Document:

October 27, 2000

NAME
TITLE
Snap-on Incorporated
P.O. Box 1430
Kenosha, Wisconsin 53141-1430

                    Re: Severance Payments

Dear NAME:

          This letter agreement (the "Agreement") will evidence the
understanding that we have reached with respect to the severance payments and
benefits that will be provided to you upon a qualifying termination of your
employment with Snap-on Incorporated (the "Company").

               1. Severance Benefits.

                    (a) Upon the occurrence of a "Qualifying Termination," you
          shall be entitled to receive the payments and benefits described in
          clauses (b) and (c) of this Section 1. A "Qualifying Termination"
          shall mean the termination of your employment with the Company and its
          subsidiaries prior to the Expiration Date (as defined in Section 8
          hereof) by the Company and its subsidiaries without Cause (as defined
          below). For purposes of this letter, the term "Cause" shall mean that
          prior to your termination of employment, you shall have (i) engaged in
          any act of fraud, embezzlement, or theft in connection with your
          duties as an executive or in the course of employment with the Company
          or its subsidiaries; (ii) wrongfully disclosed any secret process or
          confidential information of the Company or its subsidiaries; or (iii)
          participated without the written consent of the Board of Directors of
          the Company (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. You may not be
          terminated for Cause prior to your 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 you and an opportunity for you, together with
          your counsel, to be heard before the Board) finding that you were
          guilty of conduct set forth in the definition of Cause herein, and
          specifying the particulars thereof in detail. In the event of a
          dispute regarding whether your employment has been terminated

<PAGE>

          for Cause, no claim by the Company that Cause exists shall be given
          effect unless the Company establishes by clear and convincing evidence
          that Cause exists.

                    (b) You (or your estate, as the case may be) shall be
          entitled to receive, in a lump sum within five business days following
          the Qualifying Termination or, in the discretion of the Company, in
          substantially equal monthly installments over a period of [2][3] years
          following the Qualifying Termination (such period, the "Severance
          Period"), a severance payment or payments which, in the aggregate,
          equal [2][3] times the sum of (i) your highest annual rate of base
          salary in effect during the three-year period immediately prior to the
          Qualifying Termination plus (ii) the higher of (A) your highest annual
          bonus earned during the [2][3] complete fiscal years of the Company
          immediately preceding the Qualifying Termination or (B) your target
          annual bonus as in effect immediately prior to the Qualifying
          Termination. During the 30-day period beginning on the date on which
          you sign this Agreement, you may elect to defer the payment of all or
          a portion of the severance payment, to the extent that such payment
          would otherwise be made in a lump sum, to a date or dates consistent
          with the deferral options available under the Company's Deferred
          Compensation Plan. Any such deferral election shall be null and void
          and of no force and effect if the Company determines that the
          severance payments shall be made over the Severance Period. If the
          Company determines that the severance payments shall be made on a
          monthly basis, you shall be subject to the restrictive covenants set
          forth in Section 3 hereof (the "Restrictive Covenants") during the
          Severance Period. If you violate the Restrictive Covenants during such
          period, all severance payments (as set forth in this Section 1(b))
          which have not yet been paid shall be immediately forfeited and any
          further continuation of benefits (as set forth in Section 1(c) hereof)
          shall immediately cease. The severance payments hereunder shall not be
          included as compensation for purposes of calculating your 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.

                    (c) Subject to Section 7 hereof, for a [2][3]-year period
          following the Qualifying Termination (or, if later, in accordance with
          the existing plans, agreements and arrangements in effect between you
          and the Company), the Company shall provide you with continued health,
          disability, life and other insurance benefits substantially similar to
          the benefits provided to you immediately prior to the Qualifying
          Termination; provided, that the level of any continued benefit shall
          be reduced to the extent that any such benefits are being provided to
          you by a subsequent employer. Your rights to continued coverage under
          COBRA shall commence at the end of such [2][3]-year period.

          2. Option Vesting. Upon a Qualifying Termination, each outstanding
stock option held by you, 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 [2][3] years or, if
later, the period prescribed

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<PAGE>

by the applicable option agreement (but in no event later than the expiration
date of such option).

          3. Restrictive Covenants. "Restrictive Covenants" shall mean the
following:

                    (a) Non-Competition. You shall not, directly or indirectly,
          engage, whether as an employee, employer, consultant, advisor or
          director, or as an owner, investor, partner or stockholder (unless
          your 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. For
          purposes of this Section 3(a), your 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 your 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.

                    (b) Non-Solicitation. You 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, 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 90 days prior to the Qualifying 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.

                    (c) Confidentiality. Except pursuant to the performance of
          your duties to the Company during your employment with the Company or
          with the consent of the Company, you 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 you shall return to the Company,
          promptly following the Qualifying 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 your possession or control during your employment.

                    (d) Cooperation with the Company. You shall cooperate fully
          with the Company in the defense or prosecution of any claims or
          actions now in existence or

                                       3

<PAGE>

          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 you were employed by the Company.
          Your 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 you for any reasonable
          out-of-pocket expenses incurred in connection with your performance of
          obligations pursuant to this Section 3(d). To the maximum extent
          permitted by law, you agree that you will notify the Chief Executive
          Officer of the Company if you are 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.

          4. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Wisconsin without giving effect to the principles of conflict of laws of such
state, except that Section 5 shall be construed in accordance with the Federal
Arbitration Act. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.

          5. Settlement of Disputes; Arbitration. Any dispute or controversy
arising under or in connection with this Agreement shall be settled by
arbitration in Chicago, Illinois in accordance with the rules of the American
Arbitration Association then in effect.

          6. Withholding. The Company may withhold from any amounts payable
under this Agreement all federal, state and other taxes as shall be legally
required.

          7. Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties with respect to the matters discussed
herein and supersedes all other prior agreements and understandings, written or
oral, between the parties with respect to such matters. Except as provided
below, however, nothing in this Agreement shall affect your rights under
applicable law, the Restated [Senior Officer][Executive] Agreement between you
and the Company, dated as of ______________, _____, as such agreement may be
amended from time to time (the "[Senior Officer][Executive] Agreement") or under
any other plan, agreement or arrangement in effect between you and the Company.
Notwithstanding the foregoing, (a) any severance compensation to which you
become entitled pursuant to Section 2(c) of the [Senior Officer][Executive]
Agreement (the "[Senior Officer][Executive] Compensation") shall be reduced (but
not below zero) by any severance payments previously paid to you pursuant to
Section 1(b) of this Agreement, and any severance payments to which you become
entitled pursuant to Section 1(b) of this Agreement shall be reduced (but not
below zero) by any [Senior Officer][Executive] Compensation previously paid to
you and (b) from and after the time that benefit continuation commences pursuant
to Section 1(c) of this Agreement, such continuation shall supersede

                                       4

<PAGE>

any benefit continuation to which you are entitled pursuant to Section 2(d) of
the [Senior Officer][Executive] Agreement; provided, however, that the period of
the benefit continuation under said Section 1(c) shall be reduced by the period
during which any benefit continuation had previously been provided to you under
said Section 2(d). Insofar as it relates to the matters described in the
immediately preceding sentence, this Agreement shall be deemed to constitute an
amendment to the [Senior Officer][Executive] Agreement.

          8. Expiration of Agreement. This Agreement shall expire and be of no
further force and effect on the date which is two years following the date on
which a new Chief Executive Officer of the Company is appointed by the Board and
takes office to succeed the current Chief Executive Officer of the Company (the
"Expiration Date"); provided, however, that, notwithstanding the occurrence of
the Expiration Date, any rights that you have under this Agreement by reason of
a Qualifying Termination occurring prior to the Expiration Date shall not expire
but shall remain in full force and effect.

                                      * * *

Please sign below in the space provided to acknowledge your acceptance of the
terms of this Agreement.

                                              Sincerely,

                                       Snap-on Incorporated

                                       ----------------------------
                                       By:  Robert A. Cornog
                                               Chairman, President and
                                               Chief Executive Officer

Acknowledged and Agreed to:

----------------------------------------
NAME
TITLE

Date:  __________________________________

                                       5AMENDMENT TO
                          DEFERRED COMPENSATION WAIVER
                         AND INSURANCE BENEFIT AGREEMENT

          This Agreement is entered into this ____ day of ____________, 2000, by
and between SNAP-ON INCORPORATED, a Delaware corporation (the "Company"), and
_______________________ (the "Executive").

          WHEREAS, the Executive and the Company entered into a Deferred
Compensation Waiver And Insurance Benefit Agreement ("Agreement") on
___________________; and

          WHEREAS, the Executive and the Company have determined that it is in
their best interests to amend the Agreement.

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

          Section 6.a. is deleted in its entirety and replaced by the following
new Section 6.a.:

          "6. Funding Upon a Change of Control

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

          The following new Section 13 is added:

          "13. Funding Upon a Rating Event.

          (a) In the event that a Rating Event (as defined below) occurs and a
Change of Control has not occurred, the Company shall immediately transfer to an
irrevocable trust established by the Company which is substantially in the form
of the Snap-on Incorporated Split-Dollar Trust approved by the Committee on
October 21, 1999 (and contains such other supplemental provisions as are
required by the trustee which are not inconsistent with the form approved by the
Committee) an amount equal to (i) the aggregate unpaid premiums required to be
paid to the Company under Section 3 of this Agreement plus (ii) an additional
amount equal to the death benefit required to be paid under Section 4(a) of this
Agreement if the survivor of the Executive and the

<PAGE>

Executive's spouse dies in the year in which the Company's final premium payment
is due.

          (b) The term "Rating Event" means the date on which the Company's debt
rating drops below an Investment Grade Rating. "Investment Grade Rating" means a
rating at or above Baa3 by Moody's Investors Service, 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
Company 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 Company.

          (c) The Company's satisfaction of its obligation under Section 13(a)
in the event that a Rating Event occurs shall completely discharge its payment
obligations under Sections 3 and 4 of this Agreement."

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

In the presence of                     SNAP-ON INCORPORATED

                                       By
---------------------------------            ----------------------------------

                                       Its
                                             ----------------------------------

---------------------------------       ----------------------------------------
                                        -------------------------

                                      -2-

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