Document:

SNAP-ON INCORPORATED
                           DEFERRED COMPENSATION PLAN
                      (as amended through January 28, 2000)

                      Section 1. Establishment and Purposes

1.1 Establishment. Snap-on Incorporated hereby establishes, effective as of
April 1, 1986, a deferred compensation plan for executives as described herein,
which shall be known as the "SNAP-ON INCORPORATED DEFERRED COMPENSATION PLAN"
(hereinafter called the "Plan").

1.2 Purposes. The purposes of this Plan are to enable the Corporation to attract
and retain persons of outstanding competence, to provide a means whereby certain
amounts payable by the Corporation to selected executives may be deferred to
some future period and to provide such executives with a means to have deferred
amounts treated as if invested in the Corporation's stock, thereby aligning
their interests more closely with the interests of shareholders. The plan is
intended to constitute an unfunded plan primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees.

                             Section 2. Definitions

2.1 Definitions. Whenever used herein, the following terms shall have the
meanings set forth below:

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

(b)  "Committee" means the Organization and Compensation Committee of the Board.

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

(d)  "Compensation" means the gross Salary and Incentive Compensation payable to
     a Participant during a Year and Other Compensation payable to a
     Participant.

     (i)  Salary. "Salary" means all regular, basic compensation, before
          reduction for amounts deferred pursuant to this Plan or any other plan
          of the Corporation, payable in cash to a Participant for services
          during the Year, exclusive of any bonuses or incentive compensation,
          special fees or awards, allowances, or amounts designated by the
          Corporation as payments toward or reimbursement of expenses.

     (ii) Incentive Compensation. "Incentive Compensation" means the annual
          Incentive Compensation Plan payable in cash by the Corporation to a
          Participant in a Year.

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     (iii) Other Compensation. "Other Compensation" means other compensation
          payable in cash and/or Common Stock or other property by the
          Corporation to a Participant in a Year, including without limitation
          compensation payable under the Amended and Restated Snap-on
          Incorporated 1986 Incentive Stock Program, as amended (the "Stock
          Program"), if the award of such compensation provides that the
          Participant may defer the compensation.

(e)  "Corporation" means Snap-on Incorporated, a Delaware corporation.

(f)  "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 16, Fair Market Value shall mean the closing price of
     the 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.

(g)  "Growth Increment" means the amount of interest earned on a Participant's
     deferred amounts.

(h)  "Participant" means an individual selected by the Committee for
     participation in the Plan.

(i)  "Year" means a calendar year.

2.2 Gender and Number. Except when otherwise indicated by the context, any
masculine terminology used herein also shall include the feminine gender, and
the definition of any term herein in the singular also shall include the plural.

                    Section 3. Eligibility and Participation

3.1 Eligibility. The elected officers and appointed officers of the Corporation
and, effective as of January 1, 1996, the elected and appointed officers of
Snap-on Tools Company and of any other direct or indirect subsidiary of the
Corporation designated by the Committee from time to time shall be eligible to
participate in this Plan.

3.2 Ceasing Eligibility. In the event a Participant no longer meets the
requirements for participation in this Plan, he shall become an inactive
Participant, retaining all the rights described under this Plan, except the
right to make any further deferrals, until the time that he again meets the
eligibility requirements of Section 3.1.

                          Section 4. Election to Defer

4.1 Deferral Election. (a) Subject to the following provisions, prior to the
beginning of the Year, a Participant irrevocably may elect, by written notice to
the Corporation, to defer all or a percentage of annual Salary, Incentive
Compensation, or both Salary and Incentive Compensation. The amount to be
deferred each year must equal or exceed $5,000.

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(i)  With respect to Salary deferrals, the deferral percentage elected shall be
     applied to the Participant's Salary for each pay period of the Year to
     which the Deferral Election applies and must be made before November 30 of
     the year immediately preceding the Year for which such Deferral Election
     applies.

(ii) With respect to Incentive Compensation deferrals, the deferral percentage
     elected shall apply only to the Participant's Incentive Compensation
     payable with respect to service to be performed in the Year and must be
     made before December 31 of such Year.

     (b) An individual who becomes a Participant at or after the beginning of
the Year may irrevocably elect, by written notice to the Corporation, to defer
all or a percentage of (i) the annual Salary earned by such Participant for such
Year after such election, if such election is made within 30 days after becoming
a Participant, and (ii) the pro rata share of the Participant's Incentive
Compensation, if any, payable with respect to service performed during such
Year, if such election is made before December 31 of such Year.

     (c) If so provided in an award of Other Compensation, and subject to such
restrictions and conditions as may be set forth in the award or imposed by the
Corporation, a Participant irrevocably may elect, by written notice to the
Corporation, to defer all or a percentage of such Other Compensation.

4.2 Deferral Period. (a) The Participant irrevocably shall select the deferral
period for each separate deferral. The deferral period shall be for a specified
number of years or until a specified date. The deferral period shall not be less
than five years.

     (b)  However, notwithstanding the deferral period specified, payments shall
          begin following the earliest to occur of:

          (i)  Death,

          (ii) Total and permanent disability,

          (iii) Subject to subsection (c), retirement, or

          (iv) Subject to subsection (c), termination of employment.

     (c)  A Participant may elect to have the deferral period for some or all
          amounts deferred continue beyond termination of employment due to
          retirement by so indicating when the Participant selects, or modifies
          pursuant to Section 4.4, the Participant's deferral period for a
          deferral. At such time the Participant may elect one or more
          successive post retirement deferral periods of up to five years each.

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4.3 Manner of Payment Election. At the same time as an election is made pursuant
to Section 4.1, or is modified pursuant to Section 4.4, the Participant may also
elect to have a deferred amount paid either in a lump sum or in up to twenty
substantially equal annual installments; provided, however, at such time a
Participant that elects to receive payments in substantially equal annual
installments may also specify a date within the installment period to receive
all then remaining deferred amounts in a lump sum.

4.4 Modification. A Participant may change the manner in which a deferred amount
will be paid and/or the date such payments are to commence by written election
made prior to the Year in which such payments are to commence.

                    Section 5. Deferred Compensation Account

5.1 Participant Accounts. The Corporation shall establish and maintain
individual bookkeeping accounts in respect of deferrals made by a Participant
consisting of a "Cash Account" and a "Share Account." A Participant shall have
separate Cash Accounts and Share Accounts for deferred amounts with different
deferral periods under Section 4.2 hereof and/or manners of payment under
Section 4.3 hereof. A Participant's Cash Account shall be credited with the
dollar amount of any amount deferred as of the date the amount deferred
otherwise would have become due and payable unless prior to such date the
Participant notifies the Corporation in writing that all or any portion of the
dollar amount deferred shall be converted into deferred shares of Common Stock
to be credited to the Participant's Share Account. In such event (i) there shall
be credited to the Participant's Share Account as of such date a number of units
("Share Units") equal to the dollar amount of any amount deferred or if less the
dollar amount specified in such notice divided by the Fair Market Value on the
last trading business day immediately preceding the date the amount deferred
otherwise would have become due and payable and (ii) the Participant's Cash
Account shall be credited as of such date with the balance of the dollar amount
deferred, if any.

5.2 Growth Increments. The Corporation will provide the opportunity for Growth
Increments to be earned on the balance of a Participant's Cash Accounts. The
Committee will have the authority to select, from time to time, the appropriate
interest rate to apply to such amounts. Each Cash Account shall be credited on
the first day of each month with a Growth Increment computed on the daily
balance in the Cash Account during the immediately preceding month. The Growth
Increment shall be the sum of the daily interest earned, compounded monthly by
the interest rate selected by the Committee.

5.3      Share Accounts.

(a)  Subject to applicable corporate policies, from time to time a Participant
     may convert all or a portion of any Cash Account balance of the Participant
     into deferred shares of Common Stock credited to the Participant's
     corresponding Share Account by written notice to the Corporation. In such
     event, and effective as of the date the Corporation receives such a notice,
     (i) there shall be credited to the Participant's Share Account a number of
     units 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

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     by the Fair Market Value on the last trading business day immediately
     preceding the date theCorporation receives such notice and (ii) the
     Participant'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.

(b)  Subject to the authority of the Committee, the Corporation's Chief
     Executive Officer may approve the terms of any agreements between the
     Corporation and any Participant relating to the deferral of Other
     Compensation where, but for the Participant's deferral, the Participant
     would have received shares of Common Stock if such officer determines that
     such terms are appropriate to carry out the purposes of this Plan and the
     award of Other Compensation. Without limitation, the Corporation may enter
     into an agreement with a Participant relating to such a deferral under
     which (i)(A) there shall be credited to the Participant's Share Account a
     number of Share Units equal to the number of shares of Common Stock the
     receipt of which the Participant has deferred which credit shall be made as
     of the date the Other Compensation deferred otherwise would have become due
     and payable or (B) Share Units shall be credited to the Participant's Share
     Account only at a future date, such as the date that one or more conditions
     to vesting have been satisfied; (ii) a credit of Share Units may be made
     subject to such restrictions as are imposed under the terms of the award of
     Other Compensation (or restrictions substantially equivalent to those to
     which shares of Common Stock would have been subject but for the deferral),
     including without limitation forfeiture under certain circumstances and
     restrictions on the Participant's rights to convert such Share Units
     pursuant to Section 5.3(d); and (iii) if the terms of the award of Other
     Compensation require a Participant to deliver cash and/or shares of Common
     Stock to the Corporation to exercise or otherwise receive the benefit of
     such Other Compensation, then in lieu of delivering such cash and/or Common
     Stock, there may be a debit to the Participant's Cash Account in an amount
     equal to the amount of cash that the Participant otherwise would have
     delivered and/or a debit to the Participant's Share Account in an amount
     equal to the number of shares of Common Stock that the Participant
     otherwise would have delivered, in each case to the extent of any credit
     balance in such account.

(c)  Whenever cash dividends are paid by the Corporation on outstanding Common
     Stock, as of the payment date for the dividend, at the election of a
     Participant (i) there shall be credited to a Participant's Cash Account an
     amount equal to the amount per share of the cash dividend on the Common
     Stock multiplied by the number of Share Units reflected in the
     Participant's Share Account, if any, as of the close of business on the
     record date for the dividend or (ii) there shall be credited to a
     Participant's Share Account additional Share Units equal to the cash amount
     described in clause (i) divided by the Fair Market Value of the Common
     Stock on the last trading business day immediately preceding the date of
     payment of the dividend. Absent an express election by a Participant,
     clause (i) shall apply. A Participant shall be entitled to elect treatment
     under clause (i) as to some Share Units reflected in the Participant's
     Share Account and treatment under clause (ii) as to other Share Units
     reflected in the Participant's Share Account.

(d)  Subject to applicable corporate policies, from time to time a Participant
     with a credit balance in a Share Account may convert all or a portion of
     such balance into an amount to

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     be credited to the Participant's corresponding Cash Account by giving
     written notice to the Corporation. In such event, and effective as of the
     date the Corporation receives such a notice, (i) there shall be credited to
     the Participant'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 Corporation
     receives such notice and (ii) the Participant's Share Account shall be
     debited by the number of Share Units specified in the notice.

5.4 Charges Against Accounts. There shall be charged against a Participant's
Cash Account any cash payments (excluding payments for fractional shares) made
to the Participant or to his beneficiary in accordance with Section 6 hereof.
There shall be charged against a Participant's Share Account any distributions
made to the Participant or to his beneficiary in respect of the Participant's
Share Account in accordance with Section 6 hereof.

                     Section 6. Payment of Deferred Amounts

6.1 Payment of Deferred Amounts.

(a)  Payment of a Participant's Cash Account balance, including accumulated
     Growth Increments attributable thereto and dividend credits under Section
     5.3(b), shall be paid in cash commencing within thirty calendar days after
     the commencement date referred to in Section 4.2 hereof. The payments shall
     be made in the manner selected by the Participant under Section 4.3 of this
     Plan or, in the absence thereof, in a lump sum. The amount of each payment
     shall be equal to a Participant's then distributable Cash Account balance
     multiplied by a fraction, the numerator of which is one and the denominator
     of which is the number of installment payments remaining.

(b)  Payment of a Participant's Share Account balance shall be paid commencing
     within thirty calendar days after the commencement date referred to in
     Section 4.2 hereof. Payments in respect of a Share Account balance shall be
     made by converting Share Units into Common Stock on a one-for-one basis,
     with payment of fractional shares to be made in cash based upon the Fair
     Market Value on the last trading business day immediately preceding the
     date of payment; provided, however, that at the election of a Participant,
     made by written notice to the Corporation delivered not less than five
     business days before a payment due date, payments in respect of a Share
     Account may be made solely in cash in an amount equal to the number of
     Share Units then payable multiplied by the Fair Market Value on the last
     trading business day immediately preceding the date of payment. The
     payments shall be made in the manner selected by the Participant under
     Section 4.3 of this Plan or, in the absence thereof, in a lump sum. The
     number of Share Units payable at the time of a payment shall be equal to a
     Participant's then distributable Share Account balance multiplied by a
     fraction, the numerator of which is one and the denominator of which is the
     number of installment payments remaining.

6.2 Acceleration of Payments. If a Participant dies prior to the payment of all
or a portion of his Cash Account and/or Share Account balances, the balance of
any amounts payable shall be

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paid in a lump sum to the beneficiaries designated under Section 7 hereof. In
addition, if a Participant's Cash Account balance is less than $5,000 at the
time for the payment specified, such amount shall be paid to the Participant in
a lump sum, and if a Participant's Share Account balance is less than 300 Share
Units at the time for the payment specified, such amount shall be paid to the
Participant in a lump sum.

6.3 Financial Emergency. The Committee, at its sole discretion, may alter the
timing or manner of payment of deferred amounts in the event that the
Participant establishes, to the satisfaction of the Committee, severe financial
hardship. In such event, the Committee may:

(a)  provide that all, or a portion of, the amount previously deferred by the
     Participant immediately shall be paid in a lump sum payment,

(b)  provide that all, or a portion of, the installments payable over a period
     of time immediately shall be paid in a lump sum, or

(c)  provide for such other installment payment schedules as it deems
     appropriate under the circumstances, as long as the amount distributed
     shall not be in excess of that amount which is necessary for the
     Participant to meet the financial hardship.

     Severe financial hardship will be deemed to have occurred in the event of
the Participant's impending bankruptcy, a dependent's long and serious illness,
or other events of similar magnitude. The Committee's decision in passing on the
severe financial hardship of the Participant and the manner in which, if at all,
the payment of deferred amounts shall be altered or modified shall be final,
conclusive, and not subject to appeal.

                       Section 7. Beneficiary Designation

7.1 Designation of Beneficiary. A Participant shall designate a beneficiary or
beneficiaries who, upon the Participant's death, are to receive the amounts that
otherwise would have been paid to the Participant. All designations shall be in
writing to the Corporation in such form as it requires or accepts and signed by
the Participant. The designation shall be effective only if and when delivered
to the Corporation during the lifetime of the Participant. The Participant also
may change his beneficiary or beneficiaries by a signed, written instrument
delivered to the Corporation. However, if a married Participant maintains his
primary residence in a state that has community property laws, the Participant's
spouse shall join in any designation of a beneficiary or beneficiaries other
than the spouse. The payment of amounts shall be in accordance with the last
unrevoked written designation of beneficiary that has been signed and delivered
to the Corporation.

7.2 Death of Beneficiary. In the event that all of the beneficiaries named in
Section 7.1 predecease the Participant, the amounts that otherwise would have
been paid to the Participant shall be paid to the Participant's estate, and in
such event, the term "beneficiary" shall include his estate.

7.3 Ineffective Designation. In the event the Participant does not designate a
beneficiary, or

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if for any reason such designation is ineffective, in whole or in part, the
amounts that otherwise would have been paid to the Participant shall be paid to
the Participant's estate, and in such event, the term "beneficiary" shall
include his estate.

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                       Section 8. Rights of Participants

8.1 Contractual Obligation. It is intended that the Corporation is under a
contractual obligation to make payments from a Participant's account when due.
Payment of account balances payable in cash shall be made out of the general
funds of the Corporation as determined by the Board.

8.2 Unsecured Interest. No Participant or beneficiary shall have any interest
whatsoever in any specific asset of the Corporation. To the extent that any
person acquires a right to receive payments under this Plan, such receipt shall
be no greater than the right of any unsecured general creditor of the
Corporation.

8.3 Employment. Nothing in the Plan shall interfere with or limit in any way the
right of the Corporation to terminate any Participant's employment at any time,
nor confer upon any Participant any right to continue in the employ of the
Corporation.

8.4 Participation. No employee shall have a right to be selected as a
Participant or, having been so selected, to be selected again as a Participant.

                                   Section 9.

9.1 Nontransferability. In no event shall the Corporation make any payment under
this Plan to any assignee or creditor of a Participant or a beneficiary. Prior
to the time of a payment hereunder, a Participant or a beneficiary shall have no
rights by way of anticipation or otherwise to assign or otherwise dispose of any
interest under this Plan nor shall such rights be assigned or transferred by
operation of law.

                           Section 10. Administration

10.1 Administration. This Plan shall be administered by the Committee. The
Committee may from time to time establish rules for the administration of this
Plan that are not inconsistent with the provisions of this Plan.

10.2 Finality of Determination. The Committee has sole discretion in
interpreting the provisions of the Plan. The determination of the Committee as
to any disputed questions arising under this Plan, including questions of
construction and interpretation, shall be final, binding, and conclusive upon
all persons.

10.3 Expenses. The cost of payment from this Plan and the expenses of
administering the Plan shall be borne by the Corporation.

10.4 Action by the Corporation. Any action required or permitted to be taken
under this Plan by the Corporation 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.

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                     Section 11. Amendment and Termination

11.1 Amendment and Termination. The Corporation expects the Plan to be permanent
but, since future conditions affecting the Corporation cannot be anticipated or
foreseen, the Corporation necessarily must and does hereby reserve the right to
amend, modify, or terminate the Plan at any time by action of this Board.
Notwithstanding the foregoing, upon the occurrence of a Potential Change of
Control (as hereinafter defined) and for a period of six months thereafter, the
Plan may not be terminated or amended in a manner adverse to Participants. For
purposes hereof, a "Potential Change of Control" shall be deemed to have
occurred if an event set forth in any one of the following shall have occurred:

     (i)  The Corporation enters into an agreement, the consummation of which
          would result in the occurrence of a Change of Control;

     (ii) The Corporation or any other Person publicly announces an intention to
          take or consider taking actions that, if consummated, would constitute
          a Change of Control;

     (iii) Any Person becomes the beneficial owner, as defined in Rule 13d-3
          under the Securities Exchange Act of 1934, as amended (the "Beneficial
          Owner"), directly or indirectly, of securities of the Corporation
          representing 15% or more of either the then outstanding shares of
          Common Stock or the combined voting power of the Corporation's then
          outstanding voting securities; or

     (iv) The Board adopts a resolution to the effect that, for purposes of this
          Plan, a Potential Change of Control has occurred.

                           Section 12. Applicable Law

12.1 Applicable Law. This Plan shall be governed and construed in accordance
with the laws of the State of Wisconsin.

                        Section 13. Withholding of Taxes

13.1 Tax Withholding. The Corporation shall have the right to deduct from all
contributions made to, or payments made from, the Plan any federal, state, or
local taxes required by law to be withheld with respect to such contributions or
payments. The Corporation may defer making payments in the form of Common Stock
under the Plan until satisfactory arrangements have been made for the payment of
any federal, state or local taxes required to be withheld with respect to such
payment or delivery. Each Participant shall be entitled to irrevocably elect,
prior to the date shares of Common Stock would otherwise be delivered hereunder,
to have the Corporation 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
Participant in cash. Shares so withheld shall be valued at Fair Market Value on
the

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last trading business day immediately preceding the date such shares would
otherwise be transferred hereunder.

                               Section 14. Notice

14.1 Notice. Any notice required or permitted to be given under the Plan shall
be sufficient if in writing and hand-delivered, or sent by a registered or
certified mail, and if given to the Corporation, delivered to the principal
office of the Corporation. Such notice shall be deemed given as of the date of
delivery or, if delivery is made by mail, as of the date shown on the postmark
or the receipt for registration or certification.

                        Section 15. Common Stock Matters

15.1 Stock Reserved for the Plan. The number of shares of Common Stock
authorized for issuance under the Plan is 75,000 (after giving effect to the
3-for-2 stock split declared June 28, 1996), subject to adjustment pursuant to
Section 15.3 hereof. Shares of Common Stock delivered hereunder shall be
previously issued shares reacquired and held by the Corporation.

15.2     General Restrictions.

(a)  Investment Representations. The Corporation may require any Participant, as
     a condition of receiving Common Stock, to give written assurances in
     substance and form satisfactory to the Corporation 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 Corporation deems
     necessary or appropriate in order to comply with federal and applicable
     state securities laws.

(b)  Compliance with Securities Laws. Delivery of Common Stock under the Plan
     shall be subject to the requirement that, if at any time counsel to the
     Corporation shall determine that the listing, registration or qualification
     of the shares of Common Stock 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 shares may not be delivered 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 Corporation to
     apply for or to obtain such listing, registration or qualification.

15.3 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 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 the number of Share Units in each
Participant'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.

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                          Section 16. Change of Control

16.1 Change of Control. 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 16.1(1) and subsection 16.1(3), the term
          "Person" shall not include (i) the Company or any of its subsidiaries,
          (ii) a trustee or other fiduciary holding securities under an employee
          benefit plan of the Company or any of its subsidiaries, (iii) an
          underwriter temporarily holding securities pursuant to an offering of
          such securities, or (iv) 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 any direct or indirect subsidiary of
          the Company) pursuant to applicable stock exchange requirements, other
          than (i) 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 (ii) a merger or consolidation effected to
          implement a recapitalization of the Company (or similar transaction)
          in

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          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.

16.2 Payments. Upon the occurrence of a Change of Control, and notwithstanding
Section 6,

(a)  payment of a Participant's Cash Account balance shall be paid immediately
     in cash in a lump sum; and

(a)  payment of a Participant's Share Account balance shall be paid immediately
     in cash in a lump sum in an amount equal to the number of Share Units in
     the Share Account multiplied by the Fair Market Value.

                            Section 17 - RATING EVENT

17.1 Rating Event. The term "Rating Event" means the date on which the
Corporation's debt rating drops below an Investment Grade Rating. "Investment
Grade Rating" means a rating at or above Baa3 by Moody's Investors Services,
Inc. (or its successors) or a rating at or above BBB by Standard & Poor's
Corporation (or its successors). Only one such rating at the required level is
necessary for the Corporation to have an Investment Grade Rating for purposes of
this Section. If either or both of these ratings cease to be available then an
equivalent rating from a nationally prominent rating agency shall be substituted
by the Corporation.

                                       13

<PAGE>
17.2 Payment. Upon the occurrence of a Rating Event, and notwithstanding Section
6:

     (a)  a Participant's Cash Account balance shall be paid immediately in cash
          in a lump sum; and

     (b)  payments in respect of a Share Account balance shall be made
          immediately by converting Share Units into Common Stock on a
          one-for-one basis, with payment of fractional shares to be made in
          cash based upon the Fair Market Value on the last trading business day
          immediately preceding the date of payment; provided, however, that at
          the election of a Participant, made by written notice to the Company
          prior to delivery of such Common Stock, payments in respect of a Share
          Account may be made solely in cash in an amount equal to the number of
          Share Units then payable multiplied by the Fair Market Value on the
          last trading business day immediately preceding the date of payment."

     (c)  In addition to payment of the Participant's Cash Account balance as
          described above, the Corporation shall pay the Participant an amount
          equal to the interest that would have been earned on the Accelerated
          Tax Amount from the date of the Rating Event to the date payment of
          the deferred amounts were then scheduled to commence, calculated at
          the interest rate determined under Section 5.2 hereof, compounded
          monthly, which interest amount shall then be discounted to the date of
          payment at a discount rate equal to the rate determined under Section
          5.2. The Accelerated Tax Amount means the Participant's Cash Account
          balance multiplied by the Assumed Tax Rate. The Assumed Tax Rate means
          a percentage which reflects the highest stated federal and state
          income tax rates imposed on residents of Wisconsin after giving effect
          to the deductibility of state income taxes.

17.3 Revocation of Election. Upon the occurrence of a Rating Event all deferral
elections made prior thereto are revoked.

                                       14U.S. $416,666,666.67

                  AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT

                           Dated as of August 21, 2000

                                      Among

                              SNAP-ON INCORPORATED

                                   as Borrower

                                       and

                        THE INITIAL LENDERS NAMED HEREIN

                               as Initial Lenders

                                       and

                            SALOMON SMITH BARNEY INC.

                        as Lead Arranger and Book Manager

                                       and

                          BANC ONE CAPITAL MARKETS INC.

                                 as Co-Arranger

                                       and

                                 CITIBANK, N.A.

                                    as Agent

                                       and

                                  BANK ONE, NA

                              as Syndication Agent

NYDOCS03/538946.5 Amended and Restated 364-Day Credit Agreement August 21, 2000
<PAGE>

                  AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT

                           Dated as of August 21, 2000

          SNAP-ON INCORPORATED, a Delaware corporation (the "Borrower"), the
banks, financial institutions and other institutional lenders (collectively, the
"Initial Lenders") party hereto, CITIBANK, N.A., as administrative agent
(together with any successor thereto appointed pursuant to Article VII of the
Existing Credit Agreement referred to below, the "Agent") for the Lenders (as
defined in the Existing Credit Agreement referred to below) , SALOMON SMITH
BARNEY INC., as Lead Arranger and Book Manager, BANK ONE CAPITAL MARKETS INC.,
as Co-Arranger, and BANK ONE, NA, as Syndication Agent hereby agree as follows:

                             PRELIMINARY STATEMENTS

          (1) The Borrower is party to a 364-Day Credit Agreement dated as of
August 23, 1999 (as amended, supplemented or otherwise modified from time to
time to (but not including) the date of this Amendment and Restatement, the
"Existing Credit Agreement") with the banks, financial institutions and other
institutional lenders party thereto and Citibank, N.A., as Agent for the
Lenders, Salomon Smith Barney Inc., as Lead Arranger and Book Manager, Bank One
Capital Markets Inc., as Co-Arranger, and The First National Bank of Chicago, as
Syndication Agent. Capitalized terms not otherwise defined in this Amended and
Restated 364-Day Credit Agreement (this "Amendment and Restatement") shall have
the same meanings as specified in the Existing Credit Agreement.

          (2) The parties to this Amendment and Restatement desire to amend the
Existing Credit Agreement as set forth herein and to restate the Existing Credit
Agreement in its entirety to read as set forth in the Existing Credit Agreement
with the following amendments.

          (3) The Borrower has requested that the Lenders agree to extend credit
to it from time to time in an aggregate principal amount of U.S. $416,666,666.67
for general corporate purposes of the Borrower and its Subsidiaries not
otherwise prohibited under the terms of this Agreement. The Lenders have
indicated their willingness to agree to extend credit to the Borrower from time
to time in such amount on the terms and conditions of this Amendment and
Restatement.

          SECTION 1. Amendments to the Existing Credit Agreement. (a) Section
1.01 of the Existing Credit Agreement is, effective as of the date of this
Amendment and Restatement and subject to the satisfaction of the conditions
precedent set forth in Section 2, hereby amended by deleting the definitions of
"Commitment", "Lenders", "Sandvik Funding Date" and "Termination Date set forth
therein and adding the following definitions thereto:

          "Commitment" means as to any Lender (a) the Dollar amount set forth
     opposite such Lender's name on Schedule I hereto, (b) if such Lender has
     become a Lender hereunder pursuant to an Assumption Agreement, the Dollar
     amount set forth in such Assumption Agreement or (c) if such Lender has
     entered into any Assignment and Acceptance, the Dollar amount set forth for
     such Lender in the Register maintained by the Agent pursuant to Section
     8.07(d), as such amount may be reduced pursuant to Section 2.05.

          "Lenders" means, collectively, each Initial Lender, each Assuming
     Lender that shall become a party hereto pursuant to Section 2.18 and each
     Person that shall become a party hereto pursuant to Section 8.07.

NYDOCS03/538946.5 Amended and Restated 364-Day Credit Agreement August 21, 2000
<PAGE>

          "Termination Date" means the earlier of (a) August 20, 2001, subject
     to extension thereof pursuant to Section 2.18 and (b) the date of
     termination in whole of the Commitments pursuant to Section 2.05 or 6.01;
     provided, however, that the Termination Date of any Lender that is a
     Non-Consenting Lender to any requested extension pursuant to Section 2.18
     shall be the Termination Date in effect immediately prior to the applicable
     Extension Date for all purposes of this Agreement.

          (b) Section 2.01 of the Existing Credit Agreement is amended by
deleting the following proviso:

               "provided, further, that until the Sandvik Funding Date, the
               aggregate amount of all Revolving Credit Advances made by any
               Lender shall not exceed one third of such Lender's Commitment"

          (c) Section 3.02 of the Existing Credit Agreement is deleted in its
entirety.

          (d) Section 4.01(e) of the Existing Credit Agreement is amended by (i)
deleting the date "December 31, 1998" and substituting therefor the date
"December 31, 1999" and (ii) deleting the date "June 30, 1999" and substituting
therefor the date "June 30, 2000".

          (e) Section 4.01 (i) of the Existing Credit Agreement is deleted in
its entirety.

          (f) Schedule I to the Existing Credit Agreement is, effective as of
the date of this Amendment and Restatement and subject to the satisfaction of
the conditions precedent set forth in Section 2, deleted in its entirety and
replaced with Schedule I to this Amendment and Restatement.

          SECTION 2. Conditions of Effectiveness of this Amendment and
Restatement. This Amendment and Restatement shall become effective as of the
date first above written (the "Restatement Effective Date") when and only if:

          (a) The Agent shall have received counterparts of this Amendment and
Restatement executed by the Borrower and all of the Initial Lenders or, as to
any of the Initial Lenders, advice satisfactory to the Agent that such Initial
Lender has executed this Amendment and Restatement.

          (b) On the Restatement Effective Date, the following statements shall
be true and the Agent shall have received for the account of each Lender a
certificate signed by a duly authorized officer of the Borrower, dated the
Restatement Effective Date, stating that:

               (i) The representations and warranties contained in Section 4.01
          of the Existing Credit Agreement are correct on and as of the
          Restatement Effective Date, as though made on and as of such date: and

               (ii) No event has occurred and is continuing, or shall occur as a
          result of the occurrence of the Restatement Effective Date, that
          constitutes a Default.

          (c) The Agent shall have received on or before the Restatement
Effective Date the following, each dated such date and (unless otherwise
specified below) in form and substance satisfactory to the Agent and in
sufficient copies for each Initial Lender:

NYDOCS03/538946.5 Amended and Restated 364-Day Credit Agreement August 21, 2000
<PAGE>

          (i) The Revolving Credit Notes to the order of the Lenders to the
     extent requested by any Lender pursuant to Section 2.16 of the Existing
     Credit Agreement.

          (ii) Certified copies of the resolutions of the Board of Directors of
     the Borrower approving this Amendment and Restatement and the Notes, and of
     all documents evidencing other necessary corporate action and governmental
     approvals, if any, with respect to this Amendment and Restatement and the
     Notes.

          (iii) A certificate of the Secretary or an Assistant Secretary of the
     Borrower certifying the names and true signatures of the officers of the
     Borrower authorized to sign this Amendment and Restatement and the Notes
     and the other documents to be delivered hereunder.

          (iv) A favorable opinion of Susan F. Marrinan, General Counsel of the
     Borrower, and a favorable opinion of Foley & Lardner, counsel to the
     Borrower, substantially in the form of Exhibit D-1 and Exhibit D-2 hereto,
     respectively, and as to such other matters as any Lender through the Agent
     may reasonably request.

          SECTION 3. Reference to and Effect on the Existing Credit Agreement
and the Notes. (a) On and after the effectiveness of this Amendment and
Restatement, each reference in the Existing Credit Agreement to "this
Agreement", "hereunder", "hereof" or words of like import referring to the
Existing Credit Agreement, and each reference in the Notes to "the Credit
Agreement", "thereunder", "thereof" or words of like import referring to the
Existing Credit Agreement, shall mean and be a reference to the Existing Credit
Agreement, as amended by this Amendment and Restatement.

          (b) The Existing Credit Agreement and the Notes, as specifically
amended by this Amendment and Restatement, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.

          (c) Without limiting any of the other provisions of the Existing
Credit Agreement, as amended by this Amendment and Restatement, any references
in the Existing Credit Agreement to the phrases "on the date hereof", "on the
date of this Agreement" or words of similar import shall mean and be a reference
to the date of the Existing Credit Agreement (which is August 23, 1999).

          SECTION 4. Costs and Expenses. The Borrower agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Agent in connection with
the preparation, execution, delivery and administration, modification and
amendment of this Amendment and Restatement, the Notes and the other documents
to be delivered hereunder (including, without limitation, the reasonable and
documented fees and expenses of counsel for the Agent with respect hereto and
thereto) in accordance with the terms of Section 8.04 of the Existing Credit
Agreement.

          SECTION 5. Execution in Counterparts. This Amendment and Restatement
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment and Restatement by telecopier shall be effective as delivery of a
manually executed counterpart of this Amendment and Restatement.

          SECTION 6. Governing Law. This Amendment and Restatement shall be
governed by, and construed in accordance with, the laws of the State of New
York.

NYDOCS03/538946.5 Amended and Restated 364-Day Credit Agreement August 21, 2000
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Restatement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.

                                   THE BORROWER

                                            SNAP-ON INCORPORATED

                                            By /s/ Donald S. Huml
                                               --------------------------------

                                           Title: Sr. Vice President-Finance and
                                                    Chief Financial Officer

                                   THE AGENT

                                            CITIBANK, N.A.,
                                               as Agent

                                            By /s/ Robert D. Wetrus
                                               --------------------------------

                                             Title:  Vice President

                                   INITIAL LENDERS

                                            CITIBANK, N.A.

                                            By /s/ Robert D. Wetrus
                                               --------------------------------

                                             Title:  Vice President

                                            BANK ONE, NA (Main Office Chicago)

                                            By /s/ Jenny A. Gilpin
                                               --------------------------------

                                             Title:  First Vice President

                                            BANK OF AMERICA, N.A.

                                            By  /s/ Lynn Stetson
                                               -------------------------------

                                             Title:  Managing Director

NYDOCS03/538946.5 Amended and Restated 364-Day Credit Agreement August 21, 2000
<PAGE>

                                            MORGAN GUARANTY BANK AND TRUST
                                            COMPANY OF NEW YORK

                                            By /s/Dennis Wilczek
                                               --------------------------------

                                             Title:  Associate

                                            SVENSKA HANDELSBANKEN AB (publ)

                                            By  /s/ Jonas Daun
                                               -------------------------------

                                             Title:  Sr. Vice President

                                            By /s/ Henrik Jensen
                                               --------------------------------

                                             Title:  Vice President

                                            BARCLAYS BANK PLC

                                            By  /s/
                                               -------------------------------

                                             Title:  Vice President

                                            FIRSTAR BANK MILWAUKEE, N.A.

                                            By  /s/
                                               -------------------------------

                                             Title:  Assistant Vice President

                                            CIBC INC.

                                            By  /s/
                                               -------------------------------

                                           Title: Executive Director, CIBC World
                                                  Markets Corp., as Agent

                                            DAI-ICHI KANGYO BANK LTD.

                                            By  /s/ Nobuyasu Fukatsu
                                               ----------------------

                                             Title:  General Manager

NYDOCS03/538946.5 Amended and Restated 364-Day Credit Agreement August 21, 2000
<PAGE>
                               SCHEDULE I TO THE
                                     TO THE
                            AMENDMENT AND RESTATEMENT

                   COMMITMENTS AND APPLICABLE LENDING OFFICES
<TABLE>
<CAPTION>
------------------------------ ---------------------------- ---------------------------- ----------------------------
Name of Initial Lender         Commitment                   Domestic Lending Office      Eurocurrency Lending Office
----------------------         -----------                  -----------------------      ---------------------------
------------------------------ ---------------------------- ---------------------------- ----------------------------
<S>                            <C>                          <C>                          <C>
Bank of America, N.A.          $50,000,000                  1850 Gateway Blvd.           1850 Gateway Blvd.
                                                            Concord, CA 94520            Concord, CA 94520
                                                            Attn: Debbie Conchongco      Attn: Debbie Conchongco
                                                            T: 925 675-8913              T: 925 675-8913
                                                            F: 925 675-7539              F: 925 675-7539
------------------------------ ---------------------------- ---------------------------- ----------------------------
Barclays Bank PLC              $33,333,333.33               222 Broadway                 222 Broadway
                                                            New York, NY 10038           New York, NY 10038
                                                            Attn: C. Tenn                Attn: C. Tenn
                                                            T: 212 412-3728              T: 212 412-3728
                                                            F: 212 412-5308              F: 212 412-5308
------------------------------ ---------------------------- ---------------------------- ----------------------------
CIBC Inc.                      $6,666,666.67                Two Paces West               Two Paces West
                                                            2727 Paces Ferry Road,       2727 Paces Ferry Road,
                                                            Suite 1200                   Suite 1200
                                                            Atlanta, GA 30339            Atlanta, GA 30339
                                                            Attn: Charlene Harris        Attn: Charlene Harris
                                                            T: 770 319-4881              T: 770 319-4881
                                                            F: 770 319-4950              F: 770 319-4950
------------------------------ ---------------------------- ---------------------------- ----------------------------
Citibank, N.A.                 $100,000,000                 Two Penns Way                Two Penns Way
                                                            New Castle, DE 19720         New Castle, DE 19720
                                                            Attn: Maureen Prytula        Attn: Maureen Prytula
                                                            T: 302 894-6089              T: 302 894-6089
                                                            F: 302 894-6120              F: 302 894-6120
------------------------------ ---------------------------- ---------------------------- ----------------------------
Firstar Bank Milwaukee, N.A.   $10,000,000                  777 E. Wisconsin Ave.        777 E. Wisconsin Ave.
                                                            Milwaukee, WI 53202          Milwaukee, WI 53202
                                                            Attn: Bruce Anthony          Attn: Bruce Anthony
                                                            T: 414 765-4724              T: 414 765-4724
                                                            F: 414 765-5367              F: 414 765-5367
------------------------------ ---------------------------- ---------------------------- ----------------------------
Bank One, NA                   $100,000,000                 One First National Plaza,    One First National Plaza,
                                                            Suite 0088                   Suite 0088
                                                            Chicago, IL 60670            Chicago, IL 60670
                                                            Attn: Edna Guerra            Attn: Edna Guerra
                                                            T: 312 732-9609              T: 312 732-9609
                                                            F: 312 732-2715              F: 312 732-2715

NYDOCS03/538946.5 Amended and Restated 364-Day Credit Agreement August 21, 2000
<PAGE>

------------------------------ ---------------------------- ---------------------------- ----------------------------
Morgan Guaranty Bank and       $16,666,666.67               60 Wall Street               c/o J.P. Morgan Services
Trust Company of New York                                   New York, NY 100260-0060     Inc.
                                                            Attn:                        Euro-Loan Servicing Unit
                                                            T:                           500 Stanton Christiana Road
                                                            F:                           Newark DE 19713
                                                                                         Attn:
                                                                                         T:
                                                                                         F: 302 634-1094
------------------------------ ---------------------------- ---------------------------- ----------------------------
Svenska Handelsbanken AB       $50,000,000                  153 East 53rd Street         153 East 53rd Street
(publ)                                                      New York, NY 10022           New York, NY 10022
                                                            Attn: Henrik Jenson          Attn: Henrik Jenson
                                                            T: 212 326-5125              T: 212 326-5125
                                                            F: 212 326-5151              F: 212 326-5151
------------------------------ ---------------------------- ---------------------------- ----------------------------
Dai-Ichi Kangyo Bank Ltd.      $50,000,000                  10 S. Wacker Drive           10 S. Wacker Drive
                                                            Chicago, IL 60608            Chicago, IL 60608
                                                            Attn: Michael Pleasants      Attn: Michael Pleasants
                                                            T: 312 715-6361              T: 312 715-6361
                                                            F: 312 876-2011              F: 312 876-2011
------------------------------ ---------------------------- ---------------------------- ----------------------------
Total Commitment           =   U.S. $ 416,666,666.67
</TABLE>

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