Document:

SNAP-ON INCORPORATED
                           DEFERRED COMPENSATION PLAN
                      (as amended through October 22, 1999)

                      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  a  deferral  period  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.  The  Participant  may  elect one or more
    successive  post retirement  deferral  periods of up to five years each, and
    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.

4.3 Manner of Payment  Election.  At the same time as the election made pursuant
to Section 4.1, the  Participant  also may elect to have a deferred  amount paid
either in a lump

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sum or in a specified number of approximately equal annual installments,  not to
exceed ten.

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 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  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.

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(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 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

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        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 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.

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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 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.

                                       10
<PAGE>

                          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

                                       11
<PAGE>
                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.

                                       12
<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.

                                       13SNAP-ON INCORPORATED
                    SUPPLEMENTAL RETIREMENT PLAN FOR OFFICERS
                          (As Amended October 22, 1999)

SECTION 1 -- INTRODUCTION

1.1 Plan. SNAP-ON  INCORPORATED  SUPPLEMENTAL  RETIREMENT PLAN FOR OFFICERS (the
"Plan") was originally  established by Snap-on  Incorporated  for the benefit of
eligible  employees of that  corporation and its  subsidiaries  that adopted the
Plan with that corporation's consent (1/28/94,  effective 4/22/94).  The Plan is
intended to constitute an unfunded  "excess  benefit plan" as defined in Section
3(36) of the Employee  Retirement  Income  Security Act of 1974 ("ERISA") and an
unfunded  Plan  maintained  primarily  for the  purpose  of  providing  deferred
compensation for a select group of management or highly compensated employees as
defined in Section  201(2) of ERISA  (6/28/91).  Benefits  payable from the Plan
will be paid  solely  from  the  general  assets  of the  Corporation  or  other
employers under the Plan.

1.2  Effective  Date.  The  "effective  date" of the Plan as set forth  below is
August 26, 1983.

1.3 Employers. The term "Corporation" means Snap-on Tools Corporation until such
date that name "Snap-on Tools Corporation" is changed to "Snap-on  Incorporated"
by  shareholder  approval,  and on such date  "Corporation"  shall mean  Snap-on
Incorporated or any successor thereto, and all rights and obligations under this
Plan shall be transferred to Snap-on  Incorporated or any successor thereto. The
Corporation and any subsidiary of the Corporation which adopts the Plan with the
consent of the  Corporation is referred to herein  individually as an "employer"
and collectively as the "employers" (1/28/94, effective 4/22/94).

1.4 Purpose.  The Plan has been  established to supplement  retirement  benefits
provided by the  Snap-on  Tools  Retirement  Plan for  Administrative  and Field
Employees  (the  "Administrative  and Field  Plan") in the event  that  benefits
provided  under the  Administrative  and Field Plan are  limited by the  benefit
restrictions  imposed under ERISA and/or limited due to participation in Snap-on
Tools Corporation Deferred Compensation Plan.

SECTION 2 -- PARTICIPATION AND SUPPLEMENTAL BENEFITS

2.1  Eligibility.  Each  employee  of  Snap-on  Incorporated  or any  subsidiary
employer  who was a  participant  in the Plan will  continue  to be  eligible to
participate in the Plan in accordance  with the terms of the Plan. Each employee
of the  Corporation  will  become a  participant  in the Plan and  eligible  for
benefits in accordance with subsection 2.2, provided that such participant meets
the following requirements:

               (a) The  employee is an elected  officer of the  Corporation,  as
               determined  under the Bylaws of the  Corporation;  and  (1/28/94,
               effective 4/22/94)

                                      -1-
<PAGE>

               (b) Such  employee  is a member of the  Administrative  and Field
               Plan (1/28/94, effective 4/22/94).

2.2 Supplemental  Benefits.  Supplemental  benefits payable to or on behalf of a
participant under the Plan shall be equal to the difference (if any) between (i)
the full amount of the  retirement  income or  pre-retirement  spouse's  benefit
computed for the  participant or his surviving  spouse under the  Administrative
and Field  Plan  benefit  formula  (disregarding  any  benefit  or  compensation
limitations  contained in ERISA and/or limited due to  participation  in Snap-on
Tools Corporation Deferred Compensation Plan) (6/28/91),  and (ii) the amount of
retirement income or  pre-retirement  spouse's benefit which is actually payable
under the Administrative and Field Plan, subject to the following limitations:

               (a)  Should  employment  continue  after  service  as an  officer
               terminates,  retirement  benefits under this Plan will not accrue
               after the calendar year in which service as an officer terminates
               (4/26/85).

               (b) The maximum supplemental benefits payable annually under this
               Plan for any  participant  who  retired  under the Plan  prior to
               January 28, 1994 are limited to $150,000 (1/28/94).

               (c)  Supplemental  benefits will  be payable in  accordance  with
               Subsection 2.3.

               (d) Deferred compensation will be considered as eligible earnings
               only for the year payment is deferred for purposes of determining
               retirement benefits (8/22/86).

               (e) For purposes of calculating the  supplemental  benefits under
               (i) above for Robert A. Cornog, two (2) years of credited service
               shall be credited for each year of his credited service under the
               Administrative  and  Field  Plan for  both  accrual  and  vesting
               purposes (6/25/92).

2.3 Payment of Benefits.  Subject to the  provisions of this Plan,  supplemental
benefits shall be payable to or on behalf of a participant as follows;

               (a) Normal  Form.  Supplemental  benefits  to a  participant  who
               retires on a normal,  deferred or early  retirement  date will be
               made monthly,  will commence on his retirement  date and continue
               thereafter for life and, if the participant  dies within a period
               of five years after his retirement date, a continuing  payment of
               the same amount will be made to his  eligible  spouse (as defined
               in  Subsection  5.2) if then  surviving  spouse or such  eligible
               spouse is not  living  or dies  prior to the  expiration  of such
               five-year  period,  to his  beneficiary  for the  balance of said
               period.

               (b)  Payments to Surviving  Spouse.  If, at the later to occur of
               the  death of a  retired  participant  or the  completion  of the
               applicable  five-year  period  specified

                                      -2-
<PAGE>

               in  Paragraph (a) above, such  participant's  eligible spouse (as
               defined  in  Subsection  5.2) is  living,  such  spouse  shall be
               entitled  to receive a monthly  supplemental benefit on the first
               day  of the  next  month,  equal  to 50  percent  of the  monthly
               supplemental  benefit  which  the  participant  or such  eligible
               spouse was  receiving under Paragraph (a). Such spouse's  monthly
               benefit  will be  paid on the first day of each month  thereafter
               with  the last payment  being the payment due on the first day of
               the  month in which such spouse's death occurs. If such spouse is
               more  than ten years younger than the participant,  the amount of
               monthly  benefit  payable to such  spouse  shall be reduced by an
               appropriate  percentage  (determined  actuarially)  for each full
               month  by which  such  spouse's  age is more than ten years  less
               than  the participant's age.

               (c)  Retirement  Date.  For  purposes  of  this   subsection,   a
               participant's  "retirement  date"  will be the  first  day of the
               month  coincident  with or next  following the date as of which a
               participant actually retires or is retired from the employ of all
               of the employers (i) on or after attaining age 65 years,  (ii) on
               or after  attaining  age 50 years if he has completed ten or more
               years of continuous employment under the Administrative and Field
               Plan or (iii)  on the date he is  retired  because  of total  and
               permanent  disability  if he has  completed  ten or more years of
               continuous employment under the Administrative and Field Plan.

               (d) Pre-retirement  Spouse's Benefit.  In the event a participant
               who has a spouse  to whom he is  legally  married  at the time he
               satisfied the  requirements  of Paragraph  2.3(c)(ii)  above dies
               leaving  an  eligible  spouse,  there  shall be  payable  to such
               participant's  eligible spouse the supplemental amount that would
               have been payable to his spouse under Paragraph (b) above had the
               participant retired on the first day of the month coincident with
               or next  following the month in which his death  occurred and had
               received payment commencing on such date in the form described in
               Paragraphs (a) and (b) above.  Such monthly spouse's benefit will
               be paid to such  spouse on the first day of the month  coincident
               with or next  following the date of the  participant's  death and
               will be payable on the first day of each month  thereafter,  with
               the final  payment  being the payment due on the first day of the
               month in this such spouse's death occurs.

The  computation  and  payment  of such  benefits  by the  Corporation  shall be
conclusive  on  the  participant,   his  eligible  spouse  and  his  beneficiary
(6/23/89).

Notwithstanding the provisions of subparagraphs 2.3(b) and 2.3(d), if the amount
payable  to the  surviving  spouse  of  Robert  Cornog  in the  form of  payment
specified  therein is less than $50,000 per year,  the minimum amount payable to
such spouse pursuant to each of such  subparagraphs  on an annual basis shall be
$50,000 (6/25/92).

2.4 Benefits  Provided by Employers.  Benefits under this Plan to a participant,
his  surviving   spouse  or  his   beneficiary  may  be  paid  directly  by  the
participant's employer. No employee shall be required to segregate any assets or
establish  any trust or fund to provide for the  payment of benefits  under this
Plan (6/23/89).

                                      -3-
<PAGE>

SECTION 3 -- OTHER EMPLOYMENT

A participant  or other person  receiving  supplemental  benefits under the Plan
will  continue to be  entitled  to receive  such  payments  regardless  of other
employment or self-employment.

SECTION 4 -- FORFEITURE FOR CAUSE

Notwithstanding  any provisions of the Plan to the contrary,  a retired  officer
will be  disqualified  for  benefits  under this Plan if he,  during his term of
employment with the Corporation,  or within two years of the date his employment
terminates:

               (a) Uses or  discloses  trade  secrets for the benefit of someone
               other than the Corporation or its subsidiaries;

               (b) Embezzles or steals cash or other property of the Corporation
               or its  subsidiaries  or performs  other similar  dishonest  acts
               against the Corporation or its subsidiaries; or

               (c)  Enters  into a  business  in  direct  competition  with  the
               Corporation or its subsidiaries as either an employee,  director,
               proprietor,   consultant,  partner  or  joint  venturer  of  such
               business (1/6/84).

SECTION 5 -- GENERAL

5.1 Administration.  The Plan will be administered by the Corporation. The Board
of Directors of the Corporation will designate the person or persons  authorized
to act on behalf of the Corporation in the administration of the Plan.

5.2  Spouse or  Beneficiary.  Any  benefits  payable  to an  eligible  spouse or
beneficiary under the Plan shall be paid to such spouse or beneficiary  eligible
to receive the participant's benefits under the Administrative and Field Plan as
provided in Subsection 2.3 or, if no such  beneficiary has been  designated,  to
the participant's  estate.  For purposes of this Plan, an "eligible spouse" of a
participant is a spouse of the  participant as of the  participant's  retirement
date (or, if  applicable,  the  participant's  date of death)  resulting  from a
legally recognized marriage (6/23/89).

5.3 Interests Not  Transferable.  Except as to any  withholding of tax under the
laws of the United States or any state, the interest of any participant or other
person  under the Plan shall not be subject to the claims of  creditors  and may
not be voluntarily or involuntarily sold,  transferred,  assigned,  alienated or
unencumbered.

                                      -4-
<PAGE>

5.4 Facility of Payment. Any amounts payable hereunder to any person under legal
disability  or who, in the  judgment of the  Corporation,  is unable to properly
manage his  financial  affairs may be paid to the legal  representative  of such
person (6/23/89).

5.5 Gender and Number.  Words in the masculine gender shall include the feminine
gender and, where the context admits,  the plural shall include the singular and
the singular shall include the plural.

5.6 Controlling  Law. Except to the extent  superseded by the laws of the United
States,  the laws of Wisconsin  shall be controlling in all matters  relating to
the Plan.

5.7  Successors.  This Plan is  binding on each  employer  and will inure to the
benefit of any  successor  of an employer,  whether by way of purchase,  merger,
consolidation or otherwise.

5.8 Not a Contract. This Plan does not constitute a contract of employment,  and
shall not be construed to give any  participant  the right to be retained in any
employer's  employ.  No participant shall have any rights under this Plan except
those specifically provided herein. Such participant shall not have any right or
security  interest in any specific asset of the employers or any trust, it being
understood  that any assets set aside  shall be  available  for the claims of an
employer's creditors (6/23/89).

5.9 Litigation by  Participant.  If a legal action relating to the Plan is begun
against the  Corporation  or an employer by or on behalf of any person,  or if a
legal action arises because of conflicting  claims to a  participant's  or other
person's benefits,  the cost to the Corporation or the employer of defending the
action shall be charged to the extent permitted by law to the sum, if any, which
were involved in the action or were payable to the  participant  or other person
concerned,  or to the supplemental benefits payable to the participant under the
Plan.

SECTION 6 -- AMENDMENT AND TERMINATION

While the employer expects to continue the Plan indefinitely, the right to amend
or terminate the Plan by action of the Board of Directors of the  Corporation is
hereby reserved,  provided that in no event shall any participant's supplemental
benefits  accrued to the date of such  amendment  or  termination  be reduced or
modified by such action.  Any supplemental  benefits accrued to the date of such
amendment  or  termination  shall be  payable  under  Subsection  2.3  (8/28/87)
(6/23/89).

SECTION 7 -- ADDITIONAL SPECIAL RESTRICTIONS (1/1/96)

7.1 Effective Date and Overriding  Provisions.  The following provisions of this
Section  7  shall  become  effective  on a  "restricted  date"  (as  defined  in
subsection 7.6 below) and, upon becoming effective, shall remain effective until
the following related unrestricted date and, during that period, shall supersede
any other provisions of the Plan to the extent necessary to

                                      -5-
<PAGE>

eliminate any  inconsistencies  between the provisions of this Section 7 and any
other provisions of the Plan, including any exhibits and supplements thereto.

7.2  Prohibitions  Against Mergers and  Termination;  Restrictions on Amendment.
During the period  beginning  on a restricted  date and ending on the  following
related unrestricted date, (i) the Plan may not be merged into any other plan or
terminated,  (ii) no  amendment  of the Plan which  would  reduce the accrual of
benefits or change  participation  or vesting  requirements  to the detriment of
existing participants in the Plan immediately prior to the restricted date shall
be permitted,  and (iii) the  provisions of Section  2.2(a) shall not apply with
respect to any employee whose service as an officer ceases during such period.

7.3 Subsidiaries and Affiliates.  For purposes of this Section 7, a "subsidiary"
of the  Corporation  means any  corporation  more than 50  percent of the voting
stock of  which  is  owned,  directly  or  indirectly,  by the  Corporation.  An
"affiliate" of the Corporation means any individual,  corporation,  partnership,
trust or other  entity  which  controls,  is  controlled  by, or is under common
control with the Corporation.

7.4  Prohibition  Against  Amendment.  Except as otherwise  required by law, the
provisions  of this Section 7 may not be amended,  deleted or  superseded by any
other  provision of the Plan,  during the period  beginning on a restricted date
and ending on the related unrestricted date.

7.5  Timing  and  Method of  Distribution.  During  the  period  beginning  on a
restricted  date and ending on the  following  related  unrestricted  date,  the
timing and methods of  distributions  of  benefits  payable to or on behalf of a
participant  under  the Plan and the  determination  of  actuarially  equivalent
values shall be governed by the  applicable  provisions of the Plan as in effect
on the date immediately preceding the restricted date.

7.6 Restricted and Unrestricted  Dates. For purposes of this Section 7, the term
"restricted date" means the date on which either a Change of Control (as defined
in  Subsection  7.7) or a Potential  Change of Control (as defined in Subsection
7.8) occurs.  An "unrestricted  date" means (1) in the case of a restricted date
which  occurs by reason  of a Change of  Control,  the last day of the five year
period  following such Change of Control or (2) in the case of a restricted date
occurring  by  reason of a  Potential  Change  of  Control,  the last day of the
six-month period following such Potential Change of Control."

7.7 Change of Control.  A "Change of Control" of the Corporation 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 7.7 and Section 7.8, the
               term "Person" shall not include (i) the Corporation or any of its
               subsidiaries,   (ii)  a  trustee  or  other   fiduciary   holding
               securities  under an employee  benefit plan of the Corporation 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

                                      -6-
<PAGE>

                of the  Corporation  in  substantially  the same  proportions as
                their  ownership of stock in the  Corporation) is or becomes the
                "Beneficial  Owner" (as defined in Rule 13d-3 under the Exchange
                Act),  directly or indirectly,  of securities of the Corporation
                (not  including  in the  securities  beneficially  owned by such
                Person any securities  acquired directly from the Corporation or
                its  affiliates)  representing  25% or more of  either  the then
                outstanding  shares of common  stock of the  Corporation  or the
                combined  voting  power of the  Corporation'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  Corporation,  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  Corporation'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  Corporation  approve  a merger or
                consolidation of the Corporation  with any other  corporation or
                approve the issuance of voting  securities of the Corporation in
                connection with a merger or consolidation of the Corporation (or
                any direct or indirect  subsidiary of the Corporation)  pursuant
                to  applicable  stock  exchange  requirements,  other than (i) a
                merger  or  consolidation  which  would  result  in  the  voting
                securities of the Corporation  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  Corporation  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  Corporation  (or similar
                transaction)  in which no Person is or  becomes  the  Beneficial
                Owner, directly or indirectly,  of securities of the Corporation
                (not  including  in the  securities  beneficially  owned by such
                Person any securities  acquired directly from the Corporation or
                its  affiliates)  representing  25% or more of  either  the then
                outstanding  shares of common  stock of the  Corporation  or the
                combined  voting  power of the  Corporation's  then  outstanding
                voting securities; or

                (4)  the  stockholders  of the  Corporation  approve  a plan  of
                complete  liquidation or  dissolution  of the  Corporation or an
                agreement for the sale or disposition by the  Corporation of all
                or

                                      -7-
<PAGE>

                substantially   all  of  the   Corporation'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  Corporation of all or  substantially  all of
                the  Corporation'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 Corporation 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  Corporation   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 Corporation
immediately following such transaction or series of transactions.

7.8.  Potential  Change of Control.  A  "Potential  Change of Control"  shall be
deemed to have occurred if :

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

        (b) the  Corporation  or any person  publicly  announces an intention to
        take  or  to  consider  taking  actions  which,  if  consummated,  would
        constitute a Change of Control;

        (c) any person becomes the beneficial owner, directly or indirectly,  of
        securities  of the  Corporation  representing  15% or more of either the
        then  outstanding  shares  of  common  stock of the  Corporation  or the
        combined  voting  power of the  Corporation's  then  outstanding  voting
        securities; or

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

SECTION 8 - PAYMENT OF BENEFITS DURING CREDIT RATING LIMITATION PERIOD

8.1 Effective Date and Overriding  Provisions.  The following provisions of this
Section  8 shall  become  effective  upon the  occurrence  of a  "Credit  Rating
Limitation Date" (as defined in Section 8.2 below) and, upon becoming effective,
shall remain effective until a subsequent "Credit Rating  Delimitation Date" (as
defined in Section 8.2 below) and, during the "Credit Rating Limitation  Period"
(as defined in Section 8.2 below) shall  supersede  any other  provisions of the
Plan,   other  than  Section  7,  to  the  extent  necessary  to  eliminate  any
inconsistencies  between  the  provisions  of  this  Section  8  and  any  other
provisions  of the Plan,  other  than  Section 7,  including  any  exhibits  and
supplements thereto.

                                      -8-
<PAGE>

8.2 Credit  Rating  Limitation  and  Delimitation  Dates.  For  purposes of this
Section 8, the term "Credit Rating  Limitation Date" 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 8. 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.  For purposes of this  Section 8, the term  "Credit  Rating
Delimitation Date" means the date on which the Company's debt rating achieves an
Investment Grade Rating after having previously lost such rating.  The period of
time commencing on a Credit Rating Limitation Date and ending on a Credit Rating
Delimitation Date shall be the "Credit Rating Limitation Period."

8.3  Benefit  Payment  Provisions.  Upon  the  occurrence  of  a  Credit  Rating
Limitation  Date and on each  December 31 after such date  occurring  during the
Credit Rating Limitation  Period, and prior to the occurrence of a Credit Rating
Delimitation  Date,  a single  sum  payment  shall be made  immediately  to each
participant under the Plan of the amount by which the "Actuarial Equivalent" (as
defined in Section 8.4 below) of (a) exceeds the sum of (b) plus (c):

(a)     The amount  determined  in Section  2.2(i) (as limited by all of Section
        2.2)  based  upon  the  assumption   that  (1)  the  participant  has  a
        nonforfeitable right to the participant's benefit from the Pension Plan,
        (2) the participant incurs a termination of employment as of the date of
        determination,  and (3)  benefits  payable  from the Pension  Plan would
        commence  upon the earliest  payment date allowed under the Pension Plan
        immediately following such termination of employment.

(b)     The Actuarial Equivalent of the amount determined in Section 2.2(ii) (as
        limited by all of Section  2.2)  based upon the same  assumptions  as in
        Paragraph (a) above.

(c)     The Actuarial Equivalent of the amount paid to such participant based on
        any prior determination date pursuant to this Section 8.3.

8.4 Actuarial Equivalent. Actuarial Equivalent means an amount equal in value to
the benefit  replaced as  determined  with respect to a single sum  distribution
under  Section 8 by using the  average  thirty (30) year  Treasury  rate for the
second full calendar  month  preceding the first day of the calendar  quarter in
such Plan year that contains the determination  date as of which the lump sum is
being  determined,  as specified  by the  Commissioner  of the Internal  Revenue
Service in the Internal Revenue Bulletin,  and the mortality table prescribed by
the Secretary of the Treasury in revenue  rulings,  notices,  or other  guidance
pursuant to Section  807(d)(5)(A)  of the  Internal  Revenue  Code that has been
published in the Internal Revenue Bulletin as of the date such lump sum is being
determined.

                                      -9-
<PAGE>

8.5  Supplemental  Benefits In Payment  Status During  Credit Rating  Limitation
Period.  During a Credit  Rating  Limitation  Period  the  Actuarial  Equivalent
payment of any unpaid  supplemental  benefits in payment  status under this Plan
shall be made immediately to the participant or other appropriate recipient in a
single sum amount.

8.6 No  Duplication  of Benefits.  Under no  circumstances  shall a  participant
receive duplicate payment of benefits under the Plan. Entitlement to periodic or
other payment of  supplemental  benefits is canceled when such benefits are paid
out in accordance with this Section 8.

                                      -10-

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