SNAP ON INC
SHARE AWARD AGREEMENT
<DOCUMENT>
<TYPE>EX-10.(A)
<SEQUENCE>3
<FILENAME>slp347c.txt
<DESCRIPTION>SHARE AWARD AGREEMENT
<TEXT>
                                                                   Exhibit 10(a)

                              SNAP-ON INCORPORATED

                      SHARE AND PERFORMANCE Award AGREEMENT

      THIS AGREEMENT ("Agreement") is made and entered into as of April 1, 2002
by and between SNAP-ON INCORPORATED, a Delaware corporation (the "Company"), and
_________, an employee of the Company or of a subsidiary of the Company (the
"Key Employee").

                              W I T N E S S E T H :

      WHEREAS, the Organization and Executive Compensation Committee of the
Board of Directors of the Company (such committee, whether acting as such or
through the ad hoc committee of the Board to which such committee delegated its
authority in connection with this Agreement, the "Committee"), by actions of the
Committee on January 25, 2002 and March 12, 2002, approved the grant (the
"Grant") to the Key Employee of _______ (the "Grant Number") shares of the
Company's common stock ("Common Stock") and the opportunity to receive cash in
respect of performance units ("Performance Units") pursuant to the Company's
2001 Incentive Stock and Awards Plan (the "Awards Plan"), to be effective April
1, 2002;

      WHEREAS, in accordance with the terms of the Grant, the Key Employee
elected to not defer receipt of the percentage, if any, set forth on the
signature page hereto of the Grant Number (the "Share Delivery Percentage") and
the percentage, if any, set forth on the signature page hereto of the cash that
may be received in respect of the Performance Units subject to the Grant (the
"Cash Delivery Percentage") by executing an Election to Defer Compensation (the
"Deferral Election") or by choosing not to execute a Deferral Election; and

      WHEREAS, the Grant contemplated that the Grant will also be subject to the
terms of an award agreement, the form of which is to be determined by the
Company, and this Agreement is intended to serve as the additional agreement
that the Grant contemplated.

      NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements herein set forth, the parties hereby mutually covenant and agree as
follows:

1.    Restricted Shares. Subject to the terms and conditions set forth herein,
      as of April 1, 2002, the Company hereby awards to the Key Employee a
      number of shares of Common Stock (the "Restricted Shares") equal to the
      product of the Grant Number multiplied by the Share Delivery Percentage
      which shall be subject to vesting and forfeiture as set forth below.
      Except as otherwise provided herein, no Restricted Share may be sold,
      transferred or otherwise alienated or hypothecated until such Restricted
      Share vests as provided herein.

2.    Escrow.


      (a)   The Company shall cause certificates for Restricted Shares to be
            issued as soon as practicable in the name of the Key Employee, but
            the Company, as escrow agent, shall hold such shares in escrow. Upon
            issuance of such certificates, (i) the


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<PAGE>

            Company shall give the Key Employee a receipt for the Restricted
            Shares held in escrow which will state that the Company holds such
            Restricted Shares in escrow for the account of the Key Employee,
            subject to the terms of this Agreement, and (ii) the Key Employee
            shall give the Company a stock power for such Restricted Shares duly
            endorsed in blank which will be held in escrow for use in the event
            such Restricted Shares are forfeited in whole or in part.

      (b)   Unless theretofore forfeited as provided herein, Restricted Shares
            and any other property held in escrow pursuant to this Agreement
            shall cease to be held in escrow, and the Company shall release such
            certificates for such Restricted Shares, and any related property
            held in escrow (without interest), to the Key Employee, or in the
            case of his death, to his Beneficiary (as hereinafter defined) when
            such Restricted Shares vest as provided herein at which time such
            shares shall be freely transferable by the Key Employee or his
            Beneficiary.

      (c)   Restricted Shares and any other property held in escrow pursuant to
            this Agreement shall cease to be held in escrow, and the Company may
            assume possession thereof in its own right, when the Key Employee
            forfeits such Restricted Shares as provided herein.

3.    Vesting and Forfeiture Based on Performance. Subject to the terms and
      conditions set forth herein,

      (a)   Vesting of the Restricted Shares and payment in respect of
            Performance Units is dependent upon performance relative to revenue
            growth and RONAEBIT goals during fiscal 2002 and fiscal 2003. The
            threshold, target and maximum goals for revenue growth and RONAEBIT
            during fiscal 2002 and fiscal 2003 are as shown on Exhibit 1, and
            the Restricted Shares will vest, and the Performance Units will be
            earned, in accordance with the vesting matrix attached hereto as
            Exhibit 1 based on actual performance of the Company relative to the
            goals subject to the terms attached hereto as Exhibit 2. As soon as
            practicable after the Company's audited financial statements for
            fiscal 2002 and fiscal 2003 are available to the Committee, the
            Committee shall calculate the Company's revenue growth and RONAEBIT
            data for such years in accordance with the terms attached hereto as
            Exhibit 2. The Committee shall then plot the revenue growth and
            RONAEBIT data on the vesting matrix. The resulting position on the
            matrix shall determine the percentage of the Restricted Shares that
            will vest and the number of Performance Units that the Key Employee
            will earn as set forth below. In the course of calculating the
            Company's revenue growth and RONAEBIT data and plotting the revenue
            growth and RONAEBIT data on the vesting matrix, the Committee shall
            have the discretion to take action in light of the effects of
            Special Charges (as defined on Exhibit 1) that reduces the resulting
            percentage in such manner and to such extent as the Committee
            determines in its sole discretion. However, the Committee shall have
            no discretion to take into account the effects of Special Charges in
            a manner that increases the resulting percentage. The Company shall
            promptly communicate this information to the Key Employee.

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<PAGE>

      (b)   Unless the Key Employee has previously forfeited such Restricted
            Shares, if the position on the matrix reflects a percentage greater
            than zero and less than or equal to 100%, then the number of
            Restricted Shares that shall vest shall be equal to the product of
            such percentage, the Grant Number and the Share Delivery Percentage,
            and if the position on the matrix reflects a percentage greater than
            100%, then the number of Restricted Shares that shall vest shall be
            equal to the product of the Grant Number and the Share Delivery
            Percentage. Upon the Committee's determination as provided above,
            the Key Employee will forfeit the Restricted Shares that do not
            vest.

      (c)   Unless the Key Employee has previously forfeited the right to earn
            Performance Units, if the position on the matrix reflects a
            percentage greater than 100%, then the Key Employee will receive
            cash in respect of a number of Performance Units equal to the
            product of the percentage in excess of 100%, but not greater than
            50%, multiplied by the Grant Number and multiplied by the Cash
            Delivery Percentage. The amount of the cash payment for each
            Performance Unit will be the fair market value of a share of the
            Company's common stock on March 12, 2002.

4.    Forfeiture Based on Employment Status. Subject to the terms and conditions
      set forth herein,

      (a)   In addition to any rights of the Company under Section 5, the Key
            Employee will forfeit any Restricted Shares or any rights associated
            with Performance Units as to which the Committee has not made its
            vesting determination under Section 3 and not otherwise vested under
            Section 6 if the Key Employee's employment with the Company or its
            subsidiaries is terminated for any reason prior to such
            determination unless in the case of termination by the Company or a
            subsidiary the Committee determines, on such terms and conditions,
            if any, as the Committee may impose, that there may nonetheless be
            vesting of all or a portion of the award at the time of such
            determination or at any other time. Absence of the Key Employee on
            leave approved by a duly elected officer of the Company, other than
            the Key Employee, shall not be considered a termination of
            employment during the period of such leave.

      (b)   Notwithstanding the foregoing, in the case of termination of
            employment as a result of death, Disability (as defined below) or
            Retirement (as defined below), the Share Delivery Percentage of the
            Grant will vest, and the Key Employee's entitlement to cash in
            respect of Performance Units will be determined, based upon the
            Company's actual performance relative to the revenue growth and
            RONAEBIT goals over the full performance period, but in lieu of the
            amounts under Section 3(b) and (c), the respective amounts, if any,
            determined under those subsections shall be reduced by multiplying
            such amounts by a fraction representing the portion of the two-year
            period that elapsed before the termination of the Key Employee's
            employment.

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<PAGE>

      (c)   Whether or not a divestiture of a subsidiary, division or other
            business unit (including through the formation of a joint venture)
            results in termination of employment with the Company and its
            subsidiaries will be at the discretion of the Committee, which
            discretion the Committee may exercise on a case by case basis.

      (d)   As used herein,

            (i)   "Disability" means a medically-determinable physical or mental
                  condition that is expected to be permanent and that results in
                  the Key Employee being unable to perform one or more of the
                  essential duties of the Key Employee's occupation or a
                  reasonable alternative offered by the Company or its
                  subsidiaries, all as determined by the Committee or any
                  successor to such committee that administers the Awards Plan
                  (as the same may be amended).

            (ii)  "Retirement" means termination of employment from the Company
                  and its subsidiaries on or after satisfying the early or
                  normal retirement age and service conditions specified in the
                  retirement policy or retirement plan of the Company or one of
                  its subsidiaries applicable to such Key Employee as in effect
                  at the time of such termination.

5.    Detrimental Activity.

      (a)   Activity During Employment. If, prior to termination of the Key
            Employee's employment with the Company or during the one-year period
            following termination of the Key Employee's employment with the
            Company, the Company becomes aware that, prior to termination, the
            Key Employee had engaged in detrimental activity, then the Committee
            in its sole discretion, for purposes of this Agreement, may
            characterize or recharacterize termination of the Key Employee's
            employment as a termination to which this Section 5 applies and may
            determine or redetermine the date of such termination, and the Key
            Employee's rights with respect to the Grant shall be determined in
            accordance with the Committee's determination.

      (b)   Activity Following Termination. If, within the three-month period
            following the Key Employee's termination of employment with the
            Company, the Company becomes aware that the Key Employee has engaged
            in detrimental activity subsequent to termination, then the Key
            Employee's rights with respect to the Grant shall be determined in
            accordance with any determination by the Committee under this
            Section 5.

      (c)   Remedies. If the Key Employee has engaged in detrimental activity as
            described in subsections (a) and (b), then the Committee may, in its
            discretion, declare that the Key Employee has forfeited the Grant in
            whole or in part and cause the Company to assume possession of any
            or all property held in escrow in respect of the Grant in its own
            right and/or cause the Key Employee to return any cash or property
            actually realized by the Key Employee (directly or indirectly) in
            respect


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            of the Grant, in each case whether or not the Committee has made a
            vesting determination under Section 3 in respect thereof before or
            after the date the Key Employee engaged in the detrimental activity
            or before or after the date of termination as determined or
            redetermined under subsection (a).

      (d)   Allegations of Activity. If an allegation of detrimental activity by
            the Key Employee is made to the Committee, then the Committee may
            suspend the Key Employee's rights in respect of the Grant to permit
            the investigation of such allegation.

      (e)   Definition of "Detrimental Activity." For purposes of this
            Agreement, "detrimental activity" means activity that is determined
            by the Committee in its sole discretion to be detrimental to the
            interests of the Company or any of its subsidiaries, including but
            not limited to situations where the Key Employee (i) divulges trade
            secrets of the Company, proprietary data or other confidential
            information relating to the Company or to the business of the
            Company or any subsidiaries, (ii) enters into employment with a
            competitor under circumstances suggesting that the Key Employee will
            be using unique or special knowledge gained as an employee of the
            Company to compete with the Company, (iii) uses information obtained
            during the course of his prior employment with the Company for his
            own purposes, such as for the solicitation of business and
            competition with the Company, (iv) is determined to have engaged
            (whether or not prior to termination due to retirement) in either
            gross misconduct or criminal activity harmful to the Company, or (v)
            takes any action that harms the business interests, reputation or
            goodwill of the Company and/or its subsidiaries.

6.    Change in Control. In the event of a "Change of Control" (as defined in
      the Awards Plan) prior to the Committee's determination under Section
      3(a),

      (a)   Any unvested Restricted Shares shall be treated as provided in the
            Awards Plan, unless the Key Employee has previously forfeited such
            Restricted Shares; and

      (b)   Notwithstanding their treatment under the terms of the Awards Plan,
            the Company will immediately make payment in respect of the number
            of Performance Units multiplied by the Cash Delivery Percentage
            assuming performance at maximum levels for the entire period.

7.    Voting Rights; Dividends and Other Distributions.

      (a)   While the Restricted Shares are subject to restrictions under
            Section 1 and prior to any forfeiture thereof, the Key Employee may
            exercise full voting rights for the Restricted Shares registered in
            his name and held in escrow hereunder.

      (b)   A Key Employee shall have no voting rights with respect to the
            Performance Units.

      (c)   While the Restricted Shares are subject to the restrictions under
            Section 1 and prior to any forfeiture thereof, all dividends and
            other distributions paid with


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<PAGE>

            respect to the Restricted Shares shall be held in escrow pursuant to
            Section 2 and shall be subject to the same restrictions as the
            Restricted Shares with respect to which they were paid.

      (d)   There shall be no dividend right associated with the Performance
            Units.

      (e)   Subject to the provisions of this Agreement, the Key Employee shall
            have, with respect to the Restricted Shares, all other rights of
            holders of Common Stock.

8.    Tax Withholding; Repurchase.

      (a)   It shall be a condition of the obligation of the Company to issue or
            release from escrow Restricted Shares to the Key Employee or the
            Beneficiary, and the Key Employee agrees, that the Key Employee
            shall pay to the Company, upon its demand, such amount as may be
            requested by the Company for the purpose of satisfying its liability
            to withhold federal, state, or local income or other taxes incurred
            by reason of the award or as a result of the vesting hereunder or
            shall provide evidence satisfactory to the Company that the Company
            has no liability to withhold. The Company may withhold from cash
            payable in respect of Performance Units such amount as may be
            determined by the Company for the purpose of satisfying its
            liability to withhold federal, state, or local income or other taxes
            incurred by reason of such payment.

      (b)   At each time the Company is obligated to issue or release from
            escrow Restricted Shares to the Key Employee or the Beneficiary, the
            Key Employee or the Beneficiary, as the case may be, may elect to
            have the Company repurchase up to 40% of the Restricted Shares to be
            so issued or released at a price equal to the Fair Market Value (as
            defined below) on the Tax Date (as defined below). The election must
            be delivered to the Company within 30 days after the Tax Date. If
            the number of shares so determined shall include a fractional share,
            then the Company shall not be obligated to repurchase such
            fractional share. All elections shall be made in a form acceptable
            to the Company. As used herein, (i) "Tax Date" means the date on
            which the Key Employee must include in his gross income tax purposes
            the fair market value of the Restricted Shares and (ii) "Fair Market
            Value" means the per share closing price on the date in question in
            the principal market in which the Common Stock is then traded or, if
            no sales of Common Stock have taken place on such date, the closing
            price on the most recent date on which selling prices were quoted.

9.    Beneficiary.

      (a)   The person whose name appears on the signature page hereof after the
            caption "Beneficiary" or any successor that the Key Employee
            designates in accordance herewith (the person who is the Key
            Employee's Beneficiary at the time of his death herein referred to
            as the "Beneficiary") shall be entitled to receive the Restricted
            Shares that vest and the Performance Units that are earned following
            the death of the Key Employee. The Key Employee may from time to
            time


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<PAGE>

            revoke or change his Beneficiary without the consent of any prior
            Beneficiary by filing a new designation with the Committee. The last
            such designation that the Committee receives shall be controlling;
            provided, however, that no designation, or change or revocation
            thereof, shall be effective unless received by the Committee prior
            to the Key Employee's death, and in no event shall any designation
            be effective as of a date prior to such receipt.

      (b)   If no such Beneficiary designation is in effect at the time of the
            Key Employee's death, or if no designated Beneficiary survives the
            Key Employee or if such designation conflicts with law, then the Key
            Employee's estate shall be entitled to receive the Restricted Shares
            that vest and the Performance Units that are earned following the
            death of the Key Employee. If the Committee is in doubt as to the
            right of any person to receive such Restricted Shares and/or
            Performance Units, then the Company may retain such Restricted
            Shares and the cash payment associated with the Performance Units,
            without liability for any interest thereon, until the Committee
            determines the person entitled thereto, or the Company may deliver
            such Restricted Shares and the cash payment associated with the
            Performance Units to any court of appropriate jurisdiction, and such
            delivery shall be a complete discharge of the liability of the
            Company therefor.

10.   Adjustments in Event of Change in Stock. In the event of any
      reclassification, subdivision or combination of shares of Common Stock,
      merger or consolidation of the Company or sale by the Company of all or a
      portion of its assets, or other event which could, in the judgment of the
      Committee, distort the implementation of the Grant or the realization of
      its objectives, the Committee may make such adjustments in the Grant
      Number and the number of Restricted Shares under this Agreement, or in the
      terms, conditions or restrictions of this Agreement, as the Committee
      deems equitable; provided that in the absence of express action by the
      Committee, adjustments that apply generally to Restricted Shares granted
      under the Awards Plan shall apply automatically to the Restricted Shares
      under this Agreement.

11.   Powers of the Company Not Affected. The existence of the Grant shall not
      affect in any way the right or power of the Company or its stockholders to
      make or authorize any combination, subdivision or reclassification of the
      Common Stock or any reorganization, merger, consolidation, business
      combination, exchange of shares, or other change in the Company's capital
      structure or its business, or any issue of bonds, debentures or stock
      having rights or preferences equal, superior or affecting the Common Stock
      or the rights thereof, or dissolution or liquidation of the Company, or
      any sale or transfer of all or any part of its assets or business, or any
      other corporate act or proceeding, whether of a similar character or
      otherwise. Nothing in this Agreement shall confer upon the Key Employee
      any right to continue in the employment of the Company or interfere with
      or limit in any way the right of the Company to terminate the Key
      Employee's employment at any time.

12.   Certificate Legend. Each certificate for Restricted Shares shall bear the
      following legend:

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                  The sale or other transfer of the shares of stock represented
                  by this certificate, whether voluntary, or by operation of
                  law, is subject to certain restrictions set forth in the
                  Restricted Stock Award Agreement between Snap-on Incorporated
                  and the registered owner hereof. A copy of such Agreement may
                  be obtained from the Secretary of Snap-on Incorporated.

      When the restrictions imposed by Section 1 terminate, the Key Employee
      shall be entitled to have the foregoing legend removed from the
      certificates representing such Restricted Shares.

13.   Interpretation by Committee. The Key Employee agrees that any dispute or
      disagreement that may arise in connection with this Agreement shall be
      resolved by the Committee, in its sole discretion, and that any
      interpretation by the Committee of the terms of this Agreement or the
      Awards Plan and any determination made by the Committee under this
      Agreement or such plan may be made in the sole discretion of the Committee
      and shall be final, binding, and conclusive.

14.   Miscellaneous.

      (a)   This Agreement shall be governed and construed in accordance with
            the laws of the State of Wisconsin applicable to contracts made and
            to be performed therein between residents thereof.

      (b)   This Agreement may not be amended or modified except by the written
            consent of the parties hereto.

      (c)   The captions of this Agreement are inserted for convenience of
            reference only and shall not be taken into account in construing
            this Agreement.

      (d)   Any notice, filing or delivery hereunder or with respect to the
            Grant shall be given to the Key Employee at either his usual work
            location or his home address as indicated in the records of the
            Company, and shall be given to the Committee or the Company at 10801
            Corporate Drive, Kenosha, Wisconsin 53142, Attention: Secretary. All
            such notices shall be given by first class mail, postage pre-paid,
            or by personal delivery.

      (e)   This Agreement shall be binding upon and inure to the benefit of the
            Company and its successors and assigns and shall be binding upon and
            inure to the benefit of the Key Employee, the Beneficiary and the
            personal representative(s) and heirs of the Key Employee, except
            that the Key Employee may not transfer any interest in any
            Restricted Shares prior to the release of the restrictions imposed
            by Section 1.


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<PAGE>

      IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its duly authorized officer, and the Key Employee has hereunto affixed his
hand, all on the day and year set forth above.

                                          SNAP-ON INCORPORATED



                                          By:
                                             -----------------------------------
                                          Title:

                                          Key Employee:





                                          Beneficiary:
                                                      --------------------------

                                          Address of Beneficiary:






                                          Beneficiary Tax Identification

                                          No.
                                             -----------------------------------

                                          Share Delivery Percentage: ___________

                                          Cash Delivery Percentage: ____________



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<PAGE>
                                                                       Exhibit 2

1.    "RONAEBIT" for purposes of the vesting matrix means a fraction expressed
      as a percentage where (i) the numerator is earnings from continuing
      operations before income taxes (including net finance income) plus
      interest expense less other income (expense) - net (i.e., less other
      income plus other expense) plus Special Charges (as defined below) and
      (ii) the denominator is average net assets employed. "Net assets employed"
      means total assets minus cash and cash equivalents and minus all
      liabilities excluding short-term and long-term debt. "Average net assets
      employed" for a period means the average of net assets employed at the end
      of the immediately preceding fiscal period and at the end of each fiscal
      month during the period as reflected in the Company's final consolidated
      balance sheet for the month that is prepared as part of the financial
      statements used in the preparation of the Company's externally reported
      financial statements.

2.    RONAEBIT for purposes of the vesting matrix will be calculated based upon
      the amount described in (a)(i) for the period consisting of fiscal 2002
      and fiscal 2003 and average net assets employed for the same period.

3.    Revenue growth for purposes of the vesting matrix will be calculated by
      comparing the Company's consolidated net sales for fiscal 2003 with the
      net sales amounts set forth on the matrix.

4.    The amount of each component of a calculation will be determined by
      reference to the Company's audited financial statements for the year(s) in
      question or the notes thereto to the extent reflected therein and, if not
      reflected therein, by reference to the Company's unaudited financial
      statements or the notes thereto contained in the Company's periodic
      reports filed with the Securities and Exchange Commission to the extent
      reflected therein and, if not reflected therein, by reference to the
      Company's publicly disclosed earnings release for the relevant period and,
      if not reflected therein, by reference to the Company's final consolidated
      balance sheet for the month that is prepared as part of the financial
      statements used in the preparation of the Company's externally reported
      financial statements.

5.    There is graduated, proportionate vesting between points on the matrix.

6.    Except to the extent that considering any such charge would cause an award
      to fail to qualify for the performance-based exception under Section
      162(m) of the Internal Revenue Code and except to the extent that the
      committee of the Board that the Board has established to assist in the
      administration of the Awards Plan (the "Ad Hoc Committee") in its sole
      discretion determines that a charge or other expense that would otherwise
      qualify as a Special Charge shall not be considered a Special Charge,
      "Special Charges" consist of restructuring reserve charges, non-recurring
      charges and non-comparable charges. Restructuring reserve charges include
      those costs that can be accrued in accordance with GAAP at the time a
      restructuring plan is adopted. Non-recurring charges consist of
      restructuring related charges such as the write-off of inventory or
      transition costs that are incurred as a result of a restructuring plan and
      will benefit future operations, as well as non-restructuring related
      charges that are considered


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<PAGE>

      non-recurring in nature. Non-comparable charges consist of costs that do
      not qualify for restructuring reserve or non-recurring charge treatment
      but are considered one-time, unusual charges and are reflected as such in
      the Company's publicly disclosed earnings release for the relevant period.
      To the extent terms used above have meanings under U.S. GAAP, such
      meanings shall control.

7.    Except to the extent that doing so would cause an award to fail to qualify
      for the performance-based exception under Section 162(m) of the Internal
      Revenue Code, the threshold, target and maximum goals for revenue growth
      and RONAEBIT will be adjusted upward or downward as appropriate to
      eliminate the effects of acquisitions and divestitures subject to the
      following.

      (a)   There will be adjustments only where there is an acquisition or
            divestiture (or a combination of multiple acquisitions or
            divestitures) of a subsidiary, division or other business unit that
            had revenues during its last full fiscal year equal to 1% or more of
            the Company's budgeted consolidated net sales during the year the
            acquisition or divestiture occurs as reflected in the Company's
            overall final budget as of the commencement of the year as presented
            to the Company's Board of Directors at its January meeting (the
            "Final Budget").

      (b)   Adjustments to Revenue Goals. If an acquisition occurs in 2002, then
            the Ad Hoc Committee will adjust the net sales amounts set forth on
            the vesting matrix upward by an amount that is at least equal to the
            projected revenue for the acquired business in 2003 as reflected in
            the financial projections for the acquired business used as the
            basis for approval of the Company's acquisition purchase price
            decision by the Company's Board of Directors or the highest
            authority within the Company approving that decision (the "Pricing
            Projections"). If an acquisition occurs in 2003, then the Ad Hoc
            Committee will adjust the net sales amounts set forth on the vesting
            matrix upward by an amount that is at least equal to the projected
            revenue for the acquired business in 2003, as reflected in the
            Pricing Projections for the acquired business, multiplied by a
            fraction representing the portion of fiscal 2003 occurring after the
            acquisition. If a divestiture occurs in 2002, then the Ad Hoc
            Committee will adjust the net sales amounts set forth on the vesting
            matrix downward by an amount that is no greater than the budgeted
            revenue for the divested business in 2003 as reflected in the Final
            Budget as of the commencement of fiscal 2002. If a divestiture
            occurs in 2003, then the Ad Hoc Committee will adjust the net sales
            amounts set forth on the vesting matrix downward on a pro rata basis
            by an amount that is no greater than the budgeted revenue for the
            divested business in 2003, as reflected in the Final Budget as of
            the commencement of fiscal 2003, multiplied by a fraction
            representing the portion of fiscal 2003 occurring after the
            divestiture.

      (c)   Adjustments to RONAEBIT Goals. If there is an acquisition or
            divestiture, then the RONAEBIT percentages on the vesting matrix
            will be recalculated by dividing the adjusted EBIT by the adjusted
            net assets (on an annualized basis). The Company's unadjusted EBIT
            will be estimated as an amount equal to the


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            product obtained by multiplying the net assets as of the close of
            fiscal 2001 by the RONAEBIT percentage on the vesting matrix.

            For an acquisition, the Company's unadjusted EBIT will be adjusted
            upward by an amount determined by the Ad Hoc Committee that is at
            least equal to the projected EBIT for the acquired business for the
            remaining term of the fiscal 2002 through fiscal 2003 period (the
            "plan cycle"), as reflected in the Pricing Projections for the
            acquired business, divided by the total number of years in the plan
            cycle. For an acquisition, the Company's net assets as of the close
            of fiscal 2001 will be adjusted upward by an amount determined by
            the Ad Hoc Committee that is no greater than the projected average
            net assets of the acquired business for the remaining term of the
            plan cycle, as reflected in the Pricing Projections for the acquired
            business, multiplied by the number of months remaining in the plan
            cycle and divided by the total number of months in the plan cycle.

            For a divestiture, the Company's unadjusted EBIT will be adjusted
            downward by an amount determined by the Ad Hoc Committee that is no
            greater than the budgeted EBIT for the divested business for the
            year in which the divestiture occurs as reflected in the Final
            Budget as of the commencement of such year multiplied by the number
            of months remaining in the plan cycle divided by the total number of
            months in the plan cycle. For a divestiture, the Company's net
            assets as of the close of fiscal 2001 will be adjusted downward by
            an amount determined by the Ad Hoc Committee that is at least equal
            to the budgeted net assets for the divested business for the year in
            which the divestiture occurs as reflected in the Final Budget as of
            the commencement of such year multiplied by the number of months
            remaining in the plan cycle divided by the total number of months in
            the plan cycle.


                                       12
<PAGE>

                              SNAP-ON INCORPORATED

                 DEFERRED SHARE AND PERFORMANCE AWARD AGREEMENT

      THIS AGREEMENT ("Agreement") is made and entered into as of April 1, 2002
by and between SNAP-ON INCORPORATED, a Delaware corporation (the "Company"), and
_________, an employee of the Company or a subsidiary of the Company (the "Key
Employee").

                              W I T N E S S E T H :

      WHEREAS, the Organization and Executive Compensation Committee of the
Board of Directors of the Company (such committee, whether acting as such or
through the ad hoc committee of the Board to which such committee delegated its
authority in connection with this Agreement, the "Committee"), by actions of the
Committee on January 25, 2002 and March 12, 2002, approved the grant (the
"Grant") to the Key Employee of _____ (the "Grant Number") shares of the
Company's common stock ("Common Stock") and the opportunity to receive cash in
respect of performance units ("Performance Units") pursuant to the Company's
2001 Incentive Stock and Awards Plan (the "Awards Plan"), to be effective April
1, 2002;

      WHEREAS, in accordance with the terms of the Grant, the Key Employee
elected to defer receipt of the percentage set forth on the signature page
hereto of the Grant Number (the "Share Deferral Percentage") and the percentage
set forth on the signature page hereto of the cash that may be received in
respect of the Performance Units subject to the Grant (the "Cash Deferral
Percentage") by executing an Election to Defer Compensation (the "Deferral
Election") prior to the Grant's effective date, which the Company countersigned
prior to such date;

      WHEREAS, the Deferral Election provides that the Grant will also be
subject to the terms of a "Deferred Award Agreement," the form of which is to be
determined by the Company, and this Agreement is intended to serve as the
additional agreement that the Deferral Election contemplated; and

      WHEREAS, the Company has in effect the Snap-on Incorporated Deferred
Compensation Plan, as amended (the "Deferral Plan").

      NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements herein set forth, the parties hereby mutually covenant and agree as
follows:

1.    Share Units. Subject to the terms and conditions set forth herein,

      (a)   As of April 1, 2002, the Company shall establish and maintain
            bookkeeping accounts for the Key Employee relating to the Grant
            under the Deferral Plan consisting of a "Cash Account" and a "Share
            Account."

      (b)   As of April 1, 2002, there shall be credited to the Share Account a
            number of Share Units (as defined in the Deferral Plan) equal to the
            product of the Grant Number multiplied by the Share Deferral
            Percentage. From and after the time of


                                       13
<PAGE>

            such credit, the Key Employee shall have the rights afforded under
            the Deferral Plan in respect of Share Units so credited, except that
            such Share Units shall be subject to vesting and forfeiture as set
            forth below.

2.    Vesting and Forfeiture Based on Performance. Subject to the terms and
      conditions set forth herein,

      (a)   Vesting of the Share Units and payment in respect of Performance
            Units is dependent upon performance relative to revenue growth and
            RONAEBIT goals during fiscal 2002 and fiscal 2003. The threshold,
            target and maximum goals for revenue growth and RONAEBIT during
            fiscal 2002 and fiscal 2003 are as shown on Exhibit 1, and the Share
            Units will vest, and the Performance Units will be earned, in
            accordance with the vesting matrix attached hereto as Exhibit 1
            based on actual performance of the Company relative to the goals
            subject to the terms attached hereto as Exhibit 2. As soon as
            practicable after the Company's audited financial statements for
            fiscal 2002 and fiscal 2003 are available to the Committee, the
            Committee shall calculate the Company's revenue growth and RONAEBIT
            data for such years in accordance with the terms attached hereto as
            Exhibit 2. The Committee shall then plot the revenue growth and
            RONAEBIT data on the vesting matrix. The resulting position on the
            matrix shall determine the percentage of the Share Units that will
            vest and the number of Performance Units that the Key Employee will
            earn as set forth below. In the course of calculating the Company's
            revenue growth and RONAEBIT data and plotting the revenue growth and
            RONAEBIT data on the vesting matrix, the Committee shall have the
            discretion to take action in light of the effects of Special Charges
            (as defined on Exhibit 1) that reduces the resulting percentage in
            such manner and to such extent as the Committee determines in its
            sole discretion. However, the Committee shall have no discretion to
            take into account the effects of Special Charges in a manner that
            increases the resulting percentage. The Company shall promptly
            communicate this information to the Key Employee.

      (b)   Unless the Key Employee has previously forfeited such Share Units,
            if the position on the matrix reflects a percentage greater than
            zero and less than or equal to 100%, then the number of Share Units
            that shall vest shall be equal to the product of such percentage,
            the Grant Number and the Share Deferral Percentage, and if the
            position on the matrix reflects a percentage greater than 100%, then
            the number of Share Units that shall vest shall be equal to the
            product of the Grant Number and the Share Deferral Percentage. Upon
            the Committee's determination as provided above, the Key Employee
            will forfeit Share Units in an amount equal to that portion of the
            product of the Grant Number and the Share Deferral Percentage that
            does not vest.

      (c)   Unless the Key Employee has previously forfeited the right to earn
            Performance Units, if the position on the matrix reflects a
            percentage greater than 100%, then the Key Employee will receive a
            credit to the Cash Account, pursuant to Section 6.1(a) of the
            Deferral Plan, in respect of a number of Performance Units equal to
            the product of the percentage in excess of 100%, but not greater
            than 50%,


                                       14
<PAGE>

            multiplied by the Grant Number and multiplied by the Cash Deferral
            Percentage. The amount of the credit to the Cash Account for each
            Performance Unit will be the fair market value of a share of the
            Company's common stock on March 12, 2002.

3.    Forfeiture Based on Employment Status. Subject to the terms and conditions
      set forth herein,

      (a)   In addition to any rights of the Company under Section 9, the Key
            Employee will forfeit any Share Units or any rights associated with
            the Performance Units as to which the Committee has not made its
            vesting determination under Section 2 and not otherwise vested under
            Section 11 if the Key Employee's employment with the Company or its
            subsidiaries is terminated for any reason prior to such
            determination unless in the case of termination by the Company or a
            subsidiary the Committee determines, on such terms and conditions,
            if any, as the Committee may impose, that there may nonetheless be
            vesting of all or a portion of the award at the time of such
            determination or at any other time. Absence of the Key Employee on
            leave approved by a duly elected officer of the Company, other than
            the Key Employee, shall not be considered a termination of
            employment during the period of such leave.

      (b)   Notwithstanding the foregoing, in the case of termination of
            employment as a result of death, Disability (as defined below) or
            Retirement (as defined below), the Share Deferral Percentage of the
            Grant will vest, and the Key Employee's entitlement to receive a
            credit to the Cash Account in respect of Performance Units will be
            determined, based upon the Company's actual performance relative to
            the revenue growth and RONAEBIT goals over the full performance
            period, but in lieu of the amounts under Section 2(b) and (c), the
            respective amounts, if any, determined under those subsections shall
            be reduced by multiplying such amounts by a fraction representing
            the portion of the two-year period that elapsed before the
            termination of the Key Employee's employment.

      (c)   Whether or not a divestiture of a subsidiary, division or other
            business unit (including through the formation of a joint venture)
            results in termination of employment with the Company and its
            subsidiaries will be at the discretion of the Committee, which
            discretion the Committee may exercise on a case by case basis.

      (d)   As used herein,

            (i)   "Disability" means a medically-determinable physical or mental
                  condition that is expected to be permanent and that results in
                  the Key Employee being unable to perform one or more of the
                  essential duties of the Key Employee's occupation or a
                  reasonable alternative offered by the Company or its
                  subsidiaries, all as determined by the Committee or any
                  successor to such committee that administers the Awards Plan
                  (as the same may be amended).



                                       15
<PAGE>

            (ii)  "Retirement" means termination of employment from the Company
                  and its subsidiaries on or after satisfying the early or
                  normal retirement age and service conditions specified in the
                  retirement policy or retirement plan of the Company or one of
                  its subsidiaries applicable to such Key Employee as in effect
                  at the time of such termination.

4.    Dividends. Dividends on the Common Stock will result in a credit to the
      Cash Account pursuant to Section 6.4 of the Deferral Plan. However, the
      Key Employee will forfeit such credit and any related Growth Increments
      (as defined in the Deferral Plan) upon any forfeiture of the related Share
      Units.

5.    No Conversion. While Section 6.5 of the Deferral Plan would otherwise
      allow the Key Employee to convert Share Units into a cash amount to be
      credited to the Cash Account, the Key Employee shall not have any right
      under Section 6.5 of the Deferral Plan to convert all or a portion of any
      unvested Share Units into an amount to be credited to the Cash Account.
      Further, while Section 6.3(a) of the Deferral Plan would otherwise allow
      the Key Employee to convert all or a portion of any amount credited to the
      Cash Account into an amount to be credited to the Share Account, the Key
      Employee shall not have any right under Section 6.3(a) of the Deferral
      Plan to convert all or a portion of any amount credited to the Cash
      Account in respect of unvested Share Units into an amount to be credited
      to the Share Account.

6.    Deferral Period. The deferral period with respect to the Grant for
      purposes of Section 4.2 of the Deferral Plan shall extend until the
      payment commencement date set forth in the Deferral Election.

7.    Manner of Payment. Deferred amounts shall be paid in a lump sum or in
      installments in accordance with the Deferral Election.

8.    Changes in Deferral Period and Manner of Payment. The Key Employee may
      change the manner in which the deferred amount will be paid and/or delay
      the date such payments are to commence by written election made in
      accordance with the Deferral Plan.

9.    Detrimental Activity.

      (a)   Activity During Employment. If, prior to termination of the Key
            Employee's employment with the Company or during the one-year period
            following termination of the Key Employee's employment with the
            Company, the Company becomes aware that, prior to termination, the
            Key Employee had engaged in detrimental activity, then the Committee
            in its sole discretion, for purposes of this Agreement, may
            characterize or recharacterize termination of the Key Employee's
            employment as a termination to which this Section 9 applies and may
            determine or redetermine the date of such termination, and the Key
            Employee's rights with respect to the Grant shall be determined in
            accordance with the Committee's determination.

      (b)   Activity Following Termination. If, within the three-month period
            following the Key Employee's termination of employment with the
            Company, the Company


                                       16
<PAGE>

            becomes aware that the Key Employee has engaged in detrimental
            activity subsequent to termination, then the Key Employee's rights
            with respect to the Grant shall be determined in accordance with any
            determination by the Committee under this Section 9.

      (c)   Remedies. If the Key Employee has engaged in detrimental activity as
            described in subsections (a) and (b), then the Committee may, in its
            discretion, cancel any (or all) amounts credited to the Key
            Employee's Share Account and/or Cash Account in respect of the Grant
            and/or cause the Key Employee to return any cash or property
            actually realized by the Key Employee (directly or indirectly) in
            respect of the Grant, in each case whether or not the Committee has
            made a vesting determination under Section 2 in respect thereof
            before or after the date the Key Employee engaged in the detrimental
            activity or before or after the date of termination as determined or
            redetermined under subsection (a).

      (d)   Allegations of Activity. If an allegation of detrimental activity by
            the Key Employee is made to the Committee, then the Committee may
            suspend the Key Employee's rights in respect of the Grant to permit
            the investigation of such allegation.

      (e)   Definition of "Detrimental Activity." For purposes of this
            Agreement, "detrimental activity" means activity that is determined
            by the Committee in its sole discretion to be detrimental to the
            interests of the Company or any of its subsidiaries, including but
            not limited to situations where the Key Employee (i) divulges trade
            secrets of the Company, proprietary data or other confidential
            information relating to the Company or to the business of the
            Company or any subsidiaries, (ii) enters into employment with a
            competitor under circumstances suggesting that the Key Employee will
            be using unique or special knowledge gained as an employee of the
            Company to compete with the Company, (iii) uses information obtained
            during the course of his prior employment with the Company for his
            own purposes, such as for the solicitation of business and
            competition with the Company, (iv) is determined to have engaged
            (whether or not prior to termination due to retirement) in either
            gross misconduct or criminal activity harmful to the Company, or (v)
            takes any action that harms the business interests, reputation or
            goodwill of the Company and/or its subsidiaries.

10.   Beneficiary. The person whose name appears on the signature page hereof
      after the caption "Beneficiary," if any, shall be the beneficiary of the
      Key Employee designated pursuant to Section 8 of the Deferral Plan.

11.   Change in Control. In the event of a "Change of Control" (as defined in
      the Awards Plan) prior to the Committee's determination under Section
      2(a),

      (a)   Any unvested Share Units shall immediately vest in full, unless the
            Key Employee has previously forfeited such Share Units; and



                                       17
<PAGE>

      (b)   Notwithstanding their treatment under the terms of the Awards Plan,
            the Company will immediately make a credit to the Cash Account in
            respect of a number of Performance Units multiplied by the Cash
            Deferral Percentage assuming performance at maximum levels for the
            entire period unless the Key Employee has previously forfeited the
            right to earn Performance Units.

      In each case, the Key Employee shall be entitled to payments in respect of
      such amounts in accordance with Section 17.2 of the Deferral Plan.

12.   Voting Rights. Until such time, if any, as certificates representing
      shares of Common Stock are delivered to the Key Employee in accordance
      with the Deferral Plan, the Key Employee shall have no voting rights in
      respect of the Share Units.

13.   Tax Withholding. The Company and the Key Employee shall have rights with
      respect to tax withholding as set forth in Section 14 of the Deferral
      Plan. Without limitation, the Company shall be entitled to withhold any
      taxes due and payable in accordance with Section 3121(v) of the Internal
      Revenue Code from any payments due to the Key Employee.

14.   Adjustments in Event of Change in Common Stock. In the event of any
      reclassification, subdivision or combination of shares of Common Stock,
      merger or consolidation of the Company or sale by the Company of all or a
      portion of its assets, or other event which could, in the judgment of the
      Committee, distort the implementation of the Grant or the realization of
      its objectives, the Committee may make such adjustments in the Grant
      Number and the number of Share Units under this Agreement, or in the
      terms, conditions or restrictions of this Agreement, as the Committee
      deems equitable; provided that in the absence of express action by the
      Committee, adjustments that apply generally to Share Units credited under
      the Deferral Plan shall apply automatically to the number of Share Units
      under this Agreement.

15.   Powers of the Company Not Affected. The existence of the Grant shall not
      affect in any way the right or power of the Company or its stockholders to
      make or authorize any combination, subdivision or reclassification of the
      Common Stock or any reorganization, merger, consolidation, business
      combination, exchange of shares, or other change in the Company's capital
      structure or its business, or any issue of bonds, debentures or stock
      having rights or preferences equal, superior or affecting the Common Stock
      or the rights thereof, or dissolution or liquidation of the Company, or
      any sale or transfer of all or any part of its assets or business, or any
      other corporate act or proceeding, whether of a similar character or
      otherwise. Nothing in this Agreement shall confer upon the Key Employee
      any right to continue in the employment of the Company or interfere with
      or limit in any way the right of the Company to terminate the Key
      Employee's employment at any time.

16.   Interpretation by Committee. The Key Employee agrees that any dispute or
      disagreement that may arise in connection with this Agreement shall be
      resolved by the Committee, in its sole discretion, and that any
      interpretation by the Committee of the terms of this Agreement, the Awards
      Plan or the Deferral Plan and any determination made by the


                                       18
<PAGE>

      Committee under this Agreement or such plans may be made in the sole
      discretion of the Committee and shall be final, binding, and conclusive.

17.   Miscellaneous.

      (a)   This Agreement shall be governed and construed in accordance with
            the laws of the State of Wisconsin applicable to contracts made and
            to be performed therein between residents thereof.

      (b)   This Agreement may not be amended or modified except by the written
            consent of the parties hereto.

      (c)   The captions of this Agreement are inserted for convenience of
            reference only and shall not be taken into account in construing
            this Agreement.

      (d)   Any notice, filing or delivery hereunder or with respect to the
            Grant shall be given to the Key Employee at either his usual work
            location or his home address as indicated in the records of the
            Company, and shall be given to the Committee or the Company at 10801
            Corporate Drive, Kenosha, Wisconsin 53142, Attention: Secretary. All
            such notices shall be given by first class mail, postage pre-paid,
            or by personal delivery.

      (e)   This Agreement shall be binding upon and inure to the benefit of the
            Company and its successors and assigns and shall be binding upon and
            inure to the benefit of the Key Employee, his beneficiary and the
            personal representative(s) and heirs of the Key Employee.

18.   Deferral Matters.

      (a)   The Key Employee understands that (i) as a result of this Agreement,
            no restricted stock, cash or other property will be deliverable to
            the Key Employee in respect of the Share Deferral Percentage of the
            Grant Number or the Cash Deferral Percentage of the cash that may be
            received in respect of the Performance Units subject to the Grant
            until the date identified pursuant to Section 6, and (ii) all
            amounts deferred pursuant to this Agreement shall be reflected in an
            unfunded account established for the Key Employee by the Company,
            payment of the Company's obligation will be from general funds, and
            no special assets (stock, cash or otherwise) have been or will be
            set aside as security for this obligation.

      (b)   The Key Employee understands and agrees that the Key Employee's
            rights to payments hereunder are not subject in any manner to
            anticipation, alienation, sale, transfer, assignment, pledge,
            encumbrance, or garnishment by the Key Employee's creditors or the
            creditors of his beneficiaries, whether by operation of law or
            otherwise, and any attempted sale, transfer, assignment, pledge, or
            encumbrance with respect to such payment shall be null and void, and
            shall be without legal effect and shall not be recognized by the
            Company.


                                       19
<PAGE>

      (c)   The Key Employee understands and agrees that his right to receive
            payments hereunder is that of a general, unsecured creditor of the
            Company, and that this Agreement constitutes a mere promise by the
            Company to pay such benefits in the future. Further, it is the
            intention of the parties hereto that the arrangements hereunder be
            unfunded for tax purposes and for purposes of Title I of ERISA.

      (d)   The Key Employee acknowledges that there will be no matching credit
            under Section 5 of the Deferral Plan in respect of compensation
            deferred under this Agreement.


                                       20
<PAGE>

      IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its duly authorized officer, and the Key Employee has hereunto affixed his
hand, all on the day and year set forth above.

                                          SNAP-ON INCORPORATED


                                          By:
                                             -----------------------------------
                                          Title:

                                          Key Employee:





                                          Beneficiary:
                                                      --------------------------

                                          Address of Beneficiary:





                                          Beneficiary Tax Identification

                                          No.
                                             -----------------------------------

                                          Share Deferral Percentage: ___________

                                          Cash Deferral Percentage: ____________



                                       21
<PAGE>
                                                                       Exhibit 2

1.    "RONAEBIT" for purposes of the vesting matrix means a fraction expressed
      as a percentage where (i) the numerator is earnings from continuing
      operations before income taxes (including net finance income) plus
      interest expense less other income (expense) - net (i.e., less other
      income plus other expense) plus Special Charges (as defined below) and
      (ii) the denominator is average net assets employed. "Net assets employed"
      means total assets minus cash and cash equivalents and minus all
      liabilities excluding short-term and long-term debt. "Average net assets
      employed" for a period means the average of net assets employed at the end
      of the immediately preceding fiscal period and at the end of each fiscal
      month during the period as reflected in the Company's final consolidated
      balance sheet for the month that is prepared as part of the financial
      statements used in the preparation of the Company's externally reported
      financial statements.

2.    RONAEBIT for purposes of the vesting matrix will be calculated based upon
      the amount described in (a)(i) for the period consisting of fiscal 2002
      and fiscal 2003 and average net assets employed for the same period.

3.    Revenue growth for purposes of the vesting matrix will be calculated by
      comparing the Company's consolidated net sales for fiscal 2003 with the
      net sales amounts set forth on the matrix.

4.    The amount of each component of a calculation will be determined by
      reference to the Company's audited financial statements for the year(s) in
      question or the notes thereto to the extent reflected therein and, if not
      reflected therein, by reference to the Company's unaudited financial
      statements or the notes thereto contained in the Company's periodic
      reports filed with the Securities and Exchange Commission to the extent
      reflected therein and, if not reflected therein, by reference to the
      Company's publicly disclosed earnings release for the relevant period and,
      if not reflected therein, by reference to the Company's final consolidated
      balance sheet for the month that is prepared as part of the financial
      statements used in the preparation of the Company's externally reported
      financial statements.

5.    There is graduated, proportionate vesting between points on the matrix.

6.    Except to the extent that considering any such charge would cause an award
      to fail to qualify for the performance-based exception under Section
      162(m) of the Internal Revenue Code and except to the extent that the
      committee of the Board that the Board has established to assist in the
      administration of the Awards Plan (the "Ad Hoc Committee") in its sole
      discretion determines that a charge or other expense that would otherwise
      qualify as a Special Charge shall not be considered a Special Charge,
      "Special Charges" consist of restructuring reserve charges, non-recurring
      charges and non-comparable charges. Restructuring reserve charges include
      those costs that can be accrued in accordance with GAAP at the time a
      restructuring plan is adopted. Non-recurring charges consist of
      restructuring related charges such as the write-off of inventory or
      transition costs that are incurred as a result of a restructuring plan and
      will benefit future operations, as well as non-restructuring related
      charges that are considered


                                       22
<PAGE>

      non-recurring in nature. Non-comparable charges consist of costs that do
      not qualify for restructuring reserve or non-recurring charge treatment
      but are considered one-time, unusual charges and are reflected as such in
      the Company's publicly disclosed earnings release for the relevant period.
      To the extent terms used above have meanings under U.S. GAAP, such
      meanings shall control.

7.    Except to the extent that doing so would cause an award to fail to qualify
      for the performance-based exception under Section 162(m) of the Internal
      Revenue Code, the threshold, target and maximum goals for revenue growth
      and RONAEBIT will be adjusted upward or downward as appropriate to
      eliminate the effects of acquisitions and divestitures subject to the
      following.

      (a)   There will be adjustments only where there is an acquisition or
            divestiture (or a combination of multiple acquisitions or
            divestitures) of a subsidiary, division or other business unit that
            had revenues during its last full fiscal year equal to 1% or more of
            the Company's budgeted consolidated net sales during the year the
            acquisition or divestiture occurs as reflected in the Company's
            overall final budget as of the commencement of the year as presented
            to the Company's Board of Directors at its January meeting (the
            "Final Budget").

      (b)   Adjustments to Revenue Goals. If an acquisition occurs in 2002, then
            the Ad Hoc Committee will adjust the net sales amounts set forth on
            the vesting matrix upward by an amount that is at least equal to the
            projected revenue for the acquired business in 2003 as reflected in
            the financial projections for the acquired business used as the
            basis for approval of the Company's acquisition purchase price
            decision by the Company's Board of Directors or the highest
            authority within the Company approving that decision (the "Pricing
            Projections"). If an acquisition occurs in 2003, then the Ad Hoc
            Committee will adjust the net sales amounts set forth on the vesting
            matrix upward by an amount that is at least equal to the projected
            revenue for the acquired business in 2003, as reflected in the
            Pricing Projections for the acquired business, multiplied by a
            fraction representing the portion of fiscal 2003 occurring after the
            acquisition. If a divestiture occurs in 2002, then the Ad Hoc
            Committee will adjust the net sales amounts set forth on the vesting
            matrix downward by an amount that is no greater than the budgeted
            revenue for the divested business in 2003 as reflected in the Final
            Budget as of the commencement of fiscal 2002. If a divestiture
            occurs in 2003, then the Ad Hoc Committee will adjust the net sales
            amounts set forth on the vesting matrix downward on a pro rata basis
            by an amount that is no greater than the budgeted revenue for the
            divested business in 2003, as reflected in the Final Budget as of
            the commencement of fiscal 2003, multiplied by a fraction
            representing the portion of fiscal 2003 occurring after the
            divestiture.

      (c)   Adjustments to RONAEBIT Goals. If there is an acquisition or
            divestiture, then the RONAEBIT percentages on the vesting matrix
            will be recalculated by dividing the adjusted EBIT by the adjusted
            net assets (on an annualized basis). The Company's unadjusted EBIT
            will be estimated as an amount equal to the


                                       23
<PAGE>

            product obtained by multiplying the net assets as of the close of
            fiscal 2001 by the RONAEBIT percentage on the vesting matrix.

                  For an acquisition, the Company's unadjusted EBIT will be
                  adjusted upward by an amount determined by the Ad Hoc
                  Committee that is at least equal to the projected EBIT for the
                  acquired business for the remaining term of the fiscal 2002
                  through fiscal 2003 period (the "plan cycle"), as reflected in
                  the Pricing Projections for the acquired business, divided by
                  the total number of years in the plan cycle. For an
                  acquisition, the Company's net assets as of the close of
                  fiscal 2001 will be adjusted upward by an amount determined by
                  the Ad Hoc Committee that is no greater than the projected
                  average net assets of the acquired business for the remaining
                  term of the plan cycle, as reflected in the Pricing
                  Projections for the acquired business, multiplied by the
                  number of months remaining in the plan cycle and divided by
                  the total number of months in the plan cycle.

                  For a divestiture, the Company's unadjusted EBIT will be
                  adjusted downward by an amount determined by the Ad Hoc
                  Committee that is no greater than the budgeted EBIT for the
                  divested business for the year in which the divestiture occurs
                  as reflected in the Final Budget as of the commencement of
                  such year multiplied by the number of months remaining in the
                  plan cycle divided by the total number of months in the plan
                  cycle. For a divestiture, the Company's net assets as of the
                  close of fiscal 2001 will be adjusted downward by an amount
                  determined by the Ad Hoc Committee that is at least equal to
                  the budgeted net assets for the divested business for the year
                  in which the divestiture occurs as reflected in the Final
                  Budget as of the commencement of such year multiplied by the
                  number of months remaining in the plan cycle divided by the
                  total number of months in the plan cycle.




                                       24

</TEXT>
</DOCUMENT>
