan may be made in the sole discretion of the Committee
     and shall be final, binding, and conclusive.

14.  Miscellaneous.

     (a)  This Agreement shall be governed and construed in accordance with the
          laws of the State of Wisconsin applicable to contracts made and to be
          performed therein between residents thereof.

     (b)  This Agreement may not be amended or modified except by the written
          consent of the parties hereto.

     (c)  The captions of this Agreement are inserted for convenience of
          reference only and shall not be taken into account in construing this
          Agreement.

     (d)  Any notice, filing or delivery hereunder or with respect to the Grant
          shall be given to the Key Employee at either his usual work location
          or his home address as indicated in the records of the Company, and
          shall be given to the Committee or the Company at 10801 Corporate
          Drive, Kenosha, Wisconsin 53142, Attention: Secretary. All such
          notices shall be given by first class mail, postage pre-paid, or by
          personal delivery.

     (e)  This Agreement shall be binding upon and inure to the benefit of the
          Company and its successors and assigns and shall be binding upon and
          inure to the benefit of the Key Employee, the Beneficiary and the
          personal representative(s) and heirs of the Key Employee, except that
          the Key Employee may not transfer any interest in any Restricted
          Shares prior to the release of the restrictions imposed by Section 1.



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     IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its duly authorized officer, and the Key Employee has hereunto affixed his
hand, all on the day and year set forth above.

                                        SNAP-ON INCORPORATED



                                        By:
                                           -------------------------------------
                                        Title:

                                        Key Employee:




                                        ----------------------------------------

                                        Beneficiary:
                                                    ----------------------------

                                        Address of Beneficiary:


                                        ----------------------------------------


                                        ----------------------------------------


                                        Beneficiary Tax Identification

                                        No.
                                           -------------------------------------

                                        Share Delivery Percentage:
                                                                  --------------

                                        Cash Delivery Percentage:
                                                                 ---------------




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                                                                       Exhibit 2

1.   "RONAEBIT" for purposes of the vesting matrix means a fraction expressed as
     a percentage where (i) the numerator is earnings from continuing operations
     before income taxes (including net finance income) plus interest expense
     less other income (expense) - net (i.e., less other income plus other
     expense) plus Special Charges (as defined below) and (ii) the denominator
     is average net assets employed. "Net assets employed" means total assets
     minus cash and cash equivalents and minus all liabilities excluding
     short-term and long-term debt. "Average net assets employed" for a period
     means the average of net assets employed at the end of the immediately
     preceding fiscal period and at the end of each fiscal month during the
     period as reflected in the Company's final consolidated balance sheet for
     the month that is prepared as part of the financial statements used in the
     preparation of the Company's externally reported financial statements.

2.   RONAEBIT for purposes of the vesting matrix will be calculated based upon
     the amount described in (a)(i) for the period consisting of fiscal 2003,
     fiscal 2004 and fiscal 2005 and average net assets employed for the same
     period.

3.   Revenue growth for purposes of the vesting matrix will be calculated by
     comparing the Company's consolidated net sales for fiscal 2005 with the net
     sales amounts set forth on the matrix.

4.   The amount of each component of a calculation will be determined by
     reference to the Company's audited financial statements for the year(s) in
     question or the notes thereto to the extent reflected therein and, if not
     reflected therein, by reference to the Company's unaudited financial
     statements or the notes thereto contained in the Company's periodic reports
     filed with the Securities and Exchange Commission to the extent reflected
     therein and, if not reflected therein, by reference to the Company's
     publicly disclosed earnings release for the relevant period and, if not
     reflected therein, by reference to the Company's final consolidated balance
     sheet for the month that is prepared as part of the financial statements
     used in the preparation of the Company's externally reported financial
     statements.

5.   There is graduated, proportionate vesting between points on the matrix.

6.   Except to the extent that considering any such charge would cause an award
     to fail to qualify for the performance-based exception under Section 162(m)
     of the Internal Revenue Code and except to the extent that the committee of
     the Board that the Board has established to assist in the administration of
     the Plan (the "Ad Hoc Committee") in its sole discretion determines that a
     charge or other expense that would otherwise qualify as a Special Charge
     shall not be considered a Special Charge, "Special Charges" consist of
     restructuring reserve charges, non-recurring charges and non-comparable
     charges. Restructuring reserve charges include those costs that can be
     accrued in accordance with GAAP at the time a restructuring plan is
     adopted. Non-recurring charges consist of restructuring related charges
     such as the write-off of inventory or transition costs that are incurred as
     a result of a restructuring plan and will benefit future operations, as
     well as non-restructuring related charges that are considered non-recurring
     in nature. Non-comparable charges consist of costs that do not qualify for
     restructuring reserve or non-recurring charge treatment but are considered
     one-time, unusual

                                       10
<PAGE>

     charges and are reflected as such in the Company's publicly disclosed
     earnings release for the relevant period. To the extent terms used above
     have meanings under U.S. GAAP, such meanings shall control.

7.   Except to the extent that doing so would cause an award to fail to qualify
     for the performance-based exception under Section 162(m) of the Internal
     Revenue Code, the threshold, target and maximum goals for revenue growth
     and RONAEBIT will be adjusted upward or downward as appropriate to
     eliminate the effects of acquisitions and divestitures subject to the
     following.

     (a)  There will be adjustments only where there is an acquisition or
          divestiture (or a combination of multiple acquisitions or
          divestitures) of a subsidiary, division or other business unit that
          had revenues during its last full fiscal year equal to 1% or more of
          the Company's budgeted consolidated net sales during the year the
          acquisition or divestiture occurs as reflected in the Company's
          overall final budget as of the commencement of the year as presented
          to the Company's Board of Directors at its January meeting (the "Final
          Budget").

     (b)  Adjustments to Revenue Goals. If an acquisition occurs in 2003 or
          2004, then the Ad Hoc Committee will adjust the net sales amounts set
          forth on the vesting matrix upward by an amount that is at least equal
          to the projected revenue for the acquired business in 2005 as
          reflected in the financial projections for the acquired business used
          as the basis for approval of the Company's acquisition purchase price
          decision by the Company's Board of Directors or the highest authority
          within the Company approving that decision (the "Pricing
          Projections"). If an acquisition occurs in 2005, then the Ad Hoc
          Committee will adjust the net sales amounts set forth on the vesting
          matrix upward by an amount that is at least equal to the projected
          revenue for the acquired business in 2005, as reflected in the Pricing
          Projections for the acquired business, multiplied by a fraction
          representing the portion of fiscal 2005 occurring after the
          acquisition. If a divestiture occurs in 2003 or 2004, then the Ad Hoc
          Committee will adjust the net sales amounts set forth on the vesting
          matrix downward by an amount that is no greater than the budgeted
          revenue for the divested business in 2005 as reflected in the Final
          Budget as of the commencement of fiscal year in which the divestiture
          occurred. If a divestiture occurs in 2005, then the Ad Hoc Committee
          will adjust the net sales amounts set forth on the vesting matrix
          downward on a pro rata basis by an amount that is no greater than the
          budgeted revenue for the divested business in 2005, as reflected in
          the Final Budget as of the commencement of fiscal 2005, multiplied by
          a fraction representing the portion of fiscal 2005 occurring after the
          divestiture.

     (c)  Adjustments to RONAEBIT Goals. If there is an acquisition or
          divestiture, then the RONAEBIT percentages on the vesting matrix will
          be recalculated by dividing the adjusted EBIT by the adjusted net
          assets (on an annualized basis). The Company's unadjusted EBIT will be
          estimated as an amount equal to the product obtained by multiplying
          the net assets as of the close of fiscal 2002 by the RONAEBIT
          percentage on the vesting matrix.

                                       11
<PAGE>

          For an acquisition, the Company's unadjusted EBIT will be adjusted
          upward by an amount determined by the Ad Hoc Committee that is at
          least equal to the projected EBIT for the acquired business for the
          remaining term of the plan cycle, as reflected in the Pricing
          Projections for the acquired business, divided by the total number of
          years in the plan cycle. For an acquisition, the Company's net assets
          as of the close of fiscal 2002 will be adjusted upward by an amount
          determined by the Ad Hoc Committee that is no greater than the
          projected average net assets of the acquired business for the
          remaining term of the plan cycle, as reflected in the Pricing
          Projections for the acquired business, multiplied by the number of
          months remaining in the plan cycle and divided by the total number of
          months in the plan cycle.

          For a divestiture, the Company's unadjusted EBIT will be adjusted
          downward by an amount determined by the Ad Hoc Committee that is no
          greater than the budgeted EBIT for the divested business for the year
          in which the divestiture occurs as reflected in the Final Budget as of
          the commencement of such year multiplied by the number of months
          remaining in the plan cycle divided by the total number of months in
          the plan cycle. For a divestiture, the Company's net assets as of the
          close of fiscal 2002 will be adjusted downward by an amount determined
          by the Ad Hoc Committee that is at least equal to the budgeted net
          assets for the divested business for the year in which the divestiture
          occurs as reflected in the Final Budget as of the commencement of such
          year multiplied by the number of months remaining in the plan cycle
          divided by the total number of months in the plan cycle.



                                       12
<PAGE>

                              SNAP-ON INCORPORATED

                 DEFERRED SHARE AND PERFORMANCE AWARD AGREEMENT

     THIS AGREEMENT ("Agreement") is made and entered into as of March 14, 2003
by and between SNAP-ON INCORPORATED, a Delaware corporation (the "Company"), and
_________, an employee of the Company or a subsidiary of the Company (the "Key
Employee").

                              W I T N E S S E T H :

     WHEREAS, the Organization and Executive Compensation Committee of the Board
of Directors of the Company (such committee, whether acting as such or through
the ad hoc committee of the Board to which such committee delegated its
authority in connection with this Agreement, the "Committee"), by actions of the
Committee on January 24, 2003, approved the grant (the "Grant") to the Key
Employee of _____ (the "Grant Number") shares of the Company's common stock
("Common Stock") and the opportunity to receive cash in respect of performance
units ("Performance Units") pursuant to the Company's 2001 Incentive Stock and
Awards Plan (the "Awards Plan"), to be effective March 14, 2003;

     WHEREAS, in accordance with the terms of the Grant, the Key Employee
elected to defer receipt of the percentage set forth on the signature page
hereto of the Grant Number (the "Share Deferral Percentage") and the percentage
set forth on the signature page hereto of the cash that may be received in
respect of the Performance Units subject to the Grant (the "Cash Deferral
Percentage") by executing an Election to Defer Compensation (the "Deferral
Election") prior to the Grant's effective date, which the Company countersigned
prior to such date;

     WHEREAS, the Deferral Election provides that the Grant will also be subject
to the terms of a "Deferred Award Agreement," the form of which is to be
determined by the Company, and this Agreement is intended to serve as the
additional agreement that the Deferral Election contemplated; and

     WHEREAS, the Company has in effect the Snap-on Incorporated Deferred
Compensation Plan, as amended (the "Deferral Plan").

     NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements herein set forth, the parties hereby mutually covenant and agree as
follows:

1.   Share Units. Subject to the terms and conditions set forth herein,

     (a)  As of March 14, 2003, the Company shall establish and maintain
          bookkeeping accounts for the Key Employee relating to the Grant under
          the Deferral Plan consisting of a "Cash Account" and a "Share
          Account."

     (b)  As of March 14, 2003, there shall be credited to the Share Account a
          number of Share Units (as defined in the Deferral Plan) equal to the
          product of the Grant Number multiplied by the Share Deferral

                                       13
<PAGE>

          Percentage. From and after the time of such credit, the Key Employee
          shall have the rights afforded under the Deferral Plan in respect of
          Share Units so credited, except that such Share Units shall be subject
          to vesting and forfeiture as set forth below.

2.   Vesting and Forfeiture Based on Performance. Subject to the terms and
     conditions set forth herein,

     (a)  Vesting of the Share Units and payment in respect of Performance Units
          is dependent upon performance relative to revenue growth and RONAEBIT
          goals during fiscal 2003, fiscal 2004 and fiscal 2005. The threshold,
          target and maximum goals for revenue growth and RONAEBIT during fiscal
          2003, fiscal 2004 and fiscal 2005 are as shown on Exhibit 1, and the
          Share Units will vest, and the Performance Units will be earned, in
          accordance with the vesting matrix attached hereto as Exhibit 1 based
          on actual performance of the Company relative to the goals subject to
          the terms attached hereto as Exhibit 2. As soon as practicable after
          the Company's audited financial statements for fiscal 2003, fiscal
          2004 and fiscal 2005 are available to the Committee, the Committee
          shall calculate the Company's revenue growth and RONAEBIT data for
          such years in accordance with the terms attached hereto as Exhibit 2.
          The Committee shall then plot the revenue growth and RONAEBIT data on
          the vesting matrix. The resulting position on the matrix shall
          determine the percentage of the Share Units that will vest and the
          number of Performance Units that the Key Employee will earn as set
          forth below. In the course of calculating the Company's revenue growth
          and RONAEBIT data and plotting the revenue growth and RONAEBIT data on
          the vesting matrix, the Committee shall have the discretion to take
          action in light of the effects of Special Charges (as defined on
          Exhibit 1) that reduces the resulting percentage in such manner and to
          such extent as the Committee determines in its sole discretion.
          However, the Committee shall have no discretion to take into account
          the effects of Special Charges in a manner that increases the
          resulting percentage. The Company shall promptly communicate this
          information to the Key Employee.

     (b)  Unless the Key Employee has previously forfeited such Share Units, if
          the position on the matrix reflects a percentage greater than zero and
          less than or equal to 100%, then the number of Share Units that shall
          vest shall be equal to the product of such percentage, the Grant
          Number and the Share Deferral Percentage, and if the position on the
          matrix reflects a percentage greater than 100%, then the number of
          Share Units that shall vest shall be equal to the product of the Grant
          Number and the Share Deferral Percentage. Upon the Committee's
          determination as provided above, the Key Employee will forfeit Share
          Units in an amount equal to that portion of the product of the Grant
          Number and the Share Deferral Percentage that does not vest.

     (c)  Unless the Key Employee has previously forfeited the right to earn
          Performance Units, if the position on the matrix reflects a percentage
          greater than 100%, then the Key Employee will receive a credit to the
          Cash Account, pursuant to Section 6.1(a) of the Deferral Plan, in
          respect of a number of Performance Units equal to the product of the
          percentage in excess of 100%, but not greater than 50%,

                                       14
<PAGE>

          multiplied by the Grant Number and multiplied by the Cash Deferral
          Percentage. The amount of the credit to the Cash Account for each
          Performance Unit will be the fair market value of a share of the
          Company's common stock on March 14, 2003.

3.   Forfeiture Based on Employment Status. Subject to the terms and conditions
     set forth herein,

     (a)  In addition to any rights of the Company under Section 9, the Key
          Employee will forfeit any Share Units or any rights associated with
          the Performance Units as to which the Committee has not made its
          vesting determination under Section 2 and not otherwise vested under
          Section 11 if the Key Employee's employment with the Company or its
          subsidiaries is terminated for any reason prior to such determination
          unless in the case of termination by the Company or a subsidiary the
          Committee determines, on such terms and conditions, if any, as the
          Committee may impose, that there may nonetheless be vesting of all or
          a portion of the award at the time of such determination or at any
          other time. Absence of the Key Employee on leave approved by a duly
          elected officer of the Company, other than the Key Employee, shall not
          be considered a termination of employment during the period of such
          leave.

     (b)  Notwithstanding the foregoing, in the case of termination of
          employment as a result of death, Disability (as defined below) or
          Retirement (as defined below), the Share Deferral Percentage of the
          Grant will vest, and the Key Employee's entitlement to receive a
          credit to the Cash Account in respect of Performance Units will be
          determined, based upon the Company's actual performance relative to
          the revenue growth and RONAEBIT goals over the full performance
          period, but in lieu of the amounts under Section 2(b) and (c), the
          respective amounts, if any, determined under those subsections shall
          be reduced by multiplying such amounts by a fraction representing the
          portion of the two-year period that elapsed before the termination of
          the Key Employee's employment.

     (c)  Whether or not a divestiture of a subsidiary, division or other
          business unit (including through the formation of a joint venture)
          results in termination of employment with the Company and its
          subsidiaries will be at the discretion of the Committee, which
          discretion the Committee may exercise on a case by case basis.

     (d)  As used herein,

          (i)  "Disability" means a medically-determinable physical or mental
               condition that is expected to be permanent and that results in
               the Key Employee being unable to perform one or more of the
               essential duties of the Key Employee's occupation or a reasonable
               alternative offered by the Company or its subsidiaries, all as
               determined by the Committee or any successor to such committee
               that administers the Awards Plan (as the same may be amended).

                                       15
<PAGE>

          (ii) "Retirement" means termination of employment from the Company and
               its subsidiaries on or after satisfying the early or normal
               retirement age and service conditions specified in the retirement
               policy or retirement plan of the Company or one of its
               subsidiaries applicable to such Key Employee as in effect at the
               time of such termination.

4.   Dividends. Dividends on the Common Stock will result in a credit to the
     Cash Account pursuant to Section 6.4 of the Deferral Plan. However, the Key
     Employee will forfeit such credit and any related Growth Increments (as
     defined in the Deferral Plan) upon any forfeiture of the related Share
     Units.

5.   No Conversion. While Section 6.5 of the Deferral Plan would otherwise allow
     the Key Employee to convert Share Units into a cash amount to be credited
     to the Cash Account, the Key Employee shall not have any right under
     Section 6.5 of the Deferral Plan to convert all or a portion of any
     unvested Share Units into an amount to be credited to the Cash Account.
     Further, while Section 6.3(a) of the Deferral Plan would otherwise allow
     the Key Employee to convert all or a portion of any amount credited to the
     Cash Account into an amount to be credited to the Share Account, the Key
     Employee shall not have any right under Section 6.3(a) of the Deferral Plan
     to convert all or a portion of any amount credited to the Cash Account in
     respect of unvested Share Units into an amount to be credited to the Share
     Account.

6.   Deferral Period. The deferral period with respect to the Grant for purposes
     of Section 4.2 of the Deferral Plan shall extend until the payment
     commencement date set forth in the Deferral Election.

7.   Manner of Payment. Deferred amounts shall be paid in a lump sum or in
     installments in accordance with the Deferral Election.

8.   Changes in Deferral Period and Manner of Payment. The Key Employee may
     change the manner in which the deferred amount will be paid and/or delay
     the date such payments are to commence by written election made in
     accordance with the Deferral Plan.

9.   Detrimental Activity.

     (a)  Activity During Employment. If, prior to termination of the Key
          Employee's employment with the Company or during the one-year period
          following termination of the Key Employee's employment with the
          Company, the Company becomes aware that, prior to termination, the Key
          Employee had engaged in detrimental activity, then the Committee in
          its sole discretion, for purposes of this Agreement, may characterize
          or recharacterize termination of the Key Employee's employment as a
          termination to which this Section 9 applies and may determine or
          redetermine the date of such termination, and the Key Employee's
          rights with respect to the Grant shall be determined in accordance
          with the Committee's determination.

     (b)  Activity Following Termination. If, within the three-month period
          following the Key Employee's termination of employment with the
          Company, the Company

                                       16
<PAGE>

          becomes aware that the Key Employee has engaged in detrimental
          activity subsequent to termination, then the Key Employee's rights
          with respect to the Grant shall be determined in accordance with any
          determination by the Committee under this Section 9.

     (c)  Remedies. If the Key Employee has engaged in detrimental activity as
          described in subsections (a) and (b), then the Committee may, in its
          discretion, cancel any (or all) amounts credited to the Key Employee's
          Share Account and/or Cash Account in respect of the Grant and/or cause
          the Key Employee to return any cash or property actually realized by
          the Key Employee (directly or indirectly) in respect of the Grant, in
          each case whether or not the Committee has made a vesting
          determination under Section 2 in respect thereof before or after the
          date the Key Employee engaged in the detrimental activity or before or
          after the date of termination as determined or redetermined under
          subsection (a).

     (d)  Allegations of Activity. If an allegation of detrimental activity by
          the Key Employee is made to the Committee, then the Committee may
          suspend the Key Employee's rights in respect of the Grant to permit
          the investigation of such allegation.

     (e)  Definition of "Detrimental Activity." For purposes of this Agreement,
          "detrimental activity" means activity that is determined by the
          Committee in its sole discretion to be detrimental to the interests of
          the Company or any of its subsidiaries, including but not limited to
          situations where the Key Employee (i) divulges trade secrets of the
          Company, proprietary data or other confidential information relating
          to the Company or to the business of the Company or any subsidiaries,
          (ii) enters into employment with a competitor under circumstances
          suggesting that the Key Employee will be using unique or special
          knowledge gained as an employee of the Company to compete with the
          Company, (iii) uses information obtained during the course of his
          prior employment with the Company for his own purposes, such as for
          the solicitation of business and competition with the Company, (iv) is
          determined to have engaged (whether or not prior to termination due to
          retirement) in either gross misconduct or criminal activity harmful to
          the Company, or (v) takes any action that harms the business
          interests, reputation or goodwill of the Company and/or its
          subsidiaries.

10.  Beneficiary. The person whose name appears on the signature page hereof
     after the caption "Beneficiary," if any, shall be the beneficiary of the
     Key Employee designated pursuant to Section 8 of the Deferral Plan.

11.  Change in Control. In the event of a "Change of Control" (as defined in the
     Awards Plan) prior to the Committee's determination under Section 2(a),

     (a)  Any unvested Share Units shall immediately vest in full, unless the
          Key Employee has previously forfeited such Share Units; and

                                       17
<PAGE>

     (b)  Notwithstanding their treatment under the terms of the Awards Plan,
          the Company will immediately make a credit to the Cash Account in
          respect of a number of Performance Units multiplied by the Cash
          Deferral Percentage assuming performance at maximum levels for the
          entire period unless the Key Employee has previously forfeited the
          right to earn Performance Units.

     In each case, the Key Employee shall be entitled to payments in respect of
     such amounts in accordance with Section 17.2 of the Deferral Plan.

12.  Voting Rights. Until such time, if any, as certificates representing shares
     of Common Stock are delivered to the Key Employee in accordance with the
     Deferral Plan, the Key Employee shall have no voting rights in respect of
     the Share Units.

13.  Tax Withholding. The Company and the Key Employee shall have rights with
     respect to tax withholding as set forth in Section 14 of the Deferral Plan.
     Without limitation, the Company shall be entitled to withhold any taxes due
     and payable in accordance with Section 3121(v) of the Internal Revenue Code
     from any payments due to the Key Employee.

14.  Adjustments in Event of Change in Common Stock. In the event of any
     reclassification, subdivision or combination of shares of Common Stock,
     merger or consolidation of the Company or sale by the Company of all or a
     portion of its assets, or other event which could, in the judgment of the
     Committee, distort the implementation of the Grant or the realization of
     its objectives, the Committee may make such adjustments in the Grant Number
     and the number of Share Units under this Agreement, or in the terms,
     conditions or restrictions of this Agreement, as the Committee deems
     equitable; provided that in the absence of express action by the Committee,
     adjustments that apply generally to Share Units credited under the Deferral
     Plan shall apply automatically to the number of Share Units under this
     Agreement.

15.  Powers of the Company Not Affected. The existence of the Grant shall not
     affect in any way the right or power of the Company or its stockholders to
     make or authorize any combination, subdivision or reclassification of the
     Common Stock or any reorganization, merger, consolidation, business
     combination, exchange of shares, or other change in the Company's capital
     structure or its business, or any issue of bonds, debentures or stock
     having rights or preferences equal, superior or affecting the Common Stock
     or the rights thereof, or dissolution or liquidation of the Company, or any
     sale or transfer of all or any part of its assets or business, or any other
     corporate act or proceeding, whether of a similar character or otherwise.
     Nothing in this Agreement shall confer upon the Key Employee any right to
     continue in the employment of the Company or interfere with or limit in any
     way the right of the Company to terminate the Key Employee's employment at
     any time.

16.  Interpretation by Committee. The Key Employee agrees that any dispute or
     disagreement that may arise in connection with this Agreement shall be
     resolved by the Committee, in its sole discretion, and that any
     interpretation by the Committee of the terms of this Agreement, the Awards
     Plan or the Deferral Plan and any determination made by the

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<PAGE>

     Committee under this Agreement or such plans may be made in the sole
     discretion of the Committee and shall be final, binding, and conclusive.

17.  Miscellaneous.

     (a)  This Agreement shall be governed and construed in accordance with the
          laws of the State of Wisconsin applicable to contracts made and to be
          performed therein between residents thereof.

     (b)  This Agreement may not be amended or modified except by the written
          consent of the parties hereto.

     (c)  The captions of this Agreement are inserted for convenience of
          reference only and shall not be taken into account in construing this
          Agreement.

     (d)  Any notice, filing or delivery hereunder or with respect to the Grant
          shall be given to the Key Employee at either his usual work location
          or his home address as indicated in the records of the Company, and
          shall be given to the Committee or the Company at 10801 Corporate
          Drive, Kenosha, Wisconsin 53142, Attention: Secretary. All such
          notices shall be given by first class mail, postage pre-paid, or by
          personal delivery.

     (e)  This Agreement shall be binding upon and inure to the benefit of the
          Company and its successors and assigns and shall be binding upon and
          inure to the benefit of the Key Employee, his beneficiary and the
          personal representative(s) and heirs of the Key Employee.

18.  Deferral Matters.

     (a)  The Key Employee understands that (i) as a result of this Agreement,
          no restricted stock, cash or other property will be deliverable to the
          Key Employee in respect of the Share Deferral Percentage of the Grant
          Number or the Cash Deferral Percentage of the cash that may be
          received in respect of the Performance Units subject to the Grant
          until the date identified pursuant to Section 6, and (ii) all amounts
          deferred pursuant to this Agreement shall be reflected in an unfunded
          account established for the Key Employee by the Company, payment of
          the Company's obligation will be from general funds, and no special
          assets (stock, cash or otherwise) have been or will be set aside as
          security for this obligation.

     (b)  The Key Employee understands and agrees that the Key Employee's rights
          to payments hereunder are not subject in any manner to anticipation,
          alienation, sale, transfer, assignment, pledge, encumbrance, or
          garnishment by the Key Employee's creditors or the creditors of his
          beneficiaries, whether by operation of law or otherwise, and any
          attempted sale, transfer, assignment, pledge, or encumbrance with
          respect to such payment shall be null and void, and shall be without
          legal effect and shall not be recognized by the Company.



                                       19
<PAGE>

     (c)  The Key Employee understands and agrees that his right to receive
          payments hereunder is that of a general, unsecured creditor of the
          Company, and that this Agreement constitutes a mere promise by the
          Company to pay such benefits in the future. Further, it is the
          intention of the parties hereto that the arrangements hereunder be
          unfunded for tax purposes and for purposes of Title I of ERISA.

     (d)  The Key Employee acknowledges that there will be no matching credit
          under Section 5 of the Deferral Plan in respect of compensation
          deferred under this Agreement.



                                       20
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     IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its duly authorized officer, and the Key Employee has hereunto affixed his
hand, all on the day and year set forth above.

                                        SNAP-ON INCORPORATED


                                        By:
                                           -------------------------------------
                                        Title:

                                        Key Employee:


                                        ----------------------------------------


                                        Beneficiary:
                                                    ----------------------------

                                        Address of Beneficiary:


                                        ----------------------------------------


                                        ----------------------------------------

                                        Beneficiary Tax Identification

                                        No.
                                           -------------------------------------

                                        Share Deferral Percentage:
                                                                  --------------

                                        Cash Deferral Percentage:
                                                                 ---------------



                                       21
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                                                                       Exhibit 2

1.   "RONAEBIT" for purposes of the vesting matrix means a fraction expressed as
     a percentage where (i) the numerator is earnings from continuing operations
     before income taxes (including net finance income) plus interest expense
     less other income (expense) - net (i.e., less other income plus other
     expense) plus Special Charges (as defined below) and (ii) the denominator
     is average net assets employed. "Net assets employed" means total assets
     minus cash and cash equivalents and minus all liabilities excluding
     short-term and long-term debt. "Average net assets employed" for a period
     means the average of net assets employed at the end of the immediately
     preceding fiscal period and at the end of each fiscal month during the
     period as reflected in the Company's final consolidated balance sheet for
     the month that is prepared as part of the financial statements used in the
     preparation of the Company's externally reported financial statements.

2.   RONAEBIT for purposes of the vesting matrix will be calculated based upon
     the amount described in (a)(i) for the period consisting of fiscal 2003,
     fiscal 2004 and fiscal 2005 and average net assets employed for the same
     period.

3.   Revenue growth for purposes of the vesting matrix will be calculated by
     comparing the Company's consolidated net sales for fiscal 2005 with the net
     sales amounts set forth on the matrix.

4.   The amount of each component of a calculation will be determined by
     reference to the Company's audited financial statements for the year(s) in
     question or the notes thereto to the extent reflected therein and, if not
     reflected therein, by reference to the Company's unaudited financial
     statements or the notes thereto contained in the Company's periodic reports
     filed with the Securities and Exchange Commission to the extent reflected
     therein and, if not reflected therein, by reference to the Company's
     publicly disclosed earnings release for the relevant period and, if not
     reflected therein, by reference to the Company's final consolidated balance
     sheet for the month that is prepared as part of the financial statements
     used in the preparation of the Company's externally reported financial
     statements.

5.   There is graduated, proportionate vesting between points on the matrix.

6.   Except to the extent that considering any such charge would cause an award
     to fail to qualify for the performance-based exception under Section 162(m)
     of the Internal Revenue Code and except to the extent that the committee of
     the Board that the Board has established to assist in the administration of
     the Plan (the "Ad Hoc Committee") in its sole discretion determines that a
     charge or other expense that would otherwise qualify as a Special Charge
     shall not be considered a Special Charge, "Special Charges" consist of
     restructuring reserve charges, non-recurring charges and non-comparable
     charges. Restructuring reserve charges include those costs that can be
     accrued in accordance with GAAP at the time a restructuring plan is
     adopted. Non-recurring charges consist of restructuring related charges
     such as the write-off of inventory or transition costs that are incurred as
     a result of a restructuring plan and will benefit future operations, as
     well as non-restructuring related charges that are considered non-recurring
     in nature. Non-comparable charges consist of costs that do not qualify for
     restructuring reserve or non-recurring charge treatment but are considered
     one-time, unusual

                                       22
<PAGE>

     charges and are reflected as such in the Company's publicly disclosed
     earnings release for the relevant period. To the extent terms used above
     have meanings under U.S. GAAP, such meanings shall control.

7.   Except to the extent that doing so would cause an award to fail to qualify
     for the performance-based exception under Section 162(m) of the Internal
     Revenue Code, the threshold, target and maximum goals for revenue growth
     and RONAEBIT will be adjusted upward or downward as appropriate to
     eliminate the effects of acquisitions and divestitures subject to the
     following.

     (a)  There will be adjustments only where there is an acquisition or
          divestiture (or a combination of multiple acquisitions or
          divestitures) of a subsidiary, division or other business unit that
          had revenues during its last full fiscal year equal to 1% or more of
          the Company's budgeted consolidated net sales during the year the
          acquisition or divestiture occurs as reflected in the Company's
          overall final budget as of the commencement of the year as presented
          to the Company's Board of Directors at its January meeting (the "Final
          Budget").

     (b)  Adjustments to Revenue Goals. If an acquisition occurs in 2003 or
          2004, then the Ad Hoc Committee will adjust the net sales amounts set
          forth on the vesting matrix upward by an amount that is at least equal
          to the projected revenue for the acquired business in 2005 as
          reflected in the financial projections for the acquired business used
          as the basis for approval of the Company's acquisition purchase price
          decision by the Company's Board of Directors or the highest authority
          within the Company approving that decision (the "Pricing
          Projections"). If an acquisition occurs in 2005, then the Ad Hoc
          Committee will adjust the net sales amounts set forth on the vesting
          matrix upward by an amount that is at least equal to the projected
          revenue for the acquired business in 2005, as reflected in the Pricing
          Projections for the acquired business, multiplied by a fraction
          representing the portion of fiscal 2005 occurring after the
          acquisition. If a divestiture occurs in 2003 or 2004, then the Ad Hoc
          Committee will adjust the net sales amounts set forth on the vesting
          matrix downward by an amount that is no greater than the budgeted
          revenue for the divested business in 2005 as reflected in the Final
          Budget as of the commencement of fiscal year in which the divestiture
          occurred. If a divestiture occurs in 2005, then the Ad Hoc Committee
          will adjust the net sales amounts set forth on the vesting matrix
          downward on a pro rata basis by an amount that is no greater than the
          budgeted revenue for the divested business in 2005, as reflected in
          the Final Budget as of the commencement of fiscal 2005, multiplied by
          a fraction representing the portion of fiscal 2005 occurring after the
          divestiture.

     (c)  Adjustments to RONAEBIT Goals. If there is an acquisition or
          divestiture, then the RONAEBIT percentages on the vesting matrix will
          be recalculated by dividing the adjusted EBIT by the adjusted net
          assets (on an annualized basis). The Company's unadjusted EBIT will be
          estimated as an amount equal to the product obtained by multiplying
          the net assets as of the close of fiscal 2002 by the RONAEBIT
          percentage on the vesting matrix.

                                       23
<PAGE>

          For an acquisition, the Company's unadjusted EBIT will be adjusted
          upward by an amount determined by the Ad Hoc Committee that is at
          least equal to the projected EBIT for the acquired business for the
          remaining term of the plan cycle, as reflected in the Pricing
          Projections for the acquired business, divided by the total number of
          years in the plan cycle. For an acquisition, the Company's net assets
          as of the close of fiscal 2002 will be adjusted upward by an amount
          determined by the Ad Hoc Committee that is no greater than the
          projected average net assets of the acquired business for the
          remaining term of the plan cycle, as reflected in the Pricing
          Projections for the acquired business, multiplied by the number of
          months remaining in the plan cycle and divided by the total number of
          months in the plan cycle.

          For a divestiture, the Company's unadjusted EBIT will be adjusted
          downward by an amount determined by the Ad Hoc Committee that is no
          greater than the budgeted EBIT for the divested business for the year
          in which the divestiture occurs as reflected in the Final Budget as of
          the commencement of such year multiplied by the number of months
          remaining in the plan cycle divided by the total number of months in
          the plan cycle. For a divestiture, the Company's net assets as of the
          close of fiscal 2002 will be adjusted downward by an amount determined
          by the Ad Hoc Committee that is at least equal to the budgeted net
          assets for the divested business for the year in which the divestiture
          occurs as reflected in the Final Budget as of the commencement of such
          year multiplied by the number of months remaining in the plan cycle
          divided by the total number of months in the plan cycle.




                                       24