Document:

DEFERRED COMPENSATION WAIVER
                         AND INSURANCE BENEFIT AGREEMENT

               This Agreement is entered into this 27th day of September,  1999,
by and between SNAP-ON INCORPORATED, a Delaware corporation (the "Company"), and
FREDERICK D. HAY (the "Executive").

               WHEREAS,  the  Executive  has a Cash Account  under the Company's
Deferred Compensation Plan (the "Deferred Compensation Plan Balance"); and

               WHEREAS,  the Company is willing to  establish  the  Split-Dollar
Life Insurance Agreement described in Section 3 of this Agreement ("Split-Dollar
Agreement"); and

               WHEREAS, as of the date of this Agreement,  the Executive and the
Company  believe that the net Present Value of the Company's  obligations  under
the  Split-Dollar   Agreement  are  equivalent  to  the  Present  Value  of  the
Executive's waiver of rights under Section 2 of this Agreement.

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

        1. Definitions.

                a. Waived  Deferred  Compensation  Plan  Rights.  The  estimated
        payments  to  the  Executive  attributable  to  the  Executive's  Waived
        Existing  Balance (as defined in Section  2.a)  calculated  based on the
        assumptions set forth in Exhibit B to this Agreement.

                b. Change of Control.  This term shall have the meaning given in
        it Section 1.c. of the Senior Officer Agreement.

                c. Committee. The Organization and Compensation Committee of the
        Board of Directors of the Company.

                d. Deferred Compensation Plan. The Snap-on Incorporated Deferred
        Compensation Plan.

                e.  Present  Value.  The  Present  Value of a  payment  shall be
        determined  based on the  assumptions  set  forth in  Exhibit  B to this
        Agreement.

                f.  Senior  Officer  Agreement.   The  Restated  Senior  Officer
        Agreement dated February 1, 1996, between the Company and the Executive.

<PAGE>

        2. Executive's Waiver of Rights.

        The  Executive  hereby  waives any and all rights to receive Two Hundred
        Thousand  Dollars  ($200,000) of the Executive's  Cash Account under the
        Company's  Deferred  Compensation  Plan as of the date of this agreement
        (the "Waived Existing Balance").

        3. Split-Dollar Agreement.

        The Company agrees to enter into the Split-Dollar  Agreement attached as
        Exhibit A to this  Agreement.  The  Company  agrees to pay the first ten
        (10) annual premium  payments of Ninety Thousand One Hundred  Twenty-one
        and  60/100   Dollars   ($90,121.60)   pursuant  to  Section  3  of  the
        Split-Dollar Agreement.

        4. Payments Upon Death of Executive and Executive's Wife.

               a. In the event of the death of the survivor of the Executive and
        Kathleen V. Hay (the  "Executive's  wife") prior to the repayment to the
        Company under Section 5 of the Split-Dollar Agreement,  the Company will
        pay to the beneficiary designated pursuant to Section 4.b or 4.c of this
        Agreement  the  amount  (if  any) by  which  the  Present  Value  of the
        Executive's  Waived  Deferred  Compensation  Plan Rights exceeds the net
        Present Value of the Company's  premium  payments under Section 3 of the
        Split-Dollar Agreement (as recovered under Section 5 of the Split-Dollar
        Agreement).  These  calculations  shall be made based on the assumptions
        set forth in Exhibit B to this  Agreement.  The death  benefits based on
        the Waived Deferred  Compensation  Plan Rights are shown in column 11 of
        Exhibit B to this Agreement.

               b. The Executive may  designate a  beneficiary  or  beneficiaries
        who, upon the death of the survivor of the Executive and the Executive's
        wife are to receive the amounts that are paid under  Section 4.a of this
        Agreement.  All designations  shall be in writing to the Company in such
        form  as it  requires  or  accepts  and  signed  by the  Executive.  The
        designation shall be effective only if and when delivered to the Company
        during the lifetime of the Executive.  The Executive also may change his
        beneficiary or beneficiaries by a signed,  written instrument  delivered
        to the Company.  The payment of amounts shall be in accordance  with the
        last unrevoked  written  designation of beneficiary that has been signed
        and delivered to the Company.

               c. In the event the Executive does not designate a beneficiary or
        if for any reason such designation is ineffective,  in whole or in part,
        for any reason  including the death of a beneficiary  prior to the death
        of the survivor of the Executive and the  Executive's  wife,  any amount
        payable under Section 4.a of this Agreement  shall be paid to the estate
        of the survivor of the Executive and the  Executive's  wife, and in such
        event, the term "beneficiary" shall include such estate.

                                      -2-
<PAGE>

        5. Equivalence of Benefits.

        The Company and the  Executive  agree that the net Present  Value of the
        Company's premium payment obligation under Section 3 of the Split-Dollar
        Agreement (as recovered under Section 5 of the  Split-Dollar  Agreement)
        plus the net  Present  Value of any death  benefit  required  to be paid
        under Section 4 of this Agreement are equivalent to the Present Value of
        the Executive's  Waived Deferred  Compensation  Plan Rights based on the
        assumptions set forth in Exhibit B to this Agreement.

        6. Funding Upon a Change of Control.

               a. In the event that a Change of Control of the  Company  occurs,
        the Company shall immediately  transfer to an irrevocable  grantor trust
        established by the Company which is substantially identical to the trust
        attached  as  Exhibit  C to  this  Agreement  and  contains  such  other
        supplemental  provisions  as are  required by the trustee  which are not
        inconsistent  with  Exhibit C (the  "Trust") an amount  equal to (i) the
        aggregate  unpaid  premiums  required  to be paid by the  Company  under
        Section 3 of this Agreement plus (ii) an additional  amount equal to the
        death benefit required to be paid under Section 4.a of this Agreement if
        the survivor of the Executive and the Executive's  wife dies in the year
        in which the Company's final premium payment is due.

               b. The Trust is an  administrative  and  funding  vehicle for the
        Company's  general  assets  contributed  to the Trust for the purpose of
        ultimately  satisfying  obligations  under this Agreement.  In the event
        that the Company  transfers  assets to the Trust for the express purpose
        of ultimately  satisfying its  obligations  under this  Agreement  then,
        subject to the terms of the Trust and  limited by assets  available  and
        held by the  Trustees  of the  Trust  for the  purpose  of  funding  the
        benefits  provided  by this  Agreement,  payments  may be made from such
        Trust in satisfaction of Company's obligations  hereunder.  The transfer
        of  assets  by the  Company  to the  Trust  for this  purpose  shall not
        increase,  decrease or vary in any way the rights and obligations of the
        parties to this Agreement, nor shall the Executive, the Executive's wife
        or the owner of the insurance  policy held pursuant to the  Split-Dollar
        Agreement  have any  ownership  rights  with  respect to such assets nor
        shall the assets be treated as a trust fund of any kind for the  benefit
        of any  such  person;  provided  that as and when  any  such  person  is
        entitled to receive payments hereunder,  such person may, subject to the
        terms of the Trust and  limited by the terms of this  Agreement,  obtain
        such payments from the Trust. The Executive, the Executive's wife or the
        owner  of  the  insurance  policy  held  pursuant  to  the  Split-Dollar
        Agreement  may enforce and obtain  satisfaction  of such payment  rights
        against the assets held by the Trust for the purpose of satisfying  such
        obligations of the Company.

        7. Successors and Binding Agreements.

               a. The Company  shall require any  successor  (whether  direct or
        indirect,  by  purchase,   merger,   consolidation,   reorganization  or
        otherwise) to all or substantially  all

                                      -3-
<PAGE>

        of the business and/or assets of the Company  expressly to assume and to
        agree to  perform  this  Agreement  in the same  manner  and to the same
        extent the Company  would be required  to perform if no  succession  had
        taken  place.  This  Agreement  shall be  binding  upon and inure to the
        benefit of the Company and any such successor,  and such successor shall
        thereafter be deemed the "Company" for purposes of this Agreement.

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

               c. Neither the Company nor the Executive may assign,  transfer or
        delegate this Agreement or any rights or obligations hereunder except as
        expressly provided in this Agreement.

        8. Notices.

        All communications  provided for herein shall be in writing and shall be
        deemed to have been duly given when  delivered or five (5) business days
        after having been mailed by United States  registered or certified mail,
        return receipt requested,  postage prepaid, addressed to the Company (to
        the  attention  of the  Secretary  of  the  Company)  at  its  principal
        executive office and to the Executive at his principal residence,  or to
        such  other  address  as any  party may have  furnished  to the other in
        writing  in  accordance  herewith,  except  that  notices of a change of
        address shall be effective only upon receipt.

        9.     Governing Law.

        The  validity,  interpretation,  construction  and  performance  of this
        Agreement  shall  be  governed  by the laws of the  State  of  Wisconsin
        without  giving  effect to the  principles  of  conflict of laws of such
        state,  except that Section 10 shall be construed in accordance with the
        Federal  Arbitration  Act if  arbitration  is  chosen  as the  method of
        resolution.

        10.    Settlement of Disputes; Arbitration.

        Any dispute or  controversy  arising  under or in  connection  with this
        Agreement  shall be  settled,  at the  election  of the  Executive,  the
        Executive's  wife or the owner of the insurance  policy held pursuant to
        the Split-Dollar Agreement,  either by arbitration in Chicago,  Illinois
        in  accordance  with the rules of the American  Arbitration  Association
        then  in  effect  or by  litigation.  Judgment  may  be  entered  on the
        arbitrator's award in any court having jurisdiction.

        11.    Certain Limitations.

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

                                      -4-
<PAGE>

        12.    Miscellaneous.

                a.  Expenses.  All  costs and  expenses  of  administering  this
        Agreement shall be borne by the Company.

                b. Action by the Company. Any action required or permitted to be
        taken under this  Agreement by the Company shall be by resolution of the
        Board of  Directors,  by the duly  authorized  Committee of the Board of
        Directors,  or by a person or persons  authorized  by  resolution of the
        Board of Directors or the Committee.

               IN WITNESS  WHEREOF  the  parties  have  signed  and sealed  this
Agreement as of the date first above written.

In the presence of                            SNAP-ON INCORPORATED

/s/                                           By  /s/ Michael F. Montemurro

                                              Its Senior Vice President -
                                                    Transportation

/s/                                           /s/ Frederick D. Hay
                                              Frederick D. Hay

                                      -5-
<PAGE>
                                                                       EXHIBIT A
                              SNAP-ON INCORPORATED

                        SPLIT-DOLLAR INSURANCE AGREEMENT

       1. This  Agreement is entered into this 27th day of  September,  1999, by
and  between  SNAP-ON  INCORPORATED,  a Delaware  corporation,  and the HAY 1999
INSURANCE TRUST.

       2. Definitions.

       (a) "Company" means Snap-on Incorporated,  a Delaware  corporation,  with
offices in Kenosha, Wisconsin.

       (b) "Insureds" means Frederick D. and Kathleen V. Hay.

       (c) "Insurer" means Northwestern Mutual Life.

       (d) "Owner" means the Hay 1999 Insurance Trust, who may or may not be the
same person as the Insureds.

       (e)  "Policy"  means the policy or policies of  insurance on the lives of
the Insureds  issued by the Insurer and listed on Schedule  "A" attached  hereto
together with any  supplementary  contracts issued by the Insurer in conjunction
therewith

       (f) "Policy  Interest"  means the  interest of the Company in the Policy.
Policy  Interest  is an  amount  equal  to the  aggregate  premiums  paid by the
Company.  The existence of the Company's  Policy  Interest shall be evidenced by
filing with the Insurer an assignment in substantially  the form attached hereto
as Schedule "B."

       3. Premium Payments.

       (a) The  Company  agrees to pay up to the first ten (10)  annual  premium
payments  of  Ninety   Thousand  One  Hundred   Twenty-one  and  60/100  Dollars
($90,121.60)  as they become due. The Owner shall be responsible  for paying all
premium payments not paid by the Company.

       (b) Policy  dividends  shall be applied to  purchase  paid-up  additional
insurance protection.

       4. Policy Ownership.

       (a) Except as provided in  subparagraph  (b), the Owner shall be the sole
and exclusive owner of the Policy. This includes all the rights of "owner" under
the  terms of the  Policy  except  as  otherwise  provided  in this  Section  4,
including  but not limited to the right to  designate  beneficiaries  and select
settlement options.

       (b) Neither  the Owner nor the  Company  shall have the right to obtain a
cash loan from the Insurer in accordance with the loan provisions of the Policy.

<PAGE>

       (c) In exchange  for the  Company's  payment of its premium  contribution
under  Section 3, the Owner shall  assign to the Company the  following  limited
ownership rights in the Policy:

              (1)    The right to  recover  its  Policy  Interest  from the cash
                     value of the Policy in the event of the termination of this
                     Agreement as provided in Section 5.

              (2)    The right to recover its Policy  Interest from the proceeds
                     of the Policy in the event of the death of the  survivor of
                     the Insureds.

       (d) To secure  the  Company's  interest  in the  Policy  the Owner  shall
execute an  Assignment  of the Policy to the Company in  substantially  the form
attached hereto as Schedule B.

       (e) It is agreed  that  benefits  will be paid  under  the  Policy by the
Insurer only by separate checks to the parties entitled thereto.

       5. Termination of Plan.

       (a) This  Agreement  may be  terminated  by the Owner by giving notice in
writing to the Company.  In the event of termination of this Agreement the Owner
shall, at its election:

              (1)    Repay  to  the  Company  within  60  days  of the  date  of
                     termination  an  amount  equal  to  the  Company's   Policy
                     Interest. Or,

              (2)    Execute  any and all  instruments  that may be  required to
                     vest  ownership  of the  Policy  in the  Company;  and  the
                     Company  shall  refund to Owner that part of any payment by
                     the Owner under Section 3 for the premium payment period in
                     which  termination  occurred   representing  the  unexpired
                     portion of that  period.  Thereafter,  Owner  shall have no
                     further interest in the Policy.

       (b)  This  Plan  shall  terminate  on the  sixteenth  anniversary  of the
issuance of the Policy.

       6. The Insurer shall be bound only by the provisions of and  endorsements
on the  Policy,  and any  payments  made or  action  taken  by it in  accordance
therewith  shall fully  discharge  it from all claims,  suits and demands of all
persons  whatsoever.  It shall in no way be bound by or be deemed to have notice
of the provisions of this Agreement.

       7. The Company  and the Owner may amend this  Agreement.  Such  amendment
shall be in writing and signed by the Company and Owner.

                                      -2-
<PAGE>

       8. This Agreement  shall bind and inure to the benefit of the Company and
its successors and assigns; Owner and his/her heirs,  executors,  administrators
and assigns; and any Policy beneficiary.

       IN WITNESS  WHEREOF the parties have signed and sealed this  Agreement on
the date first above written.

In the presence of                   SNAP-ON INCORPORATED

 /s/                                  By /s/ Michael F. Montemurro

 /s/                                  Its Senior Vice President - Transportation

                                      OWNER

                                      HAY 1999 INSURANCE TRUST

                                      /s/ Donald W. Hay
                                      Donald W. Hay, Trustee

                                      -3-
<PAGE>

                                   SCHEDULE A

                                 LIFE INSURANCE

                               Initial Face                   Insureds' Initial
 Policy Number                    Amount                      Economic Benefit
    15173092                    $1,600,000                          $701

<PAGE>

                                   SCHEDULE B

                           COLLATERAL ASSIGNMENT FORM

                SNAP-ON INCORPORATED SPLIT-DOLLAR INSURANCE PLAN

Insurer:   Northwestern Mutual Life

Insureds:  Frederick D. and Kathleen V. Hay

Policy No. 15173092

       FOR VALUE  RECEIVED,  THIS  ASSIGNMENT is made by the  undersigned  Owner
effective this 27th day of September, 1999.

       1. Definitions.

       (a) "Assignee" means Snap-on  Incorporated,  a Delaware  corporation,  of
Kenosha, Wisconsin.

       (b) "Insureds" means Frederick D. and Kathleen V. Hay.

       (c) "Insurer" means Northwestern Mutual Life.

       (d) "Owner" means the Hay 1999 Insurance Trust.

       (e) "Policy" means the following  policy or policies of insurance  issued
by the Insurer on the lives of the  Insureds,  together  with any  supplementary
contracts issued in conjunction therewith:

       Policy Number: 15173092 Face Amount: $1,600,000

       (f) "Policy Interest" means the Assignee's "Policy Interest" as set forth
in the  Split-Dollar  Plan.  The  Insurer  shall  be  entitled  to  rely  on the
Assignee's certification of the amount of its Policy Interest.

       (g)  "Split-Dollar  Plan" means that certain plan of even date  herewith,
between  the Owner and the  Assignee.  The Insurer is not bound by nor deemed to
have notice of the provisions of the Split-Dollar Plan.

       2. Introduction.  Under the Split-Dollar Plan, the Assignee has agreed to
assist the Owner in payment of premiums on the Policy.  In consideration of such
premium  payments  by the  Assignee,  the Owner  grants  herein to the  Assignee
certain limited interests in the Policy.

       3. Assignment.  The Owner hereby assigns,  transfers and sets over to the
Assignee,  its  successors  and assigns,  the following  specific  rights in the
Policy and subject to the following terms and conditions:

<PAGE>

       (a) The right to recover its Policy  Interest  from the cash value of the
Policy in the event of the Policy's surrender by the Owner.

       (b) The right to recover  its Policy  Interest  from the  proceeds of the
Policy in the event of the death of the survivor of the Insureds.

       4. Insurer.  The Insurer is hereby authorized to recognize,  and is fully
protected in recognizing:

       (a) The claims of the Assignee to rights hereunder, without investigating
the reasons for such action by the  Assignee,  or the  validity or the amount of
such claims.

       (b) The Owner's  request for  surrender of the Policy with or without the
consent of the Assignee.  Upon surrender,  the Policy shall be terminated and of
no further force or effect.

       5.  Release of  Assignment.  Upon  payment to the  Assignee of its policy
interest, the Assignee shall execute a written release of this assignment.

       IN WITNESS  WHEREOF the Owner has executed  this  assignment  on the date
first above written.

                                          HAY 1999 INSURANCE TRUST

                                          Donald W. Hay, Trustee

                                      -2-

<PAGE>
<TABLE>
                                                                                                                EXHIBIT B

Male Age 55/Female Age 54                                                                               CORPORATE SUMMARY
-------------------------------------------------------------------------------------------------------------------------
                                                 FREDERICK AND KATHLEEN HAY
                                  CALCULATION OF NET PRESENT VALUE OF CORPORATE CASH FLOWS
                                                       September, 1999
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                                                          Corporate Cost of Deferral
                      --------------------------------------------------------------------------------------------------
                           (1)              (2)            (3)            (4)             (5)                (6)
                                                                         63%(3)          63%(2)          NPV Sum(4)
                                                                                                           +NPV(5)
                                          End of                                        Net A/T
                                           Year               Annual Payment             Death               Net
                         Annual           Account      -----------------------------    Benefit            Present
Yr.        Age          Deferral          Balance         Gross         Net A/T         Payable             Value
-------    -------    --------------   --------------  ------------  --------------- ---------------  ------------------
<S>            <C>          <C>              <C>            <C>              <C>            <C>                 <C>
     1         55           200,000          218,000             0                0         137,340             132,338
     2         56                 0          237,620             0                0         149,701             138,994
     3         57                 0          259,006             0                0         163,174             145,985
     4         58                 0          282,316             0                0         177,859             153,328
     5         59                 0          307,725             0                0         193,867             161,040
     6         60                 0          335,420             0                0         211,315             169,140
     7         61                 0          365,608             0                0         230,333             177,648
     8         62                 0          398,513             0                0         251,063             186,583
     9         63                 0          434,379             0                0         273,659             195,968
    10         64                 0          473,473             0                0         298,288             205,825
    11         65                 0          442,309        67,685           42,642         278,654             214,698
    12         66                 0          408,340        67,685           42,642         257,254             222,591
    13         67                 0          371,314        67,685           42,642         233,928             229,507
    14         68                 0          330,956        67,685           42,642         208,502             235,447
    15         69                 0          286,965        67,685           42,642         180,788             240,409
    16         70                 0          239,015        67,685           42,642         150,580             244,392
    17         71                 0          186,750        67,685           42,642         117,653             247,391
    18         72                 0          129,781        67,685           42,642          81,762             249,399
    19         73                 0           67,685        67,685           42,642          42,642             250,408
                                                                                                      ------------------
    20         74                 0                0        67,685           42,642               0             250,408
                      --------------                   ============  ---------------                  ------------------
                            200,000                        676,849          426,415
                      ==============                   ============  ===============

<CAPTION>
            Corporate Cost of Life Insurance                       Survivor Benefit
--------------------------------------------------------- ------------------------------------
       (7)               (8)                (9)                   (10)               (11)
                        Sum(7)           NPV Sum(7)             (6)-(9)            (10)/63%
                                          +NPV(8)               Net A/T
                                                              Corp. Values
    Scheduled          Premium              Net               in Excess of           Lump
     Premium           Recovery           Present                Waived              Sum
     Outlay            At Death            Value              Compensation         Payable
------------------ -----------------  -----------------   ---------------------  -------------
<S>                        <C>                 <C>                     <C>            <C>
           90,121           (90,121)             3,282                 129,055        204,849
           90,121          (180,241)             9,608                 129,386        205,374
           90,121          (270,362)            18,751                 127,234        201,958
           90,121          (360,482)            30,498                 122,830        194,968
           90,121          (450,603)            44,647                 116,393        184,751
           90,121          (540,724)            61,007                 108,133        171,640
           90,121          (630,844)            79,399                  98,249        155,951
           90,121          (720,965)            99,652                  86,931        137,986
           90,121          (811,085)           121,607                  74,361        118,034
           90,121          (901,206)           145,113                  60,712         96,369
                0          (901,206)           167,763                  46,935         74,500
                0          (901,206)           189,588                  33,003         52,386
                0          (901,206)           210,618                  18,889         29,983
                0          (901,206)           230,882                   4,565          7,246
                0          (901,206)           250,408                  (9,998)       (15,870)
         (901,206)                0            250,408                  (6,016)        (9,549)
                0                 0            250,408                  (3,017)        (4,789)
                0                 0            250,408                  (1,009)        (1,602)
                0                 0            250,408                       0              0
                                      -----------------
                0                 0            250,408                       0              0
                                      -----------------
----------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
                                             Assumptions
  Years to Defer                      1      Interest Crediting Rate        9%
  Deferral                      200,000      NPV Interest Rate              6%
  Years Before Pymts Begin           10      Year to Roll-Out               15
  Tax Rate                          37%
--------------------------------------------------------------------------------
<PAGE>
                                                                       EXHIBIT C
                  SNAP-ON INCORPORATED INSURANCE BENEFIT TRUST

          (Established pursuant to the Deferred Compensation Waiver and
          Insurance Benefit Agreement dated September 27, 1999, between
                   Snap-on Incorporated and Frederick D. Hay)

       (a) This Agreement made this 27th day of September,  1999, by and between
SNAP-ON  INCORPORATED,  a Delaware  Corporation (the "Company") and THE NORTHERN
TRUST COMPANY ("Trustee");

       (b) WHEREAS,  Company has entered into a Deferred Compensation Waiver And
Insurance  Benefit Agreement with Frederick D. Hay dated September 27, 1999 (the
"Plan").

       (c) WHEREAS, Company has incurred liability under the terms of such Plan.

       (d)  WHEREAS,  Company  wishes to establish a trust  (hereinafter  called
"Trust")  and to  contribute  to the Trust  assets  that shall be held  therein,
subject to the claims of Company's Insolvency,  as herein defined, until used to
pay  insurance  premiums  as  required by Section 3 of the Plan or used to pay a
death benefit as required by Section 4 of the Plan;

       (e) WHEREAS,  all payments  made  pursuant to the Plan are made to or for
the benefit of Frederick D. Hay,  Kathleen V. Hay, the Hay 1999 Insurance Trust,
the beneficiary designated by Frederick D. Hay pursuant to Section 4 of the Plan
or the estate of the survivor of Frederick D. Hay and Kathleen V. Hay (the "Plan
Beneficiaries");

       (f)  WHEREAS,  it is the  intention  of the parties that this Trust shall
constitute an unfunded  arrangement  and shall not affect the status of the Plan
as an unfunded  plan for purposes of Title I of the Employee  Retirement  Income
Security Act of 1974;

       (g) WHEREAS,  it is the intention of Company to make contributions to the
Trust to provide  itself  with a source of funds to assist it in the  meeting of
its liabilities under the Plan;

       NOW, THEREFORE,  the parties do hereby establish the Trust and agree that
the Trust shall be comprised, held and disposed of as follows:

       Section 1. Establishment of Trust.

       (a) Company  hereby  deposits  with Trustee in trust One Hundred  Dollars
($100.00) which shall become the principal of the Trust to be held, administered
and disposed of by the Trustee as provided in this Trust Agreement.

       (b) The Trust hereby established is revocable by Company; it shall become
irrevocable upon a Change of Control, as defined herein.

<PAGE>

       (c) The Trust is intended to be a grantor trust,  of which Company is the
grantor,  within the  meaning of subpart  E, part I,  subchapter  J,  chapter 1,
subtitle  A of the  Internal  Revenue  Code of 1986,  as  amended,  and shall be
construed accordingly.

       (d)  Company  shall have the right at any time,  and from time to time in
its sole  discretion,  to  substitute  assets of equal fair market value for any
asset held by the Trust.  This right is exercisable by Company in a nonfiduciary
capacity without the approval or consent of any person in a fiduciary capacity.

       (e) The principal of the Trust, and any earnings  thereon,  shall be held
separate and apart from other funds of Company and shall be used exclusively for
the uses and purposes of the Plan and general creditors as herein set forth.

       (f) No Plan  Beneficiary  shall  have  any  preferred  claim  on,  or any
beneficial  ownership  interest in, any asset of the Trust.  Any rights  created
under the Plan and this  Trust  Agreement  shall be mere  unsecured  contractual
rights of the Plan Beneficiaries  against Company.  Any assets held by the Trust
will be subject to the claims of Company's  general  creditors under federal and
state law in the event of Insolvency, as defined in Section 3(a) herein.

       (g)  Upon  a  Change  of  Control,  Company  shall  immediately  make  an
irrevocable  contribution to the Trust as required by Section 5 of the Plan. The
Trustee shall have no duty to enforce any funding obligations of the Company and
the duties of the Trustee  shall be  governed  solely by the terms of this Trust
Agreement.

       Section 2. Payments Under the Plan.

       (a) Upon a Change of Control, Company shall deliver to Trustee a schedule
(the "Payment  Schedule") that directs the Trustee regarding the amounts payable
under the Plan,  the form in which such amounts are to be paid, and the dates on
which such amounts are payable. Except as otherwise provided herein, the Trustee
shall make payments in accordance with such Payment Schedule.  The Company shall
have  the sole  responsibility  for all tax  withholding,  related  filings  and
reports. The Trustee shall withhold for taxes such amounts from distributions as
the  Company  directs and shall  follow the  instructions  of the  Company  with
respect  to  the  remission  of  such  withheld   amounts  to  the   appropriate
governmental authorities.

       (b) Company may make payments directly as they become due under the terms
of the Plan.  Company  shall  notify  Trustee of its  decision to make  payments
directly  prior to the time amounts are payable under the Plan. In addition,  if
the principal of the Trust, and any earnings thereon, are not sufficient to make
payments  in  accordance  with the terms of the  Plan,  Company  shall  make the
balance of each such payment as it falls due. Trustee shall notify Company where
principal and earnings are not sufficient.

       (c) The  entitlement  of Plan  Beneficiaries  to benefits  under the Plan
shall be determined  under the Plan,  and any claim for such  benefits  shall be
considered and reviewed under the procedure set out in the Plan.

                                      -2-
<PAGE>

       Section 3.  Trustee  Responsibility  Regarding  Payments  When Company is
Insolvent.

       (a)  Trustee  shall  cease  payments  under  the Plan if the  Company  is
Insolvent.  Company shall be considered  "Insolvent"  for purposes of this Trust
Agreement  if (i) Company is unable to pay its debts as they become due, or (ii)
Company is subject to a pending  proceeding  as a debtor under the United States
Bankruptcy Code.

       (b) At all times  during the  continuance  of this Trust,  as provided in
Sections  1(e) and 1(f) hereof,  the  principal and income of the Trust shall be
subject to claims of general creditors of Company under federal and state law as
set forth below.

              (1) The Board of  Directors  and the Chief  Executive  Officer  of
       Company  shall have the duty to inform  Trustee  in writing of  Company's
       Insolvency.  If a person  claiming to be a creditor of Company alleges in
       writing to Trustee  that  Company  has become  Insolvent,  Trustee  shall
       determine  whether Company is Insolvent and, pending such  determination,
       Trustee shall discontinue payment of benefits under the Plan.

              (2) Unless Trustee has actual  knowledge of Company's  Insolvency,
       or has received notice from Company or a person claiming to be a creditor
       alleging that Company is Insolvent, Trustee shall have no duty to inquire
       whether  Company is  Insolvent.  Trustee  may in all events  rely on such
       evidence concerning Company's solvency as may be furnished to Trustee and
       that provides  Trustee with a reasonable basis for making a determination
       concerning  Company's  solvency.  In no event shall "actual knowledge" be
       deemed to include  knowledge of Company's  credit  status held by banking
       officers or banking employees of The Northern Trust Company which has not
       been  communicated  to the Trust  Department of Trustee.  The Trustee may
       appoint an  independent  accounting,  consulting  or law firm to make any
       determination  of solvency  required by Trustee  under this Section 3. In
       such event,  Trustee may conclusively rely upon the determination by such
       firm and shall be  responsible  only for the  prudent  selection  of such
       firm.

              (3)  If at  any  time  Trustee  has  determined  that  Company  is
       Insolvent,  Trustee shall  discontinue  payments under the Plan and shall
       hold the  assets  of the  Trust  for the  benefit  of  Company's  general
       creditors.  Nothing in this Trust Agreement shall in any way diminish any
       rights as general creditors of Company with respect to benefits due under
       the Plan or otherwise.

              (4) Trustee shall resume the payments under the Plan in accordance
       with Section 2 of this Trust  Agreement only after Trustee has determined
       that Company is not Insolvent (or is no longer Insolvent).

       (c) Provided that there are sufficient  assets,  if Trustee  discontinues
the payments  from the Trust  pursuant to Section  3(b) hereof and  subsequently
resumes such payments,  the first payment  following such  discontinuance  shall
include the aggregate amount of all payments due under the terms of the Plan for
the period of such  discontinuance,  less the  aggregate  amount of any payments
made by Company in lieu of the payments  provided for

                                      -3-
<PAGE>

hereunder during any such period of  discontinuance,  all in accordance with the
Payment Schedule.  The Payment Schedule may only be modified by the Company with
the written  consent of all Plan  Beneficiaries  as necessary to comply with the
provisions of this paragraph.  The Company shall be responsible for securing the
written  consent of all Plan  Beneficiaries  and providing  such consents to the
Trustee.

       Section 4. Payments to Company.

       Except  as  provided  in  Section 3  hereof,  after the Trust has  become
irrevocable, Company shall have no right or power to direct Trustee to return to
Company or to divert to others any of the Trust  assets  before all  payments of
benefits have been made pursuant to the terms of the Plan.  The Trustee shall be
entitled  to rely on the  written  representations  of the  Company and all Plan
Beneficiaries  that all such  payments  have been  made.  The  Company  shall be
responsible for securing the written  representations  of all Plan Beneficiaries
and providing such representations to the Trustee.

       Section 5. Disposition of Income.

       During the term of this Trust,  all income received by the Trust,  net of
expenses and taxes, shall be accumulated and reinvested.

       Section 6. Accounting by Trustee.

       Trustee  shall keep  accurate  and detailed  records of all  investments,
receipts,  disbursements,  and  all  other  transactions  required  to be  made,
including  such  specific  records as shall be agreed  upon in  writing  between
Company and  Trustee,  which  records may be audited  annually (or at such other
times as agreed by the Company and the  Trustee) by the Company or anyone  named
by the Company.  Within  thirty (30) days  following  the close of each calendar
year and within thirty (30) days after the resignation of Trustee, Trustee shall
deliver to Company a written account of its  administration  of the Trust during
such year or during the period from the close of the last  preceding year to the
date of such resignation, setting forth all investments, receipts, disbursements
and other transactions effected by it, including a description of all securities
and  investments  purchased  and  sold  with the  cost or net  proceeds  of such
purchases or sales (accrued interest paid or receivable being shown separately),
and showing all cash, securities and other property held in the Trust at the end
of such year or as of the date of such  resignation,  as the case may be. In the
absence of the filing in writing  with the Trustee by the Company of  exceptions
or objections to any such account  within ninety (90) days, the Company shall be
deemed to have approved such account; in such case, or upon the written approval
by the Company of any such account, the Trustee shall be released,  relieved and
discharged  with  respect to all matters and things set forth in such account as
though  such  account  had been  settled by the  decree of a court of  competent
jurisdiction. The Trustee may conclusively rely on determinations of the Company
of valuations for assets of the Trust for which the Trustee deems there to be no
readily determinable fair market value and on the determination of the issuer of
any insurance  contracts with respect to the fair market value of such insurance
contracts.

                                      -4-
<PAGE>

       Section 7. Responsibility of Trustee.

       (a) Trustee shall act with the care, skill, prudence, and diligence under
the circumstances  then prevailing that a prudent person acting in like capacity
and familiar  with such matters  would use in the conduct of an  enterprise of a
like character and with like aims; provided,  however,  that Trustee shall incur
no liability to any person for any action taken pursuant to a direction, request
or approval given by Company which is contemplated  by, and in conformity  with,
the terms of this Trust and is given in writing  by  Company.  In the event of a
dispute between  Company and a party,  Trustee may apply to a court of competent
jurisdiction to resolve the dispute.

       (b) If Trustee undertakes or defends any litigation arising in connection
with this Trust,  Company agrees to indemnify  Trustee against  Trustee's costs,
expenses and liabilities  (including,  without  limitation,  attorneys' fees and
expenses)  relating  thereto and to be primarily  liable for such  payments.  If
Company does not pay such costs, expenses and liabilities in a reasonably timely
manner, Trustee may obtain payment from the Trust.

       (c) Trustee may consult  with legal  counsel (who may also be counsel for
Company generally) with respect to any of its duties or obligations hereunder.

       (d) Trustee  shall  have,  without  exclusion,  all powers  conferred  on
Trustees by applicable law, unless expressly provided otherwise herein.

       (e)  Notwithstanding any powers granted to Trustee pursuant to this Trust
Agreement or to applicable law, Trustee shall not have any power that could give
this Trust the  objective  of  carrying  on a business  and  dividing  the gains
therefrom,  within the  meaning  of  section  301.7701-2  of the  Procedure  and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.

       (f) To invest and  reinvest  part or all of the trust fund in any real or
personal  property  (including  investments  in any stocks,  bonds,  debentures,
mutual fund shares  (including  those for which the Trustee or its  affiliate is
advisor), notes, commercial paper, treasury bills, options, commodities, futures
contracts,  partnership  interests,  venture capital  investments,  any interest
bearing  deposits  held by any bank or similar  financial  institution,  and any
other real or personal  property)  and to diversify  such  investments  so as to
minimize the risk of large losses unless under the  circumstances  it is clearly
prudent not to do so;  except  that the Company may from time to time  establish
investment guidelines and the trustee shall follow such investment guidelines.

       (g) To retain in cash such amounts as the trustee considers advisable and
as are  permitted by  applicable  law and to deposit any cash so retained in any
depository (including any bank acting as trustee) which the trustee may select.

       (h) To manage, sell, insure and otherwise deal with all real and personal
property  held by the trustee on such terms and  conditions as the trustee shall
decide.

                                      -5-
<PAGE>

       (i) To vote stock and other voting securities personally or by proxy (and
to delegate the trustee's  powers and discretions  with respect to such stock or
other voting securities to such proxy), to exercise subscription, conversion and
other rights and options (and make  payments  from the trust fund in  connection
therewith),  to take any  action  and to abstain  from  taking  any action  with
respect   to   any   reorganization,    consolidation,    merger,   dissolution,
recapitalization,  refinancing  and any other  program or change  affecting  any
property  constituting a part of the trust fund (and in connection  therewith to
delegate   the   trustee's   discretionary   powers  and  to  pay   assessments,
subscriptions  and other  charges from the trust fund),  to hold or register any
property from time to time in the trustee's  name or in the name of a nominee or
to hold it  unregistered  or in such form that title shall pass by delivery and,
with the approval of the  Company,  to borrow from  anyone,  including  any bank
acting as trustee,  to the extent  permitted  by law,  such amounts from time to
time as the trustee considers desirable to carry out this trust (and to mortgage
or pledge all or part of the trust fund as security).

       (j) To make  payments  from the trust  fund of amounts  that have  become
payable  under the Plan  pursuant to Section 2 to the extent not already paid by
the  Company or that are  required  to be made to the  creditors  of the Company
pursuant to Section 3.

       (k) To employ  counsel and to begin,  maintain  or defend any  litigation
necessary  in  connection  with the  administration  of this trust  except that,
unless  otherwise  required by law, the trustee shall not be obliged or required
to do so unless indemnified to the trustee's  satisfaction.  (l) To withhold, if
the trustee  considers it advisable,  all or any part of any payment required to
be made  hereunder as may be necessary  and proper to protect the trustee or the
trust fund against any liability or claim on account of any estate, inheritance,
income or other tax or assessment  attributable to any amount payable hereunder,
and to  discharge  any such  liability  with any part or all of such  payment so
withheld,  provided  that at  least  ten  days  prior  to  discharging  any such
liability  with any amount so withheld  the trustee  shall notify the Company in
writing of the trustee's intent to do so.

       (m) The Company  (which has the  authority to do so under the laws of its
state of  incorporation)  shall  indemnify the Trustee and defend it and hold it
harmless  from and against any and all  liabilities,  losses,  claims,  suits or
expenses (including attorneys' fees), of whatsoever kind and nature which may be
imposed upon,  asserted against or incurred by the Trustee at any time by reason
of its provision of services under this Trust Agreement,  its status as Trustee,
or by reason of any act or failure to act under  this  Trust  Agreement,  or any
action taken in accordance  with any directions  which conform with the terms of
this Trust Agreement,  or acts omitted due to absence of such  directions,  from
the Company, except to the extent, such liability,  loss, claim, suit or expense
arises  directly  from the  Trustee's  negligence  or willful  misconduct in the
performance of  responsibilities  specifically  allocated to it under this Trust
Agreement. This paragraph shall survive the termination of the Trust Agreement.

                                      -6-
<PAGE>

       (n) To  furnish  the  Company  with  such  information  in the  trustee's
possession as the Company may need for tax or other purposes.

       (o) To employ agents, attorneys, accountants, actuaries and other persons
(who also may be employed by the  Company,  the Company or others),  to delegate
discretionary powers to such persons and to reasonably rely upon information and
advice  furnished by such persons;  provided that each such  delegation  and the
acceptance thereof by each such person shall be in writing; and provided further
that the trustee may not delegate its  responsibilities  as to the management or
control of the assets of the trust fund.

       (p) To  perform  all  other  acts  which in the  trustee's  judgment  are
appropriate for the proper management,  investment and distribution of the trust
fund.

       (q) The trustee may invest any part or all of the trust  assets for which
it has investment  responsibility in any common,  collective or commingled trust
fund or pooled  investment  fund that is  maintained  by a bank or trust company
(including a bank or trust company acting as trustee)  provided such investments
are consistent with applicable  investment  requirements and guidelines.  To the
extent that any trust assets are invested in any such fund,  the  provisions  of
the documents  under which such common,  collective or commingled  trust fund or
pooled investment fund are maintained shall govern any investments therein.

       Section 8. Compensation and Expenses of Trustee.

       Company shall pay all administrative and Trustee's fees and expenses.  If
not so paid, the fees and expenses shall be paid from the Trust.

       Section 9. Resignation of Trustee.

       (a)  Trustee may resign at any time by written  notice to Company,  which
shall be effective  thirty (30) days after receipt of such notice unless Company
and Trustee agree otherwise.

       (b) The Trustee may not be removed by Company.

       (c) Upon  resignation of Trustee and appointment of a successor  Trustee,
all assets shall  subsequently  be  transferred  to the successor  Trustee.  The
transfer  shall be completed  within thirty (30) days after receipt of notice of
resignation or transfer,  unless Company  extends the time limit.  The Company's
consent to the  extension  of time for the transfer of trust assets shall not be
unreasonably withheld.

       (d) If Trustee  resigns,  a successor  shall be appointed,  in accordance
with Section  10(a)  hereof,  by the  effective  date of the  resignation  under
Section 9(a). If no such appointment has been made, Trustee may apply to a court
of competent  jurisdiction  for appointment of a successor or for  instructions.
All expenses of Trustee in connection  with the  proceeding  shall be allowed as
administrative expenses of the Trust.

                                      -7-
<PAGE>

       Section 10. Appointment of Successor.

       (a) If Trustee  resigns a successor  Trustee  shall be  appointed  by the
written consent of the Company and all Plan Beneficiaries.  The Company shall be
responsible  for  securing  the written  consent of all Plan  Beneficiaries  and
providing  such  consents to the former  Trustee and the new Trustee.  Any third
party  such as a bank  trust  department  or other  party  that  may be  granted
corporate trustee powers under state law may be appointed successor Trustee. The
appointment  of a successor  Trustee shall be effective when accepted in writing
by the new Trustee.  The new Trustee shall have all the rights and powers of the
former Trustee,  including  ownership rights in Trust assets. The former Trustee
shall execute any instrument  necessary or reasonably requested by the successor
Trustee to evidence the transfer.

       (b) The  successor  Trustee  need not examine the records and acts of any
prior  Trustee and may retain or dispose of existing  Trust  assets,  subject to
Sections 6 and 7 hereof.  The successor Trustee shall not be responsible for and
Company  shall  indemnify  and defend the  successor  Trustee  from any claim or
liability resulting from any action or inaction of any prior Trustee or from any
other past event,  or any  condition  existing at the time it becomes  successor
Trustee.

       Section 11. Amendment or Termination.

       (a) This Trust Agreement may be amended by a written instrument  executed
by Trustee and the Company.  Notwithstanding  the  foregoing,  no such amendment
shall  conflict  with the terms of the Plan or shall  make the  Trust  revocable
after it has become  irrevocable  in  accordance  with Section 1(b) hereof.  The
Trustee  be  shall  entitled  to  rely  upon  the  written   determination   and
representation  of the Company and all Plan  Beneficiaries  that such  amendment
does not conflict with the terms of the Plan.  The Company shall be  responsible
for securing the written  determination of all Plan  Beneficiaries and providing
such determinations to the Trustee.

       (b) The  Trust  shall  not  terminate  until  the date on which no one is
entitled to payments  pursuant to the terms of the Plan unless sooner revoked in
accordance  with Section 1(b) hereof.  Upon  termination of the Trust any assets
remaining  in the Trust  shall be returned  to  Company.  The  Trustee  shall be
entitled  to rely  upon the  written  determination  and  representation  of the
Company and the Plan Beneficiaries as to such non-entitlement. The Company shall
be responsible for securing the written  determination of all Plan Beneficiaries
and providing such determinations to the Trustee.

       (c) Upon  written  approval  of all Plan  Beneficiaries  the  Company may
terminate this Trust prior to the time all benefit  payments under the Plan have
been made. All assets in the Trust at termination shall be returned to Company.

                                      -8-
<PAGE>

       Section 12. Miscellaneous.

       (a) Any  provision  of this Trust  Agreement  prohibited  by law shall be
ineffective  to the extent of any such  prohibition,  without  invalidating  the
remaining provisions hereof.

       (b) Amounts  payable under this Trust  Agreement may not be  anticipated,
assigned  (either  at law  or in  equity),  alienated,  pledged,  encumbered  or
subjected  to  attachment,  garnishment,  levy,  execution  or  other  legal  or
equitable process.

       (c) This Trust Agreement shall be governed by and construed in accordance
with the laws of Wisconsin.

       (d) For purposes of this Trust,  Change of Control shall have the meaning
given it in Section 1.c. of the Restated  Senior Officer  Agreement  between the
Company  and  Frederick  D. Hay  dated  January  29,  1996.  The  Company  shall
immediately  notify the  Trustee  of any  Change of  Control.  The  Trustee  may
conclusively rely upon such notice and shall have no duty to determine whether a
Change of Control has occurred.

       (e) Where written approval, consent, determination or other communication
is required of or by the Plan  Beneficiaries  under any  provision of this Trust
Agreement,  the Company  shall certify to the Trustee that the  responding  Plan
Beneficiaries are all of the Plan Beneficiaries  under the terms of the Plan and
this  Trust   Agreement  at  that  time,  and  the  Trustee  may  rely  on  such
certification.

       Section 13. Effective Date.

       The  effective  date of this Trust  Agreement  shall be the date  written
above.

In the presence of                   SNAP-ON INCORPORATED

                                     By

                                     Its

                                     THE NORTHERN TRUST COMPANY, Trustee

                                     By

                                     Its

                                       9Amended and Restated
                              Snap-on Incorporated
                            Directors' 1993 Fee Plan
                      (as amended through October 22, 1999)

          1. Purpose. The Amended and Restated Snap-on  Incorporated  Directors'
1993 Fee Plan (the "Plan") is intended to provide an incentive to members of the
Board of Directors (the "Board") of Snap-on Incorporated, a Delaware corporation
(the "Company"),  who are not employees of the Company ("Directors"),  to remain
in the service of the Company and increase  their efforts for the success of the
Company and to encourage such Directors to own shares of the Company's  stock or
participate in a Company phantom stock account, thereby aligning their interests
more closely with the interests of stockholders.

          2.  Definitions.

              (a) "Board" means the Board of Directors of the Company.

              (b) "Committee"  means a  committee  consisting  of members of the
Board authorized to administer the Plan.

              (c) "Common  Stock"  means the common  stock,  par value $1.00 per
share, of the Company.

              (d) "Deferral  Election"  means an election  pursuant to Section 6
hereof to defer  receipt  of Fees  and/or  shares of Common  Stock  which  would
otherwise be received pursuant to Minimum Grants and Elective Grants.

              (e) "Deferred  Amounts" mean the amounts  credited to a Director's
Share Account or Cash Account pursuant to a Deferral Election.

              (f) "Director"  means  a  member  of  the  Board  or an  appointed
Director Emeritus, who is not an employee of the Company.

              (g) "Elective  Grants" shall have the meaning set forth in Section
5(b) hereof.

              (h) "Exchange Act" means the  Securities  Exchange Act of 1934, as
amended.

              (i) "Fair  Market  Value"  means the  closing  price of the Common
Stock on the New York Stock Exchange on any particular date; provided,  however,
that for purposes of Section 8, Fair Market  Value shall mean the closing  price
of Common  Stock on the New York  Stock  Exchange  on the date of the  Change of
Control  (as defined  therein)  or, if higher,  the  highest  price per share of
Common Stock paid in the transaction giving rise to the Change of Control.

                                       1
<PAGE>

              (j) "Fees"  mean the  annual  retainer  scheduled  to be paid to a
Director for the calendar year plus any additional fees  (including  meeting and
committee fees) earned by a Director for his or her services on the Board during
the calendar year.

              (k) "Grants" mean Minimum Grants and Elective Grants.

              (l) "Minimum  Grants"  shall have the meaning set forth in Section
5(a) hereof.

              (m) "Share  Election"  shall have the meaning set forth in Section
5(b) hereof.

          3.  Administration of the Plan.

              (a) Member of the Committee. The Plan shall be administered by the
Committee.  Members of the Committee shall be appointed from time to time by the
Board,  shall serve at the pleasure of the Board and may resign at any time upon
written notice to the Board.

              (b) Authority of the  Committee.  The  Committee  shall adopt such
rules as it may deem  appropriate in order to carry out the purpose of the Plan.
All questions of  interpretation,  administration,  and  application of the Plan
shall be  determined  by a  majority  of the  members of the  Committee  then in
office,  except that the Committee may authorize any one or more of its members,
or any officer of the Company, to execute and deliver documents on behalf of the
Committee.  The determination of such majority shall be final and binding in all
matters relating to the Plan. No member of the Committee shall be liable for any
act done or  omitted  to be done by such  member or by any  other  member of the
Committee  in  connection  with the Plan,  except for such  member's own willful
misconduct or as expressly provided by statute.

          4.  Stock Reserved for the Plan.  The number of shares of Common Stock
authorized  for  issuance  under  the Plan is  300,000,  subject  to  adjustment
pursuant to Section 7 hereof.  Shares of Common Stock delivered hereunder may be
either authorized but unissued shares or previously issued shares reacquired and
held by the Company.

          5.  Terms and Conditions of Grants.

              (a) Minimum Grant.  Subject to Section 5(e) hereof,  each Director
shall  automatically  receive (subject to a Deferral Election) a number of whole
shares of Common Stock equal in value to fifty  percent (50%) of his or her Fees
earned in each calendar year (the "Minimum Grants"). Such shares of Common Stock
(and cash in lieu of fractional  shares) shall be transferred in accordance with
Section 5(c) hereof.

              (b) Elective Grant.  Subject to Section 5(e) hereof, each Director
may make an election (the "Share  Election")  to receive  (subject to a Deferral
Election) any or all of his or her  remaining  Fees earned in each calendar year
in the form of Common Stock (the "Elective Grants").  The shares of Common Stock
(and cash in lieu of fractional  shares)  issuable  pursuant to a Share Election
shall be transferred in accordance with Section 5(c) hereof. The Share

                                       2
<PAGE>

Election (i) must be in writing and  delivered to the  Secretary of the Company,
(ii) shall be effective  commencing on the date the Secretary receives the Share
Election or such later date as may be specified in the Share Election, and (iii)
shall remain in effect unless modified or revoked by a subsequent Share Election
in accordance with the provisions hereof.

              (c) Transfer  of  Shares.  Shares of Common  Stock  issuable  to a
Director with respect to Minimum Grants and Elective Grants shall be transferred
to such Director as of the last business day of each calendar  month.  The total
number of  shares  of Common  Stock to be so  transferred  (1) in  respect  of a
Minimum  Grant,  shall be  determined  by dividing  (a) an amount equal to fifty
percent (50%) of the  Director's  Fees payable  during the  applicable  calendar
month,  by (b) the Fair  Market  Value of a share  of  Common  Stock on the last
business day of such calendar  month,  and (2) in respect of an Elective  Grant,
shall be  determined by dividing (x) the dollar  amount of the  Director's  Fees
payable  during  the  applicable  calendar  month to which  the  Share  Election
applies,  by (y) the Fair  Market  Value of a share of Common  Stock on the last
business day of such calendar month. In no event,  shall the Company be required
to issue  fractional  shares.  Whenever  under  the  terms of this  Section  5 a
fractional  share of Common Stock would  otherwise be required to be issued to a
Director,  an amount in lieu  thereof  shall be paid in cash based upon the Fair
Market Value of such fractional share.

              (d) Termination of Services.  If a Director's  services as a Board
member are terminated before the end of a calendar  quarter,  the Director shall
receive in cash the Fees such  Director  would  otherwise  have been entitled to
receive for such quarter in the absence of this Plan.

              (e) Commencement of Grants.  Notwithstanding anything in this Plan
to the  contrary,  no Grants shall be effective  with respect to Fees to be paid
prior to the requisite approval of this Plan by the stockholders of the Company.

          6. Deferral Election.

              (a) In General.  Each Director may  irrevocably  elect annually (a
"Deferral Election") to defer receiving all or a portion of the shares of Common
Stock (that would otherwise be transferred upon a Grant) or such Director's Fees
in  respect  of a  calendar  year  that are not  subject  to a  Grant.  Deferral
Elections  shall be made in  multiples  of ten  percent.  A Director who makes a
Deferral  Election  with  respect to Grants  shall  have the amount of  deferred
shares of  Common  Stock  credited  to a "Share  Account"  in the form of "Share
Units." A Director who makes a Deferral  Election  with respect to Fees that are
not  subject to a Grant  shall have the amount of  Deferred  Fees  credited to a
"Cash Account." Collectively, the amounts deferred in a Director's Share Account
and Cash Account shall hereafter be the "Deferred Amounts."

                                       3
<PAGE>

              (b) Timing of Deferral Election. The Deferral Election shall be in
writing and delivered to the Secretary of the Company on or prior to December 31
of the  calendar  year  immediately  preceding  the  calendar  year in which the
applicable  Fees are to be earned;  provided,  however,  that a New Director may
make a Deferral Election with respect to Fees earned subsequent to such election
during the thirty-day  period  immediately  following the commencement of his or
her directorship.  A Deferral Election,  once made, shall be irrevocable for the
calendar  year with  respect to which it is made and shall  remain in effect for
future  calendar  years  unless  modified  or revoked by a  subsequent  Deferral
Election in accordance with the provisions  hereof.  A Deferral  Election may be
changed only with respect to fees earned  subsequent  to the  effective  date of
such Election; provided, however, until December 31, 1999, Directors may execute
a new Deferral Election to change the payment commencement date and/or manner of
payments for previously Deferred Amounts.

              (c) Cash Dividends and Share Accounts. Whenever cash dividends are
paid by the Company on outstanding  Common Stock, there shall be credited to the
Director's  Share  Account  additional  Share Units  equal to (i) the  aggregate
dividend  that would be payable on  outstanding  Shares of Common Stock equal to
the  number of Share  Units in such Share  Account  on the  record  date for the
dividend,  divided by (ii) the Fair Market Value of the Common Stock on the last
trading business day immediately preceding the date of payment of the dividend.

              (d) Cash  Accounts.  At the  election of a Director,  a Director's
Cash  Account  shall be credited or debited  with (i) interest at an annual rate
equal  to the  sum of the  daily  interest  earned  at a rate  specified  by the
Committee and compounded  monthly or (ii) the annual  investment return relating
to such investment  vehicle or vehicles that the Director chooses from those the
Committee  determines to make available,  or such combination of (i) and (ii) as
the Director  designates  at the time of a Deferral  Election or a  modification
thereof.

              (e) Commencement  of  Payments.  Except as  otherwise  provided in
Sections 6(h) and 8(b), a Director's  Deferred  Amounts shall become  payable as
soon as practicable  following the earlier to occur of (a) the date the Director
terminates  service as a Director  or (b) the  Director's  attainment  of age 70
years or such later date designated by the Director in the Deferral Election.

              (f) Form of Payments.  Subject to a Director's  right to convert a
Share Account balance to a Cash Account, all payments from a Share Account shall
be made in shares of Common Stock by converting Share Units into Common Stock on
a one-for-one  basis,  with payment of fractional shares to be made in cash. All
payments from a Cash Account shall be made in cash.

              (g) Manner of  Payments.  In his or her  Deferral  Election,  each
Director shall elect to receive payment of his or her Deferred Amounts either in
a lump sum or in two to fifteen substantially equal annual installments.  In the
event of a Director's death,  payment of the remaining portion of the Director's
Deferred  Amounts will be made to the  Director's  beneficiary  in a lump sum as
soon as practicable following the Director's death.

                                       4
<PAGE>

              (h) Hardship Distribution.  Notwithstanding any Deferral Election,
in the event of severe financial  hardship to a Director resulting from a sudden
and unexpected illness,  accident or disability of the Director or other similar
extraordinary  and  unforeseeable  circumstances  arising  as a result of events
beyond the  control of the  Director,  all as  determined  by the  Committee,  a
Director may withdraw any portion of the Share Units in his or her Share Account
or cash in his or her Cash Account by providing  written notice to the Secretary
of the Company. All payments resulting from such a hardship shall be made in the
form provided in Section 6(f) above.

              (i) Designation of  Beneficiary.  Each Director or former Director
entitled  to  payment  of  deferred  amounts  hereunder  from  time to time  may
designate any beneficiary or beneficiaries (who may be designated  concurrently,
contingently or  successively)  to whom any such deferred amounts are to be paid
in case of the  Director's  death before  receipt of any or all of such deferred
amounts.  Each designation will revoke all prior designations by the Director or
former  Director,  shall be in a form  prescribed  by the  Company,  and will be
effective only when filed by the Director or former Director,  during his or her
lifetime,  in writing with the Secretary of the Company.  Reference in this Plan
to a Director's  "beneficiary" at any date shall include such persons designated
as concurrent  beneficiaries on the Director's beneficiary designation form then
in effect.  In the absence of any such  designation,  any balance remaining in a
Director's  or former  Director's  Share  Account at the time of the  Director's
death shall be paid to such Director's estate in a lump sum.

              (j) Account  Transfers.   Subject  to  any   applicable  corporate
policies,  from time to time a Director may convert all or a portion of any Cash
Account balance of the Director into deferred shares of Common Stock credited to
the Director's  corresponding Share Account by written notice to the Company. In
such event, and effective as of the date the Company receives such a notice, (i)
there shall be credited to the Director's  Share Account a number of Share Units
equal to the number of Share  Units  specified  in the notice or, if such notice
specifies a dollar  amount,  a number of Share Units equal to such dollar amount
divided by the Fair Market  Value on the last trading  business day  immediately
preceding the date the Company receives such notice and (ii) the Director's Cash
Account  shall be  debited  in an  amount  equal to the  number  of Share  Units
credited to the Share  Account  multiplied  by the Fair Market Value on the same
trading business day. Subject to any applicable corporate policies, from time to
time a Director  with a credit  balance in a Share  Account may convert all or a
portion  of such  balance  into  an  amount  to be  credited  to the  Director's
corresponding  Cash Account by giving  written  notice to the  Company.  In such
event,  and  effective as of the date the Company  receives  such a notice,  (i)
there shall be credited to the  Director's  Cash  Account an amount equal to the
number of Share  Units  specified  in the notice  multiplied  by the Fair Market
Value  on the last  trading  business  day  immediately  preceding  the date the
Company  receives  such notice and (ii) the  Director's  Share  Account shall be
debited by the number of Share Units specified in the notice.

          7.  Effect of  Certain  Changes  in  Capitalization.  If  there is any
change in the number or class of shares of Common Stock through the  declaration
of  stock  dividends,   or  recapitalization   resulting  in  stock  splits,  or
combinations or exchanges of such shares or similar

                                       5
<PAGE>

corporate  transactions,  the maximum number or class of shares  available under
the  Plan,  the  number  or class of  shares  of  Common  Stock to be  delivered
hereunder and each Director's Share Account shall be proportionately adjusted by
the Committee to reflect any such change in the number or class of issued shares
of Common Stock; provided, however, that the number or class of shares of Common
Stock to be delivered and each Director's Share Account shall be subject to only
such adjustment as shall be necessary to maintain the proportionate  interest of
the  Director  and  preserve,  without  exceeding,  the value  reflected  by the
Director's Share Account.

          8. Change of Control.

              (a) A "Change of Control"  of the Company  shall be deemed to have
occurred if:

        (1)    any "Person"  (as such term is defined in Section  3(a)(9) of the
               Securities Exchange Act of 1934, as amended (the "Exchange Act"),
               as modified and used in Sections 13(d) and 14(d) thereof,  except
               that for purposes of this Section 8, the term "Person"  shall not
               include (A) the Company or any of its subsidiaries, (B) a trustee
               or other fiduciary  holding  securities under an employee benefit
               plan  of  the  Company  or  any  of  its  subsidiaries,   (C)  an
               underwriter   temporarily   holding  securities  pursuant  to  an
               offering of such securities, or (D) a corporation owned, directly
               or   indirectly,   by  the   stockholders   of  the   Company  in
               substantially the same proportions as their ownership of stock in
               the Company) is or becomes the "Beneficial  Owner"(as  defined in
               Rule 13d-3 under the Exchange Act),  directly or  indirectly,  of
               securities  of the  Company  (not  including  in  the  securities
               beneficially  owned  by  such  Person  any  securities   acquired
               directly from the Company or its affiliates)  representing 25% or
               more of either the then outstanding shares of common stock of the
               Company  or the  combined  voting  power  of the  Company's  then
               outstanding voting securities; or

        (2)    the  following  individuals  cease for any reason to constitute a
               majority of the number of  directors  then  serving:  individuals
               who, on January 1,1996, constitute the Board and any new director
               (other than a director  whose initial  assumption of office is in
               connection  with  an  actual  or  threatened   election  contest,
               including but not limited to a consent solicitation,  relating to
               the election of directors of the Company,  as such terms are used
               in Rule 14a-11 of  Regulation  14A under the Exchange  Act) whose
               appointment  or election by the Board or nomination  for election
               by the Company's  stockholders was approved by a vote of at least
               two-thirds (2/3) of the directors then still in office who either
               were directors on January 1, 1996 or whose appointment,  election
               or nomination for election was previously so approved; or

        (3)    the stockholders of the Company approve a merger or consolidation
               of the Company with any other corporation or approve the issuance
               of voting  securities of the Company in connection  with a merger
               or  consolidation  of the  Company  (or

                                       6
<PAGE>

               any direct or indirect  subsidiary  of the  Company)  pursuant to
               applicable stock exchange  requirements,  other than (1) a merger
               or consolidation  which would result in the voting  securities of
               the  Company  outstanding  immediately  prior to such  merger  or
               consolidation   continuing  to  represent  (either  by  remaining
               outstanding or by being  converted into voting  securities of the
               surviving  entity  or any  parent  thereof)  at least  60% of the
               combined voting power of the voting  securities of the Company or
               such  surviving   entity  or  any  parent   thereof   outstanding
               immediately after such merger or  consolidation,  or (2) a merger
               or consolidation  effected to implement a recapitalization of the
               Company (or similar transaction) in which no Person is or becomes
               the Beneficial  Owner,  directly or indirectly,  of securities of
               the Company not including in the securities beneficially owned by
               such Person any securities  acquired directly from the Company or
               its  affiliates)  representing  25% or more of  either  the  then
               outstanding shares of common stock of the Company or the combined
               voting power of the Company's then outstanding voting securities;
               or

        (4)    the  stockholders  of the  Company  approve  a plan  of  complete
               liquidation or dissolution of the Company or an agreement for the
               sale or disposition by the Company of all or substantially all of
               the Company's  assets (in one  transaction or a series of related
               transactions within any period of 24 consecutive  months),  other
               than a sale or disposition by the Company of all or substantially
               all of the  Company's  assets to an  entity,  at least 75% of the
               combined voting power of the voting securities of which are owned
               by  Persons  in  substantially  the  same  proportions  as  their
               ownership of the Company immediately prior to such sale.

        Notwithstanding the foregoing, no "Change of Control" shall be deemed to
        have  occurred  if there is  consummated  any  transaction  or series of
        integrated  transactions  immediately following which the record holders
        of the common stock of the Company immediately prior to such transaction
        or  series  of  transactions  continue  to have  substantially  the same
        proportionate ownership in an entity which owns all or substantially all
        of the assets of the Company  immediately  following such transaction or
        series of transactions.

              (b) Upon the occurrence of a Change of Control:

               (i)  All  Share  Units  credited  to a  Share  Account  shall  be
converted  into cash in an amount equal to the number of Share Units  multiplied
by the Fair Market Value,  and together with all Deferred  Amounts credited to a
Cash Account shall be transferred as soon as practicable to each Director; and

               (ii) Notwithstanding anything herein to the contrary, Fees earned
in respect of the calendar quarter in which the Change of Control occurs,  shall
be paid in cash as soon as practicable.

                                       7
<PAGE>

          9.  Term of Plan.  This Plan shall become  effective as of the date of
approval of the Plan by the  stockholders  of the  Company,  and shall remain in
effect  until a Change  of  Control,  unless  sooner  terminated  by the  Board;
provided,  however,  that,  except as provided in Section 8(b) hereof,  Deferred
Amounts may be delivered pursuant to any Deferral  Election,  in accordance with
such election, after the Plan's termination.  Prior to the effective date of the
Plan,   Directors  may  make  the  elections   provided  for  herein,   but  the
effectiveness  of such  elections  shall  be  contingent  upon  the  receipt  of
stockholder  approval of the Plan.  No transfer of shares of Common Stock may be
made to any  Director  or any other  person  under the Plan  until  such time as
stockholder  approval of the Plan is obtained pursuant to this Section 9. In the
event  stockholder  approval  is not  obtained,  Fees that were not  subject  to
Deferral  Elections  shall be paid to the  Directors  in cash and Fees that were
subject to Deferral Elections shall be deferred pursuant to the Prior Plan.

          10. Amendment; Termination. The Board or the Committee may at any time
and from time to time alter,  amend,  suspend, or terminate the Plan in whole or
in part;  provided,  however,  that (a) no amendment which requires  stockholder
approval in order for the exemptions  available under Rule 16b-3 of the Exchange
Act, as amended from time to time ("Rule  16b-3"),  to be applicable to the Plan
and the  Directors  shall be effective  unless the same shall be approved by the
stockholders  of the Company  entitled to vote  thereon;  (b) the  provisions of
Section 5(a) hereof shall not be amended more than once every six months,  other
than to comport with changes in the Internal  Revenue Code of 1986,  as amended,
the Employee  Retirement  Income Security Act of 1974, as amended,  or the rules
thereunder;  and (c) action by the Board  shall be  required  to amend the first
sentence of Section 5(a) hereof.  Notwithstanding  the  foregoing,  no amendment
shall  affect  adversely  any  of  the  rights  of any  Director,  without  such
Director's consent, under any election theretofore in effect under the Plan.

          11. Rights of Directors.

              (a) Retention as Director.  Nothing  contained in the Plan or with
respect to any Grant shall  interfere  with or limit in any way the right of the
stockholders  of the Company to remove any Director  from the Board  pursuant to
the bylaws of the Company, nor confer upon any Director any right to continue in
the service of the Company as a Director.

              (b) Nontransferability.  No right  or interest of any  Director in
Deferred Amounts shall be assignable or transferable  during the lifetime of the
Director,  either  voluntarily  or  involuntarily,  or  subjected  to any  lien,
directly or indirectly, by operation of law, or otherwise,  including execution,
levy,  garnishment,  attachment,  pledge  or  bankruptcy.  In  the  event  of  a
Director's  death,  a  Director's  rights and  interests  in his or her Deferred
Amounts shall be transferable  by  testamentary  will or the laws of descent and
distribution.  If in the opinion of the Committee a person  entitled to payments
or to exercise  rights with respect to the Plan is disabled  from caring for his
or her affairs because of mental condition,  physical  condition or age, payment
due such  person may be made to, and such  rights  shall be  exercised  by, such
person's  guardian,  conservator  or other legal  personal  representative  upon
furnishing  the Committee  with evidence  satisfactory  to the Committee of such
status.

                                       8
<PAGE>

          12. General Restrictions.

              (a) Investment  Representations.  The  Company  may   require  any
director to whom Common  Stock is granted,  as a  condition  of  receiving  such
Common Stock, to give written  assurances in substance and form  satisfactory to
the Company and its  counsel to the effect  that such  person is  acquiring  the
Common  Stock  for his own  account  for  investment  and not with  any  present
intention  of  selling or  otherwise  distributing  the same,  and to such other
effects as the Company deems  necessary or  appropriate  in order to comply with
Federal and applicable state securities laws.

              (b) Compliance with  Securities  Laws. Each Grant shall be subject
to the  requirement  that, if at any time counsel to the Company shall determine
that the listing,  registration or  qualification  of the shares subject to such
Grant upon any  securities  exchange  or under any state or federal  law, or the
consent or approval of any  governmental  or regulatory  body, is necessary as a
condition of, or in connection  with,  the issuance of shares  thereunder,  such
Grant may not be accepted or exercised in whole or in part unless such  listing,
registration,  qualification,  consent or approval  shall have been  effected or
obtained on conditions  acceptable  to the  Committee.  Nothing  herein shall be
deemed  to  require  the  Company  to  apply  for  or to  obtain  such  listing,
registration or qualification.

          13. Withholding.  The Company may defer making payments under the Plan
until  satisfactory  arrangements have been made for the payment of any federal,
state or local income taxes required to be withheld with respect to such payment
or delivery.  Each Director shall be entitled to  irrevocably  elect to have the
Company  withhold  shares of Common Stock having an aggregate value equal to the
amount required to be withheld.  The value of fractional  shares remaining after
payment of the withholding  taxes shall be paid to the Director in cash.  Shares
so withheld  shall be valued at Fair Market  Value on the regular  business  day
immediately  preceding  the date such  shares  would  otherwise  be  transferred
hereunder.

          14. Governing  Law.  This  Plan  and  all  rights  hereunder  shall be
construed in accordance with and governed by the laws of the State of Delaware.

          15. Headings.  The  headings  of sections and  subsections  herein are
included solely for convenience of reference and shall not affect the meaning of
any of the provisions of the Plan.

                                       9

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