Document:

SNAP-ON INCORPORATED
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                           DEFERRED COMPENSATION PLAN
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                       (as amended through June 22, 2001)

                      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 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.

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

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                               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 Corporation shall make available as and
when required a sufficient number of shares of Common Stock to meet the needs of
the Plan. Shares of Common Stock issued 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.

                                       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.

                                       13EMPLOYMENT AGREEMENT

          THIS AGREEMENT by and between Snap-on Incorporated, a Delaware
corporation (the "Company"), and Dale F. Elliott (the "Executive"), is effective
as of April 27, 2001 (the "Effective Date").

                              W I T N E S S E T H:

          WHEREAS, the Company wishes to provide for the employment by the
Company of the Executive, and the Executive wishes to serve the Company, in the
capacities and on the terms and conditions set forth in this Agreement;

          NOW, THEREFORE, it is hereby agreed as follows:

          1. TERM. The term of this Agreement (the "Term") shall commence as of
the Effective Date and end on the third anniversary of the Effective Date;
provided, however, that commencing on the second anniversary of the Effective
Date and on each subsequent anniversary of the Effective Date (each such
anniversary, a "Renewal Date"), the Term shall automatically be extended for one
additional year unless, not later than such Renewal Date, the Company or the
Executive shall have given notice not to extend the Term. During the Term, the
Company shall employ the Executive, and the Executive shall serve the Company,
on the terms and conditions set forth in this Agreement.

          2. POSITION AND DUTIES. (a) Effective as of the resignation of the
Company's Chief Executive Officer, the Executive shall serve as the Chief
Executive Officer and President of the Company, with such duties and
responsibilities as are consistent with such positions and the Company's
by-laws, and such other duties and responsibilities not inconsistent therewith
as may from time to time be assigned to him by the Board of Directors of the
Company (the "Board"). As soon as practicable following the Effective Date, the
Company shall use its best efforts to cause the Executive to be appointed as a
member of the Board. During the Term, the Executive shall report solely to the
Board.

          (b) During the Term, and excluding any periods of vacation and sick
leave to which the Executive is entitled, the Executive shall devote his full
attention and time during normal business hours to the business and affairs of
the Company and, to the extent necessary to discharge the responsibilities
assigned to the Executive under this Agreement, use the Executive's reasonable
best efforts to carry out such responsibilities faithfully and efficiently. It
shall not be considered a violation of the foregoing for the Executive to serve
on corporate, industry, civic or charitable

                                       1
<PAGE>

boards or committees, so long as the Executive has received written consent in
advance of the commencement of each such service or to devote time to his
personal, legal and financial matters, as long as such activities, individually
or in the aggregate, do not materially interfere with the performance of the
Executive's responsibilities hereunder.

          (c) During the Term, the Executive shall be based at the Company's
principal headquarters, except for travel reasonably required for the
performance of the Executive's duties hereunder.

          3. COMPENSATION. (a) BASE SALARY. During the Term, the Executive shall
receive an initial annual base salary (the "Annual Base Salary") of $600,000,
which shall be paid in monthly increments of $50,000, except to the extent
deferred. The Annual Base Salary shall be payable in accordance with the
Company's regular payroll practice for its senior executives, as in effect from
time to time. During the Term, the Annual Base Salary shall be reviewed by the
Organization and Executive Compensation Committee of the Board (the
"Compensation Committee") at least annually. The Annual Base Salary may be
decreased by the Board only as part of (a) a restructuring of the Company's
compensation structure with respect to its elected officers, so long as the
Executive's targeted total annual cash compensation is not reduced or (b) an
across-the-board reduction in the compensation of the Company's elected
officers. To the extent that the Annual Base Salary is increased or decreased,
the term "Annual Base Salary" shall refer to the Annual Base Salary as so
increased or decreased.

          (b) ANNUAL CASH INCENTIVE. The Executive shall be eligible to
participate in the Company's annual cash incentive program in accordance with
its terms. The Executive's minimum target annual cash incentive opportunity (the
"Target Annual Incentive") under such program for fiscal 2001 shall be 100% of
Annual Base Salary. In the event that the performance taken into account under
such incentive program exceeds targeted levels, the Executive's bonus shall be
increased above the Target Annual Incentive, in proportion to the actual level
of achievement, subject to the maximum percentage provided by the terms of such
program, (i) with any eventual payout adjusted to reflect any change in the
Annual Base Salary during such year and (ii) multiplied by a fraction, the
numerator of which is the number of full months during such year during which
the Executive was employed by the Company as its Chief Executive Officer and
President and the denominator of which is 12. The Executive's bonus for the
portion of fiscal 2001 prior to the Executive becoming Chief Executive Officer
and President of the Company shall be determined using the annual base salary
and applicable percentage in effect with respect to the Executive immediately
prior to the Effective Date. For years following fiscal 2001, the Executive's
Target Annual Incentive shall be determined

                                       2
<PAGE>

based on the Company's annual review of market practices and the Company's
compensation plans, subject in all events to a minimum of 85% of the Executive's
Annual Base Salary; provided, however, that such minimum Target Annual Incentive
may be decreased by the Board only as part of (a) a restructuring of the
Company's compensation structure with respect to its elected officers, so long
as the Executive's targeted total annual cash compensation is not reduced or (b)
an across-the-board reduction in the compensation of the Company's elected
officers.

          (c) INCENTIVE COMPENSATION OTHER THAN ANNUAL CASH INCENTIVE. The
Executive shall be eligible to participate in the Company's other incentive
compensation plans in accordance with their terms. For each of fiscal 2001 and
fiscal 2002, the Executive's annualized target incentive opportunity under the
Company's intermediate incentive plan shall be $300,000, payable in accordance
with the terms of such plan. Future intermediate or long-term incentive
opportunities shall be determined by the Board in accordance with the Company's
annual review of market practices and the Company's compensation plans.

          (d) OTHER BENEFITS. During the Term, the Executive shall be entitled
to participate in the benefit plans and perquisite programs of the Company that
are generally made available to other senior officers of the Company.

          (e) EQUITY AWARDS.

               (i) As soon as practicable following, and contingent upon,
     shareholder approval of the Company's 2001 Incentive Stock and Awards Plan
     (the "2001 Plan"), the Compensation Committee shall grant to the Executive
     a stock option (the "Option") to purchase 200,000 shares of the Company's
     common stock ("Company Stock") pursuant to the 2001 Plan. The Option shall
     (w) be memorialized in the form of a stock option agreement having terms
     and conditions no less favorable than the form of stock option agreement
     used to make option grants under the 2001 Plan to other elected officers of
     the Company during the month that the Option is granted, (x) have a ten
     year term, (y) have a per share exercise price equal to the fair market
     value (as defined in the 2001 Plan) of the Company Stock on the Option's
     date of grant and (z) subject to the provisions hereof, vest and become
     exercisable at the rate of one-half on each of the first two anniversaries
     of its date of grant.

               (ii) As soon as practicable following, and contingent upon,
     shareholder approval of the 2001 Plan, the Compensation Committee shall
     also grant to the Executive 100,000 restricted share units (the "Share
     Units") pursuant to the 2001 Plan. Notwithstanding any provision of the
     2001 Plan

                                       3
<PAGE>

     to the contrary, and subject to the provisions hereof, (x) the Share Units
     shall be memorialized in the form of a deferred award agreement consistent
     with the terms of the 2001 Plan, (y) the restrictions on the Share Units
     shall lapse at the rate of one-third on their date of grant and one-third
     on each of the first two anniversaries of their date of grant and (z)
     subject to the provisions hereof, vested Share Units shall be credited in
     shares of Common Stock upon the earlier of (1) the Executive's termination
     of employment for any reason or (2) such earlier date that such Share Units
     may be credited without causing the Company to lose its deduction with
     respect to such Share Units pursuant to Section 162(m) of the Internal
     Revenue Code of 1986, as it may be amended (the "Code"), subject to the
     provisions of the 2001 Plan, including any provisions thereof with respect
     to deferral. Dividend equivalents will be credited pursuant to the 2001
     Plan with respect to such Share Units.

               (iii) During the Term, the Executive shall be entitled to be
     granted additional options to acquire Company Stock, restricted stock and
     other equity awards at the discretion of the Compensation Committee.

          (f) RETIREMENT BENEFIT. The Executive shall continue to participate in
the Snap-on Incorporated Retirement Plan (the "Retirement Plan") and shall elect
the final average pay formula thereunder. In addition, the Executive shall be
eligible to participate in the Snap-on Incorporated Supplemental Executive
Retirement Plan (the "Supplemental Plan"). For purposes of calculating the
Executive's pension under the Supplemental Plan, the Executive's actual years of
continuous employment (used for purposes of determining vesting and eligibility)
and credited service (used to compute benefits) (such years of continuous
employment and credited service, "Years of Service") shall be multiplied by 1.5
(such multiplier, the "Multiplier"); provided, however, that the number of years
of credited service used for calculating the Executive's benefits under the
Supplemental Plan shall not exceed 35, after taking into account the application
of the Multiplier. The Executive shall be deemed to be eligible for an early
retirement benefit under the Supplemental Plan upon the attainment of age 50 and
10 years of continuous employment (after taking into account the application of
the Multiplier). Except as set forth in Section 5(a)(vi) hereof, the elements of
the Executive's compensation that will be used for purposes of calculating the
Executive's pension under the Supplemental Plan shall be determined in
accordance with the provisions of such plan.

          4. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY. The Company
shall be entitled to terminate the Executive's employment because of the
Executive's Disability during the Term. "Disability" means that the Executive is
disabled within the meaning of the Company's long-term disability

                                       4
<PAGE>

policy (such that, if the Company maintains a long-term disability policy, the
Executive's employment may only be terminated for Disability under this
Agreement if he is eligible for benefits under such policy) or, if there is no
such policy in effect, that (i) the Executive has been substantially unable, for
120 business days within a period of 180 consecutive business days, to perform
the Executive's duties under this Agreement, as a result of physical or mental
illness or injury, and (ii) a physician selected by the Company or its insurers,
and acceptable to the Executive or the Executive's legal representative, has
determined that the Executive is disabled. A termination of the Executive's
employment by the Company for Disability shall be communicated to the Executive
by written notice, and shall be effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), unless the Executive
returns to full-time performance of the Executive's duties before the Disability
Effective Date. The Board may, if it deems such action to be in the best
interest of the Company, appoint an individual on a temporary basis during the
period prior to the Disability Effective Date to fulfill any duties that the
Executive is unable to perform. The Term shall terminate automatically upon the
Executive's death.

          (b) TERMINATION BY THE COMPANY. The Company may terminate the
Executive's employment during the Term for Cause or without Cause.

               (i) "Cause" shall mean that prior to the Executive's termination
     of employment, the Executive shall have (A) engaged in any act of fraud,
     embezzlement, or theft in connection with his duties as an executive or in
     the course of employment with the Company or its subsidiaries; (B)
     wrongfully disclosed any secret process or confidential information of the
     Company or its subsidiaries; (C) participated without the written consent
     of the Board in the management of any business enterprise which
     manufacturers or sells any product or service competitive with any product
     or service of the Company or its subsidiaries (other than the mere
     ownership of less than five (5) percent of the securities in any enterprise
     and exercise of any ownership rights related thereto); and in any such case
     the act shall have been determined by the Board to have been materially
     harmful to the Company; (D) failed in a willful and continued manner to
     substantially perform his duties with the Company after a written demand
     for substantial performance is delivered to the Executive by the Board,
     which demand specifically identifies the manner in which the Board believes
     that the Executive has not substantially performed the Executive's duties,
     or (E) willfully engaged in conduct which is demonstrably and materially
     injurious to the Company or its subsidiaries, monetarily or otherwise.

               (ii) For purposes of Sections 4(b)(i)(D) and (E) hereof, no act,
     or failure to act, on the Executive's part shall be deemed "willful" unless

                                       5
<PAGE>

     done, or omitted to be done, by the Executive not in good faith and without
     reasonable belief that the Executive's act, or failure to act, was in the
     best interest of the Company. The Executive may not be terminated for Cause
     prior to his receipt of a copy of a resolution duly adopted by the
     affirmative vote of not less than three-quarters (3/4) of the entire
     membership of the Board at a meeting of the Board called and held for the
     purpose of considering such termination (after reasonable notice to the
     Executive and an opportunity for the Executive, together with his counsel,
     to be heard before the Board) finding that the Executive was guilty of
     conduct set forth in the definition of Cause herein, and specifying the
     particulars thereof in detail.

          (c) GOOD REASON. (i) The Executive may terminate employment for Good
Reason or without Good Reason. "Good Reason" means, without the Executive's
written consent, the occurrence of any of the following actions or failures to
act, which action or failure to act is not cured within ten business days
following the date on which the Executive advises the Company in writing of the
occurrence of such action or failure to act (such ten-day period, the "Cure
Period"):

          (A)       a material and adverse change in the Executive's status,
                    authority, duties or functions;

          (B)       except as provided in Section 3(a) hereof, any reduction in
                    the Executive's base salary;

          (C)       the failure by the Company to pay the Executive's
                    compensation when due;

          (D)       the relocation of the Executive's principal place of
                    employment to a location more than 50 miles from the
                    Executive's principal place of employment; or

          (E)       the failure of the Company to obtain from a successor the
                    assumption and agreement to perform this Agreement (as
                    described in Section 10(c) hereof) prior to the
                    effectiveness of any such succession.

                                       6
<PAGE>

               (ii) A termination of employment by the Executive for Good Reason
     shall be effectuated by giving the Company written notice of the
     termination, setting forth in reasonable detail the specific conduct of the
     Company that constitutes Good Reason and the specific provision(s) of this
     Agreement on which the Executive relies. A termination of employment by the
     Executive for Good Reason shall be effective on the tenth business day
     following the end of the Cure Period, unless the notice sets forth a later
     date (which date shall in no event be later than 30 days following the end
     of the Cure Period). The failure to set forth any fact or circumstance in
     such notice of termination shall not constitute a waiver of the right to
     assert, and shall not preclude the Executive from asserting such fact or
     circumstance in an attempt to enforce any right under or provision of this
     Agreement. Any election by the Executive to terminate his employment for
     Good Reason shall not be deemed a voluntary termination of employment by
     the Executive for the purpose of any other employee benefit or other plan.

               (iii) A termination of the Executive's employment by the
     Executive without Good Reason shall be effected by giving the Company 30
     days written notice of the termination.

          (d) DATE OF TERMINATION. The "Date of Termination" means the date of
the Executive's death, the Disability Effective Date or the date on which the
termination of the Executive's employment by the Company for Cause or without
Cause or by the Executive for Good Reason or without Good Reason is effective.

          5. OBLIGATIONS OF THE COMPANY UPON TERMINATION OR NON-RENEWAL.

          (a) OTHER THAN FOR CAUSE, DEATH OR DISABILITY, OR FOR GOOD REASON;
NON-RENEWAL. If the Company terminates the Executive's employment during the
Term for any reason other than Cause, death or Disability, or the Executive
terminates his employment for Good Reason, or if the Company provides the
Executive with notice, pursuant to Section 1 hereof, that the Term of the
Agreement shall not be extended (a "Non-Renewal"), then, subject to the
provisions of this Agreement, the Executive shall receive the payments and
benefits described in this Section 5(a).

               (i) The Company shall pay (A) no later than ten business days
     following the Date of Termination (the end of the Term in the case of a
     Non-Renewal), the Executive's full Annual Base Salary to the Executive

                                       7
<PAGE>

     through the Date of Termination (or the end of the Term, as the case may
     be), without regard to any reduction in Annual Base Salary which
     constitutes Good Reason, together with all compensation and benefits then
     payable to the Executive through the Date of Termination (or end of the
     Term, as the case may be) under the terms of any compensation or benefit
     plan, program or arrangement maintained by the Company during such period,
     subject to the terms of such plans and (B) the Executive's normal
     post-termination benefits to the Executive as such benefits become due, in
     accordance with the terms of the relevant plans and agreements (the
     obligations described in this paragraph (i), the "Accrued Obligations").

               (ii) The Company shall pay to the Executive, in a lump sum
     payment within ten business days following the Date of Termination (or the
     end of the Term, as the case may be) or, in the discretion of the Company,
     in substantially equal monthly installments over a period of two years
     following the Date of Termination (one year following the end of the Term
     in the case of a Non-Renewal) (such period, the "Severance Period"), a
     severance payment or payments which, in the aggregate, equal two times (one
     times in the case of a Non-Renewal) the sum of (i) the Executive's Annual
     Base Salary in effect immediately prior to the Date of Termination (or end
     of the Term, as the case may be), without regard to any reduction thereof
     which constitutes Good Reason plus (ii) the Executive's Target Annual
     Incentive in effect immediately prior to the Date of Termination (or the
     end of the Term, as the case may be) (such payments, the "Severance
     Payments"). Except as provided in Section 5(a)(vi) below, the Severance
     Payments hereunder shall not be included as compensation for purposes of
     calculating the Executive's retirement benefits from the Company, and the
     Severance Period shall not count as service for purposes of any benefit
     plan or arrangement maintained by the Company.

               (iii) Subject to Section 5(a)(ii) hereof, for a two-year period
     (one year in the case of a Non-Renewal) following the Date of Termination
     (or end of the Term, as the case may be) (or, if later, in accordance with
     the existing plans, agreements and arrangements in effect between the
     Executive and the Company), the Company shall provide the Executive with
     continued health, disability, life and other insurance benefits
     substantially similar to the benefits provided during such period to the
     elected officers of the Company; provided, however, that the level of any
     continued benefit shall be reduced to the extent that any such benefits are
     being provided to the Executive by a subsequent employer.

                                       8
<PAGE>

               (iv) Each outstanding Company stock option held by the Executive,
     whether or not vested and exercisable, shall become fully vested and
     exercisable and, in the case of a non-qualified stock option, shall remain
     outstanding and exercisable for a period of two years (one year in the case
     of a Non-Renewal) or, if later, the period prescribed by the applicable
     option agreement (but in no event later than the expiration date of such
     option).

               (v) Each outstanding Share Unit held by the Executive shall
     become fully vested.

               (vi) The Executive shall be credited with two additional Years of
     Service (one Year of Service in the case of a Non-Renewal), prior to taking
     into account the application of the Multiplier, for purposes of the
     Supplemental Plan service formula set forth in Section 3(f) hereof and, if
     the Executive has not yet attained age 50 as of the Date of Termination (or
     the end of the Term, as the case may be), the Executive shall be deemed to
     have attained age 50. The Severance Payments shall be deemed to be eligible
     compensation for purposes of calculating the Executive's final average pay
     under the Supplemental Plan, with the Annual Base Salary and Target Annual
     Incentive elements of such Severance Payments deemed to have been paid over
     the two-year period (one-year period in the case of a Non-Renewal)
     following the Date of Termination (or the end of the Term, as the case may
     be) in accordance with the Company's payment practices, as if the Executive
     were still employed during such period. The Executive's pension benefit
     shall be payable no earlier than the later of (A) the second anniversary
     (the first anniversary in the case of a Non-Renewal) of the Date of
     Termination (or the end of the Term, as the case may be) or (B) the date
     that payment of pension benefits to the Executive is to commence pursuant
     to the terms of the Supplemental Plan, in each case based on the
     Executive's payment election made under the Supplemental Plan.

          (b) DEATH AND DISABILITY. If the Executive's employment is terminated
by reason of the Executive's death or Disability during the Term, the Company
shall pay to the Executive (or his estate or legal representative, as the case
may be) the Accrued Obligations.

          (c) BY THE COMPANY FOR CAUSE; BY THE EXECUTIVE OTHER THAN FOR GOOD
REASON. If the Executive's employment is terminated by the Company for Cause or
the Executive voluntarily terminates employment other than for Good Reason
during the Term, (i) the Company shall have no further payment or benefit
coverage obligations to the Executive, except that

                                       9
<PAGE>

the Company shall pay to the Executive the Accrued Obligations and (ii) the
Executive shall forfeit the then unvested portions of the Option and the Share
Units and all previously vested options and other vested equity awards granted
on or after the Effective Date shall be treated according to the provisions of
the plan and agreements under which such awards were granted.

          (d) NO DUPLICATION. Notwithstanding any other provision hereof, if a
termination of the Executive's employment entitles the Executive to severance
compensation under the Restated Senior Officer Agreement between the Executive
and the Company referred to in Section 11(f) hereof, then the Executive shall
not be entitled to any compensation and benefits under this Section 5.

          6. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company for which the Executive may
qualify nor shall anything in this Agreement limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company. Vested benefits and other amounts that the Executive is otherwise
entitled to receive under any plan, policy, practice or program of, or any
contract of agreement with, the Company on or after the Date of Termination
shall be payable in accordance with the terms of each such plan, policy,
practice, program, contract or agreement, as the case may be, except as
explicitly modified by this Agreement.

          7. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in, and otherwise to perform its obligations under, this Agreement
shall not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action that the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and, except as provided
in Section 5(a)(iii) hereof, such amounts shall not be reduced, regardless of
whether the Executive obtains other employment.

          8. RESTRICTIVE COVENANTS.

          (a) APPLICATION. The Executive shall be subject to the restrictive
covenants set forth in Sections 8(b), (c), (d) and (e) hereof (the "Restrictive
Covenants") during the Executive's employment and for the respective
post-employment period set forth herein. The Restrictive Covenant set forth in
Section 8(b) hereof shall apply for a period of (i) two years following the Date
of Termination, in the case of a termination of the Executive's employment by
the Company for Cause or

                                       10
<PAGE>

by the Executive without Good Reason, (ii) one year following the Date of
Termination, in the case of a termination of the Executive's employment by the
Company without Cause or by the Executive for Good Reason or (iii) one year
following the end of the Term, in the case of a Non-Renewal (the applicable
period of employment and post-employment period, collectively, (the "Restrictive
Period")). The Restrictive Covenant set forth in Section 8(c) hereof shall apply
for a period of (i) two years following the Date of Termination, in the case of
a termination of the Executive's employment for any reason or (ii) two years
following the end of the Term, in the case of a Non-Renewal. The Restrictive
Covenants set forth in Sections 8(d) and 8(e) hereof shall apply indefinitely.
If the Executive violates any of the Restrictive Covenants during the
Restrictive Period, then, (i) to the extent that the Executive is entitled to
monthly Severance Payments, all such Severance Payments which have not yet been
paid shall be immediately forfeited, (ii) any further continuation of benefits
(as set forth in Section 5(a)(iii) hereof) shall immediately cease and (iii) in
addition to any forfeiture provisions contained in the Supplemental Plan, any
pension benefits to be paid under the Supplemental Plan shall be calculated as
if Section 5(a)(vi) of this Agreement did not exist.

          (b) NON-COMPETITION. The Executive shall not, directly or indirectly,
engage, whether as an employee, employer, consultant, advisor or director, or as
an owner, investor, partner or stockholder (unless his interest is
insubstantial), in any business in an area or region in which the Company or any
subsidiary or affiliate then conducts business, which business is directly in
competition with a business then conducted by the Company or a subsidiary or
affiliate (such business, a "Competitive Business"). For purposes of this
Section 8(b), the Executive's interest as a stockholder shall be considered
insubstantial if such interest represents beneficial ownership of less than five
percent of the outstanding class of stock, and the Executive's interest as an
owner, investor or partner shall be considered insubstantial if such interest
represents ownership of less than five percent of the outstanding equity of the
entity. Notwithstanding the foregoing, the Executive's engaging or participating
in a non-Competitive Business (as determined in the discretion of the Company
prior to the commencement of such engagement or participation, which
determination shall not be unreasonably made) of an entity which also operates a
Competitive Business shall not constitute a violation of this Section 8(b).

          (c) NON-SOLICITATION. The Executive shall not, directly or indirectly,
whether as employee, employer, consultant, advisor or director, or as an owner,
investor, partner, stockholder or otherwise, (i) solicit or induce any client or
customer of the Company or a subsidiary or affiliate, or entity with which the
Company or a subsidiary or affiliate has a business relationship, to curtail,
cancel,

                                       11
<PAGE>

not renew or not continue his or her or its business with the Company or any
subsidiary or affiliate, (ii) hire any person who is then, or who within 180
days prior to the Date of Termination was, an employee of, or a consultant or
independent contractor to, the Company or a subsidiary or affiliate or (iii)
solicit or induce any person who is an employee of, or a consultant or
independent contractor to, the Company or a subsidiary or affiliate to curtail,
cancel, not renew or not continue his or her or its employment, consulting or
other relationship with the Company or any subsidiary or affiliate.

          (d) CONFIDENTIALITY. Except pursuant to the performance of the
Executive's duties to the Company during his employment with the Company or with
the consent of the Company, the Executive shall not take, disclose, use, sell or
otherwise transfer any confidential or proprietary information of the Company or
any subsidiary or affiliate, including but not limited to information regarding
current and potential customers, clients, counterparts, organization, employees,
finances and financial results, and methods of operation, transactions and
investments, so long as such information has not otherwise been disclosed to the
public or is not otherwise in the public domain, except as required by law or
pursuant to legal process; and the Executive shall return to the Company,
promptly following the Date of Termination, any information, documents,
materials, data, manuals, computer programs or device containing information
relating to the Company or any subsidiary or affiliate, and each of their
customers, clients and counterparts, which came into the Executive's possession
or control during his employment.

          (e) COOPERATION WITH THE COMPANY. The Executive shall cooperate fully
with the Company in the defense or prosecution of any claims or actions now in
existence or which may be brought in the future against or on behalf of the
Company or its subsidiaries or affiliates which relate to events or occurrences
that transpired while the Executive was employed by the Company. The Executive's
full cooperation in connection with such claims or actions shall include, but
not be limited to, being available to meet with counsel to prepare for discovery
or trial and to act as a witness on behalf of the Company and its subsidiaries
and affiliates at mutually convenient times. The Company shall reimburse the
Executive for any reasonable out-of-pocket expenses incurred in connection with
the Executive's performance of obligations pursuant to this Section 8(e). To the
maximum extent permitted by law, the Executive agrees that he will notify the
Chairman of the Board if the Executive is contacted by any government agency
relating to a matter involving the Company, by any other person contemplating or
maintaining any claim or legal action against the Company or its subsidiaries
and affiliates, or by any agent or attorney of such person.

                                       12
<PAGE>

          (f) ENFORCEABILITY. It is the intention of the parties that the
provisions of this Section 8 shall be enforceable to the fullest extent
permissible under applicable law, but that if any portion or provision of this
Section 8 shall to any extent be declared illegal or unenforceable by a court of
competent jurisdiction, then the court may amend such portion or provision so as
to comply with law in a manner consistent with the intention of this Agreement.

          9. DISPUTE RESOLUTION; ATTORNEYS' FEES. All disputes arising under or
related to the employment of the Executive or the provisions of this agreement
shall be settled by arbitration under the rules of the American Arbitration
Association then in effect, such arbitration to be held in Kenosha, Wisconsin,
as the sole and exclusive remedy of either party and judgement on any
arbitration award may be entered in any court of competent jurisdiction;
provided, however, that the Company may go to court to enforce the provisions of
Section 8 hereof. The Company agrees to pay, as incurred, to the fullest extent
permitted by law, all legal fees and expenses that the Executive may reasonably
incur as a result of any contest (regardless of the outcome) by the Company, the
Executive or others of the validity or enforceability of or liability under, or
otherwise involving, any provision of this Agreement, together with interest on
any delayed payment at the applicable federal rate provided for in Section
7872(f)(2)(A) of the Code; provided, however, that such reimbursement of legal
fees and expenses shall be contingent on the Executive having brought or
defended such contest in good faith. The Company shall also pay all reasonable
legal fees and expenses incurred by the Executive in connection with the
preparation and negotiation of this Agreement.

          10. SUCCESSORS. (a) This Agreement is personal to the Executive and,
without the prior written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.

          (b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.

          (c) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, the "Company" shall mean
both the Company as defined above and any such successor that assumes and agrees
to perform this Agreement, by operation

                                       13
<PAGE>
of law or otherwise.

          11. MISCELLANEOUS. (a) This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Wisconsin, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified except by a written agreement executed
by the parties hereto or their respective successors and legal representatives.

          (b) All notices and other communications under this Agreement shall be
in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

                              If to the Executive:

                              c/o Snap-on Incorporated
                              10801 Corporate Drive
                              P. O. Box 1430
                              Kenosha, WI  53141-1430

                              If to the Company:

                              Snap-on Incorporated
                              10801 Corporate Drive
                              P. O. Box 1430
                              Kenosha, WI  53141-1430

                              Attention: General Counsel

or to such other address as either party furnishes to the other in writing in
accordance with this Section 11(b). Notices and communications shall be
effective when actually received by the addressee.

          (c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement. If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.

          (d) Notwithstanding any other provision of this Agreement, the

                                       14
<PAGE>

Company may withhold from amounts payable under this Agreement all federal,
state, local and foreign taxes that are required to be withheld by applicable
laws or regulations.

          (e) The Executive's or the Company's failure to insist upon strict
compliance with any provisions of, or to assert, any right under, this Agreement
(including, without limitation, the right of the Executive to terminate
employment for Good Reason) shall not be deemed to be a waiver of such provision
or right or of any other provision of or right under this Agreement.

          (f) The Executive and the Company acknowledge that, as of the
Effective Date, this Agreement supersedes any other agreement between them
concerning the subject matter hereof (including but not limited to the letter
agreement between the Company and the Executive, dated as of October 27, 2000)
and that, following the Effective Date, no such agreement shall be of any
further force or effect. As soon as practicable following the execution of this
Agreement, the Company and the Executive shall enter into a Restated Senior
Officer Agreement and an Indemnification Agreement, each of which shall be
consistent with the form of such agreement entered into by the Company and its
current Chief Executive Officer.

          (g) The rights and benefits of the Executive under this Agreement may
not be anticipated, assigned, alienated or subject to attachment, garnishment,
levy, execution or other legal or equitable process except as required by law.
Any attempt by the Executive to anticipate, alienate, assign, sell, transfer,
pledge, encumber or charge the same shall be void. Payments hereunder shall not
be considered assets of the Executive in the event of insolvency or bankruptcy.

          (h) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument.

                                       15
<PAGE>

          IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization of its Board, the Company has caused
this Agreement to be executed in its name on its behalf, all as of the day and
year first above written.

                                       SNAP-ON INCORPORATED

                                       By: /s/ Robert A. Cornog
                                           ---------------------------------
                                       Title:

                                       /s/ Dale F. Elliott
                                       -------------------------------------
                                       EXECUTIVE

                                       16

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