Exhibit 10.1 



SNAP-ON INCORPORATED

COMBINED INCENTIVE STOCK OPTION AND NON-QUALIFIED STOCK OPTION 
AGREEMENT WITH VESTING
PROVISIONS 



        THIS
COMBINED INCENTIVE STOCK OPTION AND NON-QUALIFIED STOCK OPTION AGREEMENT, dated the [ ]
day of [Month], [YEAR], is granted by SNAP-ON INCORPORATED (the “Company”) to
[Name] (the “Optionee”) pursuant to the Company’s 2001 Incentive Stock and
Awards Plan (the “Plan”). 



        WHEREAS,
the Company believes it to be in the best interests of the Company, its subsidiaries and
its stockholders for its officers and other key employees to obtain or increase their
stock ownership interest in the Company so that they will have a greater incentive to work
for and manage the Company’s affairs in such a way that its shares may become more
valuable; and 



        WHEREAS,
the Optionee is employed by the Company or one of its subsidiaries as an officer or other
key employee and has been selected by the Committee to receive an option; 



        NOW,
THEREFORE, in consideration of the premises and of the services to be performed by the
Optionee, the Company and the Optionee hereby agree as follows: 



        1.
OPTION GRANT  




        Subject
to the terms of this Agreement and the Plan, the Company grants to the Optionee an option
to purchase a total of [#] shares of Common Stock of the Company at a price of [$] per
share divided as follows: 



        (a)              A
portion of this option to purchase [#] shares of Common Stock is intended to
          qualify as an “incentive stock option” within the meaning of Section
          422 of the Internal Revenue Code of 1986, as amended (the “Code”).  




        (b)              The
remaining portion of this option to purchase [#] shares of Common Stock is not intended
to qualify as an “incentive stock option” within           the meaning of
Section 422 of the Code, which this Agreement refers to as           “non-qualified”.  













        2.
TIME OF EXERCISE  




        Subject
to the termination provisions of paragraphs 3, 4 and 5, and provided that the Optionee is
an employee of the Company or one of its subsidiaries on such date, 



        (a)              the
Optionee may purchase [#] of the incentive option shares on or after           [Date] [and
may purchase an additional [#] of the incentive option shares           on or after
[Date]]; and  




        (b)              the
Optionee may purchase [#] of the non-qualified option shares on or after           [Date] [and
may purchase an additional [#]of the non-qualified           option shares on or
after [Date]].  




If the Optionee terminates employment
from the Company and its subsidiaries, only those option shares for which the right to
purchase has accrued as of the date of such termination may be purchased after such
termination (subject to the provisions of paragraphs 3, 4 and 5). If the Optionee takes an
unpaid leave of absence, then the Committee may defer the dates on which the Optionee may
first purchase the option shares to take into account such leave of absence. 



        3.
 TERMINATION OF OPTION  




            A.                 INCENTIVE
STOCK OPTION 




        The
Optionee may not exercise the portion of this option that is intended to qualify as an
incentive stock option after, and this portion of the option will terminate without notice
to the Optionee on, the earlier of: 



        (a)              Three
(3) months after the date of the termination of the Optionee’s           employment
from the Company and its subsidiaries for any reason other than for           Cause or
due to Disability or death;  




        (b)              On
the date the Company or one of its subsidiaries terminates the           Optionee’s
employment for Cause;  




        (c)              Twelve
(12) months after the date of the termination of the Optionee’s           employment
from the Company and its subsidiaries by reason of death or           Disability; or  




        (d)              Ten
(10) years from the date of this Agreement.  











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            B.
NON-QUALIFIED STOCK OPTION  




        The
Optionee may not exercise the portion of this option that is non-qualified after, and this
portion of the option will terminate without notice to the Optionee on, the earlier of: 



        (a)              Six
(6) months after the date of the Optionee’s termination of employment           from
the Company and its subsidiaries for any reason other than for Cause or due           to
Disability, death or Retirement;  




        (b)              The
date the Company or one of its subsidiaries terminates the Optionee’s
          employment for Cause;  




        (c)              Twelve
(12) months after the date of termination of the Optionee’s           employment
from the Company and its subsidiaries by reason of death or           Disability;  




        (d)              Ten
(10) years after the Optionee terminates employment from the Company and its
          subsidiaries on account of Retirement; or  




        (e)     Ten
(10) years from the date of this Agreement. 



        For
purposes of this paragraph 3, termination shall occur at 11:59 P.M. (Central Time) on the
applicable date described above, except that if the Optionee is terminated for Cause,
termination shall occur immediately at the time of such termination. 



        The
Company is under no obligation, whatsoever, to update, remind or notify Optionee of any
expiration date prior to the expiration of the options, regardless of whether Company
provides an update to Optionee or any other Plan Participant. 



        If
the Company divests a subsidiary, division or other business unit, then the Committee will
have the discretion to determine whether or not such divestiture of a subsidiary, division
or other business unit results in termination of the Optionee’s employment from the
Company and its subsidiaries for purposes of this Agreement, which discretion the
Committee may exercise on a case by case basis. 



        In
addition, if the Optionee takes a military, sick leave or other bona fide leave of absence
from the Company and its subsidiaries, the Optionee will be considered to have terminated
employment from the Company and its subsidiaries on the later of (i) the 91st
day of such leave, or (ii) the last day that the Optionee’s right to reemployment
following the end of such leave is guaranteed by law or contract with the Company or a
subsidiary. 











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        4.
TERMINATION FOR CAUSE  




        If
the Company or one of its subsidiaries terminates the Optionee’s employment for
Cause, then the Committee may determine that any exercises of this option within the six
(6) month period prior to such termination will be deemed of no force and effect and the
Committee may pursue any remedy or proceeding available to compel the Optionee to return
to the Company any profits the Optionee realized (directly or indirectly) from exercising
this option during such period. 



        5.
DETRIMENTAL ACTIVITY 




        (a)              If,
within one (1) year after the Optionee’s termination of employment from
          the Company and its subsidiaries, the Company becomes aware that the Optionee
          had engaged in activity prior to his or her termination that would have
          constituted Cause for termination had the Company known of such activity, then
          the Committee may re-characterize the Optionee’s termination as a
          termination for Cause and/or may redetermine the date of such termination. In
          such an event, the Optionee’s right to exercise this option will be
          terminated as of the Optionee’s deemed date of termination for Cause.  




        (b)              If,
within three (3) months after the Optionee’s termination of employment
          from the Company and its subsidiaries, the Company becomes aware that the
          Optionee has engaged in Detrimental Activity subsequent to his or her
          termination, then the Committee may determine that the Optionee’s right to
          exercise this option will be terminated as of the date the Optionee engaged in
          the Detrimental Activity.  




        (c)              If
the Optionee exercised this option during the period beginning six (6) months
          before the deemed date of termination for Cause in accordance with (a) above,
or           the date the Optionee engaged in Detrimental Activity in accordance with (b)
          above, and ending on the date of the Committee’s determination, then such
          exercise will be deemed of no force and effect and the Committee reserves its
          right to pursue any remedy or proceeding available to compel the Optionee to
          return to the Company any profits the Optionee realized (directly or
indirectly)           from exercising this option during such period.  




        (d)              If
an allegation of Detrimental Activity by the Optionee is made to the           Committee,
then the Optionee’s ability to exercise this option will be           suspended for
the period the Committee determines to permit the Committee to           investigate the
allegation.  




        (e)              Notwithstanding
any other provision hereof, the provisions of this Section 5           shall be null and
void and of no effect upon the occurrence of a Change of           Control (as defined in
the Plan).  










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        6.
EXERCISE PROCEDURES 




        (a)    
                    The Optionee may exercise this option in whole or in part only with
respect to                     any shares for which the right to exercise shall have
accrued pursuant to                     paragraph 2 and only so long as paragraphs 3 and
5 do not prohibit such                     exercise.  




        (b)    
                    This option may be exercised by delivering a written notice of option
exercise                     to the Company’s Human Resources Department at Kenosha,
Wisconsin,                     accompanied by payment of the purchase price and such
additional amount (if any)                     determined by the Human Resources
Department as necessary to satisfy the                     Company’s tax withholding
obligations, and such other documents or                     representations as the
Company may reasonably request to comply with securities,                     tax or
other laws then applicable to the exercise of the option. Delivery may be
                    made in person, by nationally-recognized delivery service that
guarantees                     overnight delivery, or by facsimile. A notice of option
exercise that the Human                     Resources Department receives after the date
of termination (as provided in                     paragraph 3) shall be null and void.  




        (c)    
                    The Optionee may pay the purchase price in one or more of the
following forms:  




	 	        i.
                    a check payable to the order of the Company for the purchase price of
the shares                     being purchased; or  







	 	        ii.
                    delivery of shares of Common Stock (including by attestation) that
the Optionee                     has owned for at least six (6) months and that have a
Fair Market Value                     (determined on the date of delivery) equal to the
purchase price of the shares                     being purchased; or  







	 	        iii.
                    delivery (including by facsimile) to the Human Resources Department
of the                     Company at Kenosha, Wisconsin, of an executed irrevocable
option exercise form                     together with irrevocable instructions, in a
form acceptable to the Company, to                     a broker-dealer to sell or margin
a sufficient portion of the shares of Common                     Stock issuable upon
exercise of this option and deliver the sale or margin loan                     proceeds
directly to the Company to pay for the exercise price.  







        (d)    
                    The Optionee may satisfy any tax withholding obligation of the
Company arising                     from the exercise of this option, in whole or in
part, by paying such tax                     obligation in cash or by check made payable
to the Company, or by electing to                     have the Company withhold shares of
Common Stock having a Fair Market Value on                     the date of exercise equal
to the amount required to be withheld, subject to                     such rules as the
Committee may adopt. In any event, the Company reserves the                     right to
withhold from any compensation otherwise payable to the Optionee such
                    amount as the Company determines is necessary to satisfy the Company’s
tax                     withholding obligations arising from the exercise of this option.  











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        7.
DEFINITIONS 




        (a)              “Cause” means
termination of employment as a result of (i) the failure           of the Optionee to
perform or observe any of the terms or provisions of any           written employment
agreement between the Optionee and the Company or its           subsidiaries or, if no
written agreement exists, the gross dereliction of the           Optionee’s duties
with respect to the Company or any of its subsidiaries,           as applicable; (ii) the
failure of the Optionee to comply fully with the lawful           directives of the Board
of Directors of the Company or its subsidiaries, as           applicable, or the officers
or supervisory employees to whom the Optionee is           reporting; (iii) the Optionee’s
dishonesty, misconduct, misappropriation of           funds, or disloyalty or
disparagement of the Company, any of its subsidiaries,           or its management or
employees; (iv) engaging in Detrimental Activity prior to           termination of
employment, or (v) other proper cause determined in good faith by           the
Committee. Notwithstanding the foregoing, if the Optionee is subject to a
          written agreement with the Company or any of its subsidiaries that contains a
          definition of “Cause” that is different from the definition provided
          in this paragraph, then the definition of “Cause” in such other
          agreement shall apply in lieu of the definition provided in this paragraph.  




        (b)              “Detrimental
Activity” means activity that the Committee determines 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 Optionee:           (i)
divulges trade secrets of the Company or its subsidiaries, proprietary data           or
other confidential information relating to the Company or any subsidiary or           to
the business of the Company or any subsidiary, (ii) enters into employment           with
a competitor under circumstances suggesting that such Optionee will be           using
unique or special knowledge gained as a Company or subsidiary employee to
          compete with the Company or any subsidiary, (iii) uses information obtained
          during the course of his or her prior employment for his or her own purposes,
          such as for the solicitation of business in 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.  




        (c)              “Disability” means
permanently and totally disabled within the meaning           of section 22(e)(3) of the
Internal Revenue Code of 1986, as amended.  




        (d)              “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 Optionee as in effect at           the time of such
termination.  




        8.
OPTION AS COLLATERAL 




        The
Optionee may not assign or mortgage this option, or pledge this option as any type of
security or collateral. Any attempted assignment, mortgage or pledge of this option in
violation of this paragraph 8 will be null and void and have no legal effect. 




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        9.
NON-TRANSFERABILITY; DEATH  




            A.
INCENTIVE STOCK OPTION  




The following provisions apply only
to the portion of this option intended to qualify as an incentive stock option: 



                (i)                 Except
as the Committee otherwise provides, the Optionee may not transfer this           option
other than by will or the laws of descent and distribution, and only the
          Optionee may exercise this option during his or her lifetime. However, if the
          Committee determines that the Optionee is unable to exercise this option as a
          result of incapacity or Disability, then the Committee may permit the
          Optionee’s guardian or an individual who has obtained an appropriate power
          of attorney to exercise this option on behalf of the Optionee. In such an
event,           neither the Committee nor the Company will be liable for any losses
resulting           from such exercise or from the disposition of shares acquired upon
such           exercise.  




                (ii)                 If
the Optionee dies while this option is outstanding, then the Optionee’s
          estate or the person to whom this option passes by will or the laws of descent
          and distribution may exercise this option in the manner described in paragraph
          6, but only within a period of (A) twelve (12) months after the Optionee’s
          death or (B) ten (10) years from the date of this Agreement, whichever period
is           shorter. In such event, this option shall continue to be subject to the same
          terms and conditions as were applicable immediately prior to the Optionee’s
          death, provided that for purposes of this Agreement, the term           “Optionee” as
used in paragraphs 8, 10, 11, 12, 13 and 14 shall be           deemed to refer to the
person(s) who has(ve) the right to exercise the option           after the Optionee’s
death. The Company disclaims any obligation to provide           notice to any person who
has the right to exercise this option of circumstances           triggering termination
of this option.  




            B.
NON-QUALIFIED STOCK OPTION  




The following provisions apply only
to the portion of this option that is non-qualified: 



                (i)                 Except
as provided in paragraph 9.B(iii), or as the Committee otherwise           provides, the
Optionee may not transfer this option other than by will or the           laws of descent
and distribution, and only the Optionee may exercise this option           during his or
her lifetime. However, if the Committee determines that the           Optionee is unable
to exercise this option as a result of incapacity or           Disability, then the
Committee may permit the Optionee’s guardian or an           individual who has
obtained an appropriate power of attorney to exercise this           option on behalf of
the Optionee. In such an event, neither the Committee nor           the Company will be
liable for any losses resulting from such exercise or from           the disposition of
shares acquired upon such exercise.  




                (ii)                 If
the Optionee dies while this option is outstanding, then the Optionee’s
          estate or the person to whom this option passes by will or the laws of descent
          and distribution may exercise this option in the manner described in paragraph
          6, but only within a period of (A) twelve (12) months after the Optionee’s
          death or (B) ten (10) years from the date of this Agreement, whichever period
is           shorter.  





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                (iii)                 The
Optionee may transfer this option to (A) his or her spouse, children or
          grandchildren   (“Immediate Family Members”); (B) a trust or trusts
for the exclusive benefit of such Immediate Family Members; or (C) a partnership in which
such Immediate Family Members are the only partners. The transfer will be effective only
if the Optionee receives no consideration for such transfer. Subsequent transfers of the
transferred option are prohibited except transfers to those persons or entities to which
the Optionee could have transferred this option or transfers otherwise in accordance with
this paragraph 9.B.  




        Following
any transfer (whether voluntarily or pursuant to will or the law of descent and
distribution) under this paragraph 9.B, this option shall continue to be subject to the
same terms and conditions as were applicable immediately prior to such transfer, provided
that for purposes of this Agreement, the term “Optionee” as used in paragraphs
8, 10, 11, 12, 13 and 14 shall be deemed to refer to the transferee. The Company disclaims
any obligation to provide notice to any person who has the right to exercise this option
of circumstances triggering termination of this option. 



        10.
REGISTRATION  




        If
the Company is advised by its counsel that shares deliverable upon exercise of this option
are required to be registered under the Securities Act of 1933 (“Act”) or any
applicable state or foreign securities laws, or that delivery of the shares must be
accompanied or preceded by a prospectus meeting the requirements of that Act or such state
or foreign securities laws, then the Company will use its best efforts to effect the
registration or provide the prospectus within a reasonable time following the
Company’s receipt of written notice of option exercise relating to this option, but
delivery of shares by the Company may be deferred until the registration is effected or
the prospectus is available. The Optionee shall have no interest in shares covered by this
option until certificates for the shares are issued. 



        11.
ADJUSTMENTS AND CHANGE OF CONTROL  




        The
number and type of shares subject to this option and the option price may be adjusted, or
this option may be assumed, cancelled or otherwise changed, in the event of certain
transactions, as provided in Section 12 of the Plan. Upon a change of control, as defined
in the Plan, the Optionee shall have the rights specified in Section 12 of the Plan. 











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        12.
AMENDMENT OR MODIFICATION  




        Except
as provided in paragraph 11, no term or provision of this Agreement may be amended,
modified or supplemented orally, but only by an instrument in writing signed by the party
against which or whom the enforcement of the amendment, modification or supplement is
sought. 



        13. LIMITED
INTEREST 




        (a)              The
Optionee has no rights as a stockholder as a result of the grant of the           option
until this option is exercised, the exercise price and applicable           withholding
taxes are paid, and the shares issued.  




        (b)              The
grant of this option does not confer on the Optionee any right to continue           as
an employee, nor interfere in any way with the right of the Company or any of
          its subsidiaries to terminate the Optionee at any time.  




        (c)              The
grant of this option shall not affect in any way the right or power of the
          Company or any of its subsidiaries to make or authorize any or all adjustments,
          recapitalizations, reorganizations, or other changes in the Company’s or
          any subsidiary’s capital structure or its business, or any merger,
          consolidation or business combination of the Company or any subsidiary, or any
          issuance or modification of any term, condition, or covenant of any bond,
          debenture, debt, preferred stock or other instrument ahead of or affecting the
          Common Stock or the rights of the holders of Common Stock, or the dissolution
or           liquidation of the Company or any subsidiary, or any sale or transfer of all
or           any part of its assets or business or any other Company or subsidiary act or
          proceeding, whether of a similar character or otherwise.  




        14. LIMITS
ON INCENTIVE STOCK OPTIONS 




        To the
extent that the aggregate Fair Market Value of the Common Stock in respect of which the
portion of this option that is intended to qualify as an “incentive stock
option” is exercisable for the first time by the Optionee during a single calendar
year (determined as of the date of this Agreement), plus the aggregate Fair Market Value
of any shares of Common Stock subject to incentive stock options previously granted to the
Optionee by the Company or any subsidiary (determined as of their respective dates of
grant) that are exercisable for the first time by the Optionee during a single calendar
year, exceeds one hundred thousand dollars ($100,000), such portion of this option as to
any such excess shall be considered a non-qualified stock option in addition to the
portion of this option that is non-qualified as contemplated by paragraph 1(b). 










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        15.
ACTION OR PROCEEDING; SUBJECT TO PLAN  




        The
Company may require that any legal action or proceeding with respect to the Plan or this
option be determined in a bench trial. 



        THE
OPTIONEE ACKNOWLEDGES RECEIPT OF A COPY OF THE PLAN. ALL PARTIES ACKNOWLEDGE THAT THIS
OPTION IS GRANTED UNDER AND PURSUANT TO THE PLAN, WHICH SHALL GOVERN ALL RIGHTS,
INTERESTS, OBLIGATIONS, AND UNDERTAKINGS OF BOTH THE COMPANY AND THE OPTIONEE. ALL
CAPITALIZED TERMS NOT OTHERWISE DEFINED IN THIS OPTION SHALL HAVE THE MEANINGS ASSIGNED TO
SUCH TERMS IN THE PLAN. 



        OPTIONEE
HEREBY ACKNOWLEDGES THAT IT IS OPTIONEE’S RESPONSIBILITY TO EXERCISE THE OPTIONS
PRIOR TO THEIR EXPIRATION. OPTIONEE FURTHER ACKNOWLEDGES THAT COMPANY IS UNDER NO
OBLIGATION, WHATSOEVER, TO UPDATE, REMIND OR NOTIFY OPTIONEE OF ANY EXPIRATION DATE PRIOR
TO THE EXPIRATION OF THE OPTIONS, REGARDLESS OF WHETHER COMPANY PROVIDES AN UPDATE TO
OPTIONEE OR ANY OTHER PLAN PARTICIPANT. 



        16.
COUNTERPARTS 




        This
Agreement may be executed in one or more counterparts, each of which will be deemed to be
an original but all of which together will constitute one and the same instrument. 



        IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer and the Optionee has executed this Agreement all as of the day and date
first above written. 



		SNAP-ON INCORPORATED
	

 	By_____________________________________
	

 	_______________________________________
		[Optionee]
	

 	_______________________________________
	 	Social Security Number
















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