UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

X    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For quarterly period ended September 27, 2003

Commission File Number 1-7724

Snap-on Incorporated
(Exact name of registrant as specified in its charter)

Delaware                                    39-0622040
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

10801 Corporate Drive, Pleasant Prairie, Wisconsin                  53158-1603
(Address of principal executive offices)                       (zip code)

Registrant's telephone number, including area code: (262) 656-5200

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ X ] No [ ]

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date:

Class                               Outstanding at October 25, 2003
--------------------------                    -------------------------------
Common stock, $1 par value                            58,264,700 shares

SNAP-ON INCORPORATED

INDEX

Page
----
Part I.   Financial Information

Consolidated Statements of Earnings -
Three and Nine Months Ended
September 27, 2003, and September 28, 2002                      3

Consolidated Balance Sheets -
September 27, 2003, and December 28, 2002                       4-5

Consolidated Statements of Cash Flows -
Nine Months Ended
September 27, 2003, and September 28, 2002                      6

Notes to Consolidated Financial Statements                      7-21

Management's Discussion and Analysis of
Financial Condition and Results of Operations                   22-36

Quantitative and Qualitative Disclosures
About Market Risk                                               37-38

Controls and Procedures                                         38

Part II.  Other Information                                                39-40

2

PART I. FINANCIAL INFORMATION

Item 1: Financial Statements

SNAP-ON INCORPORATED
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in millions, except per share data)
(Unaudited)

Three Months Ended                     Nine Months Ended    
-------------------------------     ------------------------------
September 27,      September 28,    September 27,     September 28,
2003               2002             2003              2002    
----               ----             ----              ----

Net sales                                                     $   525.6          $   502.4        $ 1,633.9        $ 1,559.6

Cost of goods sold                                               (303.8)            (274.6)          (920.6)          (844.7)
---------          ---------        ---------        ---------
Gross profit                                                      221.8              227.8            713.3            714.9

Operating expenses                                               (200.7)            (198.8)          (630.2)          (604.3)
Net finance income                                                 10.0               10.3             31.7             26.4
---------          ---------        ---------        ---------
Operating earnings                                                 31.1               39.3            114.8            137.0

Interest expense                                                   (5.8)              (6.9)           (18.2)           (22.2)
Other income (expense) - net                                       (2.4)              (2.3)            (6.5)            (5.3)
---------          ---------        ---------        ---------
Earnings before income taxes                                       22.9               30.1             90.1            109.5

Income taxes                                                       (5.2)             (10.9)           (28.7)           (39.4)
---------          ---------        ---------        ---------
Earnings before cumulative effect of a change in
accounting principle                                             17.7               19.2             61.4             70.1
Cumulative effect of a change in accounting
principle, net of tax                                               -                  -                -              2.8
---------          ---------        ---------        ---------
Net earnings                                                  $    17.7          $    19.2        $    61.4        $    72.9
=========          =========        =========        =========
Net earnings per share - basic and diluted:
Earnings before cumulative effect of a change in
accounting principle                                        $     .30          $     .33        $    1.05        $    1.20
Cumulative effect of a change in accounting
principle, net of tax                                               -                  -                -              .05
---------          ---------        ---------        ---------
Net earnings per share                                        $     .30          $     .33        $    1.05        $    1.25
=========          =========        =========        =========
Weighted-average shares outstanding:
Basic                                                            58.3               58.4             58.2             58.2
Effect of dilutive options                                         .1                 .3               .2               .3
---------          ---------        ---------        ---------
Diluted                                                          58.4               58.7             58.4             58.5
=========          =========        =========        =========

Dividends declared per common share                           $       -         $        -        $     .75        $     .72
=========          =========        =========        =========

See Notes to Consolidated Financial Statements.

3

SNAP-ON INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Amounts in millions, except share data)

September 27,        December 28,
2003                2002
-------------        ------------
(unaudited)

ASSETS
Current Assets
Cash and cash equivalents                                $   85.4              $   18.4
Accounts receivable - net of allowances                     561.2                 556.2
Inventories
Finished goods                                           316.8                 337.5
Work in process                                           47.0                  42.0
Raw materials                                             90.9                  86.2
Excess of current cost over LIFO cost                    (89.5)                (95.8)
--------              --------
Total inventory                                      365.2                 369.9
Prepaid expenses and other assets                           119.1                 106.5
--------              --------
Total current assets                               1,130.9               1,051.0

Property and equipment
Land                                                         25.6                  23.8
Buildings and improvements                                  216.3                 202.9
Machinery and equipment                                     570.8                 541.8
--------              --------
812.7                 768.5
Accumulated depreciation                                   (487.2)               (438.3)
--------              --------
Property and equipment - net                         325.5                 330.2

Deferred income tax benefits                                    61.5                  60.9
Goodwill                                                       397.5                 366.4
Other intangibles - net                                         68.6                  65.7
Other assets                                                   123.9                 119.9
--------              --------

Total assets                                      $2,107.9              $1,994.1
========              ========

See Notes to Consolidated Financial Statements.

4

SNAP-ON INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Amounts in millions, except share data)

September 27,        December 28,
2003                2002
-------------        ------------
(unaudited)

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable                                          $  175.4              $  170.9
Notes payable and current maturities of long-term debt        31.8                  56.4

Accrued benefits                                              44.1                  40.1
Accrued compensation                                          43.3                  44.4
Dealer deposits                                               48.4                  46.1
Deferred subscription revenue                                 31.8                  42.5
Income taxes                                                  35.9                  29.8
Other accrued liabilities                                    147.8                 122.2
--------             ---------
Total current liabilities                                 558.5                 552.4

Long-term debt                                                  303.9                 304.3
Deferred income taxes                                            35.4                  33.6
Retiree health care benefits                                     98.4                  94.0
Pension liability                                               139.6                 136.6
Other long-term liabilities                                      44.0                  42.8
--------             ---------
Total liabilities                                       1,179.8               1,163.7
--------             ---------

SHAREHOLDERS' EQUITY
Preferred stock - authorized 15,000,000 shares
of $1 par value; none outstanding                                -                     -
Common stock - authorized 250,000,000 shares
of $1 par value; issued 66,942,777 and 66,897,506 shares       66.9                  66.9
Additional paid-in capital                                       72.0                  72.9
Retained earnings                                             1,081.9               1,064.2
Accumulated other comprehensive income (loss)                   (43.6)               (123.8)
Grantor stock trust at fair market value - 5,075,680
and 5,321,977 shares                                         (138.8)               (147.5)
Treasury stock at cost - 3,624,764 and 3,326,462 shares        (110.3)               (102.3)
--------             ---------
Total shareholders' equity                                928.1                 830.4
--------             ---------

Total liabilities and shareholders' equity             $2,107.9              $1,994.1
========             =========

See Notes to Consolidated Financial Statements.

5

SNAP-ON INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in millions)
(Unaudited)

Nine Months Ended
-----------------------------------
September 27,         September 28,
2003                  2002
-------------         -------------

OPERATING ACTIVITIES
Net earnings                                                                     $  61.4               $  72.9
Adjustments to reconcile net earnings to net cash
provided (used) by operating activities:
Cumulative effect of a change in accounting principle
(net of tax) for goodwill                                                         -                  (2.8)
Depreciation                                                                     41.9                  37.8
Amortization of intangibles                                                       1.6                   1.3
Deferred income tax provision (benefit)                                          (5.2)                 26.3
Gain on sale of assets                                                              -                   (.5)
Loss (gain) on mark to market for cash flow hedges                                 .8                  (1.6)
Changes in operating assets and liabilities, net of effects of acquisitions:
(Increase) decrease in receivables                                               27.7                  40.6
(Increase) decrease in inventories                                               29.5                 (19.0)
(Increase) decrease in prepaid and other assets                                 (23.0)                 (9.6)
Increase (decrease) in accounts payable                                          (2.9)                 40.4
Increase (decrease) in accruals and other liabilities                             8.2                 (60.0)
-------               -------
Net cash provided by operating activities                                          140.0                 125.8

INVESTING ACTIVITIES
Capital expenditures                                                               (18.7)                (37.3)
Acquisitions of businesses - net of cash acquired                                     .1                   (.8)
Disposal of property and equipment                                                   4.0                   6.8
-------               -------
Net cash used in investing activities                                              (14.6)                (31.3)

FINANCING ACTIVITIES
Payment of long-term debt                                                            (.2)                 (3.1)
Increase in long-term debt                                                             -                   4.3
Net decrease in short-term borrowings                                              (22.8)                (65.3)
Purchase of treasury stock                                                          (8.1)                 (6.4)
Proceeds from stock purchase and option plans                                        7.8                  17.2
Proceeds from termination of interest rate swap agreement                            5.1                    -
Cash dividends paid                                                                (43.6)                (41.8)
-------               -------
Net cash used in financing activities                                              (61.8)                (95.1)

Effect of exchange rate changes on cash                                                  3.4                    .8
-------               -------

Increase in cash and cash equivalents                                                   67.0                    .2

Cash and cash equivalents at beginning of period                                        18.4                   6.7
-------               -------
Cash and cash equivalents at end of period                                           $  85.4               $   6.9
=======               =======
Supplemental cash flow disclosures:
Cash paid for interest                                                           $  19.3               $  24.2
Cash paid (refunded) for income taxes                                            $  13.3               $  (2.4)

See Notes to Consolidated Financial Statements.

6

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   This report should be read in conjunction with the consolidated financial
statements and related notes included in Snap-on Incorporated's ("Snap-on"
or "the company") Annual Report on Form 10-K for the year ended December
28, 2002.

In the opinion of management, all adjustments (consisting only of normal
recurring adjustments and adjustments related to restructuring and other
non-recurring charges) necessary to a fair statement of financial condition
and results of operations for the three and nine months ended September 27,
2003, have been made. Management also believes that the results of
operations for the three and nine months ended September 27, 2003, are not
necessarily indicative of the results to be expected for the full year.
Certain prior-year amounts have been reclassified to conform to the
current-year presentation.

2.   In May 2003, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 150, "Accounting
for Certain Financial Instruments with Characteristics of both Liabilities
and Equity," which requires issuers to classify as liabilities certain
classes of freestanding financial instruments (instruments that are entered
into separately from other instruments or transactions or are legally
detachable and separately exercisable) that represent obligations of the
issuer. SFAS No. 150 is effective for all public company freestanding
financial instruments entered into or modified after May 31, 2003. The
adoption of SFAS No. 150, which became effective for Snap-on on June 29,
2003, the beginning of its fiscal 2003 third quarter, did not have a
material impact on the company's consolidated financial statements.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement No.
133 on Derivative Instruments and Hedging Activities," which became
effective for Snap-on on June 29, 2003, the beginning of its fiscal 2003
third quarter. SFAS No. 149 clarifies accounting for certain derivative
instruments, including certain derivative instruments embedded in other
contracts and hedging activities under SFAS No. 133. The adoption of SFAS
No. 149 did not have a material impact on the company's consolidated
financial statements. See Note 9 for additional information on Snap-on's
derivative and hedging financial instruments.

The FASB issued Interpretation ("FIN") No. 46, "Consolidation of Variable
Interest Entities" (an interpretation of Accounting Research Bulletin No.
51, "Consolidated Financial Statements") in January 2003. FIN No. 46
provides consolidation guidance regarding the identification of variable
interest entities ("VIE") for which control is achieved through means other
than through voting rights. FIN No. 46 provides guidance in determining if
a business enterprise is the primary beneficiary of a VIE and whether or
not that business enterprise should consolidate the VIE for financial
reporting purposes. FIN No. 46 applies to a VIE in which equity investors
of the VIE, if any, do not have the characteristics of a controlling
interest or do not have sufficient equity at risk for the VIE to finance
its activities independently. FIN No. 46 requires each enterprise involved
with a special purpose entity to determine whether it provides financial
support to the special purpose entity through a variable interest. Variable
interests may arise from financial instruments, service contracts, minority
ownership interests or other arrangements. If an entity holds a majority of
the variable interests, or a significant variable interest that is
considerably more than any other party's variable interest, then that
entity would be the primary beneficiary and would be required to include
the assets, 

7

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

liabilities and results of operations of the special purpose entity in its
consolidated financial statements.

In Snap-on's Form 10-Q for the quarter ended June 28, 2003, the company
disclosed that it had completed its evaluation of FIN No. 46 and concluded
that Snap-on was not required to consolidate Snap-on Credit LLC ("SOC"), a
50%-owned financial services joint venture that is accounted for using the
equity method. On October 9, 2003, the FASB postponed the initial
implementation date for FIN No. 46, which would have been effective for
Snap-on on June 29, 2003, the beginning of its fiscal 2003 third quarter.

The company is evaluating recent guidance from the FASB, the U.S.
Securities and Exchange Commission ("SEC") and the accounting profession on
the implementation of FIN No. 46, the results of which could alter the
company's previously disclosed position on the consolidation of SOC. During
the fourth quarter of 2003, Snap-on will continue to evaluate the
appropriate accounting for SOC under FIN No. 46. The company will conclude
on the impact of the adoption of FIN No. 46 in the fourth quarter of fiscal
2003, provided that FIN No. 46 becomes effective for Snap-on in that
quarter. If it is determined that Snap-on is required to consolidate SOC,
then Snap-on will include the assets and liabilities of SOC in its
consolidated financial statements as of January 3, 2004, Snap-on's fiscal
2003 year end. Refer to Note 7 for additional information regarding SOC,
including SOC's unaudited summary statements of financial condition as of
September 30, 2003, and December 31, 2002, and SOC's unaudited summary
results of operations for the three and nine months ended September 30,
2003, and September 30, 2002.

3.   Accounts receivable include trade accounts receivable, installment
receivables and dealer financing. Current gross installment receivables
amounted to $59.1 million and $49.5 million at September 27, 2003, and
December 28, 2002, and include $9.9 million and $8.1 million of unearned
finance charges. The components of Snap-on's current accounts receivable
were as follows:

Sept.27,             Dec. 28,
(Amounts in millions)                     2003                 2002
----                 ----
Trade accounts receivable                 $519.3               $497.0
Installment receivables                     49.2                 41.4
Other accounts receivable                   38.3                 59.0
------               ------
Total                                 606.8                597.4
Allowance for doubtful accounts            (45.6)               (41.2)
------               ------
Total accounts receivable - net           $561.2               $556.2
======               ======

The long-term portion of accounts receivable is classified in "Other
assets" on the accompanying Consolidated Balance Sheets and is comprised of
installment and dealer financing receivables with payment terms that are
due beyond one year. Long-term gross installment receivables amounted to
$49.2 million and $45.2 million at September 27, 2003, and December 28,
2002, and include $8.5 million and $7.9 million of unearned finance
charges.

4.   Inventories consist of manufactured products and merchandise for resale and
are stated at the lower of cost or market. Manufactured products include
the costs of materials, labor and manufacturing overhead. Inventories
accounted for using the first-in, first-out (FIFO) method as of September
27, 2003, and December 28, 2002, approximated 68% and 65% of total
inventories, respectively. All other inventories are generally determined
using the last-in, first-out (LIFO) cost method.

The company's LIFO reserve at September 27, 2003, was $89.5 million, down
$6.3 million from $95.8 million at December 28, 2002,and down $5.1 million
from $94.6 million at June 28, 2003, reflecting lower inventory levels.
Since year-end 2002, finished goods inventory levels have declined from
$337.5 million to $316.8 million at September 27, 2003. The change in the
company's LIFO reserve for both the three and nine months ended September
27, 2003, is reflected as a reduction in "Cost of goods sold" on the
accompanying Consolidated Statements of Earnings.

8

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5.   At the beginning of its 2002 fiscal year, Snap-on adopted SFAS No. 142,
"Goodwill and Other Intangible Assets." SFAS No. 142 applies to all
goodwill and other intangible assets recognized by the company as of
December 30, 2001. In accordance with SFAS No. 142, Snap-on recorded a
cumulative effect of a change in accounting principle transition adjustment
that increased net earnings in the first quarter of 2002 by $2.8 million,
on both a pretax and after-tax basis, from the recognition of negative
goodwill.

Additional disclosures related to acquired intangible assets were as
follows:

September 27, 2003                        December 28, 2002
-------------------------------------    --------------------------------------
Gross Carrying                            Gross Carrying
Value             Accumulated             Value             Accumulated
Amortization                               Amortization
(Amounts in millions)
----------------    -----------------    ------------------    ----------------

Amortized intangible assets:
Trademarks                            $  4.4               $  (.4)               $  3.9                $  (.3)
Patents                                 31.4                (10.7)                 29.4                  (8.3)
------               ------                ------                ------
Total                                   35.8                (11.1)                 33.3                  (8.6)
Unamortized intangible assets:
Trademarks                              43.9                    -                  41.0                     -
------               ------                ------                ------
Total intangible assets                   $ 79.7               $(11.1)               $ 74.3                $ (8.6)
======               ======                ======                ======

As of September 27, 2003, the weighted-average amortization period was 35
years for trademarks, 16 years for patents, and 19 years on a combined
basis. As of December 28, 2002, the weighted-average amortization period
was 34 years for trademarks, 16 years for patents, and 19 years on a
combined basis.

Amortization expense was $.7 million and $1.6 million for the three and
nine months ended September 27, 2003, and $.5 million and $1.3 million for
the three and nine months ended September 28, 2002. Total estimated annual
amortization expense expected for each of the next five fiscal years, based
on current levels of other intangible assets, is approximately $2.0
million.

Goodwill was $397.5 million and $366.4 million at September 27, 2003, and
December 28, 2002. The increase in goodwill as compared to the December 28,
2002, balance primarily reflects currency translation.

6.   In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 addresses
significant issues regarding the recognition, measurement and reporting of
costs that are associated with exit and disposal activities, including
restructuring activities that are accounted for pursuant to the guidance
that the Emerging Issues Task Force ("EITF") set forth in EITF Issue No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." SFAS No. 146 nullifies EITF Issue No. 94-3 and requires
that a liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred, rather than at

9

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

the date of the entity's commitment to an exit plan. SFAS No. 146 is
effective for exit and disposal activities that are initiated after
December 28, 2002. Snap-on adopted SFAS No. 146 at the beginning of its
2003 fiscal year.

In mid-July 2003, Snap-on announced plans to phase out production at two of
its U.S. hand tool manufacturing facilities, with a planned completion in
2004. In the company's Form 10-Q for the quarter ended June 28, 2003,
Snap-on disclosed that it expected to record approximately $22 million of
costs in the remainder of 2003 associated with these actions, of which
approximately $17 million would be in the third quarter, including
approximately $12 million for accelerated pension and post-retirement
medical curtailment expenses, with the remaining costs primarily for
severance and transition expenses. Snap-on also disclosed that it expected
to incur approximately $4 million of severance and transition expenses over
the phase-out period in 2004.

In the third quarter of 2003, Snap-on recorded restructuring charges of
$14.0 million, including $13.3 million for costs related to the
above-mentioned facility closures. Due to continuing negotiations with the
representative unions for these locations, the company was unable to record
a portion of the severance and benefits that were previously anticipated to
be recorded in the third quarter of 2003. Of the $13.3 million in facility
closure costs recorded in the third quarter, $11.7 million was for the
recognition of accelerated pension and post-retirement medical curtailment
expenses, with the remaining costs primarily for severance, equipment
transfer and other costs. In addition to the $13.3 million of costs
incurred in the third quarter of 2003, the company now expects that it will
record approximately $4 million to $5 million of severance and transition
costs in the fourth quarter of 2003 and approximately $8 million to $9
million of remaining severance and transition costs in the first quarter of
2004 for these actions. Snap-on believes that the anticipated savings from
the closure of the two U.S. hand tool facilities will be approximately $12
million per year, beginning in 2004. In the third quarter of 2003, Snap-on
also incurred $.7 million of costs primarily for severance and facility
consolidation or closure costs to effect consolidation initiatives and
management realignment actions at various other Snap-on facilities.

For the three months ended September 27, 2003, Snap-on recorded
restructuring charges of $14.0 million, including $11.7 million for pension
and post-retirement medical curtailment costs, as discussed above, $1.1
million for severance costs to effect consolidation initiatives and
management realignment actions, and $1.2 million for facility consolidation
or closure costs. For the nine months ended September 27, 2003, Snap-on
recorded restructuring charges of $19.5 million, including the $11.7
million for pension and post-retirement medical curtailment costs, $6.1
million for severance costs to effect consolidation initiatives and
management realignment actions, and $1.7 million for facility consolidation
or closure costs. For the three and nine months ended September 27, 2003,
restructuring charges of $13.3 million and $16.1 million were included in
"Cost of goods sold," and $.7 million and $3.4 million were included in
"Operating expenses," on the accompanying Consolidated Statements of
Earnings.

The restructuring reserve usage of $14.6 million for the quarter ended
September 27, 2003, consisted of a non-cash pension and post-retirement
medical curtailment charge of $11.7 million related to the above-mentioned
closure of the two hand tool facilities, $1.6 million for severance

10

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

payments related to the separation of 207 employees, and $1.3 million for
equipment transfer and other costs. The restructuring reserve usage of
$19.9 million for the nine months ended September 27, 2003, included the
$11.7 million for pension and post-retirement medical curtailment, $6.5
million for severance payments related to the separation of 353 employees,
and $1.7 million for equipment transfer and other costs. During the first
quarter of 2003, Snap-on completed its restructuring actions initiated in
the fourth quarter of 2002.

The composition of Snap-on's restructuring charge activity for the quarter
ended September 27, 2003, was as follows:

Balance at                                         Balance at
(Amounts in millions)                June 28, 2003         Additions         Usage      Sept. 27, 2003
-------------         ---------         -----      --------------

Severance costs                           $ 3.0             $ 1.1          $ (1.6)           $ 2.5
Pension and post-
retirement medical                            -              11.7           (11.7)               -
Facility consolidation
or closure costs                            .1               1.2            (1.3)               -
-----             -----          ------            -----
Total                                     $ 3.1             $14.0          $(14.6)           $ 2.5
=====             =====          ======            =====

Snap-on has funded and expects to continue to fund the remaining cash
requirements of its restructuring activities with cash flows from
operations and borrowings under its existing credit facilities. The
specific restructuring measures and estimated costs were based on
management's best business judgment under prevailing circumstances. If
future events warrant changes to the reserve, such adjustments will be
reflected as either "Cost of goods sold" or "Operating expenses," as
appropriate, in the applicable Consolidated Statements of Earnings.

7.   SOC is an unconsolidated 50%-owned joint venture between Snap-on and The
CIT Group, Inc. ("CIT") that is presently accounted for by Snap-on using
the equity method. SOC was formed as a limited liability company with
member contributions totaling $2.0 million, and SOC commenced operations on
January 3, 1999. As of September 27, 2003, Snap-on's equity investment in
SOC totaled approximately $6.2 million. SOC provides a broad range of
financial services to Snap-on's U.S. dealer and customer network and to
Snap-on's industrial and other customers. Snap-on also provides financing
to its dealers and customers internationally through its wholly owned
credit subsidiaries, the results of which are included in Snap-on's
Consolidated Financial Statements.

Snap-on receives royalty and management fee income from SOC based on the
volume of financings originated by SOC. Snap-on also shares with CIT
ratably in any residual net profit or loss of the joint venture after
operating expenses, including royalty and management fees, interest costs
and credit loss provisions.

SOC sells substantially all of its originated contracts on a limited
recourse basis to CIT, net of certain fees. SOC services these contracts
for an estimated market-rate servicing fee.

11

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

SOC establishes a reserve for all contract receivables sold to CIT, and
SOC's credit losses on the sold contract receivables are limited to the
extent of the reserve. SOC also establishes a prepayment reserve to cover
amounts due to CIT as a result of early prepayments by customers on loans
sold to CIT. Loan losses on the contract receivables retained by SOC were
not material in any year.

Snap-on has credit risk exposure for certain loans that SOC originates with
recourse provisions against Snap-on. At September 27, 2003, and December
28, 2002, $27.4 million and $32.1 million of these loans, with terms
ranging from six months to ten years, have a primary recourse provision
against Snap-on if the loans become more than 90 days past due. For the
three and nine months ended September 27, 2003, $.2 million and $1.2
million of such loans were purchased by Snap-on pursuant to the recourse
provisions.

The maximum potential amount of future payments that Snap-on could be
required to make to SOC under the recourse provisions as of September 27,
2003, is $27.4 million, including $11.1 million that was originated in
fiscal 2003. The asset value of the collateral underlying these recourse
loans would serve to mitigate Snap-on's loss in the event of default. In
accordance with the provisions of FIN No. 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others," Snap-on established a liability for the estimated
fair value of the guarantees for all fiscal-2003 loan originations with
recourse. The remaining estimated fair value of the guarantees for the
$11.1 million of fiscal-2003 loan originations outstanding with recourse as
of September 27, 2003, was $.9 million.

SOC had previously maintained a $25 million bank line of credit for working
capital purposes, of which Snap-on was a 60% guarantor and CIT was a 40%
guarantor. SOC's bank line of credit expired May 31, 2003, and was not
renewed. CIT and Snap-on have agreed to fund SOC's future working capital
requirements on a 50 / 50 basis, with a combined maximum borrowing limit
not to exceed $24 million. As of September 27, 2003, the outstanding amount
loaned by Snap-on to SOC pursuant to this agreement was $1.5 million. The
balance loaned by Snap-on to SOC as of the end of SOC's calendar quarter,
September 30, 2003, was $.5 million.

The maximum exposure to Snap-on as of September 27, 2003, and December 28,
2002, related to SOC was the $6.2 million and $2.7 million equity
investment plus the recourse obligations on customer financings and the
outstanding amount borrowed by SOC, all of which are discussed above. At
December 28, 2002, Snap-on's maximum exposure related to SOC also included
the guarantee on SOC's bank line of credit.

12

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Summarized unaudited financial information of SOC as of September 30, 2003,
and December 31, 2002, and for the three and nine months ended September
30, 2003, and September 30, 2002, as provided to Snap-on by SOC, is as
follows:

September 30,          December 31,
(Amounts in millions)                                 2003                   2002
----                   ----

Cash and cash equivalents                            $  1.2                 $  5.4
Receivables, net of allowances                         12.9                   13.4
Servicing receivable                                    8.2                    7.6
Due from members                                        8.1                   10.9
Other assets                                           10.4                    8.0
------                 ------
$40.8                 $ 45.3
======                 ======

Payable to members                                   $  8.3                 $ 12.4
Reserves for contract receivables sold                 12.0                    8.3
Other accrued liabilities                               7.2                    8.6
Short-term borrowings                                   1.0                   11.0
Members' equity                                        12.3                    5.0
------                 ------
$ 40.8                  $45.3
======                 ======

Three Months Ended           Nine Months Ended
------------------           -----------------
September 30,                September 30,
(Amounts in millions)                      ------------                 ------------
Revenues:                              2003           2002           2003          2002
----           ----           ----          ----
Gain on sale of contract
receivables sold                  $14.2         $15.2           $46.4         $39.0
Servicing fee income                      2.6           2.1             7.7           6.5
Other income                               .2            .2              .4            .3
-----         -----           -----         -----
Total revenues                         17.0          17.5            54.5          45.8

Expenses:
Royalty fees                              5.7           5.6            17.3          16.5
Salaries and benefits                     4.3           3.8            12.7          11.3
Management fees                           2.8           2.8             8.6           8.2
Other                                     2.8           2.1             8.7           7.6
-----         -----           -----         -----
Total expenses                         15.6          14.3            47.3          43.6
-----         -----           -----         -----

Net income                              $ 1.4         $ 3.2           $ 7.2           2.2
=====         =====           =====         =====

The FASB issued FIN No. 46, "Consolidation of Variable Interest Entities"
in January 2003. As discussed in Note 2, the original implementation date
for FIN No. 46 has been deferred. During the fourth quarter of 2003,
Snap-on will continue to evaluate the appropriate accounting for SOC under
FIN

13

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

No. 46. The company will conclude on the impact of the adoption of FIN No.
46 in the fourth quarter of fiscal 2003, provided that FIN No. 46 becomes
effective for Snap-on in that quarter.

8.   Notes payable and long-term debt at September 27, 2003, totaled $335.7
million, down $25.0 million from the $360.7 million reported at December
28, 2002. Notes payable to banks under bank lines of credit totaled $6.6
million and $22.3 million at September 27, 2003, and December 28, 2002. At
September 27, 2003, Snap-on had commercial paper outstanding denominated in
U.S. dollars of $25.0 million, and at December 28, 2002, Snap-on had
commercial paper outstanding denominated in U.S. dollars of $25.0 million
and Japanese yen of $7.9 million.

At September 27, 2003, Snap-on had $408 million of multi-currency revolving
credit facilities that provide back-up liquidity for its commercial paper
programs. These facilities include a $200 million, 364-day revolving credit
facility with a one-year term-out option that terminates on July 30, 2004.
The company's credit facilities also include a five-year, $208 million
revolving credit facility that terminates on August 20, 2005. As of
September 27, 2003, and December 28, 2002, Snap-on was in compliance with
all covenants of its revolving credit facilities and there were no
borrowings under any revolving credit facility. Snap-on also has an unused
committed $20 million bank line of credit that expires on August 1, 2004.

9.   Snap-on accounts for its hedging activities under SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities," as amended by SFAS No.
138 and SFAS No. 149. These standards require that all derivative
instruments be reported in the consolidated financial statements at fair
value. Changes in the fair value of derivatives are to be recorded each
period in earnings or "Accumulated other comprehensive income (loss),"
depending on the type of hedged transaction and whether the derivative is
designated and effective as part of a hedged transaction. Gains or losses
on derivative instruments reported in "Accumulated other comprehensive
income (loss)" must be reclassified as earnings in the period in which
earnings are affected by the underlying hedged item, and the ineffective
portion of all hedges must be recognized in earnings in the current period.

Snap-on uses derivative instruments to manage well-defined interest rate
and foreign currency exposures. Snap-on does not use derivative instruments
for speculative or trading purposes. The criteria used to determine if
hedge accounting treatment is appropriate are (i) the designation of the
hedge to an underlying exposure, (ii) whether or not overall risk is being
reduced, and (iii) if there is a correlation between the value of the
derivative instrument and the underlying obligation. On the date a
derivative contract is entered into, Snap-on designates the derivative as a
fair value hedge, a cash flow hedge, a hedge of a net investment in a
foreign operation, or a natural hedging instrument whose change in fair
value is recognized as an economic hedge against changes in the values of
the hedged item.

Foreign Currency Derivative Instruments: Snap-on has operations in a number
of countries that have transactions outside their functional currencies
and, as a result, is exposed to changes in foreign currency exchange rates.
In addition, Snap-on hedges the anticipated repayment of intercompany loans
to foreign subsidiaries denominated in foreign currencies. Snap-on manages
most of these

14

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

exposures on a consolidated basis, which allows for netting of certain
exposures to take advantage of natural offsets. Forward exchange contracts
are used to hedge the net exposures. Gains or losses on net foreign
currency hedges are intended to offset losses or gains on the underlying
net exposures in an effort to reduce the earnings volatility resulting from
fluctuating foreign currency exchange rates.

At September 27, 2003, Snap-on had net outstanding foreign exchange forward
contracts totaling $121.1 million comprised of buy contracts of $64.3
million in Swedish kronor and sell contracts of $97.2 million in euros,
$44.4 million in British pounds, $18.6 million in Canadian dollars, $9.9
million in Singapore dollars, $7.2 million in Japanese yen, $3.7 million in
Danish kronor, $3.3 million in Norwegian kronor and $1.1 million in other
currencies. At December 28, 2002, Snap-on had net outstanding foreign
exchange forward contracts totaling $161.9 million comprised of buy
contracts of $52.5 million in Swedish kronor and sell contracts of $103.8
million in euros, $59.1 million in British pounds, $31.2 million in
Canadian dollars, $7.5 million in Singapore dollars, $3.0 million in Danish
kronor, $2.5 million in Australian dollars, $3.7 million in Mexican pesos
and $3.6 million in other currencies.

Snap-on classifies the majority of its forward exchange contracts as
natural hedges and therefore these contracts are excluded from the
assessment of effectiveness. The fair value changes of these contracts are
reported in earnings as foreign exchange gain or loss, which is included in
"Other income (expense) - net" on the accompanying Consolidated Statements
of Earnings. Those forward exchange contracts that qualify for hedge
accounting treatment are accounted for as cash flow hedges where the
effective portion of the changes in fair value of the derivative is
recorded in "Accumulated other comprehensive income (loss)." When the
hedged item is realized in income, the gain or loss included in
"Accumulated other comprehensive income (loss)" is reclassified to income
in the same financial statement caption as the hedged item. The ineffective
portion of changes in fair value of the cash flow hedges are reported in
earnings as foreign exchange gain or loss, which is included in "Other
income (expense) - net," and were not material for the three and nine
months ended September 27, 2003, and September 28, 2002.

Non-Derivative Instruments Designated in Hedging Relationships: Snap-on
uses non-U.S. dollar financing transactions as net investment hedges of
long-term investments in the corresponding foreign currency. Hedges that
meet the effectiveness requirements are accounted for under net investment
hedging rules. The effective portion of the net investment hedge of a
foreign operation is recorded in "Accumulated other comprehensive income
(loss)" as a cumulative translation adjustment. When applicable, the
ineffective portion of the net investment hedge is recorded in earnings as
foreign exchange gain or loss, which is included in "Other income (expense)
- net." These ineffective portions were not material for the three and nine
months ended September 27, 2003, and September 28, 2002. At September 27,
2003, net gains of $.1 million arising from effective hedges of net
investments have been reflected in the cumulative translation adjustment
account as a component of "Accumulated other comprehensive income (loss)."

Interest Rate Swap Agreements: Snap-on enters into interest rate swap
agreements to manage interest costs and risks associated with changing
interest rates. Interest rate swap agreements are accounted for as either
cash flow hedges or fair value hedges. The differentials paid or received
on interest rate

15

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

swap agreements are accrued and recognized as adjustments to interest
expense. For fair value hedges the effective portion of the change in fair
value of the derivative is recorded in "Long-term debt," while any
ineffective portion is recorded as an adjustment to interest expense. For
cash flow hedges the effective portion of the change in fair value of the
derivative is recorded in "Accumulated other comprehensive income (loss),"
while any ineffective portion is recorded as an adjustment to interest
expense.

In June 2003, Snap-on received proceeds of $5.1 million for the termination
of a $25 million interest rate swap that was a fair value hedge for a
portion of its $200 million, 6.25% long-term notes. The $5.1 million will
be amortized to income using the effective interest rate method over the
remaining life of the notes, which mature on August 15, 2011. At the same
time, Snap-on entered into a new $25 million interest rate swap to hedge
that same portion of these notes.

The notional amount of interest rate swaps was $50 million at September 27,
2003, and December 28, 2002, and included $25 million of fair value hedges
and $25 million of cash flow hedges.

For all cash flow hedges qualifying for hedge accounting under SFAS No.
133, the net accumulated derivative loss at September 27, 2003, was $2.4
million, after tax, and is reflected in "Accumulated other comprehensive
income (loss)." Changes in the fair value of derivative financial
instruments qualifying for hedge accounting under SFAS No. 133, are
reflected as derivative assets or liabilities with the corresponding gains
or losses reflected in earnings in the period of change. An offsetting gain
or loss is also reflected in earnings based upon the changes of the fair
value of the debt instrument being hedged. For all fair value hedges
qualifying for hedge accounting under SFAS No. 133, the net accumulated
derivative loss at September 27, 2003, was $1.7 million. At September 27,
2003, the maximum maturity date of any cash flow hedge and fair value hedge
was approximately two years and eight years, respectively. During the next
12 months, Snap-on expects to reclassify into earnings net losses from
"Accumulated other comprehensive income (loss)" of approximately $.9
million after tax at the time the underlying hedged transactions are
realized.

During the quarter ended September 27, 2003, cash flow hedge and fair value
hedge ineffectiveness was not material.

10.   Snap-on has stock option plans for directors, officers and key employees,
with expiration dates on the options ranging from 2003 to 2013 and vesting
periods ranging from immediate to three years. The plans provide that
options be granted at exercise prices equal to market value on the date the
option is granted.

Snap-on accounts for its stock-based employee compensation plans under the
recognition and measurement principles of Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." In
accordance with the provisions of APB Opinion No. 25, no compensation
expense was recorded for stock options as all options granted had an
exercise price equal to the market value of the underlying common stock on
the measurement date. For restricted stock and stock appreciation rights
awards, Snap-on recorded compensation expense in the respective periods as
appropriate.

16

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Snap-on adopted the disclosure provisions of SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure, an amendment of FASB
Statement No. 123," as of December 28, 2002. The following table
illustrates the effect on net earnings and earnings per share as if Snap-on
had applied the fair value recognition provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," to stock-based employee
compensation using the Black-Scholes option-pricing model.

Three Months Ended         Nine Months Ended
Sept. 27,    Sept. 28,     Sept. 27,    Sept. 28,
(Amounts in millions except per share data)                       2003         2002          2003         2002  
----         ----          ----         ----

Net earnings, as reported                                          $17.7        $19.2        $61.4         $72.9
Add: Stock-based employee compensation
expense (income) included in reported net
earnings, net of related tax effects                        .3          (.2)         2.2           (.7)

Deduct: Total stock-based employee compensation
expense determined under fair value based
method for all awards, net of related tax effects         (2.0)        (1.9)        (5.7)         (5.7)
-----        -----        -----         -----
Pro forma net earnings                                             $16.0        $17.1        $57.9         $66.5
=====        =====        =====         =====
Net earnings per share - basic and diluted:
As reported                                                      $ .30        $ .33        $1.05         $1.25
Pro forma                                                          .27          .29          .99          1.14

The assumptions used to calculate the fair value of options granted are
evaluated and revised, as necessary, to reflect market conditions and
experience.

11.  Basic earnings per share calculations were computed by dividing net
earnings by the corresponding weighted-average number of common shares
outstanding for the period. The dilutive effect of the potential exercise
of outstanding options to purchase common shares is calculated using the
treasury stock method. Snap-on had dilutive shares as of September 27,
2003, and September 28, 2002, of 149,711 shares and 326,352 shares. Options
to purchase 3,779,270 shares and 2,320,019 shares of Snap-on common stock
at September 27, 2003, and September 28, 2002, were not included in the
computation of diluted earnings per share as the exercise prices of the
options was greater than the average market price of the common stock for
the respective period and the effect on earnings per share would be
anti-dilutive.

17

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12.  Total comprehensive income for the three and nine months ended September
27, 2003, and September 28, 2002, was as follows:

Three Months Ended                   Nine Months Ended
--------------------------        ---------------------------
Sept. 27,        Sept. 28,        Sept. 27,         Sept. 28,
(Amounts in millions)                        2003             2002             2003              2002
----             ----             ----              ----

Net earnings                                $  17.7          $  19.2          $  61.4           $  72.9
Foreign currency translation                     .4             (8.0)            79.1              31.5
Change in fair value of derivative
instruments, net of tax                        .2              (.9)             1.0              (1.7)
-------          -------          -------           -------
Total comprehensive income                  $  18.3          $  10.3          $ 141.5           $ 102.7
=======          =======          =======           =======

13.  Snap-on has various corporate and government customers worldwide that
purchase Snap-on products pursuant to multi-year contracts. These contracts
can include a variety of terms and are periodically subject to audit by the
customers for compliance. Snap-on currently has two contracts being audited
by government auditors. Snap-on is also involved in various other legal
matters that are being defended and handled in the ordinary course of
business. Snap-on maintains accruals for such costs that it expects to
incur with regard to these matters. Although it is not possible to predict
the outcome of these matters, management believes that the results will not
have a material impact on Snap-on's financial statements.

Snap-on provides product warranties for specific product lines and accrues
for estimated future warranty cost in the period in which the sale is
recorded. Snap-on calculates its reserve requirements based on historical
warranty loss experience that is periodically adjusted for recent actual
experience. The following is an analysis of Snap-on's product warranty
reserve for the three and nine months ended September 27, 2003, and
September 28, 2002:

Three Months Ended                   Nine Months Ended
--------------------------        ---------------------------
Sept. 27,        Sept. 28,        Sept. 27,         Sept. 28,
(Amounts in millions)                        2003             2002             2003              2002
----             ----             ----              ----

Beginning of period                         $  11.8          $   8.4          $  11.6           $   8.2
Additions                                       2.6              5.0              8.7              11.7
Usage                                          (3.0)            (2.6)            (8.9)             (9.1)
-------          -------          -------           -------
End of period                               $  11.4          $  10.8          $  11.4           $  10.8
=======          =======          =======           =======

18

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14.  Snap-on's business segments are based on the organization structure used by
management for making operating and investment decisions and for assessing
performance. Snap-on's reportable business segments include: (i) the
Snap-on Dealer Group; (ii) the Commercial and Industrial Group; and (iii)
the Diagnostics and Information Group. The Snap-on Dealer Group consists of
Snap-on's business operations serving the worldwide franchised dealer van
channel. The Commercial and Industrial Group consists of the business
operations providing tools and equipment products to a broad range of
industrial and commercial customers worldwide through direct, distributor
and other non-franchised distribution channels. The Diagnostics and
Information Group consists of the business operations providing diagnostics
equipment, vehicle-service information, business management systems,
equipment repair services and other solutions for vehicle service to
customers in the worldwide vehicle service and repair marketplace.

Snap-on evaluates the performance of its operating segments based on
segment net sales and operating earnings. Segment net sales are defined as
total net sales, including both net sales to external customers and
intersegment sales. Segment operating earnings are defined as segment net
sales less cost of goods sold and operating expenses, including applicable
restructuring and other non-recurring charges. Snap-on began allocating
restructuring and other non-recurring charges to its reportable segments in
fiscal 2003. Prior to fiscal 2003, Snap-on did not allocate such charges to
the reportable segments. As a result, all prior-year segment information
presented herein has been restated to conform to the 2003 presentation.
Snap-on accounts for intersegment sales and transfers based primarily on
standard costs with reasonable mark-ups established between the segments.
Snap-on allocates shared services expenses to those segments that utilize
the services based on a percentage of either cost of goods sold or segment
net sales, as appropriate. Certain other prior-year reclassifications have
been made to conform to the 2003 management reporting structure.

Neither Snap-on nor any of its segments depends on any single customer,
small group of customers or government for more than 10% of its sales.

19

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Financial data by segment was as follows:

Three Months Ended                   Nine Months Ended
--------------------------        ---------------------------
Sept. 27,        Sept. 28,        Sept. 27,         Sept. 28,
(Amounts in millions)                              2003             2002             2003              2002
----             ----             ----              ----

Net sales to external customers:
Snap-on Dealer Group                            $  244.9         $   236.5        $   777.6         $   758.4
Commercial and Industrial Group                    236.0             224.2            729.5             680.8
Diagnostics and Information Group                   44.7              41.7            126.8             120.4
--------         ---------        ---------         ---------
Total net sales to external customers           $  525.6         $   502.4        $ 1,633.9         $ 1,559.6
========         =========        =========         =========
Intersegment sales:
Snap-on Dealer Group                            $    6.7         $     6.8        $    20.2         $    17.5
Commercial and Industrial Group                     28.6              28.8             90.1              89.3
Diagnostics and Information Group                   34.8              43.3            105.0             135.1
--------         ---------        ---------         ---------
Total intersegment sales                        $   70.1         $    78.9        $   215.3         $   241.9
========         =========        =========         =========

Total net sales:
Snap-on Dealer Group                            $  251.6         $   243.3        $   797.8         $   775.9
Commercial and Industrial Group                    264.6             253.0            819.6             770.1
Diagnostics and Information Group                   79.5              85.0            231.8             255.5
--------         ---------        ---------         ---------
Segment net sales                                  595.7             581.3          1,849.2           1,801.5
Intersegment eliminations                          (70.1)            (78.9)          (215.3)           (241.9)
--------         ---------        ---------         ---------
Total consolidated net sales                    $  525.6         $   502.4        $ 1,633.9         $ 1,559.6
========         =========        =========         =========

Operating earnings:
Snap-on Dealer Group                            $    8.2         $    11.7        $    55.4         $    64.6
Commercial and Industrial Group                      3.8               9.2             10.7              28.6
Diagnostics and Information Group                    9.1               8.1             17.0              17.4
--------         ---------        ---------         ---------
Segment operating earnings                          21.1              29.0             83.1             110.6
Net finance income                                  10.0              10.3             31.7              26.4
--------         ---------        ---------         ---------
Operating earnings                                  31.1              39.3            114.8             137.0
Interest expense                                    (5.8)             (6.9)           (18.2)            (22.2)
Other income (expense) - net                        (2.4)             (2.3)            (6.5)             (5.3)
--------         ---------        ---------         ---------
Earnings before income taxes                    $   22.9         $    30.1          $  90.1         $   109.5
========         =========        =========         =========

20

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of
----------------------------
Sept. 27,        Dec. 28,
(Amounts in millions)                          2003             2002     
---------       ------------
Assets:
Snap-on Dealer Group                         $  757.0        $  759.7
Commercial and Industrial Group               1,087.3         1,010.7
Diagnostics and Information Group               199.0           198.5
--------        --------
Total from reportable segments                2,043.3         1,968.9
Financial Services                               97.6            82.5
Elimination of intersegment receivables         (33.0)          (57.3)
--------        --------
Total assets                                 $2,107.9        $1,994.1
========        ========

21

SNAP-ON INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations

RESULTS OF OPERATIONS

Consolidated
------------

Third Quarter

Net sales were $525.6 million in the third quarter of 2003, up $23.2 million, or
4.6%, from the $502.4 million in the prior-year period. The year-over-year
increase in net sales includes favorable currency translation of $19.7 million,
or 3.9% of total sales, as well as a 5.7% increase in sales volume in the North
American franchised dealer operation, and a 10.7% increase in sales to new
vehicle dealerships under facilitation agreements ("the facilitation business").
Favorable net pricing also contributed to the year-over-year sales increase.
These year-over-year increases in sales were largely offset by a continued
decline in sales of equipment and large platform-based diagnostics. Sales of
tools for industrial and commercial applications worldwide were essentially flat
year over year.

The ramp-up of the Technical Automotive Group ("TAG"), which was launched in the
second quarter of 2003, continued in the third quarter with sales, sales leads
and margins increasing sequentially compared with the second quarter of 2003,
despite a traditional seasonal downturn and the continued difficult economy. The
TAG direct sales group was created to enhance Snap-on's existing equipment
distribution network and improve the long-term operating margin in that
business. As expected, the launch of the new TAG sales organization led to a
short-term disruption in sales, negatively affecting both second and third
quarter year-over-year sales comparisons. Snap-on continues to expect
sequentially improved TAG equipment sales and profitability trends in the fourth
quarter of 2003.

Net earnings were $17.7 million, or $.30 per diluted share, for the third
quarter of 2003, as compared with net earnings of $19.2 million, or $.33 per
diluted share, for the third quarter of 2002. Net earnings in the third quarter
of 2003 included $8.7 million ($13.3 million pretax), or $.15 per diluted share,
for costs associated with the previously announced closure of two of Snap-on's
U.S. hand tool manufacturing facilities. Net earnings in 2003 also included $2.8
million, or $.05 per diluted share, as a result of a lower third-quarter
effective tax rate. Foreign currency effects on diluted earnings per share were
negligible in the third quarter of 2003.

Gross profit for the third quarter of 2003 was $221.8 million, down $6.0 million
from $227.8 million in the prior-year period. As a percentage of sales, gross
profit margin was 42.2% in the third quarter of 2003, versus 45.3% in the third
quarter of 2002. Gross profit in the third quarter of 2003 was reduced by $13.3
million, primarily for accelerated pension and post-retirement medical
curtailment costs, for the closure of the two hand tool facilities. The combined
effect of lower sales of large platform-based diagnostics products through the
company's technical representatives ("tech rep") organization, unfavorable sales
mix and lower sales volumes in the Commercial and Industrial Group, higher sales
volume in the North American franchised dealer business and favorable net
pricing, lowered third-quarter 2003 gross profit by $1.6 million. Additionally,
year-over-year favorable net currency impacts of $6.6 million and net savings
from restructuring and Operational Fitness activities of $3.2 million were
partially offset by higher pension, other retirement and insurance costs of $2.1
million. Unfavorable year-over-year manufacturing cost absorption, primarily due
to lower production volumes associated with improving inventory turns in a slow
sales environment, and inventory-related adjustments were more than offset by a
third-quarter 2003 reduction of $5.1 million in the company's LIFO reserve,
relfecting the continued progress in Snap-on's efforts to reduce inventory
levels.

22

SNAP-ON INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Operating expenses for the third quarter of 2003 were $200.7 million, or 38.2%
of sales, as compared to $198.8 million, or 39.6% of sales, in the prior-year
period. The $1.9 million increase in year-over-year operating expenses primarily
includes unfavorable net currency impacts of $6.6 million, higher pension, other
retirement and insurance costs of $3.5 million, and higher health care costs of
$1.8 million, partially offset by savings from continuous improvement and cost
reduction initiatives of $4.3 million and lower bad debt expense of $3.7
million. Snap-on also incurred operating expenses of $.7 million in the third
quarter of 2003 for continuous improvement initiatives, as compared to $1.6
million in the third quarter of 2002.

Operating earnings were $31.1 million for the third quarter of 2003 compared
with $39.3 million in the third quarter of 2002. In addition to the
year-over-year gross profit and operating expense impacts discussed above, net
finance income of $10.0 million in the third quarter of 2003 was down slightly
as compared to $10.3 million in the third quarter of 2002.

Year to Date

For the first nine months of 2003, net sales were $1,633.9 million, up $74.3
million, or 4.8%, from the $1,559.6 million in the prior-year period. Favorable
currency impacts of $78.4 million, along with increased sales in the worldwide
franchised dealer operation and in the facilitation business, were partially
offset by declines in sales of industrial tools, equipment and large
platform-based diagnostics. Favorable net pricing and benefits from sales of new
products also contributed to the year-over-year sales increase.

For the first nine months of 2003, net earnings were $61.4 million, or $1.05 per
diluted share, as compared with net earnings of $72.9 million, or $1.25 per
diluted share, in 2002. Net earnings in 2002 included a first-quarter net gain
of $2.8 million, or $.05 per diluted share, for the cumulative effect of an
accounting change associated with Snap-on's adoption of Statement of Financial
Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets."
Snap-on adopted SFAS No. 142 at the beginning of its 2002 fiscal year. For the
first nine months of 2002, net earnings before the cumulative effect of the
change in accounting principle were $70.1 million, or $1.20 per diluted share.
Foreign currency effects on diluted earnings per share were negligible in the
first nine months of 2003.

Gross profit for the first nine months of 2003 was $713.3 million, as compared
to $714.9 million in the first nine months of 2002. Year to date, gross profit
margin was 43.7% in 2003, versus 45.8% in 2002. For the first nine months of
2003, gross profit benefited from favorable net currency impacts of $25.4
million and savings from restructuring and Operational Fitness activities of
$12.9 million. Gross profit in 2003 was negatively impacted by $16.1 million of
higher costs for continuous improvement initiatives, including the $13.3 million
incurred in the third quarter for the closure of the two hand tool facilities.
The combination of unfavorable sales mix and lower sales volumes, particularly
in the Commercial and Industrial Group, partially offset by benefits from
favorable net pricing, reduced gross profit by $11.0 

23

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

million for the first nine months of 2003. Unfavorable manufacturing cost
absorption and inventory-related costs, net of LIFO reserve benefits realized,
also lowered year-to-date 2003 gross profit by $10.0 million. In the first nine
months of 2003, Snap-on also incurred higher year-over-year pension, other
retirement and insurance costs of $5.1 million.

Operating expenses for the first nine months of 2003 were $630.2 million, or
38.6% of sales, as compared to $604.3 million, or 38.7% of sales, in the
prior-year period. The $25.9 million, or 4.3%, increase in year-over-year
operating expenses primarily includes unfavorable net currency impacts of $25.4
million, higher pension, other retirement and insurance costs of $11.1 million,
increased costs of $1.7 million for the "More Feet on the Street" dealer
expansion and enhancement initiative, costs for continuous improvement
initiatives of $3.4 million, higher health care costs of $2.0 million, and
higher research and development spending of $1.4 million. The year-over-year
operating expense comparison was also impacted by the inclusion, in 2003, of
$3.8 million in operating expenses for the prior-year acquisition of two
business operations. These year-over-year increases were partially offset by
savings of $13.7 million from Snap-on's restructuring and Operational Fitness
activities. In addition, the year-over-year operating expense comparison
benefited from the absence of costs incurred in the first quarter of 2002 that
included $3.0 million related to the 2002 resignation of Snap-on's former chief
financial officer and $2.6 million for the write-down of a receivable related to
the closure of auto service centers associated with a major retailer's
bankruptcy. Operating expenses in the first nine months of 2002 included $3.4
million for employee and equipment relocation transition costs to finalize the
company's fiscal 2001 restructuring actions.

Operating earnings for the first nine months of 2003 were $114.8 million,
compared to $137.0 million in the first nine months of 2002. In addition to the
year-over-year gross profit and operating expense impacts discussed above,
Snap-on realized higher net finance income of $5.3 million for the first nine
months of 2003, primarily as a result of increased credit originations and
continued favorable interest rates.

Segment Results
---------------

Snap-on's business segments are based on the organization structure used by
management for making operating and investment decisions and for assessing
performance. Snap-on's reportable business segments include: (i) the Snap-on
Dealer Group, (ii) the Commercial and Industrial Group, and (iii) the
Diagnostics and Information Group. The Snap-on Dealer Group consists of
Snap-on's business operations serving the worldwide franchised dealer van
channel. The Commercial and Industrial Group consists of the business operations
providing tools and equipment products to a broad range of industrial and
commercial customers worldwide through direct, distributor and other
non-franchised distribution channels. The Diagnostics and Information Group
consists of the business operations providing diagnostics equipment,
vehicle-service information, business management systems, equipment repair
services and other solutions for customers in the worldwide vehicle service and
repair marketplace.

Snap-on evaluates the performance of its operating segments based on segment net
sales and operating earnings. Segment net sales are defined as total net sales,
including both net sales to external

24

SNAP-ON INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

customers and intersegment sales. Segment operating earnings are defined as
segment net sales less cost of goods sold and operating expenses, including
applicable restructuring and other non-recurring charges. Snap-on began
allocating restructuring and other non-recurring charges to its reportable
segments in fiscal 2003. Prior to fiscal 2003, Snap-on did not allocate such
charges to the reportable segments. As a result, all prior-year segment
information presented herein has been restated to conform to the 2003
presentation. Snap-on accounts for intersegment sales and transfers based
primarily on standard costs with reasonable mark-ups established between the
segments. Snap-on allocates shared services expenses to those segments that
utilize the services based on a percentage of either cost of goods sold or
segment net sales, as appropriate. Certain other prior-year reclassifications
have been made to conform to the 2003 management reporting structure.

The following discussion focuses on Snap-on's net sales and operating earnings
by reportable segment.

Three Months Ended                 Nine Months Ended
--------------------------         --------------------------
Sept. 27,        Sept. 28,         Sept. 27,        Sept. 28,
(Amounts in millions)                             2003             2002              2003             2002
---------        ---------         ---------        ---------

Total net sales:
Snap-on Dealer Group                             $ 251.6           $ 243.3         $  797.8          $  775.9
Commercial and Industrial Group                    264.6             253.0            819.6             770.1
Diagnostics and Information Group                   79.5              85.0            231.8             255.5
-------           -------         --------          --------
Segment net sales                                  595.7             581.3          1,849.2           1,801.5
Intersegment eliminations                          (70.1)            (78.9)          (215.3)           (241.9)
-------           -------         --------          --------
Total consolidated net sales                     $ 525.6           $ 502.4         $1,633.9          $1,559.6
=======           =======         ========          ========
Operating earnings:
Snap-on Dealer Group                             $   8.2           $  11.7          $  55.4          $   64.6
Commercial and Industrial Group                      3.8               9.2             10.7              28.6
Diagnostics and Information Group                    9.1               8.1             17.0              17.4
-------           -------         --------          --------
Segment operating earnings                          21.1              29.0             83.1             110.6
Net finance income                                  10.0              10.3             31.7              26.4
-------           -------         --------          --------
Operating earnings                                  31.1              39.3            114.8             137.0
Interest expense                                    (5.8)             (6.9)           (18.2)            (22.2)
Other income (expense) - net                        (2.4)             (2.3)            (6.5)             (5.3)
-------           -------         --------          --------
Earnings before income taxes                     $  22.9           $  30.1          $  90.1            $109.5
=======           =======         ========          ========

Snap-on Dealer Group

In the worldwide Snap-on Dealer Group, segment net sales for the third quarter
of 2003 were $251.6 million, as compared to $243.3 million in the comparable
prior-year period. Higher year-over-year sales in the North American franchised
dealer operation, coupled with favorable currency translation impacts of $5.3
million, were partially offset by significantly lower sales of equipment and
large platform-based diagnostics through the tech rep organization. The sales
growth in the North American franchised dealer operation in the third quarter of
2003 reflects sales gains by dealers to end-user customers - automotive

25

SNAP-ON INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

technicians and mechanics. In the Dealer Group's international markets, sales
were up slightly year over year due to favorable currency translation.

In 2002, Snap-on began focusing its dealers on the importance of better working
capital management, including improving inventory turns. Over the past 15
months, Snap-on's sales growth was constrained as dealers continued to improve
their inventory turns. While this focus will continue, Snap-on believes the
unfavorable effect on its sales from this action to be largely behind it at the
present time. The improved working capital position of its dealers reflects
Snap-on's continued focus on enhancing the business proposition for, and the
fiscal strength of, its dealers under the More Feet on the Street initiative.
End-market demand for tools and tool storage products in the first nine months
of 2003 increased as sell-through by the dealers was up slightly when compared
with the first nine months of 2002, despite the negative effect of severe winter
weather in certain parts of the United States that hindered dealers' sales
activity in the first quarter of 2003.

Segment earnings for the Dealer Group for the third quarter of 2003 of $8.2
million were down from $11.7 million in the third quarter of 2002. As a
percentage of net sales, segment earnings were 3.3% in the third quarter of
2003, as compared to 4.8% in the third quarter of 2002. Segment earnings in 2003
were reduced by $11.6 million for continuous improvement activities, including
$11.5 million in costs related to the closure of two hand tool facilities, and
by $2.6 million in higher year-over-year costs for pension, other retirement and
insurance. In 2003, benefits from favorable net pricing, lower inventory levels
and the success of new products, as well as productivity and cost savings of
$2.0 million, and lower year-over-year bad debt expense of $1.8 million, were
only partially offset by lower manufacturing cost absorption and weakness in
sales of equipment and large platform-based diagnostics sold through the tech
rep organization. In the third quarter of 2002, the Dealer Group incurred $.8
million of restructuring-related transition costs to complete its 2001
restructuring initiatives.

For the first nine months of 2003, segment net sales were $797.8 million, as
compared to $775.9 million in the comparable prior-year period. Higher
year-over-year sales in the North American franchised dealer operation and in
the Dealer Group's international markets, including favorable currency
translation impacts of $16.5 million, were partially offset by lower sales of
equipment and large platform-based diagnostics sold through the tech rep
organization.

Segment earnings for the Dealer Group for the first nine months of 2003 were
$55.4 million, down from $64.6 million in the first nine months of 2002. On a
year-to-date basis, segment earnings were 6.9% of segment net sales in 2003, as
compared to 8.3% in the first nine months of 2002. Costs of $15.0 million for
continuous improvement initiatives, including third-quarter costs of $11.6
million, and increased costs for pension, other retirement and insurance of $8.3
million, lowered segment earnings for the Dealer Group in 2003. Snap-on also
incurred higher year-over-year costs of $1.7 million for continued investment in
the More Feet on the Street initiative. Costs incurred for the More Feet on the
Street initiative included higher dealer turnover costs to remove low-performing
dealers, as well as higher costs for new dealer training, recruiting and other
dealer expansion costs. In 2003, benefits from productivity and cost savings of
$7.0 million, as well as benefits from favorable net pricing and the success of
new products, were only partially offset by lower manufacturing cost absorption
and weakness in sales of equipment and large platform-based diagnostics sold
through the tech rep organization. For the first nine 

26

SNAP-ON INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

months of 2002, the Dealer Group incurred $2.4 million of restructuring-related
transition costs to complete its 2001 restructuring initiatives.

Commercial and Industrial Group

In the Commercial and Industrial Group, segment net sales for the third quarter
of 2003 were $264.6 million, up 4.6% from $253.0 million in the third quarter of
2002, including favorable currency translation of $13.1 million and sales growth
in the facilitation business. These year-over-year increases were partially
offset by sales declines of capital equipment to vehicle repair shops in North
America and Europe, reflecting ongoing depressed economic conditions. Sales of
tools in the industrial and commercial marketplace worldwide for the third
quarter of 2003 were flat with prior-year levels. The continued decline in sales
to states and local municipalities was more than offset by increased sales to
federal government entities. In addition to the continuing weak capital goods
market, the second-quarter 2003 launch of the new TAG sales organization, which
is focused on the marketing of equipment, also contributed to the weaker third
quarter sales performance year over year. Snap-on believes that the TAG
organization will enhance the company's alignment of resources to provide better
sales coverage, training and service to its customers. As of the end of the
third quarter, sales, sales leads and margins increased sequentially compared
with the second quarter of 2003, despite a traditional seasonal downturn and the
continued difficult economy. Snap-on continues to expect sequentially improved
TAG equipment sales and profitability trends toward the latter part of 2003, and
on into 2004.

Segment earnings for the Commercial and Industrial Group for the third quarter
of 2003 were $3.8 million, down from $9.2 million in the third quarter of 2002.
As a percentage of net sales, segment earnings were 1.4% in the third quarter of
2003, as compared to 3.6% in the third quarter of 2002. Lower volumes and
unfavorable sales mix in 2003 adversely impacted year-over-year operating
earnings by $4.8 million, as the unfavorable earnings effect from lower sales of
high-margin industrial tools and equipment, including the impact related to the
start-up of the new TAG organization, was not offset by the increased sales in
the lower-margin facilitation business. Segment earnings in 2003 were also
lowered by $2.2 million for continuous improvement activities, including $1.8
million related to the closure of the two hand tool facilities, and by $2.5
million in higher year-over-year costs for pension, other retirement and
insurance. Savings of $3.8 million from restructuring and Operational Fitness
activities partially offset these declines in year-over-year segment earnings.
In the third quarter of 2002, the Commercial and Industrial Group incurred $.6
million of restructuring-related transition costs to complete its 2001
restructuring initiatives.

In the Commercial and Industrial Group, segment net sales for the first nine
months of 2003 were $819.6 million, up $49.5 million or 6.4%, as compared to
$770.1 million in the first nine months of 2002, including $55.5 million from
favorable currency translation. Growth in the company's facilitation business,
along with higher sales of equipment for the European vehicle-service
marketplace, reflecting the success of new product introductions over the past
three years, was partially offset by sales declines in industrial tools and
equipment, principally in North America, largely reflecting the continued impact
of weak economic conditions in the manufacturing and capital goods marketplace.

27

SNAP-ON INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

For the first nine months of 2003, segment earnings for the Commercial and
Industrial Group were $10.7 million, as compared to $28.6 million in the first
nine months of 2002. As a percentage of segment net sales, segment earnings for
the first nine months of 2003 were 1.3%, as compared to 3.7% in the comparable
prior-year period. Segment operating earnings in 2003 were adversely impacted by
lower volumes, general cost increases and unfavorable sales mix of $14.7
million, unfavorable manufacturing absorption and inventory-related costs of
$7.2 million, and higher costs of $6.7 million for pension, other retirement and
insurance. Segment earnings in 2003 were also lowered by $4.3 million for
continuous improvement activities, including $1.8 million related to the closure
of the two U.S. hand tool facilities. Savings from fiscal 2002 restructuring and
Operational Fitness activities of $13.5 million and benefits from favorable net
pricing partially offset these declines in year-over-year segment earnings. For
the first nine months of 2002, the Commercial and Industrial Group incurred $3.9
million of restructuring-related transition costs to complete its 2001
restructuring initiatives.

Diagnostics and Information Group

In the Diagnostics and Information Group, segment net sales for the third
quarter of 2003 were $79.5 million, down $5.5 million, or 6.5%, as compared to
$85.0 million in the third quarter of 2002, including favorable currency of $1.3
million. The year-over-year sales decline is principally attributable to lower
intersegment sales. Increased sales of handheld diagnostics were more than
offset by a decline in sales of equipment and large platform-based diagnostics
in North America, primarily in products sold through the Dealer Group's tech rep
organization. In addition, the Diagnostics and Information Group transferred
production of certain European equipment products to the Commercial and
Industrial Group, which reduced its intersegment sales for these products.

Despite the decline in year-over-year sales, segment earnings for the
Diagnostics and Information Group for the third quarter of 2003 were $9.1
million, as compared to $8.1 million in the third quarter of last year. As a
percentage of segment net sales, operating margin in the Diagnostics and
Information Group was 11.4%, as compared to 9.5% in the third quarter of 2002.
The year-over-year increase in both segment earnings and operating margins
primarily reflects the impact of productivity and cost savings of $1.7 million
from the realignment of production capabilities in certain European equipment
lines, as well as contributions from new products and favorable net pricing.

In the Diagnostics and Information Group, segment net sales for the first nine
months of 2003 were $231.8 million, down $23.7 million, or 9.3%, as compared to
the comparable period in 2002. As discussed above, the year-over-year sales
decline is principally attributable to lower intersegment sales, including the
transferring of production of certain European equipment products to the
Commercial and Industrial Group.

Segment earnings for the Diagnostics and Information Group for the first nine
months of 2003 were $17.0 million, or 7.3% of segment net sales, as compared to
$17.4 million, or 6.8%, in the first nine months of 2002. Savings of $6.1
million from productivity, restructuring and cost reduction efforts, as well as
benefits from favorable net pricing and new product sales, were more than offset
by the combined net margin impact of the lower sales volumes and lower
manufacturing cost absorption. In addition, year-over-year segment earnings were
lowered by higher costs for pension, other retirement and insurance of 

28

SNAP-ON INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

$1.2 million. Segment earnings in 2002 were lowered by $2.6 million for the
first-quarter write-down of a receivable related to the closure of auto service
centers associated with a major retailer's bankruptcy.

Other
-----

Net finance income was $10.0 million in the third quarter of 2003, down $.3
million from $10.3 million in the prior-year period, primarily reflecting higher
expenses on flat credit originations volume. For the first nine months of 2003,
net finance income was $31.7 million, compared to $26.4 million in 2002. Higher
credit originations and a more favorable interest-rate environment contributed
to the year-over-year increase.

Interest expense was $5.8 million in the third quarter of 2003, down $1.1
million from $6.9 million in the third quarter of 2002, reflecting significantly
lower year-over-year debt levels. For the first nine months of 2003, interest
expense of $18.2 million was down $4.0 million from $22.2 million in the prior
year, reflecting lower average interest rates and significantly lower debt
levels due to strong cash flow from operating activities.

Other income (expense)-net was an expense of $2.4 million for the third quarter
of 2003, as compared to an expense of $2.3 million in the comparable prior-year
period. This item includes the impact of all non-operating items such as
interest income, minority interests, hedging and exchange rate transaction gains
and losses, and other miscellaneous non-operating items. Minority interest
expense for the third quarter of 2003 was $.8 million, as compared to $.9
million for the third quarter of 2002. For the nine months ended September 27,
2003, and September 28, 2002, minority interest expense totaled $1.9 million and
$2.0 million, respectively.

Snap-on's effective tax rate of 22.7% for the third quarter of 2003 benefited
from the conclusion of prior-years' tax matters. For the first nine months of
2003, Snap-on's overall effective tax rate was 31.9%. Snap-on anticipates that
its effective tax rate for the fourth quarter of 2003 will approximate 35%.
Snap-on's effective income tax rate was 36.2% in the third quarter of 2002 and
36.0% for the first nine months of 2002.

Exit or Disposal Activities
---------------------------

In June 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No.
146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS
No. 146 addresses significant issues regarding the recognition, measurement and
reporting of costs that are associated with exit and disposal activities,
including restructuring activities that are accounted for pursuant to the
guidance that the Emerging Issues Task Force ("EITF") set forth in EITF Issue
No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." SFAS No. 146 nullifies EITF Issue No. 94-3 and requires that a
liability for a cost associated with an exit or disposal activity be recognized
when the liability is incurred, rather than at the date of the entity's
commitment to an exit plan. SFAS No. 146 is effective for exit and disposal
activities that are initiated after December 28, 2002. Snap-on adopted SFAS No.
146 at the beginning of its 2003 fiscal year.

29

SNAP-ON INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

In mid-July 2003, Snap-on announced plans to phase out production at two of its
U.S. hand tool manufacturing facilities, with a planned completion in 2004. In
the company's Form 10-Q for the quarter ended June 28, 2003, Snap-on disclosed
that it expected to record approximately $22 million of costs in the remainder
of 2003 associated with these actions, of which approximately $17 million would
be in the third quarter, including approximately $12 million for accelerated
pension and post-retirement medical curtailment expenses, with the remaining
costs primarily for severance and transition expenses. Snap-on also disclosed
that it expected to incur approximately $4 million of severance and transition
expenses over the phase-out period in 2004.

In the third quarter of 2003, Snap-on recorded restructuring charges of $14.0
million, including $13.3 million for costs related to the above-mentioned
facility closures. Due to continuing negotiations with the representative unions
for these locations, the company was unable to record a portion of the severance
and benefits that were previously anticipated to be recorded in the third
quarter of 2003. Of the $13.3 million in facility closure costs recorded in the
third quarter, $11.7 million was for the recognition of accelerated pension and
post-retirement medical curtailment expenses, with the remaining costs primarily
for severance, equipment transfer and other costs. In addition to the $13.3
million of costs incurred in the third quarter of 2003, the company now expects
that it will record approximately $4 million to $5 million of severance and
transition costs in the fourth quarter of 2003 and approximately $8 million to
$9 million of remaining severance and transition costs in the first quarter of
2004 for these actions. Snap-on believes that the anticipated savings from the
closure of the two U.S. hand tool facilities will be approximately $12 million
per year, beginning in 2004. In the third quarter of 2003, Snap-on also incurred
$.7 million of costs primarily for severance and facility consolidation or
closure costs to effect consolidation initiatives and management realignment
actions at various other Snap-on facilities.

For the three months ended September 27, 2003, Snap-on recorded restructuring
charges of $14.0 million, including $11.7 million for pension and
post-retirement medical curtailment costs, as discussed above, $1.1 million for
severance costs to effect consolidation initiatives and management realignment
actions, and $1.2 million for facility consolidation or closure costs. For the
nine months ended September 27, 2003, Snap-on recorded restructuring charges of
$19.5 million, including the $11.7 million for pension and post-retirement
medical curtailment costs, $6.1 million for severance costs to effect
consolidation initiatives and management realignment actions, and $1.7 million
for facility consolidation or closure costs. For the three and nine months ended
September 27, 2003, restructuring charges of $13.3 million and $16.1 million
were included in "Cost of goods sold," and $.7 million and $3.4 million were
included in "Operating expenses," on the accompanying Consolidated Statements of
Earnings.

The restructuring reserve usage of $14.6 million for the quarter ended September
27, 2003, consisted of a non-cash pension and post-retirement medical
curtailment charge of $11.7 million related to the above-mentioned closure of
the two hand tool facilities, $1.6 million for severance payments related to the
separation of 207 employees, and $1.3 million for equipment transfer and other
costs. The restructuring reserve usage of $19.9 million for the nine months
ended September 27, 2003, included the $11.7 million for pension and
post-retirement medical curtailment, $6.5 million for severance

30

SNAP-ON INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

payments related to the separation of 353 employees, and $1.7 million for
equipment transfer and other costs. During the first quarter of 2003, Snap-on
completed its restructuring actions initiated in the fourth quarter of 2002.

The composition of Snap-on's restructuring charge activity for the quarter ended
September 27, 2003, was as follows:

Balance at                                         Balance at
(Amounts in millions)                June 28, 2003         Additions         Usage      Sept. 27, 2003
-------------         ---------         -----      --------------

Severance costs                           $ 3.0             $  1.1          $ (1.6)           $ 2.5
Pension and post-
retirement medical                           -               11.7           (11.7)               -
Facility consolidation
or closure costs                            .1                1.2            (1.3)               -
-----             ------          ------            -----
Total                                     $ 3.1             $ 14.0          $(14.6)           $ 2.5
=====             ======          ======            =====

Snap-on has funded and expects to continue to fund the remaining cash
requirements of its restructuring activities with cash flows from operations and
borrowings under its existing credit facilities. The specific restructuring
measures and estimated costs were based on management's best business judgment
under prevailing circumstances. If future events warrant changes to the reserve,
such adjustments will be reflected as either "Cost of goods sold" or "Operating
expenses," as appropriate, in the applicable Consolidated Statements of
Earnings.

FINANCIAL CONDITION

Snap-on's growth has historically been supported by a combination of cash
provided by operating activities and debt financing. Snap-on believes that its
cash from operations, coupled with its sources of borrowings, are sufficient to
support its anticipated requirements for working capital, capital expenditures
and restructuring activities, acquisitions, common stock repurchases and
dividend payments. Due to Snap-on's credit rating over the years, external funds
have been available at a reasonable cost. As of the date of the filing of this
Form 10-Q, Snap-on's long-term debt and commercial paper was rated A2 and P-1 by
Moody's Investors Service and A and A-1 by Standard & Poor's. Snap-on believes
that the strength of its balance sheet affords the company the financial
flexibility to respond to both internal growth opportunities and those available
through acquisition.

Cash flow provided by operating activities was $140.0 million for the first nine
months of 2003, including $54.3 million from a net reduction in accounts
receivable and inventories, less accounts payable. Cash flow from operating
activities in the first nine months of 2003 included pension plan contributions
of $14 million. In the fourth quarter of 2003, Snap-on may, at its discretion,
use cash flow from operating or financing activities to make additional
voluntary pension plan contributions. Snap-on also expects that its full-year
2003 pension expense will increase by approximately $17 million over 2002
levels. Cash flow from operating activities in 2002 was $125.8 million,
including a $44.0 million payment ($27.9 million 

31

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

net of tax benefit) for the December 2001 resolution of an arbitration matter,
partially offset by a net reduction in accounts receivable and inventories, less
accounts payable.

Total notes payable and long-term debt was $335.7 million at the end of the
third quarter of 2003, as compared to $360.7 million at year-end 2002 and $407.8
million at the end of the third quarter of 2002. Third-quarter 2003 total debt
levels have decreased $72.1 million from the end of the third quarter of 2002,
reflecting Snap-on's increased cash flow. Cash and cash equivalents were $85.4
million and $6.9 million at the end of the third quarters of 2003 and 2002.

The ratio of Snap-on's total net debt (defined as total debt less cash and cash
equivalents) to total invested capital (defined as total net debt plus
shareholders' equity) was 21.2% at the end of the third quarter of 2003,
compared to 29.2% at year-end 2002 and 32.1% at the end of the third quarter of
2002. The improvement in this ratio reflects lower debt levels and increased
shareholders' equity, including a $79.1 million increase from foreign currency
translation, since December 28, 2002. This ratio may vary from time to time as
the company issues commercial paper to fund seasonal working capital
requirements and to the extent that the company may use debt to fund
acquisitions. Snap-on expects that its total net debt to total capital ratio
will target 30% - 35% in the long term; however, in the near term, this ratio is
expected to remain below 30%. Total invested capital was $1,178.4 million, up
$5.7 million from year-end 2002 and down $70.0 million from the end of the third
quarter of 2002.

In June 2003, Snap-on received proceeds of $5.1 million for the termination of a
$25 million interest rate swap that was a fair value hedge for a portion of its
$200 million, 6.25% long-term notes. The $5.1 million will be amortized to
income using the effective interest rate method over the remaining life of the
notes, which mature on August 15, 2011. At the same time, Snap-on entered into a
new $25 million interest rate swap to hedge that same portion of these notes.

Borrowings under commercial paper programs totaled $25.0 million at the end of
the third quarter of 2003 and $32.9 million at year-end 2002. At September 27,
2003, Snap-on had $408.0 million of multi-currency revolving credit facilities
that provide back-up liquidity for its commercial paper programs. These
facilities include a $200 million, 364-day revolving credit facility with a
one-year term-out option that terminates on July 30, 2004. The term-out option
allows Snap-on to elect to borrow under the credit facility for an additional
year after the termination date. The company's credit facilities also include a
five-year, $208 million revolving credit facility that terminates on August 20,
2005. As of September 27, 2003, and December 28, 2002, Snap-on was in compliance
with all covenants of its revolving credit facilities and there were no
borrowings under any revolving credit facility. The most restrictive financial
covenant requires that Snap-on maintain a total debt to total capital (defined
as total debt plus shareholders' equity) ratio that does not exceed 60%. The
company's total debt to total capital ratio, computed as defined by the
financial covenant, was 26.6% at September 27, 2003, and 30.3% at December 28,
2002. Snap-on also has an unused committed $20 million bank line of credit that
expires August 1, 2004.

At September 27, 2003, Snap-on had cash and cash equivalents of $85.4 million
and approximately $403.0 million of unused available debt capacity under the
terms of its revolving credit facilities and committed bank line of credit.

32

SNAP-ON INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Working investment (defined as current accounts receivable - net plus
inventories less accounts payable) as of September 27, 2003, was $751.0 million,
down $4.2 million from the $755.2 million as of year-end 2002, despite an
increase of $50.1 million from currency translation effects. The working
investment measure is used by Snap-on in assessing management performance and
effectiveness related to working capital.

Current accounts receivable-net at the end of the third quarter of 2003 was
$561.2 million, up $5.0 million from year-end 2002 levels, including an increase
of $32.7 million from currency translation, and up $13.9 million from the third
quarter of 2002. As of the end of the third quarter of 2003, days sales
outstanding improved to 96 days from 98 days for the comparable prior-year
period. Additionally, allowances for doubtful accounts increased from $41.2
million at year-end 2002 to $45.6 million at the end of the third quarter of
2003, including an increase of $2.0 million from currency translation.

Inventories totaled $365.2 million at the end of the third quarter of 2003, down
$40.7 million from the end of the third quarter of 2002, including a $32.9
million increase from currency translation. Inventories at September 27, 2003,
were down $4.7 million from year-end 2002 levels, including an increase of $24.8
million from currency translation. The inventory change in the first nine months
of 2003 reflects Snap-on's continued focus on improving working investment
levels. Inventories accounted for using the first-in, first-out (FIFO) method as
of September 27, 2003, and December 28, 2002, approximated 68% and 65% of total
inventories, respectively. All other inventories are generally accounted for
using the last-in, first-out (LIFO) cost method. As a result of the progress
made in reducing its inventory levels, the company's LIFO reserve declined from
$95.8 million at December 28, 2002, to $89.5 million at September 27, 2003. As
compared to the third quarter of 2002, inventory turns have improved from 2.8
turns to 3.3 turns (defined as the current quarter's cost of goods sold
annualized, divided by the average of the last four quarter-end's inventory
balances).

Capital expenditures of $18.7 million in the first nine months of 2003 were down
from $37.3 million in the first nine months of 2002, reflecting a more
disciplined approach to capital spending that focuses on investment in growth
projects while eliminating waste. Investments primarily included new
product-related, quality, and cost-reduction capital investments, as well as
ongoing replacements of manufacturing and distribution facilities and equipment.
Snap-on now anticipates fiscal 2003 capital expenditures will be in the range of
$30 million, of which approximately two-thirds is expected to be used for
investments relating to new products, quality enhancement or cost reduction.
Capital expenditures in fiscal 2002 totaled $45.8 million.

Snap-on has undertaken stock repurchases from time to time to offset dilution
created by shares issued for employee and dealer stock purchase plans, stock
options, and other corporate purposes, as well as to repurchase shares when
market conditions are favorable. Snap-on repurchased 300,000 shares of common
stock for $8.1 million under its previously announced share repurchase programs
during the first nine months of 2003. As of the end of the third quarter of
2003, Snap-on has remaining availability to repurchase up to an additional
$145.7 million in common stock pursuant to the Board of Directors'
authorizations. The purchase of Snap-on common stock is at the company's
discretion, subject to prevailing financial and market conditions.

33

SNAP-ON INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Snap-on has paid consecutive quarterly cash dividends since 1939. Cash dividends
paid totaled $43.6 million for the first nine months of 2003, as compared to
$41.8 million for the first nine months of 2002.

Snap-on believes that its cash from operations, coupled with its sources of
borrowings, are sufficient to support its anticipated requirements for working
capital, capital expenditures and continuous improvement activities,
acquisitions, common stock repurchases and dividend payments.

Unconsolidated Joint Venture
----------------------------

The FASB issued Interpretation ("FIN") No. 46, "Consolidation of Variable
Interest Entities" in January 2003. FIN No. 46 provides consolidation guidance
for certain variable interest entities ("VIE") in which equity investors of the
VIE do not have the characteristics of a controlling interest or do not have
sufficient equity at risk for the VIE to finance its activities independently.
Variable interests may arise from arrangements such as the company's 50%-owned
financial services joint venture, Snap-on Credit LLC ("SOC"), which is accounted
for using the equity method. In Snap-on's Form 10-Q for the quarter ended June
28, 2003, the company disclosed that it had completed its evaluation of FIN No.
46 and concluded that Snap-on was not required to consolidate SOC. On October 9,
2003, the FASB postponed the initial implementation date for FIN No. 46, which
would have been effective for Snap-on on June 29, 2003, the beginning of its
fiscal 2003 third quarter.

The company is evaluating recent guidance from the FASB, the U.S. Securities and
Exchange Commission and the accounting profession on the implementation of FIN
No. 46, the results of which could alter the company's previously disclosed
position on the consolidation of SOC. During the fourth quarter of 2003, Snap-on
will continue to evaluate the appropriate accounting for SOC under FIN No. 46.
The company will conclude on the impact of the adoption of FIN No. 46 in the
fourth quarter of fiscal 2003, provided that FIN No. 46 becomes effective for
Snap-on in that quarter. If it is determined that SOC qualifies as a VIE, then
Snap-on may be required to include the assets and liabilities (or some portion
thereof) of SOC in its consolidated financial statements as of January 3, 2004,
Snap-on's fiscal 2003 year end. See Note 7 for additional information on SOC,
including SOC's unaudited summary statements of financial condition as of
September 30, 2003, and December 31, 2002, and SOC's unaudited summary results
of operations for the three and nine months ended September 30, 2003, and
September 30, 2002.

OTHER MATTERS

For a discussion of recent accounting pronouncements, see Note 2.

CRITICAL ACCOUNTING POLICIES

Snap-on's disclosures of its critical accounting policies, which are contained
in its Annual Report on Form 10-K for the year ended December 28, 2002, have not
materially changed since that report was filed.

34

SNAP-ON INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

OUTLOOK

Snap-on will continue to emphasize the consistent and widespread application of
its Driven to Deliver(TM) strategic framework, including the implementation of
performance improvement initiatives. The company remains committed to seeking
opportunities for process improvements that will enhance competitiveness and
customer responsiveness throughout its global organization.

Snap-on expects to record in the fourth quarter of 2003 approximately $4 million
to $5 million of costs associated with the previously announced closing of two
U.S. hand tool manufacturing facilities, primarily for severance and transition
expenses. Snap-on also expects to record approximately $8 million to $9 million
of additional severance and transition costs for these closures in the first
quarter of 2004. Savings from these actions are expected to be approximately $12
million annually, beginning in 2004. In addition, Snap-on also expects that it
will incur between $2 million and $4 million of costs in the fourth quarter of
2003 for other continuous improvement actions.

For the remainder of the year, Snap-on expects continued steady growth in demand
for tools and handheld diagnostics by vehicle-service technicians. Additionally,
while there are indications of improving trends in the overall general economy,
these have not yet been reflected in sales improvements of equipment in the
industrial and capital goods sectors in which Snap-on participates. As a result
of its nine-month results and these marketplace assumptions, Snap-on expects
full-year 2003 reported earnings to be in a range of $1.50 to $1.55 per diluted
share.

Safe Harbor: Statements in this document that are not historical facts,
including statements (i) that include the words "expects," "believes,"
"anticipates," or similar words that reference Snap-on or its management; (ii)
specifically identified as forward-looking; or (iii) describing Snap-on's or
management's future outlook, plans, estimates, objectives or goals, are
forward-looking statements. Snap-on or its representatives may also make similar
forward-looking statements from time to time orally or in writing. Snap-on
cautions the reader that these statements are subject to risks, uncertainties or
other factors that could cause (and in some cases have caused) actual results to
differ materially from those described in any such statement.

Those important factors include the validity of the assumptions and bases set
forth above and the timing and progress with which Snap-on can continue to
achieve savings from its cost reduction and other Operational Fitness
initiatives; Snap-on's capability to retain and attract dealers and effectively
implement new programs; its ability to capture new business; the success of new
products and other Profitable Growth initiatives; Snap-on's ability to withstand
external negative factors including terrorist disruptions on business; changes
in trade, monetary and fiscal policies, regulatory reporting requirements, laws
and regulations, or other activities of governments or their agencies, including
military actions and such aftermath that might occur; disruption arising from
planned facility closures, Snap-on's ability to grow the U.S. dealer network;
differences between the actual and estimated return on pension plan assets; and
the absence of significant changes in inflation, the current competitive

35

SNAP-ON INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

environment, energy supply or pricing, legal proceedings, supplier disruptions,
currency fluctuations or the material worsening of economic and political
situations around the world.

These factors may not constitute all factors that could cause actual results to
differ materially from those discussed in any forward-looking statement. Snap-on
operates in a continually changing business environment and new factors emerge
from time to time. Snap-on cannot predict such factors nor can it assess the
impact, if any, of such factors on Snap-on's financial position or its results
of operations. Accordingly, forward-looking statements should not be relied upon
as a prediction of actual results. Snap-on disclaims any responsibility to
update any forward-looking statement provided in this document.

36

Item 3: Quantitative and Qualitative Disclosures About Market Risk

Market, Credit and Economic Risks
---------------------------------

Market risk is the potential economic loss that may result from adverse changes
in the fair value of financial instruments. Snap-on is exposed to market risk
from changes in both foreign currency exchange rates and interest rates. Snap-on
monitors its exposure to these risks and attempts to manage the underlying
economic exposures through the use of financial instruments such as forward
exchange contracts and interest rate swap agreements. Snap-on does not use
derivative instruments for speculative or trading purposes. Snap-on's
broad-based business activities help to reduce the impact that volatility in any
particular area or related areas may have on its operating earnings as a whole.
Snap-on's management takes an active role in the risk management process and has
developed policies and procedures that require specific administrative and
business functions to assist in the identification, assessment and control of
various risks.

FOREIGN CURRENCY RISK MANAGEMENT: Snap-on has significant international
operations. Foreign exchange risk exists to the extent that Snap-on has payment
obligations or receipts denominated in currencies other than the functional
currency. To manage these exposures, Snap-on identifies naturally offsetting
positions and then purchases hedging instruments in an attempt to protect the
residual net anticipated exposures. For additional information, refer to Note 9.

INTEREST RATE RISK MANAGEMENT: Snap-on's interest rate risk management policies
are designed to reduce the potential volatility of earnings that could arise
from changes in interest rates. Through the use of interest rate swaps, Snap-on
aims to better manage funding costs of the differing maturities and interest
rate structures of Snap-on's assets and liabilities. For additional information,
refer to Note 9.

Snap-on utilizes a Value-at-Risk ("VAR") model to determine the potential
one-day loss in the fair value of its interest rate and foreign
exchange-sensitive financial instruments from adverse changes in market factors.
The VAR model estimates were made assuming normal market conditions and a 95%
confidence level. Snap-on's computations are based on the inter-relationships
among movements in various currencies and interest rates (variance/co-variance
technique). These inter-relationships were determined by observing interest rate
and foreign currency market changes over the preceding quarter.

The estimated maximum potential one-day loss in fair value, calculated using the
VAR model, at September 27, 2003, was $1.3 million on interest rate-sensitive
financial instruments and $.6 million on foreign currency-sensitive financial
instruments. The VAR model is a risk management tool and does not purport to
represent actual losses in fair value that will be incurred by Snap-on, nor does
it consider the potential effect of favorable changes in market factors.

37

CREDIT RISK: Credit risk is the possibility of loss from a customer's failure to
make payments according to contract terms. Prior to granting credit, each
customer is evaluated, taking into consideration the borrower's financial
condition, collateral, debt-servicing capacity, past payment experience, credit
bureau information, and other financial and qualitative factors that may affect
the borrower's ability to repay. Specific credit reviews and standard industry
credit scoring models are used in performing this evaluation. Loans that have
been granted are typically monitored through an asset-quality-review process
that closely monitors past due accounts and initiates collection actions when
appropriate. In addition to credit risk exposure from its on-balance-sheet
receivables, Snap-on also has credit risk exposure for certain loans that SOC
originated with recourse provisions against Snap-on. At September 27, 2003,
$27.4 million of loans originated by SOC have a recourse provision against
Snap-on if the loans become more than 90 days past due. For additional
information on SOC, refer to Note 7.

ECONOMIC RISK: Economic risk is the possibility of loss resulting from economic
instability in certain areas of the world. Snap-on continually monitors its
exposure in these markets. Snap-on's Commercial and Industrial Group includes a
Bahco Group AB hand-tool manufacturing facility in Argentina with net assets of
approximately $9.7 million as of September 27, 2003. Due to economic instability
in Argentina, Snap-on resized its operations there in 2001, and Snap-on will
continue to assess Argentina's economic situation to determine if any future
actions or impairment write-downs are warranted.

As a result of the above market, credit and economic risks, net income and
revenues in any particular period may not be representative of full-year results
and may vary significantly from year to year and from quarter to quarter.
Inflation has not had a significant impact on the company.

Item 4: Controls and Procedures
-------------------------------

(a) Disclosure Controls and Procedures. The company's management, with the
participation of the company's Chief Executive Officer and Chief Financial
Officer, has evaluated the effectiveness of the company's disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the
end of the period covered by this report. Based on such evaluation, the
company's Chief Executive Officer and Chief Financial Officer have concluded
that, as of the end of such period, the company's disclosure controls and
procedures are effective in recording, processing, summarizing and reporting, on
a timely basis, information required to be disclosed by the company in the
reports that it files or submits under the Exchange Act.

(b) Internal Control Over Financial Reporting. There have not been any changes
in the company's internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
fiscal quarter to which this report relates that have materially affected, or
are reasonably likely to materially affect, the company's internal control over
financial reporting.

38

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K
----------------------------------------

Item 6(a): Exhibits
-------------------

Exhibit 10.1   Snap-on Incorporated Deferred Compensation Plan (as amended
through August 21, 2003)

Exhibit 10.2   Amended and Restated 364-Day Credit Agreement between the
Corporation and Citigroup Global Markets, Inc., Banc One Capital
Markets, Inc., Citibank N.A. and Bank One N.A.

Exhibit 12     Computation of Ratio of Earnings to Fixed Charges.

Exhibit 31.1   Certification of Chief Executive Officer pursuant to Rule
13a-14(a) under the Securities Exchange Act of 1934, as amended.

Exhibit 31.2   Certification of Principal Financial Officer pursuant to
Rule 13a-14(a) under the Securities Exchange Act of 1934, as
amended.

Exhibit 32.1   Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. This certification accompanies the
issuer's Quarterly Report on Form 10-Q and is not filed as
provided in SEC Release Nos. 33-8212, 34-47551 and IC-25967.

Exhibit 32.2   Certification of Principal Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. This certification accompanies the
issuer's Quarterly Report on Form 10-Q and is not filed as
provided in SEC Release Nos. 33-8212, 34-47551 and IC-25967.

39

Item 6(b): Reports on Form 8-K Filed During the Reporting Period
----------------------------------------------------------------

During the third quarter of 2003, Snap-on reported on Form 8-K the following:

Date Filed      Date of Report    Item
----------      --------------    ----
July 23, 2003   July 23, 2003     Snap-on furnished a press release entitled
"Snap-on Reports $.38 in EPS for the Second
Quarter; Results in line with recent outlook;
Announces additional actions to enhance
performance."

40

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Snap-on
Incorporated has duly caused this report to be signed on its behalf by the
undersigned duly authorized person.

SNAP-ON INCORPORATED

Date:  October 29, 2003           /s/ Martin M. Ellen
---------------------------------------------
Martin M. Ellen, Principal Financial Officer,
Chief Financial Officer and
Senior Vice President - Finance

41

EXHIBIT INDEX

Exhibit No.        Exhibit

10.1      Snap-on Incorporated Deferred Compensation Plan (as amended
through August 21, 2003)

10.2      Amended and Restated 364-Day Credit Agreement between the
Corporation and Citigroup Global Markets, Inc., Banc One 
Capital Markets, Inc., Citibank N.A. and Bank One N.A.

12        Computation of Ratio of Earnings to Fixed Charges.

31.1      Certification of Chief Executive Officer pursuant to Rule
13a-14(a) under the Securities Exchange Act of 1934, as
amended.

31.2      Certification of Principal Financial Officer pursuant to
Rule 13a-14(a) under the Securities Exchange Act of 1934, as
amended.

32.1      Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002. This certification
accompanies the issuer's Quarterly Report on Form 10-Q and
is not filed as provided in SEC Release Nos. 33-8212,
34-47551 and IC-25967.

32.2      Certification of Principal Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002. This certification
accompanies the issuer's Quarterly Report on Form 10-Q and
is not filed as provided in SEC Release Nos. 33-8212,
34-47551 and IC-25967.

42

EXHIBIT 10.1

SNAP-ON INCORPORATED
DEFERRED COMPENSATION PLAN

(as amended through August 21, 2003)

Section 1. Establishment and Purposes

1.1 Establishment. Snap-on Incorporated established effective as of April
1, 1986, a deferred compensation plan for executives as described herein, known
as the "SNAP-ON INCORPORATED DEFERRED COMPENSATION PLAN" (hereinafter called the
"Plan"). Snap-on Incorporated hereby amends the Plan effective August 21, 2003.

1.2 Purposes. The purposes of this Plan are to (i) enable the Corporation
to attract and retain persons of outstanding competence, (ii) provide a means
whereby certain amounts payable by the Corporation to selected executives may be
deferred to some future period and to provide such executives with a means to
have deferred amounts treated as if invested in the Corporation's stock, thereby
aligning their interests more closely with the interests of shareholders and
(iii) effective July 1, 2001, provide a matching credit by the Corporation to
certain elected officers of the Corporation and to provide such elected officers
with alternatives as to the manner in which annual adjustments are made to their
credited matching accounts. The Plan is intended to constitute an unfunded plan
primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees.

Section 2. Definitions

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

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

(b) "Cause" means that prior to a Participant's Termination of Employment,
he shall have (i) engaged in any act of fraud, embezzlement or theft in
connection with his duties as an executive or in the course of employment with
the Corporation or its subsidiaries; (ii) wrongfully disclosed any secret
process or confidential information of the Corporation or its subsidiaries; or
(iii) engaged in any Competitive Activity; and in any such case the act shall
have been determined to have been materially harmful to the Corporation. A
Participant's employment may not be terminated for Cause prior to the receipt by
the Participant of a copy of a resolution duly adopted by the affirmative vote
of not less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board called and held for the purpose of considering such
termination (after reasonable notice to the Participant and an opportunity for
the Participant, together with the Participant's counsel, to be heard before the
Board) finding that the Participant was guilty of conduct set forth in the
definition of Cause, and specifying the particulars thereof in detail. In the
event of a dispute regarding whether the Participant's employment has been
terminated for Cause, no claim by the Corporation that Cause exists shall be
given effect unless the Corporation establishes by clear and convincing evidence
that Cause exists.

(c) "Committee" means the Organization and Executive Compensation Committee
of the Board or, as to compensation matters in respect of which it has
authority, any other committee of the Board or director or officer of the
Corporation that has authority of the Organization and Executive Compensation
Committee of the Board relating to compensation matters.

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

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

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

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

(iii) Other Compensation. "Other Compensation" means other
compensation payable in cash and/or Common Stock or other property by the
Corporation to a Participant in the Year in question, including without
limitation compensation payable under the Amended and Restated Snap-on
Incorporated 2001 Incentive Stock and Awards Plan, as amended, if the award
of such compensation provides that the Participant may defer the
compensation.

(iv) Match Compensation. "Match Compensation" means Salary and
Incentive Compensation that a Participant eligible to receive matching
credits under Section 5 would have otherwise received in the Year in
question, but for such amounts being deferred pursuant to this Plan.

(f) "Competitive Activity" shall mean the Participant's participation
without the written consent of the Board in the management of any business
enterprise which manufactures or sells any product or service competitive with
any product or service of the Corporation or its subsidiaries. Competitive
Activity shall not include the ownership of less than five (5) percent of the
securities in any enterprise and exercise of any ownership rights related
thereto.

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

(h) "Fair Market Value" means the closing price of Common Stock on the New
York Stock Exchange on any particular date or, if no closing price is available
on that date, then the closing price on the immediately succeeding business day
on which there is a closing price; provided, however, that for purposes of
Section 17, Fair Market Value shall mean the closing price of the Common Stock
on the New York Stock Exchange on the date of the Change of

2

Control (as defined therein) or, if higher, the highest price per share of
Common Stock paid in the transaction giving rise to the Change of Control.

(i) "Growth Increment" means the amount of interest earned on a
Participant's deferred amounts in the Participant's Cash Account (as defined in
Section 6.1(a)).

(j) "Participant" means an individual eligible to participate in the Plan
pursuant to Section 3.1.

(k) "Retirement" means that (1) a Participant retires or is retired from
the employ of the Corporation and its subsidiaries (i) on or after attaining age
sixty-five (65) years or (ii) on or after attaining age fifty (50) years if the
Participant has completed ten or more years of continuous employment, as defined
in the Snap-on Incorporated Retirement Plan; (2) a Participant retires or is
retired from the employ of the Corporation and its subsidiaries because of total
and permanent disability; or (3) the Committee determines by resolution that a
Participant shall be deemed to have retired from the employ of the Corporation
and its subsidiaries for purposes of the Plan

(l) "Termination of Employment" means (i) that a Participant has terminated
the Participant's employment with the Corporation and its subsidiaries for any
reason other than Retirement or Death; or (2) that the Corporation and its
subsidiaries have terminated the Participant's employment with the Corporation
and its subsidiaries for any reason other than Retirement or Death. Termination
of Employment does not include a Participant's change in status from full-time
employment to part-time employment.

(m) "Year" means a calendar year.

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

Section 3. Eligibility and Participation

3.1 Eligibility. The Plan is primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees. Subject to the preceding sentence, the following persons shall be
eligible to participate in the Plan:

(a) the elected officers and appointed officers of the Corporation;

(b) the elected officers and appointed officers of Snap-on Tools Company
LLC;

(c) any other U.S. employee of the Corporation or any direct or indirect
subsidiary of the Corporation whose employment grade is Grade 37 or higher (or
the equivalent of Grade 37 or higher, as determined by the Chief Executive
Officer); and

(d) any other employee of the Corporation or any direct or indirect
subsidiary of the Corporation designated by the Chair of the Committee or by the
Chief Executive Officer of the Corporation from time to time.

3

3.2 Ceasing Eligibility. In the event a Participant no longer meets the
requirements for participation in this Plan, he shall become an inactive
Participant. An inactive Participant shall retain all rights described under
this Plan, except the right to make any further deferrals and the right to
receive any further matching credits, until the time that he again meets the
eligibility requirements of Section 3.1 (and, if applicable, Section 5.1).

Section 4. Election to Defer

4.1 Deferral Election. (a) Subject to the following provisions, a
Participant irrevocably may elect, by written notice to the Corporation, to
defer all or a percentage of annual Salary, Incentive Compensation, or both
Salary and Incentive Compensation.

(i) With respect to Salary deferrals, the deferral percentage elected
shall be applied to the Participant's Salary for each pay period of the
Year to which the deferral election applies, and the deferral election must
be made before the last business day of the Year immediately preceding the
Year for which such deferral election applies.

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

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

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

(d) In connection with a Participant's deferral election pursuant to this
Section 4.1 relating to Compensation that the Participant would have otherwise
received in a given Year, and thereafter from time to time during that Year as
determined by the Participant subject to any rules established by the Committee
pursuant to Section 11.1, the Participant shall provide written direction to the
Corporation indicating the portion of the Participant's Compensation that the
Participant would have otherwise received in that Year that should be (1)
credited to the Participant's Cash Account, except to the extent Section 6.5
would require a credit of some or all of the Compensation to the Participant's
Share Account (as defined in Section 6.1(a)); (2) credited to the Participant's
Share Account; or (3) for deferral elections made on or after September 1, 2003,
credited to the Participant's Mutual Fund Account (as defined in Section
6.1(a)), except to the extent Section 6.5 would require a credit of some or all
of the Compensation to the Participant's Share Account. Each written direction
shall become effective immediately upon receipt by the Corporation for
Compensation otherwise payable after such

4

date subject to rules that the Committee establishes pursuant to Section 11.1. A
Participant who has elected to defer any of the Participant's Compensation to
the Mutual Fund Account shall further elect which one or more of the investment
funds, from those designated from time to time by the Committee as available to
Participants under the Plan (each a "Reference Fund" and, collectively, the
"Reference Funds"), shall be used for purposes of crediting hypothetical
investment gains or losses to the Participant's Mutual Fund Account, and the
Participant shall elect the percentage of the Participant's Compensation that is
to be deemed invested in each elected Reference Fund. To the extent a
Participant fails to elect an account to which to credit Compensation for a Year
pursuant to this Section 4.1(d), the Participant's Compensation for such Year
shall be credited to the Participant's Cash Account, except to the extent
Section 6.5 would require a credit of some or all of the Compensation to the
Participant's Share Account.

4.2 Deferral Period (a) The first time a Participant makes an election
pursuant to this Section 4.1 relating to Compensation that the Participant would
have otherwise received in a given Year, the Participant irrevocably shall
select a single deferral period for all Compensation that the Participant would
have otherwise received in that Year ("Year Deferred Amounts"). The deferral
period shall be for a specified number of Years or until a specified date. The
earliest a deferral period may end is the first January 1 following the Year in
which the Participant would have otherwise received the Compensation.

Respecting deferral elections made prior to September 1, 2003, a
Participant shall modify any such prior elections to ensure that going forward
all Year Deferred Amounts subject to such prior elections have a single deferral
period for Year Deferred Amounts for each Year in question. The Committee shall
establish the appropriate procedures and time frame to effect the required
modifications.

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

(i) Death,

(ii) Subject to subsection (c), Retirement, or

(iii) Subject to subsection (d), Termination of Employment.

(c) A Participant may elect to have the deferral period for Year Deferred
Amounts continue beyond termination of employment due to Retirement by so
indicating when the Participant selects, or modifies pursuant to Section 4.4,
the Participant's deferral period for a the Year Deferred Amounts. At such time,
the Participant may elect one or more successive post -retirement deferral
periods of up to one (1) Year each, but in no event may the aggregate of these
successive post-retirement deferral periods and any annual installments elected
pursuant to Section 4.3 exceed twenty-five (25) years beyond termination of
employment due to Retirement.

(d) Effective January 1, 2001, a Participant may elect to have the deferral
period for Year Deferred Amounts continue beyond Termination of Employment with
the Corporation, but only if such employment was terminated at the initiative of
the Corporation for reasons other than for Cause. A Participant may exercise
this one-time election by so indicating when the Participant selects, or
modifies pursuant to Section 4.4, the Participant's deferral period for the

5

Year Deferred Amounts. At such time, the Participant may elect one or more
post-termination deferral periods of up to one (1) Year each, but in no event
may the aggregate of these successive post-retirement deferral periods and any
annual installments elected pursuant to Section 4.3 exceed twenty-five (25)
years beyond Termination of Employment initiated by the Corporation for reasons
other than Cause.

4.3 Manner of Payment Election. At the same time as an election is made
pursuant to Section 4.1, or is modified pursuant to Section 4.4, the Participant
also may elect to have Year Deferred Amounts paid either in a lump sum or in up
to twenty-five (25) substantially equal annual installments; provided, however,
at such time a Participant that elects to receive payments in substantially
equal annual installments may also specify a date within the installment period
to receive all then remaining Year Deferred Amounts in a lump sum.

4.4 Modification. A Participant may change the manner in which Year
Deferred Amounts will be paid and/or the date such payments are to commence by
written election made prior to the Year in which such payments are to commence.
A Participant may not make any modification pursuant to this Section 4.4 in or
after the Year payments commence respecting the deferral election in question.

Section 5. Matching Credits

5.1 Effective Date and Eligibility. Effective July 1, 2001, the Corporation
shall credit matching credits under this Plan only to Participants described in
this Section at such time and in such amounts as provided in Section 5.2.
Notwithstanding anything to the contrary in the Plan, only those Participants
who are also actively participating in the cash balance formula in the Snap-on
Incorporated Supplemental Retirement Plan for Officers, as amended from time to
time, and are making deferrals under this Plan, or into the Snap-on Incorporated
Savings Plan, for the Year shall be eligible for a matching credit by the
Corporation for a Year for their benefit under this Plan.

5.2 Time and Amount of Matching Contributions. The Corporation shall credit
matching credits under this Plan during each calendar quarter for the benefit of
each eligible Participant. The amount of the matching credit for each calendar
quarter for the benefit of an eligible Participant will be an amount equal to
the excess of:

(a) the lesser of (i) the product of the Participant's Match Compensation
for the calendar quarter multiplied by fifty percent (50%), or (ii) three
percent (3%) of the Participant's Compensation (other than Other Compensation)
for such calendar quarter, over

(b) the actual matching contribution made by the Corporation for the
benefit of such Participant for such calendar quarter under the Snap-on 401(k)
Plan.

5.3 Deferral Period.

(a) The deferral period selected for Year Deferred Amounts by a Participant
under Section 4.2 shall also apply to the matching credits credited under
Section 5 with respect to those Year Deferred Amounts.

6

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

(i) Death,

(ii) Subject to Section 4.2(c), Retirement, or

(iii) Subject to section 4.2(d), Termination of Employment.

5.4 Manner of Payment Election. A Participant's elected manner of payment
for Year Deferred Amounts under Section 4.3 shall also apply to the matching
credits credited under Section 5 with respect to those Year Deferred Amounts.

5.5 Modification. A Participant's change in the manner in which Year
Deferred Amounts will be paid and/or the date such payments are to commence
under Section 4.4 will apply to the associated matching credits.

Section 6. Accounts

6.1 Participant Accounts.

(a) Deferred Compensation Accounts. The Corporation shall establish and
maintain individual bookkeeping accounts in respect of deferrals made by a
Participant consisting of a "Cash Account", a "Share Account" and a "Mutual Fund
Account". A Participant shall have separate accounts for Year Deferred Amounts
with different deferral periods under Section 4.2 and/or manners of payment
under Section 4.3.

(i) If a Participant has elected pursuant to Section 4.1(d) to have
any portion of the Participant's Year Deferred Amounts credited to the
Participant's Cash Account, then the Participant's Cash Account shall be
credited with the dollar amount of any amount deferred and to be credited
to the Participant's Cash Account as of the date the amount deferred
otherwise would have become due and payable.

(ii) If a Participant has elected pursuant to Section 4.1(d) to have
any portion of the Participant's Year Deferred Amounts credited to the
Participant's Share Account, then the dollar amount deferred and to be
credited to the Participant's Share Account shall be converted into
deferred shares of Common Stock to be credited to the Participant's Share
Account as of the date the amount deferred otherwise would have become due
and payable. In such event, there shall be credited to the Participant's
Share Account as of such date a number of units ("Share Units") equal to
the dollar amount of any amount deferred divided by the Fair Market Value
as of the payroll date.

(iii) If a Participant has elected pursuant to Section 4.1(d) to have
any portion of the Participant's Year Deferred Amounts credited to the
Participant's Mutual Fund Account, then based on the dollar amount deferred
shares (including fractional shares) of the appropriate Reference Fund(s)
shall be credited to the Participant's Mutual Fund Account ("Mutual Fund
Shares"), with the number of Mutual Fund Shares to be credited determined
in accordance with administrative procedures and regulations that the

7

Committee establishes from time to time. A Participant's Mutual Fund
Account may consist of any one or more of the Reference Funds, in such
proportion as the Participant has elected pursuant to 4.1(d) in connection
with the first deferral election made respecting a given Year, and this
proportion may not be modified, except as permitted by the Committee.

(b) Matching Credits Accounts. The Corporation shall establish and maintain
an individual bookkeeping account in respect of matching credits by the
Corporation for the benefit of an eligible Participant to be known as a
"Matching Account". A Participant's Matching Account shall be credited with a
number of Share Units equal to the dollar amount of matching credits under
Section 5 for the Participant's benefit divided by the Fair Market Value on the
date the Corporation credits the matching credits.

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

6.3 Changing Accounts.

(a) Subject to applicable corporate policies and Section 6.3(g), from time
to time a Participant may convert all or a portion of any Cash Account balance
of the Participant into deferred shares of Common Stock credited to the
Participant's corresponding Share Account by written notice to the Corporation.
In such event, and effective as of the close of business on the trading day on
the date that the Corporation receives such notice, if the notice is received
before the close of trading on that day, otherwise as of the close of business
on the immediately succeeding trading day (the "Effective Date"), (i) there
shall be credited to the Participant's Share Account a number of Share Units
equal to the number of Share Units specified in the notice or, if such notice
specifies a dollar amount, a number of Share Units equal to such dollar amount
divided by the Fair Market Value as of the Effective Date; and (ii) the
Participant's Cash Account shall be debited in an amount equal to the number of
Share Units credited to the Share Account multiplied by the Fair Market Value as
of the Effective Date.

(b) Subject to applicable corporate policies, from time to time a
Participant may convert all or a portion of any Cash Account balance of the
Participant into an amount to be credited to the Participant's corresponding
Mutual Fund Account by giving written notice to the Corporation, which notice
shall specify the dollar amount to be credited to each of the Reference Funds.
In such event, and effective as of the Effective Date, (i) there shall be
credited to the Participant's Mutual Fund Account Mutual Fund Shares for the
applicable Reference Funds equal to the dollar amount being converted divided by
the net asset value of the applicable Mutual Fund Shares as of the close of
trading on the Effective Date ("Effective Date Fund Shares Value"); and (ii) the
Participant's Cash Account shall be debited in an amount equal to the dollar
amount being converted.

8

(c) Subject to applicable corporate policies and Section 6.3(g), from time
to time a Participant with a credit balance in a Mutual Fund Account may convert
all or a portion of any Mutual Fund Shares credited to the Participant's
corresponding Mutual Fund Account into deferred shares of Common Stock credited
to the Participant's corresponding Share Account by written notice to the
Corporation, which notice shall specify the number of Mutual Fund Shares to be
converted and the Reference Fund(s) to which such Mutual Fund Shares correspond
or a dollar amount and the Reference Fund(s) to which such dollar amount
corresponds. In such event, and effective as of the Effective Date, (i) there
shall be credited to the Participant's Share Account a number of Share Units
equal to (A) the Effective Date Fund Shares Value of the Mutual Fund Shares
specified in the notice divided by the Fair Market Value as of the Effective
Date or (B) the dollar amount specified in the notice divided by the Fair Market
Value as of the Effective Date; and (ii) the Participant's Mutual Fund Account
shall be debited by the number of Mutual Fund Shares specified in the notice or,
as the case may be, by the number of Mutual Fund Shares having an Effective Date
Fund Shares Value equal to the dollar amount specified in the notice.

(d) Subject to applicable corporate policies, from time to time a
Participant with a credit balance in a Mutual Fund Account may convert all or a
portion of any Mutual Fund Shares credited to the Participant's corresponding
Mutual Fund Account into an amount to be credited to the Participant's
corresponding Cash Account by giving written notice to the Corporation, which
notice shall specify the number of Mutual Fund Shares to be converted and the
Reference Fund(s) to which such Mutual Fund Shares correspond or a dollar amount
and the Reference Fund(s) to which such dollar amount corresponds. In such
event, and effective as of the Effective Date, (i) there shall be credited to
the Participant's Cash Account an amount equal to (A) the Effective Date Fund
Shares Value of the Mutual Fund Shares specified in the notice or (B) the dollar
amount specified in the notice; and (ii) the Participant's Mutual Fund Account
shall be debited by the number of Mutual Fund Shares specified in the notice or,
as the case may be, by the number of Mutual Fund Shares having a Effective Date
Fund Shares Value equal to the dollar amount specified in the notice.

(e) Subject to applicable corporate policies and Section 6.3(g), from time
to time a Participant with a credit balance in a Share Account may convert all
or a portion of such balance into an amount to be credited to the Participant's
corresponding Cash Account by giving written notice to the Corporation, which
notice shall specify the number of Share Units to be converted or a dollar
amount. In such event, and effective as of the Effective Date, (i) there shall
be credited to the Participant's Cash Account an amount equal to (A) the number
of Share Units specified in the notice multiplied by the Fair Market Value as of
the Effective Date or (B) the dollar amount specified in the notice; and (ii)
the Participant's Share Account shall be debited by the number of Share Units
specified in the notice, or, as the case may be, by the number of Share Units
having a Fair Market Value as of the Effective Date equal to the dollar amount
specified in the notice.

(f) Subject to applicable corporate policies and Section 6.3(g), from time
to time a Participant with a credit balance in a Share Account may convert all
or a portion of such balance into an amount to be credited to the Participant's
corresponding Mutual Fund Account by giving written notice to the Corporation,
which notice shall specify the number of Share Units to be converted or a dollar
amount and the Share Units or dollar amounts to be credited to each

9

of the Reference Funds. In such event, and effective as of the Effective Date,
(i) there shall be credited to the Participant's Mutual Fund Account a number of
Mutual Fund Shares for the applicable Reference Funds equal to (A) the Fair
Market Value of the Share Units as of the Effective Date divided by the
Effective Date Fund Shares Value or (B) the dollar amount specified in the
notice divided by the Effective Date Fund Shares Value; and (ii) the
Participant's Share Account shall be debited by the number of Share Units
specified in the notice, or, as the case may be, by the number of Share Units
having a Fair Market Value as of the Effective Date equal to the dollar amount
specified in the notice.

(g) A Participant who is subject to Section 16 of the Securities Exchange
Act of 1934, as amended, may make transfers of existing balances pursuant to
Sections 6.3(a), (c), (e) or (f) if the transfer is effected pursuant to an
election made at least six (6) months after the date of the Participant's most
recent opposite-way election making a transfer of existing balances pursuant to
Sections 6.3(a), (c), (e) or (f) or existing account balances out of or into a
Common Stock fund under any other Corporation plan, or more frequently as
permitted by the Committee.

6.4 Cash Dividends. Whenever cash dividends are paid by the Corporation on
outstanding Common Stock, as of the payment date for the dividend, there shall
be credited between a Participant's Share Account and Matching Account (if any,
and then only to the extent then maintained in Share Units), as appropriate,
additional Share Units equal to the amount per share of the cash dividend on the
Common Stock multiplied by the number of Share Units credited to the
Participant's Share Account, if any, and Matching Account (if any, and then only
to the extent then maintained in Share Units) as of the close of business on the
record date for the dividend divided by the Fair Market Value of the Common
Stock on the date of payment of the dividend.

6.5 Deferral of Other Compensation. Subject to the authority of the
Committee, the Corporation's Chief Executive Officer may approve the terms of
any agreements between the Corporation and any Participant relating to the
deferral of Other Compensation where, but for the Participant's deferral, the
Participant would have received shares of Common Stock if such officer
determines that such terms are appropriate to carry out the purposes of this
Plan and the award of Other Compensation. Without limitation, the Corporation
may enter into an agreement with a Participant relating to such a deferral under
which (i)(A) there shall be credited to the Participant's Share Account a number
of Share Units equal to the number of shares of Common Stock the receipt of
which the Participant has deferred which credit shall be made as of the date the
Other Compensation deferred otherwise would have become due and payable or (B)
Share Units shall be credited to the Participant's Share Account only at a
future date, such as the date that one or more conditions to vesting have been
satisfied; (ii) a credit of Share Units may be made subject to such restrictions
as are imposed under the terms of the award of Other Compensation (or
restrictions substantially equivalent to those to which shares of Common Stock
would have been subject but for the deferral), including without limitation
forfeiture under certain circumstances and restrictions on the Participant's
rights to convert such Share Units pursuant to this Section 6.5; and (iii) if
the terms of the award of Other Compensation require a Participant to deliver
cash and/or shares of Common Stock to the Corporation to exercise or otherwise
receive the benefit of such Other Compensation, then in lieu of delivering such
cash and/or Common Stock, there may be a debit to the Participant's Cash Account
in an amount equal to the amount of cash that the Participant otherwise would
have delivered and/or a debit to

10

the Participant's Share Account in an amount equal to the number of shares of
Common Stock that the Participant otherwise would have delivered, in each case
to the extent of any credit balance in such account.

6.6 Earnings Adjustments to Matching Accounts.

(a) Except as provided in Section 6.6(b), a Participant's Matching Account
will be adjusted (in the manner provided in Section 6.6(c)) at the end of each
Year in an amount which is equal to the net increase (or net decrease as
appropriate) in Fair Market Value for the same Year.

(b) Diversification Election. Unless elected by a Participant to the
contrary under and subject to this Section 6.6(b), annual earnings adjustments
to the Participant's Matching Account shall be determined with reference to Fair
Market Value pursuant to Section 6.6(a). A Participant may elect to have the
annual earnings adjustments to the Participant's Matching Account be determined
with reference to a measure other than Fair Market Value, including the Cash
Account, the Mutual Fund Account and any other alternative earnings measure that
the Committee approves. Once an election is made under this Section 6.6(b), the
Participant's Matching Account balance shall be converted out of Share Units
(using Fair Market Value on the date the election is effective) and shall not be
maintained in Share Units again.

For purposes of this Section 6.6(b), a change to the measure used to
determine adjustments to a Matching Account of a Participant shall be made at
the election of the Participant, but only at the same times, under the same
conditions and subject to the same limitations as are allowed or imposed under
the Snap-on 401(k) Plan for diversifying the Corporation's matching contribution
under such plan out of shares of Common Stock to other permissible investments
available under the Snap-on 401(k) Plan. The election provided in this Section
6.6(b) shall be made in writing as directed by the Committee. Earnings
adjustments to Matching Accounts after the effective date of an election under
this Section 6.6(b) shall be calculated for the Participant's Matching Account
with reference to the Participant's duly elected alternative earnings measure.

(c) An eligible Participant's Matching Account shall be credited, or
debited, as appropriate, at the end of each Year with (i) a number of Share
Units equal to the dollar amount of adjustments determined under Section 6.6(a)
divided by the Fair Market Value on the date the Corporation credits such
adjustments to the Participant's Matching Account, or (ii) an earnings
adjustment calculated as provided in Section 6.6(b) if a qualified election has
been made under Section 6.6(b).

6.7 Charges Against Accounts. There shall be charged against a
Participant's Cash Account any cash payments (excluding payments for fractional
shares) made to the Participant or to his beneficiary in accordance with Section
7. There shall be charged against a Participant's Share Account any
distributions made to the Participant or to his beneficiary in respect of the
Participant's Share Account in accordance with Section 7. There shall be charged
against a Participant's Mutual Fund Account any distributions made to the
Participant or to his beneficiary in respect of the Participant's Mutual Fund
Account in accordance with Section 7. There shall be charged against a
Participant's Matching Account any distributions made to the

11

Participant or to his beneficiary in respect of the Participant's Matching
Account in accordance with Section 7.

6.8 Terminated Reference Fund. In the event a Reference Fund shall for any
reason no longer be available or otherwise appropriate for use under the Plan,
including but not limited to considerations of administrative feasibility, the
Committee shall determine the aggregate net asset value of the Mutual Fund
Shares of the affected Reference Fund in a Participant's Mutual Fund Account.
Based on the aggregate net asset value of the Mutual Fund Shares of the affected
Reference Fund in the Participant's Mutual Fund Account, the Participant shall
redesignate all such amounts to another Reference Fund(s), or to the
Participant's Cash Account, to be credited to the Participant's Cash Account in
accordance with Section 6.1(a).

Section 7. Payment of Deferred and Matching Amounts

7.1 Payment of Deferred and Matching Amounts.

(a) Payment of a Participant's Cash Account balance, including accumulated
Growth Increments attributable thereto and dividend credits under Section 6.4,
shall be paid in cash commencing within thirty (30) calendar days after the
commencement date referred to in Section 4.2 (as may be modified pursuant to
Section 4.4). The payments shall be made in the manner selected by the
Participant under Section 4.3 or, in the absence thereof, in a lump sum. The
amount of each payment shall be equal to a Participant's then distributable Cash
Account balance multiplied by a fraction, the numerator of which is one and the
denominator of which is the number of installment payments remaining.

(b) Payment of a Participant's Share Account balance shall be paid
commencing within thirty (30) calendar days after the commencement date referred
to in Section 4.2 (as may be modified pursuant to Section 4.4). Payments in
respect of a Share Account balance shall be made in cash in an amount equal to
the number of Share Units then payable multiplied by the Fair Market Value on
the date of payment; provided, however, that at the election of a Participant,
made by written notice to the Corporation delivered not less than five business
days before a payment due date, payments in respect of a Share Account may be
made solely in Common Stock by converting Share Units into Common Stock on a
one-for-one basis, with payment of fractional shares to be made in cash based
upon the Fair Market Value on the date of payment. The payments shall be made in
the manner selected by the Participant under Section 4.3 or, in the absence
thereof, in a lump sum. The number of Share Units payable at the time of a
payment shall be equal to a Participant's then distributable Share Account
balance multiplied by a fraction, the numerator of which is one and the
denominator of which is the number of installment payments remaining.

(c) Payment of a Participant's Mutual Fund Account balance shall be paid
commencing within thirty (30) calendar days after the commencement date referred
to in Section 4.2 (as may be modified pursuant to Section 4.4). Payments in
respect of a Mutual Fund Account shall be made in cash as set forth below. The
payments shall be made in the manner selected by the Participant under Section
4.3 or, in the absence thereof, in a lump sum. The amount of cash payable shall
be equal to the aggregate net asset value of the Mutual Fund Shares credited to
the Participant's Mutual Fund Account as of the payment date multiplied by a

12

fraction, the numerator of which is one and the denominator of which is the
number of installment payments remaining.

(d) Payment of a Participant's Matching Account balance shall be paid
commencing within thirty (30) calendar days after the commencement date referred
to in Section 5.3 (as may be modified pursuant to Section 5.5). Payments in
respect of a Matching Account balance maintained in Share Units at the time
shall be made in cash in an amount equal to the number of Share Units then
payable multiplied by the Fair Market Value on the date of payment; provided,
however, that at the election of a Participant, made by written notice to the
Corporation delivered not less than five (5) business days before a payment due
date, payments in respect of a Matching Account maintained in Share Units at the
time may be made solely in Common Stock by converting Share Units into Common
Stock on a one-for-one basis, with payment of fractional shares to be made in
cash based upon the Fair Market Value on the date of payment. Payments of a
Participant's Matching Account balance that is no longer maintained in Share
Units shall be in cash in an amount equal to the Matching Account balance plus
accumulated adjustments under Sections 6.6(b) and 6.6(c) and dividend credits
under Section 6.4. The payments shall be made in the manner selected by the
Participant under Section 5.4 or, in the absence thereof, in a lump sum. The
number of Share Units payable at the time of a payment shall be equal to a
Participant's then distributable Matching Account balance maintained in Share
Units multiplied by a fraction, the numerator of which is one and the
denominator of which is the number of installment payments remaining.

7.2 Acceleration of Payments. If a Participant dies prior to the payment of
all or a portion of his Cash Account, Share Account, Mutual Fund Account and/or
Matching Account balances, the balance of any amounts payable shall be paid in a
lump sum to the beneficiaries designated under Section 8.

7.3 Financial Emergency. The Committee, in its sole discretion, may alter
the timing or manner of payment of Year Deferred Amounts and/or matching amounts
in the event that the Participant establishes, to the satisfaction of the
Committee, severe financial hardship. In such event, the Committee may:

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

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

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

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

13

Section 8. Beneficiary Designation

8.1 Designation of Beneficiary. A Participant shall designate a beneficiary
or beneficiaries who, upon the Participant's death, are to receive the amounts
that otherwise would have been paid to the Participant. All designations shall
be in writing to the Corporation in such form as it requires or accepts and
signed by the Participant. The designation shall be effective only if and when
delivered to the Corporation during the lifetime of the Participant. The
Participant also may change his beneficiary or beneficiaries by a signed,
written instrument delivered to the Corporation. If a Participant is married and
names someone other than (or in addition to) the Participant's spouse as a
beneficiary, then the Participant's spouse must provide a written consent to
this beneficiary designation that has been witnessed by a notary public. The
payment of amounts shall be in accordance with the last unrevoked written
designation of beneficiary that has been signed and delivered to the
Corporation.

8.2 Death of Beneficiary. In the event that all of the beneficiaries named
in Section 8.1 predecease the Participant, the amounts that otherwise would have
been paid to the Participant shall be paid to the Participant's estate, and in
such event, the term "beneficiary" shall include his estate.

8.3 Ineffective Designation. In the event the Participant does not
designate a beneficiary, or if for any reason such designation is ineffective,
in whole or in part, the amounts that otherwise would have been paid to the
Participant shall be paid to the Participant's estate, and in such event, the
term "beneficiary" shall include his estate.

Section 9. Rights of Participants

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

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

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

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

Section 10. Nontransferability

10.1 Nontransferability. In no event shall the Corporation make any payment
under this Plan to any assignee or creditor of a Participant or a beneficiary.
Prior to the time of a payment hereunder, a Participant or a beneficiary shall
have no rights by way of anticipation or

14

otherwise to assign or otherwise dispose of any interest under this Plan nor
shall such rights be assigned or transferred by operation of law.

Section 11. Administration

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

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

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

11.4 Action by the Corporation. Any action required or permitted to be
taken under this Plan by the Corporation shall be by resolution of the Board, by
the duly authorized Committee of the Board, or by a person or persons authorized
by resolution of the Board or the Committee.

Section 12. Amendment and Termination

12.1 Amendment and Termination. The Corporation expects the Plan to be
permanent but, since future conditions affecting the Corporation cannot be
anticipated or foreseen, the Corporation necessarily must and does hereby
reserve the right to amend, modify, or terminate the Plan at any time by action
of the Board. Notwithstanding the foregoing, upon the occurrence of a Potential
Change of Control (as hereinafter defined) and for a period of six (6) months
thereafter, the Plan may not be terminated or amended in a manner adverse to
Participants. For purposes of this Section, a "Potential Change of Control"
shall be deemed to have occurred if an event set forth in any one of the
following shall have occurred:

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

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

(iii) Any Person becomes the Beneficial Owner, directly or indirectly,
of securities of the Corporation representing fifteen percent (15%) or more
of either the then outstanding shares of Common Stock or the combined
voting power of the Corporation's then outstanding voting securities; or

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

15

Each of "Change of Control," "Person" and "Beneficial Owner" shall have the
meaning set forth in Section 17.1.

Section 13. Applicable Law

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

Section 14. Withholding of Taxes

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

Section 15. Notice

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

Section 16. Common Stock Matters

16.1 Stock Reserved for the Plan. The Corporation shall make available as
and when required a sufficient number of shares of Common Stock to meet the
needs of the Plan. Shares of Common Stock issued hereunder shall be previously
issued shares reacquired and held by the Corporation.

16.2 General Restrictions.

(a) Investment Representations. The Corporation may require any
Participant, as a condition of receiving Common Stock under this Plan, to give
written assurances in substance and form satisfactory to the Corporation and its
counsel to the effect that such person is acquiring the Common Stock for his own
account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Corporation
deems necessary or appropriate in order to comply with federal and applicable
state securities laws.

16

(b) Compliance with Securities Laws. Delivery of Common Stock under the
Plan shall be subject to the requirement that, if at any time counsel to the
Corporation shall determine that the listing, registration or qualification of
the shares of Common Stock upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental or regulatory body,
is necessary as a condition of, or in connection with, the issuance of shares
thereunder, such shares may not be delivered in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained on conditions acceptable to the Committee. Nothing herein
shall be deemed to require the Corporation to apply for or to obtain such
listing, registration or qualification.

16.3 Effect of Certain Changes in Capitalization. In the event of any
Change in Capitalization, a proportionate substitution or adjustment may be made
in (a) the aggregate number and/or kind of shares or other property reserved for
issuance under the Plan, (b) the number and kind of shares or other property to
be delivered under the Plan and (c) the number and kind of shares or other
property held in each Participant's Share Account and Matching Account (if any),
in each case as may be determined by the Committee in its sole discretion. Such
other proportionate substitutions or adjustments may be made as shall be
determined by the Committee in its sole discretion. "Change in Capitalization"
means any increase, reduction, change or exchange of shares of Common Stock for
a different number or kind of shares or other securities or property by reason
of a reclassification, recapitalization, merger, consolidation, reorganization,
issuance of warrants or rights, stock dividend, stock split or reverse stock
split, combination or exchange of shares, repurchase of shares, change in
corporate structure or otherwise; or any other corporate action, such as
declaration of a special dividend, that affects the capitalization of the
Corporation.

Section 17. Change of Control

17.1 Change of Control. For purposes of this Plan, a "Change of Control"
shall be deemed to have occurred on the first to occur of any one of the events
set forth in the following paragraphs:

(a) any Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Corporation (not including in the securities Beneficially
Owned by such Person any securities acquired directly from the Corporation or
its Affiliates) representing 25% or more of either the then outstanding shares
of Common Stock or the combined voting power of the Corporation's then
outstanding voting securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction described in clause (i) of
paragraph (c) below; or

(b) the following individuals cease for any reason to constitute a majority
of the number of directors then serving: individuals who, on January 25, 2002,
constitute the Board and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation, relating to the
election of directors of the Corporation as such terms are used in Rule 14a-11
of Regulation 14A under the Exchange Act) whose appointment or election by the
Board or nomination for election by the Corporation's stockholders was approved
or recommended by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors on

17

January 25, 2002 or whose appointment, election or nomination for election was
previously so approved or recommended; or

(c) there is consummated a merger or consolidation of the Corporation or
any direct or indirect subsidiary of the Corporation with any other corporation,
other than (i) a merger or consolidation which would result in the voting
securities of the Corporation outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof) at least 60% of the combined voting power of the voting securities of
the Corporation or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of the Corporation (or
similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation (not including in the
securities Beneficially Owned by such Person any securities acquired directly
from the Corporation or its Affiliates) representing 25% or more of either the
then outstanding shares of Common Stock or the combined voting power of the
Corporation's then outstanding voting securities; or

(d) the stockholders of the Corporation approve a plan of complete
liquidation or dissolution of the Corporation or there is consummated an
agreement for the sale or disposition by the Corporation of all or substantially
all of the Corporation's assets (in one transaction or a series of related
transactions within any period of 24 consecutive months), other than a sale or
disposition by the Corporation of all or substantially all of the Corporation's
assets to an entity, at least 75% of the combined voting power of the voting
securities of which are owned by stockholders of the Corporation in
substantially the same proportions as their ownership of the Corporation
immediately prior to such sale.

Notwithstanding the foregoing, no "Change of Control" shall be deemed to
have occurred if there is consummated any transaction or series of integrated
transactions immediately following which the record holders of the Common Stock
immediately prior to such transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity which owns all or
substantially all of the assets of the Corporation immediately following such
transaction or series of transactions.

For purposes of the definitions of Change of Control and Potential Change
of Control, "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act; "Beneficial Owner" shall have
the meaning set forth in Rule 13d-3 under the Exchange Act; "Exchange Act" shall
mean the Securities Exchange Act of 1934, as amended; and "Person" shall have
the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used
in Sections 13(d) and 14(d) thereof, except that such term shall not include (i)
the Corporation or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation or any of
its Affiliates, (iii) an underwriter temporarily holding securities pursuant to
an offering of such securities, (iv) a corporation owned, directly or
indirectly, by the shareholders of the Corporation in substantially the same
proportions as their ownership of stock of the Corporation or (v) any
individual, entity or group which is permitted to, and actually does, report its
Beneficial Ownership on Schedule 13G (or any successor schedule); provided that
if any such individual, entity or group subsequently becomes required to or does
report its Beneficial Ownership on Schedule 13D (or any successor

18

schedule), such individual, entity or group shall be deemed to be a Person for
purposes hereof on the first date on which such individual, entity or group
becomes required to or does so report Beneficial Ownership of all of the voting
securities of the Corporation Beneficially Owned by it on such date.

17.2 Payments. Upon the occurrence of a Change of Control, and
notwithstanding Section 7,

(a) payment of a Participant's Cash Account balance and Matching Account
balance (if any, and then only to the extent not then maintained in Share Units)
shall be made immediately in cash in a lump sum; and

(b) payment of a Participant's Mutual Fund Account balance shall be made
immediately in cash in a lump sum in an amount equal to the aggregate net asset
value of the Mutual Fund Shares credited to the Participant's Mutual Fund
Account as of the date of the Change of Control; and

(c) all Share Units credited to a Participant's Share Account and Matching
Account (if any) shall be converted into an amount equal to the number of Share
Units multiplied by the Fair Market Value, which amount shall be (i) paid as
soon as possible to such Participant and (ii) denominated in (A) such form of
consideration as the Participant would have received had the Participant been
the owner of record of such shares of Common Stock at the time of such Change of
Control, in the case of a "Change of Control With Consideration" or (B) cash, in
the case of a "Change of Control Without Consideration". For purposes of this
Section 17.2(b), (I) "Change of Control With Consideration" shall mean a Change
of Control in which shares of Common Stock are exchanged or surrendered for
shares, cash or other property and (II) "Change of Control Without
Consideration" shall mean a Change of Control pursuant to which shares of Common
Stock are not exchanged or surrendered for shares, cash or other property.

Section 18. Rating Event

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

18.2 Payment. Upon the occurrence of a Rating Event, and notwithstanding
Section 7:

(a) a Participant's Cash Account balance and Matching Account balance (if
any, and then only to the extent not then maintained in Share Units) shall be
paid immediately in cash in a lump sum; and

19

(b) payment of a Participant's Mutual Fund Account balance shall be made
immediately in cash in a lump sum in an amount equal to the aggregate net asset
value of the Mutual Fund Shares credited to the Participant's Mutual Fund
Account as of the payment date; and

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

(d) payments in respect of a Matching Account balance (if any, and then
only to the extent then maintained in Share Units) shall be made immediately in
cash in an amount equal to the number of Share Units then payable multiplied by
the Fair Market Value on the date of payment; provided, however, that at the
election of a Participant, made by written notice to the Corporation prior to
delivery of such cash, payments in respect of a Share Account may be made solely
in Common Stock by converting Share Units into Common Stock on a one-for-one
basis, with payment of fractional shares to be made in cash based upon the Fair
Market Value on the date of payment; and

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

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

20

EXHIBIT 10.2

AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT

Dated as of August 1, 2003

SNAP-ON INCORPORATED, a Delaware corporation (the "Borrower"), the banks,
financial institutions and other institutional lenders (the "Initial Lenders")
listed on the signature pages hereof, CITIGROUP GLOBAL MARKETS INC., as lead
arranger and book manager, BANC ONE CAPITAL MARKETS INC., as co-arranger,
CITIBANK, N.A. ("Citibank"), as administrative agent (the "Agent") for the
Lenders (as hereinafter defined) and BANK ONE, NA, as syndication agent, agree
as follows:

PRELIMINARY STATEMENTS

(1) The Borrower is party to an Amended and Restated 364-Day Credit
Agreement dated as of August 9, 2002, which amended and restated the Amended and
Restated 364-Day Credit Agreement dated as of August 20, 2001, which amended and
restated the Amended and Restated 364-Day Credit Agreement dated as of August
21, 2000, which in turn amended and restated the 364-Day Credit Agreement dated
as of August 23, 1999 (as amended, supplemented or otherwise modified from time
to time to (but not including) the date of this Amendment and Restatement, the
"Existing Credit Agreement") with the banks, financial institutions and other
institutional lenders party thereto and Citibank, N.A., as Agent for the
Lenders, Salomon Smith Barney Inc., as Lead Arranger and Book Manager, Banc One
Capital Markets Inc., as Co-Arranger, and Bank One, NA, as Syndication Agent.

(2) The Borrower has requested that the Lenders agree to extend credit to
it from time to time in an aggregate principal amount of U.S. $200,000,000 for
general corporate purposes of the Borrower and its Subsidiaries not otherwise
prohibited under the terms of this Agreement. The Lenders have indicated their
willingness to agree to extend credit to the Borrower from time to time in such
amount on the terms and conditions set forth below.

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01. Certain Defined Terms.
---------------------

As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):

"Advance" means a Revolving Credit Advance or a Competitive Bid
Advance.

"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with
such Person or is a director or officer of such Person. For purposes of
this definition, the term "control" (including the terms "controlling",
"controlled by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to vote 5% or more of the
Voting Stock of such Person or to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
Voting Stock, by contract or otherwise.

"Agent's Account" means (a) in the case of Advances denominated in
Dollars, the account of the Agent maintained by the Agent at Citibank at
its office at 399 Park Avenue, New York, New York 10043, Account No.
36852248, Attention: Bank Loan Syndications, (b) in the case of Advances
denominated in any Foreign Currency, the account of the Sub-Agent
designated in writing from time to time by the Agent to the Borrower and
the Lenders for such purpose and (c) in any such case, such other account
of the Agent as is designated in writing from time to time by the Agent to
the Borrower and the Lenders for such purpose.

"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of a Base Rate Advance and
such Lender's Eurocurrency Lending Office in the case of a Eurocurrency
Rate Advance and, in the case of a Competitive Bid Advance, the office of
such Lender notified by such Lender to the Agent as its Applicable Lending
Office with respect to such Competitive Bid Advance.

"Applicable Margin" means (a) for Base Rate Advances, 0% per annum and
(b) for Eurocurrency Rate Advances, as of any date prior to the Term Loan
Conversion Date, 0.195% per annum and, as of any date on and after the Term
Loan Conversion Date, 0.55% per annum.

"Applicable Percentage" means 0.055% per annum.

"Applicable Utilization Fee" means, as of any date prior to the Term
Loan Conversion Date that the aggregate principal amount of the Advances
exceeds 25% of the aggregate Commitments, 0.10% per annum.

"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by the Agent, in
substantially the form of Exhibit C hereto.

"Assuming Lender" has the meaning specified in Section 2.18(c).

"Assumption Agreement" has the meaning specified in Section 2.18(c).

"Base Rate" means a fluctuating interest rate per annum in effect from
time to time, which rate per annum shall at all times be equal to the
highest of:

(a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time, as Citibank's base rate;

(b) the sum (adjusted to the nearest 1/4 of 1% or, if there is no
nearest 1/4 of 1%, to the next higher 1/4 of 1%) of (i) 1/2 of 1% per
annum, plus (ii) the rate obtained by dividing (A) the latest
three-week moving average of secondary market morning offering rates
in the United States for three-month certificates of deposit of major
United States money market banks, such three-week moving average
(adjusted to the basis of a year of 360 days) being determined weekly
on each Monday (or, if such day is not a Business Day, on the next
succeeding Business Day) for the three-week period ending on the
previous Friday by Citibank on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve
Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by
Citibank from three New York certificate of deposit dealers of
recognized standing selected by Citibank, by (B) a percentage equal to
100% minus the average of the daily percentages specified during such
three-week period by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement (including, but not limited to, any emergency,
supplemental or other marginal reserve requirement) for Citibank with
respect to liabilities consisting of or including (among other
liabilities) three-month U.S. dollar non-personal time deposits in the
United States, plus (iii) the average during such three-week period of
the annual assessment rates estimated by Citibank for determining the
then current annual assessment payable by Citibank to the Federal
Deposit Insurance Corporation (or any successor) for insuring U.S.
dollar deposits of Citibank in the United States; and

(c) 1/2 of one percent per annum above the Federal Funds Rate.

2

"Base Rate Advance" means a Revolving Credit Advance denominated in
Dollars that bears interest as provided in Section 2.07(a)(i).

"Borrowing" means a Revolving Credit Borrowing or a Competitive Bid
Borrowing.

"Business Day" means a day of the year on which banks are not required
or authorized by law to close in New York City and, if the applicable
Business Day relates to any Eurocurrency Rate Advances or LIBO Rate
Advances, on which dealings are carried on in the London interbank market
and banks are open for business in London and in the country of issue of
the currency of such Eurocurrency Rate Advance or LIBO Rate Advance (or, in
the case of an Advance denominated in the euro, in Frankfurt, Germany) and,
if the applicable Business Day relates to any Local Rate Advances on which
banks are open for business in the country of issue of the currency of such
Local Rate Advance.

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

"Committed Currencies" means lawful currency of the United Kingdom of
Great Britain and Northern Ireland, lawful currency of The Swiss
Federation, lawful currency of Canada, lawful currency of Australia, lawful
currency of Japan, lawful currency of the European Economic and Monetary
Union and any other currency that is freely convertible into Dollars and
available to all Lenders.

"Competitive Bid Advance" means an advance by a Lender to the Borrower
as part of a Competitive Bid Borrowing resulting from the competitive
bidding procedure described in Section 2.03 and refers to a Fixed Rate
Advance, a LIBO Rate Advance or a Local Rate Advance.

"Competitive Bid Borrowing" means a borrowing consisting of
simultaneous Competitive Bid Advances from each of the Lenders whose offer
to make one or more Competitive Bid Advances as part of such borrowing has
been accepted under the competitive bidding procedure described in Section
2.03.

"Competitive Bid Note" means a promissory note of the Borrower payable
to the order of any Lender, in substantially the form of Exhibit A-2
hereto, evidencing the indebtedness of the Borrower to such Lender
resulting from a Competitive Bid Advance made by such Lender.

"Competitive Bid Reduction" has the meaning specified in Section 2.01.

"Confidential Information" means information that the Borrower
furnishes to the Agent or any Lender, but does not include any such
information that is or becomes generally available to the public or that is
or becomes available to the Agent or such Lender from a source other than
the Borrower.

"Consenting Lender" has the meaning specified in Section 2.18(b).

"Consolidated" refers to the consolidation of accounts in accordance
with GAAP.

"Convert", "Conversion" and "Converted" each refers to a conversion of
Revolving Credit Advances of one Type into Revolving Credit Advances of the
other Type pursuant to Section 2.08 or 2.09.

"Debt" of any Person means, without duplication, (a) all indebtedness
of such Person for borrowed money, (b) all obligations of such Person for
the deferred purchase price of property or services (other than trade
payables not overdue by more than 90 days incurred in the ordinary course
of such Person's business), (c) all obligations of such Person evidenced by
notes, bonds, debentures or other similar instruments, (d) all

3

obligations of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or sale
of such property), (e) all obligations of such Person as lessee under
leases that have been or should be, in accordance with GAAP, recorded as
capital leases, (f) all obligations, contingent or otherwise, of such
Person in respect of acceptances, letters of credit or similar extensions
of credit, (g) all net obligations of such Person in respect of Hedge
Agreements, (h) all Debt of others referred to in clauses (a) through (g)
above or clause (i) below guaranteed directly or indirectly in any manner
by such Person, or in effect guaranteed directly or indirectly by such
Person through an agreement (1) to pay or purchase such Debt or to advance
or supply funds for the payment or purchase of such Debt, (2) to purchase,
sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment
of such Debt or to assure the holder of such Debt against loss, (3) to
supply funds to or in any other manner invest in the debtor (including any
agreement to pay for property or services irrespective of whether such
property is received or such services are rendered) or (4) otherwise to
assure a creditor against loss, and (i) all Debt referred to in clauses (a)
through (h) above secured by (or for which the holder of such Debt has an
existing right, contingent or otherwise, to be secured by) any Lien on
property (including, without limitation, accounts and contract rights)
owned by such Person, even though such Person has not assumed or become
liable for the payment of such Debt; provided, however, that the term
"Debt" shall not include obligations incurred in connection with sales of
accounts receivable or other asset securitization transactions by the
Borrower or any Subsidiary or Affiliate of the Borrower, except to the
extent that such transaction creates a liability which is required by
generally accepted accounting principles to be included on the Consolidated
balance sheet of the Borrower and its Subsidiaries.

"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be given
or time elapse or both.

"Disclosed Litigation" has the meaning specified in Section 3.01(b).

"Dollars" and the "$" sign each means lawful currency of the United
States of America.

"Domestic Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite
its name on Schedule I hereto or in the Assumption Agreement or the
Assignment and Acceptance pursuant to which it became a Lender, or such
other office of such Lender as such Lender may from time to time specify to
the Borrower and the Agent.

"Effective Date" has the meaning specified in Section 3.01.

"Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a Lender;
and (iii) any other Person approved by the Agent and, unless an Event of
Default has occurred and is continuing at the time any assignment is
effected in accordance with Section 8.07, the Borrower, such approval not
to be unreasonably withheld or delayed; provided, however, that neither the
Borrower nor an Affiliate of the Borrower shall qualify as an Eligible
Assignee.

"Environmental Action" means any action, suit, demand, demand letter,
claim, notice of non-compliance or violation, notice of liability or
potential liability, investigation, proceeding, consent order or consent
agreement relating in any way to any Environmental Law, Environmental
Permit or Hazardous Materials or arising from alleged injury or threat of
injury to health, safety or the environment, including, without limitation,
(a) by any governmental or regulatory authority for enforcement, cleanup,
removal, response, remedial or other actions or damages and (b) by any
governmental or regulatory authority or any third party for damages,
contribution, indemnification, cost recovery, compensation or injunctive
relief.

"Environmental Law" means any federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, judgment, decree or
judicial or agency interpretation, policy or guidance relating to pollution
or protection of the environment, health, safety or natural resources,
including, without limitation, 

4

those relating to the use, handling, transportation, treatment, storage,
disposal, release or discharge of Hazardous Materials.

"Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any Environmental
Law.

"Equivalent" in Dollars of any Foreign Currency on any date means the
equivalent in Dollars of such Foreign Currency determined by using the
quoted spot rate at which the Sub-Agent's principal office in London offers
to exchange Dollars for such Foreign Currency in London prior to 4:00 P.M.
(London time) (unless otherwise indicated by the terms of this Agreement)
on such date as is required pursuant to the terms of this Agreement, and
the "Equivalent" in any Foreign Currency of Dollars means the equivalent in
such Foreign Currency of Dollars determined by using the quoted spot rate
at which the Sub-Agent's principal office in London offers to exchange such
Foreign Currency for Dollars in London prior to 4:00 P.M. (London time)
(unless otherwise indicated by the terms of this Agreement) on such date as
is required pursuant to the terms of this Agreement.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.

"ERISA Affiliate" means any Person that for purposes of Title IV of
ERISA is a member of the Borrower's controlled group, or under common
control with the Borrower, within the meaning of Section 414 of the
Internal Revenue Code.

"ERISA Event" means (a) (i) the occurrence of a reportable event,
within the meaning of Section 4043 of ERISA, with respect to any Plan
unless the 30-day notice requirement with respect to such event has been
waived by the PBGC, or (ii) the requirements of subsection (1) of Section
4043(b) of ERISA (without regard to subsection (2) of such Section) are met
with a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of
a Plan, and an event described in paragraph (9), (10), (11), (12) or (13)
of Section 4043(c) of ERISA is reasonably expected to occur with respect to
such Plan within the following 30 days; (b) the application for a minimum
funding waiver with respect to a Plan; (c) the provision by the
administrator of any Plan of a notice of intent to terminate such Plan
pursuant to Section 4041(a)(2) of ERISA (including any such notice with
respect to a plan amendment referred to in Section 4041(e) of ERISA); (d)
the cessation of operations at a facility of the Borrower or any ERISA
Affiliate in the circumstances described in Section 4062(e) of ERISA; (e)
the withdrawal by the Borrower or any ERISA Affiliate from a Multiple
Employer Plan during a plan year for which it was a substantial employer,
as defined in Section 4001(a)(2) of ERISA; (f) the conditions for the
imposition of a lien under Section 302(f) of ERISA shall have been met with
respect to any Plan; (g) the adoption of an amendment to a Plan requiring
the provision of security to such Plan pursuant to Section 307 of ERISA; or
(h) the institution by the PBGC of proceedings to terminate a Plan pursuant
to Section 4042 of ERISA, or the occurrence of any event or condition
described in Section 4042 of ERISA that constitutes grounds for the
termination of, or the appointment of a trustee to administer, a Plan.

"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.

"Eurocurrency Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurocurrency Lending Office"
opposite its name on Schedule I hereto or in the Assumption Agreement or
the Assignment and Acceptance pursuant to which it became a Lender (or, if
no such office is specified, its Domestic Lending Office), or such other
office of such Lender as such Lender may from time to time specify to the
Borrower and the Agent.

"Eurocurrency Rate" means, for any Interest Period for each
Eurocurrency Rate Advance comprising part of the same Revolving Credit
Borrowing, an interest rate per annum equal to the rate per annum obtained
by dividing (a) the rate per annum (rounded upward to the nearest whole
multiple of 1/100 

5

of 1% per annum) appearing on Dow Jones Markets Telerate Page 3750 (or any
successor page) as the London interbank offered rate for deposits in
Dollars or the applicable Committed Currency at approximately 11:00 A.M.
(London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period or, if for any reason
such rate is not available, the average (rounded upward to the nearest
whole multiple of 1/100 of 1% per annum, if such average is not such a
multiple) of the rate per annum at which deposits in Dollars or the
applicable Committed Currency is offered by the principal office of each of
the Reference Banks in London, England to prime banks in the London
interbank market at 11:00 A.M. (London time) two Business Days before the
first day of such Interest Period in an amount substantially equal to such
Reference Bank's Eurocurrency Rate Advance comprising part of such
Revolving Credit Borrowing to be outstanding during such Interest Period
and for a period equal to such Interest Period by (b) a percentage equal to
100% minus the Eurocurrency Rate Reserve Percentage for such Interest
Period. If the Dow Jones Markets Page 3750 (or any successor page) is
unavailable, the Eurocurrency Rate for any Interest Period for each
Eurocurrency Rate Advance comprising part of the same Revolving Credit
Borrowing shall be determined by the Agent on the basis of applicable rates
furnished to and received by the Agent from the Reference Banks two
Business Days before the first day of such Interest Period, subject,
however, to the provisions of Section 2.08.

"Eurocurrency Rate Advance" means a Revolving Credit Advance
denominated in Dollars or a Committed Currency that bears interest as
provided in Section 2.07(a)(ii).

"Eurocurrency Rate Reserve Percentage" for any Interest Period for all
Eurocurrency Rate Advances or LIBO Rate Advances comprising part of the
same Borrowing means the reserve percentage applicable two Business Days
before the first day of such Interest Period under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other marginal reserve
requirement) for a member bank of the Federal Reserve System in New York
City with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate
on Eurocurrency Rate Advances or LIBO Rate Advances is determined) having a
term equal to such Interest Period.

"Events of Default" has the meaning specified in Section 6.01.

"Extension Date" has the meaning specified in Section 2.18(b).

"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by
it.

"Fixed Rate Advances" has the meaning specified in Section 2.03(a)(i),
which Advances shall be denominated in Dollars or in any Foreign Currency.

"Foreign Currency" means any Committed Currency and any other lawful
currency (other than Dollars) that is freely transferable or convertible
into Dollars.

"GAAP" has the meaning specified in Section 1.03.

"Hazardous Materials" means (a) petroleum and petroleum products,
byproducts or breakdown products, radioactive materials,
asbestos-containing materials, polychlorinated biphenyls and radon gas and
(b) any other chemicals, materials or substances designated, classified or
regulated as hazardous or toxic or as a pollutant or contaminant under any
Environmental Law.

6

"Hedge Agreements" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements,
currency future or option contracts and other similar agreements.

"Information Memorandum" means the information memorandum
dated__________, 2003 used by the Agent in connection with the syndication
of the Commitments.

"Interest Period" means, for each Eurocurrency Rate Advance comprising
part of the same Revolving Credit Borrowing and each LIBO Rate Advance
comprising part of the same Competitive Bid Borrowing, the period
commencing on the date of such Eurocurrency Rate Advance or LIBO Rate
Advance or the date of the Conversion of any Base Rate Advance into such
Eurocurrency Rate Advance and ending on the last day of the period selected
by the Borrower pursuant to the provisions below and, thereafter, with
respect to Eurocurrency Rate Advances, each subsequent period commencing on
the last day of the immediately preceding Interest Period and ending on the
last day of the period selected by the Borrower pursuant to the provisions
below. The duration of each such Interest Period shall be one, two, three
or six months, as the Borrower may, upon notice received by the Agent not
later than 11:00 A.M. (New York City time) on the third Business Day prior
to the first day of such Interest Period, select; provided, however, that:

(i) the Borrower may not select any Interest Period that ends
after the Termination Date or, if the Revolving Credit Advances have
been converted to a term loan pursuant to Section 2.06 prior to such
selection, that ends after the Maturity Date;

(ii) Interest Periods commencing on the same date for
Eurocurrency Rate Advances comprising part of the same Revolving
Credit Borrowing or for LIBO Rate Advances comprising part of the same
Competitive Bid Borrowing shall be of the same duration;

(iii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, provided, however, that, if such extension would cause
the last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day; and

(iv) whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months
in such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month.

"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.

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

"LIBO Rate" means, for any Interest Period for all LIBO Rate Advances
comprising part of the same Competitive Bid Borrowing, an interest rate per
annum equal to the rate per annum obtained by dividing (a) the rate per
annum (rounded upward to the nearest whole multiple of 1/100 of 1% per
annum) appearing on Dow Jones Markets Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits in Dollars or the
applicable Committed Currency at approximately 11:00 A.M. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period or, if for any reason such rate is not
available, the average (rounded upward to the nearest whole multiple of
1/100 of 1% per annum, if such average is not such a multiple) of the rate
per annum at which deposits in Dollars or the applicable Foreign Currency
is offered by the principal office of

7

each of the Reference Banks in London, England to prime banks in the London
interbank market at 11:00 A.M. (London time) two Business Days before the
first day of such Interest Period in an amount substantially equal to the
amount that would be the Reference Banks' respective ratable shares of such
Borrowing if such Borrowing were to be a Revolving Credit Borrowing to be
outstanding during such Interest Period and for a period equal to such
Interest Period by (b) a percentage equal to 100% minus the Eurocurrency
Rate Reserve Percentage for such Interest Period. If the Dow Jones Markets
Telerate Page 3750 (or any successor page) is unavailable, the LIBO Rate
for any Interest Period for each LIBO Rate Advance comprising part of the
same Competitive Bid Borrowing shall be determined by the Agent on the
basis of applicable rates furnished to and received by the Agent from the
Reference Banks two Business Days before the first day of such Interest
Period, subject, however, to the provisions of Section 2.08.

"LIBO Rate Advances" means a Competitive Bid Advance denominated in
Dollars or in any Foreign Currency and bearing interest based on the LIBO
Rate.

"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on
title to real property.

"Local Rate Advance" means a Competitive Bid Advance denominated in
any Foreign Currency sourced from the jurisdiction of issuance of such
Foreign Currency and bearing interest at a fixed rate.

"Material Adverse Change" means any material adverse change in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower or the Borrower and its
Subsidiaries taken as a whole.

"Material Adverse Effect" means a material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower or the Borrower and its
Subsidiaries taken as a whole, (b) the rights and remedies of the Agent or
any Lender under this Agreement or any Note or (c) the ability of the
Borrower to perform its obligations under this Agreement or any Note.

"Maturity Date" means the earlier of (a) the first anniversary of the
Termination Date and (b) the date of termination in whole of the aggregate
Commitments pursuant to Section 2.05 or 6.01.

"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate is making
or accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make
contributions.

"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower or any ERISA Affiliate and at least one Person other than the
Borrower and the ERISA Affiliates or (b) was so maintained and in respect
of which the Borrower or any ERISA Affiliate could have liability under
Section 4064 or 4069 of ERISA in the event such plan has been or were to be
terminated.

"Non-Consenting Lender" has the meaning specified in Section 2.18(b).

"Note" means a Revolving Credit Note or a Competitive Bid Note.

"Notice of Revolving Credit Borrowing" has the meaning specified in
Section 2.02(a).

"Notice of Competitive Bid Borrowing" has the meaning specified in
Section 2.03(a).

"Payment Office" means, for any Foreign Currency, such office of
Citibank as shall be from time to time selected by the Agent and notified
by the Agent to the Borrower and the Lenders.

8

"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).

"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall
have been commenced: (a) Liens for taxes, assessments and governmental
charges or levies to the extent not required to be paid under Section
5.01(b) hereof; (b) Liens imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's Liens and other similar
Liens arising in the ordinary course of business securing obligations that
are not overdue for a period of more than 45 days; (c) pledges or deposits
to secure obligations under workers' compensation laws or similar
legislation or to secure public or statutory obligations; and (d)
easements, rights of way and other encumbrances on title to real property
that do not render title to the property encumbered thereby unmarketable or
materially adversely affect the use of such property for its present
purposes.

"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
joint venture, limited liability company or other entity, or a government
or any political subdivision or agency thereof.

"Plan" means a Single Employer Plan or a Multiple Employer Plan.

"Reference Banks" means Citibank, Bank One, NA and Bank of America,
N.A.

"Register" has the meaning specified in Section 8.07(d).

"Related Person" means each of the following: (a) the Borrower, (b)
any Subsidiary of the Borrower or (c) any employee benefit plan of the
Borrower or of any Subsidiary of the Borrower or any Person organized,
appointed or established by the Borrower for or pursuant to the terms of
any such plan.

"Required Lenders" means at any time Lenders owed at least a majority
in interest of the then aggregate unpaid principal amount (based on the
Equivalent in Dollars at such time) of the Revolving Credit Advances owing
to Lenders, or, if no such principal amount is then outstanding, Lenders
having at least a majority in interest of the Commitments.

"Revolving Credit Advance" means an advance by a Lender to the
Borrower as part of a Revolving Credit Borrowing and refers to a Base Rate
Advance or a Eurocurrency Rate Advance (each of which shall be a "Type" of
Revolving Credit Advance).

"Revolving Credit Borrowing" means a borrowing consisting of
simultaneous Revolving Credit Advances of the same Type made by each of the
Lenders pursuant to Section 2.01.

"Revolving Credit Note" means a promissory note of the Borrower
payable to the order of any Lender, delivered pursuant to a request made
under Section 2.16 in substantially the form of Exhibit A-1 hereto,
evidencing the aggregate indebtedness of the Borrower to such Lender
resulting from the Revolving Credit Advances made by such Lender.

"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower or any ERISA Affiliate and no Person other than the Borrower and
the ERISA Affiliates or (b) was so maintained and in respect of which the
Borrower or any ERISA Affiliate could have liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated.

"Sub-Agent" means Citibank International plc.

"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which)
more than 50% of (a) the issued and outstanding capital stock having
ordinary voting power to elect a majority of the Board of Directors of such
corporation

9

(irrespective of whether at the time capital stock of any other class or
classes of such corporation shall or might have voting power upon the
occurrence of any contingency), (b) the interest in the capital or profits
of such limited liability company, partnership or joint venture or (c) the
beneficial interest in such trust or estate is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or
more of its other Subsidiaries or by one or more of such Person's other
Subsidiaries; it being understood that Snap-On Credit LLC, which is 50%
owned by the Borrower, shall not be deemed to be a "Subsidiary" of the
Borrower for purposes of this Agreement.

"Term Loan Conversion Date" means the Termination Date on which all
Revolving Credit Advances outstanding on such date are converted into a
term loan pursuant to Section 2.06.

"Term Loan Election" has the meaning specified in Section 2.06.

"Termination Date" means the earlier of (a) July 30, 2004, subject to
the extension thereof pursuant to Section 2.18 and (b) the date of
termination in whole of the Commitments pursuant to Section 2.05 or 6.01;
provided, however, that the Termination Date of any Lender that is a
Non-Consenting Lender to any requested extension pursuant to Section 2.18
shall be the Termination Date in effect immediately prior to the applicable
Extension Date for all purposes of this Agreement.

"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of
such a contingency.

SECTION 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".

SECTION 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 4.01(e) ("GAAP").

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES

SECTION 2.01. The Revolving Credit Advances. Each Lender severally agrees,
on the terms and conditions hereinafter set forth, to make Revolving Credit
Advances to the Borrower from time to time on any Business Day during the period
from the Effective Date until the Termination Date in an aggregate amount (based
in respect of any Revolving Credit Advances to be denominated in a Committed
Currency on the Equivalent in Dollars determined on the date of delivery of the
applicable Notice of Revolving Credit Borrowing) not to exceed at any time
outstanding such Lender's Commitment, provided that the aggregate amount of the
Commitments of the Lenders shall be deemed used from time to time to the extent
of the aggregate amount (based in respect of any Competitive Bid Advance
denominated in a Foreign Currency on the Equivalent in Dollars at such time) of
the Competitive Bid Advances then outstanding and such deemed use of the
aggregate amount of the Commitments shall be allocated among the Lenders ratably
according to their respective Commitments (such deemed use of the aggregate
amount of the Commitments being a "Competitive Bid Reduction"). Each Revolving
Credit Borrowing shall be in an aggregate amount of $10,000,000 or an integral
multiple of $1,000,000 in excess thereof (or the Equivalent thereof in any
Committed Currency determined on the date of delivery of the applicable Notice
of Revolving Credit Borrowing) and shall consist of Revolving Credit Advances of
the same Type made on the same day by the Lenders ratably according to their
respective Commitments. Within the limits of each Lender's Commitment, the
Borrower may borrow under this Section 2.01, prepay pursuant to Section 2.10 and
reborrow under this Section 2.01.

10

SECTION 2.02. Making the Revolving Credit Advances. (a) Each Revolving
Credit Borrowing shall be made on notice, given not later than (x) 11:00 A.M.
(New York City time) on the third Business Day prior to the date of the proposed
Revolving Credit Borrowing in the case of a Revolving Credit Borrowing
consisting of Eurocurrency Rate Advances denominated in Dollars, (y) 4:00 P.M.
(London time) on the third Business Day prior to the date of the proposed
Revolving Credit Borrowing in the case of a Revolving Credit Borrowing
consisting of Eurocurrency Rate Advances denominated in any Committed Currency,
or (z) 11:00 A.M. (New York City time) on the first Business Day prior to the
date of the proposed Revolving Credit Borrowing in the case of a Revolving
Credit Borrowing consisting of Base Rate Advances, by the Borrower to the Agent
(and, in the case of a Revolving Credit Borrowing consisting of Eurocurrency
Rate Advances, simultaneously to the Sub-Agent), which shall give to each Lender
prompt notice thereof by telecopier or telex. Each such notice of a Revolving
Credit Borrowing (a "Notice of Revolving Credit Borrowing") shall be by
telephone, confirmed immediately in writing, or telecopier or telex in
substantially the form of Exhibit B-1 hereto, specifying therein the requested
(i) date of such Revolving Credit Borrowing, (ii) Type of Advances comprising
such Revolving Credit Borrowing, (iii) aggregate amount of such Revolving Credit
Borrowing, and (iv) in the case of a Revolving Credit Borrowing consisting of
Eurocurrency Rate Advances, initial Interest Period and currency for each such
Revolving Credit Advance. Each Lender shall, before 11:00 A.M. (New York City
time) on the date of such Revolving Credit Borrowing, in the case of a Revolving
Credit Borrowing consisting of Advances denominated in Dollars, and before 4:00
P.M. (London time) on the date of such Revolving Credit Borrowing, in the case
of a Revolving Credit Borrowing consisting of Eurocurrency Rate Advances
denominated in any Committed Currency, make available for the account of its
Applicable Lending Office to the Agent at the applicable Agent's Account, in
same day funds, such Lender's ratable portion of such Revolving Credit
Borrowing. After the Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Agent will make such funds
available to the Borrower at the Agent's address referred to in Section 8.02(a)
or at the applicable Payment Office, as the case may be.

(b) Anything in subsection (a) above to the contrary notwithstanding, (i)
the Borrower may not select Eurocurrency Rate Advances for any Revolving Credit
Borrowing if the aggregate amount of such Revolving Credit Borrowing is less
than $10,000,000 or if the obligation of the Lenders to make Eurocurrency Rate
Advances shall then be suspended pursuant to Section 2.08 or 2.12 and (ii) the
Eurocurrency Rate Advances may not be outstanding as part of more than six
separate Revolving Credit Borrowings.

(c) Each Notice of Revolving Credit Borrowing shall be irrevocable and
binding on the Borrower. In the case of any Revolving Credit Borrowing that the
related Notice of Revolving Credit Borrowing specifies is to be comprised of
Eurocurrency Rate Advances, the Borrower shall indemnify each Lender against any
loss, cost or expense incurred by such Lender as a result of any failure to
fulfill on or before the date specified in such Notice of Revolving Credit
Borrowing for such Revolving Credit Borrowing the applicable conditions set
forth in Article III, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund the
Revolving Credit Advance to be made by such Lender as part of such Revolving
Credit Borrowing when such Revolving Credit Advance, as a result of such
failure, is not made on such date.

(d) Unless the Agent shall have received notice from a Lender prior to the
date of any Revolving Credit Borrowing that such Lender will not make available
to the Agent such Lender's ratable portion of such Revolving Credit Borrowing,
the Agent may assume that such Lender has made such portion available to the
Agent on the date of such Revolving Credit Borrowing in accordance with
subsection (a) of this Section 2.02 and the Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If and to the extent that such Lender shall not have so made such ratable
portion available to the Agent, such Lender and the Borrower severally agree to
repay to the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Agent, at (i) in the
case of the Borrower, the higher of (A) the interest rate applicable at the time
to Revolving Credit Advances comprising such Revolving Credit Borrowing and (B)
the cost of funds incurred by the Agent in respect of such amount and (ii) in
the case of such Lender, (A) the Federal Funds Rate in the case of Advances
denominated in Dollars or (B) the cost of funds incurred by the Agent in respect
of such amount in the case of Advances denominated in Committed Currencies. If
such Lender shall repay to the Agent such corresponding amount, such amount so
repaid shall constitute such Lender's Revolving Credit Advance as part of such
Revolving Credit Borrowing for purposes of this Agreement.

11

(e) The failure of any Lender to make the Revolving Credit Advance to be
made by it as part of any Revolving Credit Borrowing shall not relieve any other
Lender of its obligation, if any, hereunder to make its Revolving Credit Advance
on the date of such Revolving Credit Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make the Revolving Credit
Advance to be made by such other Lender on the date of any Revolving Credit
Borrowing.

SECTION 2.03. The Competitive Bid Advances. (a) Each Lender severally
agrees that the Borrower may make Competitive Bid Borrowings under this Section
2.03 from time to time on any Business Day during the period from the date
hereof until the date occurring 30 days prior to the Termination Date in the
manner set forth below; provided that, following the making of each Competitive
Bid Borrowing, the aggregate amount of the Advances then outstanding (based in
respect of any Advance denominated in a Foreign Currency on the Equivalent in
Dollars at the time such Competitive Bid Borrowing is requested) shall not
exceed the aggregate amount of the Commitments of the Lenders (computed without
regard to any Competitive Bid Reduction); provided further that following the
making of each Competitive Bid Borrowing, the aggregate amount of the Advances
then outstanding (based in respect of any Advance denominated in a Foreign
Currency on the Equivalent in Dollars at the time such Competitive Bid Borrowing
is requested) shall not exceed the aggregate amount of one third of the
Commitments of the Lenders (computed without regard to any Competitive Bid
Reduction).

(i) The Borrower may request a Competitive Bid Borrowing under this
Section 2.03 by delivering to the Agent (and, in the case of a Competitive
Bid Borrowing not consisting of Fixed Rate Advances or LIBO Rate Advances
to be denominated in Dollars, simultaneously to the Sub-Agent), by
telecopier or telex, a notice of a Competitive Bid Borrowing (a "Notice of
Competitive Bid Borrowing"), in substantially the form of Exhibit B-2
hereto, specifying therein the requested (A) date of such proposed
Competitive Bid Borrowing, (B) aggregate amount of such proposed
Competitive Bid Borrowing, (C) interest rate basis and day count convention
to be offered by the Lenders, (D) currency of such proposed Competitive Bid
Borrowing, (E) in the case of a Competitive Bid Borrowing consisting of
LIBO Rate Advances, Interest Period, or in the case of a Competitive Bid
Borrowing consisting of Fixed Rate Advances or Local Rate Advances,
maturity date for repayment of each Fixed Rate Advance or Local Rate
Advance to be made as part of such Competitive Bid Borrowing (which
maturity date may not be earlier than the date occurring seven days after
the date of such Competitive Bid Borrowing or later than the earlier of (I)
180 days after the date of such Competitive Bid Borrowing and (II) the
Termination Date), (F) interest payment date or dates relating thereto, (G)
location of the Borrower's account to which funds are to be advanced and
(H) other terms (if any) to be applicable to such Competitive Bid
Borrowing, not later than (w) 10:00 A.M. (New York City time) at least two
Business Days prior to the date of the proposed Competitive Bid Borrowing,
if the Borrower shall specify in the Notice of Competitive Bid Borrowing
that the rates of interest to be offered by the Lenders shall be fixed
rates per annum (the Advances comprising any such Competitive Bid Borrowing
being referred to herein as "Fixed Rate Advances") and that the Advances
comprising such proposed Competitive Bid Borrowing shall be denominated in
Dollars, (x) 10:00 A.M. (New York City time) at least four Business Days
prior to the date of the proposed Competitive Bid Borrowing, if the
Borrower shall specify in the Notice of Competitive Bid Borrowing that the
Advances comprising such Competitive Bid Borrowing shall be LIBO Rate
Advances denominated in Dollars, (y) 10:00 A.M. (London time) at least two
Business Days prior to the date of the proposed Competitive Bid Borrowing,
if the Borrower shall specify in the Notice of Competitive Bid Borrowing
that the Advances comprising such proposed Competitive Bid Borrowing shall
be either Fixed Rate Advances denominated in any Foreign Currency or Local
Rate Advances denominated in any Foreign Currency and (z) 10:00 A.M.
(London time) at least four Business Days prior to the date of the proposed
Competitive Bid Borrowing, if the Borrower shall instead specify in the
Notice of Competitive Bid Borrowing that the Advances comprising such
Competitive Bid Borrowing shall be LIBO Rate Advances denominated in any
Foreign Currency. The Agent shall in turn promptly notify each Lender of
each request for a Competitive Bid Borrowing received by it from the
Borrower by sending such Lender a copy of the related Notice of Competitive
Bid Borrowing.

(ii) Each Lender may, if, in its sole discretion, it elects to do so,
irrevocably offer to make one or more Competitive Bid Advances to the
Borrower as part of such proposed Competitive Bid

12

Borrowing at a rate or rates of interest specified by such Lender in its
sole discretion, by notifying the Agent or the Sub-Agent, as the case may
be (which shall give prompt notice thereof to the Borrower), (A) before
9:30 A.M. (New York City time) on the date of such proposed Competitive Bid
Borrowing, in the case of a Competitive Bid Borrowing consisting of Fixed
Rate Advances denominated in Dollars, (B) before 10:00 A.M. (New York City
time) three Business Days before the date of such proposed Competitive Bid
Borrowing, in the case of a Competitive Bid Borrowing consisting of LIBO
Rate Advances, denominated in Dollars, (C) before 12:00 noon (London time)
on the Business Day prior to the date of such proposed Competitive Bid
Borrowing, in the case of a Competitive Bid Borrowing consisting of either
Fixed Rate Advances denominated in any Foreign Currency or Local Rate
Advances denominated in any Foreign Currency and (D) before 12:00 noon
(London time) on the third Business Day prior to the date of such proposed
Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing
consisting of LIBO Rate Advances denominated in any Foreign Currency, of
the minimum amount and maximum amount of each Competitive Bid Advance which
such Lender would be willing to make as part of such proposed Competitive
Bid Borrowing (which amounts or the Equivalent thereof in Dollars, as the
case may be, of such proposed Competitive Bid may, subject to the provisos
to the first sentence of this Section 2.03(a), exceed such Lender's
Commitment, if any), the rate or rates of interest therefor and such
Lender's Applicable Lending Office with respect to such Competitive Bid
Advance; provided that if the Agent in its capacity as a Lender shall, in
its sole discretion, elect to make any such offer, it shall notify the
Borrower of such offer at least 30 minutes before the time and on the date
on which notice of such election is to be given to the Agent or to the
Sub-Agent, as the case may be, by the other Lenders. If any Lender shall
elect not to make such an offer, such Lender shall so notify the Agent
before 10:00 A.M. (New York City time) or the Sub-Agent before 12:00 noon
(London time) on the date on which notice of such election is to be given
to the Agent or to the Sub-Agent, as the case may be, by the other Lenders,
and such Lender shall not be obligated to, and shall not, make any
Competitive Bid Advance as part of such Competitive Bid Borrowing; provided
that the failure by any Lender to give such notice shall not cause such
Lender to be obligated to make any Competitive Bid Advance as part of such
proposed Competitive Bid Borrowing.

(iii) The Borrower shall, in turn, (A) before 10:30 A.M. (New York
City time) on the date of such proposed Competitive Bid Borrowing, in the
case of a Competitive Bid Borrowing consisting of Fixed Rate Advances
denominated in Dollars, (B) before 11:00 A.M. (New York City time) three
Business Days before the date of such proposed Competitive Bid Borrowing,
in the case of a Competitive Bid Borrowing consisting of LIBO Rate Advances
denominated in Dollars, (C) before 3:00 P.M. (London time) on the Business
Day prior to the date of such proposed Competitive Bid Borrowing, in the
case of a Competitive Bid Borrowing consisting of either Fixed Rate
Advances denominated in any Foreign Currency or Local Rate Advances
denominated in any Foreign Currency and (D) before 3:00 P.M. (London time)
on the third Business Day prior to the date of such Competitive Bid
Borrowing, in the case of a Competitive Bid Borrowing consisting of LIBO
Rate Advances denominated in any Foreign Currency, either:

(x) cancel such Competitive Bid Borrowing by giving the Agent
notice to that effect, or

(y) accept one or more of the offers made by any Lender or
Lenders pursuant to paragraph (ii) above, in its sole discretion, by
giving notice to the Agent or to the Sub-Agent, as the case may be, of
the amount of each Competitive Bid Advance (which amount shall be
equal to or greater than the minimum amount, and equal to or less than
the maximum amount, notified to the Borrower by the Agent or the
Sub-Agent, as the case may be, on behalf of such Lender for such
Competitive Bid Advance pursuant to paragraph (ii) above) to be made
by each Lender as part of such Competitive Bid Borrowing, and reject
any remaining offers made by Lenders pursuant to paragraph (ii) above
by giving the Agent or the Sub-Agent, as the case may be, notice to
that effect. The Borrower shall accept the offers made by any Lender
or Lenders to make Competitive Bid Advances in order of the lowest to
the highest rates of interest offered by such Lenders. If two or more
Lenders have offered the same interest rate, the amount to be borrowed
at

13

such interest rate will be allocated among such Lenders in proportion
to the amount that each such Lender offered at such interest rate.

(iv) If the Borrower notifies the Agent or the Sub-Agent, as the case
may be, that such Competitive Bid Borrowing is cancelled pursuant to
paragraph (iii)(x) above, the Agent or the Sub-Agent, as the case may be,
shall give prompt notice thereof to the Lenders and such Competitive Bid
Borrowing shall not be made.

(v) If the Borrower accepts one or more of the offers made by any
Lender or Lenders pursuant to paragraph (iii)(y) above, the Agent or the
Sub-Agent, as the case may be, shall in turn promptly notify (A) each
Lender that has made an offer as described in paragraph (ii) above, of the
date and aggregate amount of such Competitive Bid Borrowing and whether or
not any offer or offers made by such Lender pursuant to paragraph (ii)
above have been accepted by the Borrower, (B) each Lender that is to make a
Competitive Bid Advance as part of such Competitive Bid Borrowing, of the
amount of each Competitive Bid Advance to be made by such Lender as part of
such Competitive Bid Borrowing, and (C) each Lender that is to make a
Competitive Bid Advance as part of such Competitive Bid Borrowing, upon
receipt, that the Agent or the Sub-Agent, as the case may be, has received
forms of documents appearing to fulfill the applicable conditions set forth
in Article III. Each Lender that is to make a Competitive Bid Advance as
part of such Competitive Bid Borrowing shall, before 11:00 A.M. (New York
City time), in the case of Competitive Bid Advances to be denominated in
Dollars or 11:00 A.M. (London time), in the case of Competitive Bid
Advances to be denominated in any Foreign Currency, on the date of such
Competitive Bid Borrowing specified in the notice received from the Agent
or the Sub-Agent, as the case may be, pursuant to clause (A) of the
preceding sentence or any later time when such Lender shall have received
notice from the Agent or the Sub-Agent, as the case may be pursuant to
clause (C) of the preceding sentence, make available for the account of its
Applicable Lending Office to the Agent (x) in the case of a Competitive Bid
Borrowing denominated in Dollars, at its address referred to in Section
8.02(a), in same day funds, such Lender's portion of such Competitive Bid
Borrowing in Dollars and (y) in the case of a Competitive Bid Borrowing in
a Foreign Currency, at the Payment Office for such Foreign Currency as
shall have been notified by the Agent to the Lenders prior thereto, in same
day funds, such Lender's portion of such Competitive Bid Borrowing in such
Foreign Currency. Upon fulfillment of the applicable conditions set forth
in Article III and after receipt by the Agent of such funds, the Agent will
make such funds available to the Borrower at the location specified by the
Borrower in its Notice of Competitive Bid Borrowing. Promptly after each
Competitive Bid Borrowing the Agent will notify each Lender of the amount
of the Competitive Bid Borrowing, the consequent Competitive Bid Reduction
and the dates upon which such Competitive Bid Reduction commenced and will
terminate.

(vi) If the Borrower notifies the Agent or the Sub-Agent, as the case
may be, that it accepts one or more of the offers made by any Lender or
Lenders pursuant to paragraph (iii)(y) above, such notice of acceptance
shall be irrevocable and binding on the Borrower. The Borrower shall
indemnify each Lender against any loss, cost or expense incurred by such
Lender as a result of any failure to fulfill on or before the date
specified in the related Notice of Competitive Bid Borrowing for such
Competitive Bid Borrowing the applicable conditions set forth in Article
III, including, without limitation, any loss (including loss of anticipated
profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund the
Competitive Bid Advance to be made by such Lender as part of such
Competitive Bid Borrowing when such Competitive Bid Advance, as a result of
such failure, is not made on such date.

(b) Each Competitive Bid Borrowing shall be in an aggregate amount of
$10,000,000 (or the Equivalent thereof in any Foreign Currency, determined as of
the time of the applicable Notice of Competitive Bid Borrowing) or an integral
multiple of $1,000,000 (or the Equivalent thereof in any Foreign Currency,
determined as of the time of the applicable Notice of Competitive Bid Borrowing)
in excess thereof and, following the making of each Competitive Bid Borrowing,
the Borrower shall be in compliance with the limitations set forth in the
provisos to the first sentence of subsection (a) above.

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(c) Within the limits and on the conditions set forth in this Section 2.03,
the Borrower may from time to time borrow under this Section 2.03, repay or
prepay pursuant to subsection (d) below, and reborrow under this Section 2.03,
provided that a Competitive Bid Borrowing shall not be made within three
Business Days of the date of any other Competitive Bid Borrowing.

(d) The Borrower shall repay to the Agent for the account of each Lender
that has made a Competitive Bid Advance, on the maturity date of each
Competitive Bid Advance (such maturity date being that specified by the Borrower
for repayment of such Competitive Bid Advance in the related Notice of
Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above and
provided in the Competitive Bid Note evidencing such Competitive Bid Advance),
the then unpaid principal amount of such Competitive Bid Advance. The Borrower
shall have no right to prepay any principal amount of any Competitive Bid
Advance unless, and then only on the terms, specified by the Borrower for such
Competitive Bid Advance in the related Notice of Competitive Bid Borrowing
delivered pursuant to subsection (a)(i) above and set forth in the Competitive
Bid Note evidencing such Competitive Bid Advance.

(e) The Borrower shall pay interest on the unpaid principal amount of each
Competitive Bid Advance from the date of such Competitive Bid Advance to the
date the principal amount of such Competitive Bid Advance is repaid in full, at
the rate of interest for such Competitive Bid Advance specified by the Lender
making such Competitive Bid Advance in its notice with respect thereto delivered
pursuant to subsection (a)(ii) above, payable on the interest payment date or
dates specified by the Borrower for such Competitive Bid Advance in the related
Notice of Competitive Bid Borrowing delivered pursuant to subsection (a)(i)
above, as provided in the Competitive Bid Note evidencing such Competitive Bid
Advance. Upon the occurrence and during the continuance of an Event of Default,
the Borrower shall pay interest on the amount of unpaid principal of and
interest on each Competitive Bid Advance owing to a Lender, payable in arrears
on the date or dates interest is payable thereon, at a rate per annum equal at
all times to 2% per annum above the rate per annum required to be paid on such
Competitive Bid Advance under the terms of the Competitive Bid Note evidencing
such Competitive Bid Advance unless otherwise agreed in such Competitive Bid
Note.

(f) The indebtedness of the Borrower resulting from each Competitive Bid
Advance made to the Borrower as part of a Competitive Bid Borrowing shall be
evidenced by a separate Competitive Bid Note of the Borrower payable to the
order of the Lender making such Competitive Bid Advance.

SECTION 2.04. Fees. (a) Facility Fee. The Borrower agrees to pay to the
Agent for the account of each Lender a facility fee on the aggregate amount of
such Lender's Commitment from the Effective Date in the case of each Initial
Lender and from the later of the Effective Date and the effective date specified
in the Assumption Agreement or in the Assignment and Acceptance pursuant to
which it became a Lender in the case of each other Lender until the earlier of
the Term Loan Conversion Date and the Termination Date at a rate per annum equal
to the Applicable Percentage in effect from time to time, payable in arrears
quarterly on the last day of each March, June, September and December,
commencing September 30, 2003, and on the Term Loan Conversion Date or the
Termination Date, as the case may be.

(b) Agent's Fees. The Borrower shall pay to the Agent for its own account
such fees as may from time to time be agreed between the Borrower and the Agent.

SECTION 2.05. Termination or Reduction of the Commitments. (a) Optional.
The Borrower shall have the right, upon at least three Business Days' notice to
the Agent, to terminate in whole or reduce ratably in part the unused portions
of the respective Commitments of the Lenders, provided that each partial
reduction shall be in the aggregate amount of $10,000,000 or an integral
multiple of $1,000,000 in excess thereof and provided further that the aggregate
amount of the Commitments of the Lenders shall not be reduced to an amount that
is less than the aggregate principal amount of the Competitive Bid Advances
denominated in Dollars then outstanding plus the Equivalent in Dollars
(determined as of the date of the notice of prepayment) of the aggregate
principal amount of the Competitive Bid Advances denominated in Foreign
Currencies then outstanding.

(b) Mandatory. On the Termination Date, if the Borrower has made the Term
Loan Election in accordance with Section 2.06 prior to such date, and from time
to time after the Termination Date upon

15

each prepayment of the Revolving Credit Advances, the Commitments of the Lenders
shall be automatically and permanently reduced on a pro rata basis by an amount
equal to the amount by which (i) the aggregate Commitments immediately prior to
such reduction exceeds (ii) the aggregate unpaid principal amount of all
Revolving Credit Advances outstanding at such time.

SECTION 2.06. Repayment of Revolving Credit Advances. The Borrower shall,
subject to the next succeeding sentence, repay to the Agent for the ratable
account of the Lenders on the Termination Date the aggregate principal amount of
the Revolving Credit Advances then outstanding. The Borrower may, upon not less
than 15 days' notice to the Agent, elect (the "Term Loan Election") to convert
all of the Revolving Credit Advances outstanding on the Termination Date in
effect at such time into a term loan which the Borrower shall repay in full
ratably to the Lenders on the Maturity Date; provided that the Term Loan
Election may not be exercised if (a) a Default has occurred and is continuing on
the date of notice of the Term Loan Election or on the date on which the Term
Loan Election is to be effected or (b) the Borrower has requested an extension
of the Termination Date in accordance with Section 2.18 and the applicable
Extension Date has not occurred. All Revolving Credit Advances converted into a
term loan pursuant to this Section 2.06 shall continue to constitute Revolving
Credit Advances except that the Borrower may not reborrow pursuant to Section
2.01 after all or any portion of such Revolving Credit Advances have been
prepaid pursuant to Section 2.10.

SECTION 2.07. Interest on Revolving Credit Advances. (a) Scheduled
Interest. The Borrower shall pay interest on the unpaid principal amount of each
Revolving Credit Advance owing to each Lender from the date of such Revolving
Credit Advance until such principal amount shall be paid in full, at the
following rates per annum:

(i) Base Rate Advances. During such periods as such Revolving Credit
Advance is a Base Rate Advance, a rate per annum equal at all times to the
sum of (x) the Base Rate in effect from time to time plus (y) the
Applicable Margin in effect from time to time plus (z) the Applicable
Utilization Fee in effect from time to time, payable in arrears quarterly
on the last day of each March, June, September and December during such
periods and on the date such Base Rate Advance shall be Converted or paid
in full.

(ii) Eurocurrency Rate Advances. During such periods as such Revolving
Credit Advance is a Eurocurrency Rate Advance, a rate per annum equal at
all times during each Interest Period for such Revolving Credit Advance to
the sum of (x) the Eurocurrency Rate for such Interest Period for such
Revolving Credit Advance plus (y) the Applicable Margin in effect from time
to time plus (z) the Applicable Utilization Fee in effect from time to
time, payable in arrears on the last day of such Interest Period and, if
such Interest Period has a duration of more than three months, on each day
that occurs during such Interest Period every three months from the first
day of such Interest Period and on the date such Eurocurrency Rate Advance
shall be Converted or paid in full.

(b) Default Interest. Upon the occurrence and during the continuance of an
Event of Default, the Borrower shall pay interest on (i) the unpaid principal
amount of each Revolving Credit Advance owing to each Lender, payable in arrears
on the dates referred to in clause (a)(i) or (a)(ii) above, at a rate per annum
equal at all times to 2% per annum above the rate per annum required to be paid
on such Revolving Credit Advance pursuant to clause (a)(i) or (a)(ii) above and
(ii) to the fullest extent permitted by law, the amount of any interest, fee or
other amount payable hereunder that is not paid when due, from the date such
amount shall be due until such amount shall be paid in full, payable in arrears
on the date such amount shall be paid in full and on demand, at a rate per annum
equal at all times to 2% per annum above the rate per annum required to be paid
on Base Rate Advances pursuant to clause (a)(i) above.

SECTION 2.08. Interest Rate Determination. (a) The Agent shall give prompt
notice to the Borrower and the Lenders of the applicable interest rate
determined by the Agent for purposes of Section 2.07(a)(i) or (ii), and the
rate, if any, furnished by each Reference Bank for the purpose of determining
the interest rate under Section 2.07(a)(ii).

(b) If, with respect to any Eurocurrency Rate Advances, the Required
Lenders notify the Agent that (i) they are unable to obtain matching deposits in
the London inter-bank market at or about 11:00 A.M.

16

(London time) on the second Business Day before the making of a Borrowing in
sufficient amounts to fund their respective Revolving Credit Advances as a part
of such Borrowing during its Interest Period or (ii) the Eurocurrency Rate for
any Interest Period for such Advances will not adequately reflect the cost to
such Required Lenders of making, funding or maintaining their respective
Eurocurrency Rate Advances for such Interest Period, the Agent shall forthwith
so notify the Borrower and the Lenders, whereupon (A) the Borrower will, on the
last day of the then existing Interest Period therefor, (1) if such Eurocurrency
Rate Advances are denominated in Dollars, either (x) prepay such Advances or (y)
Convert such Advances into Base Rate Advances and (2) if such Eurocurrency Rate
Advances are denominated in any Committed Currency, either (x) prepay such
Advances or (y) redenominate such Advances into an Equivalent amount of Dollars
and Convert such Advances into Base Rate Advances and (B) the obligation of the
Lenders to make, or to Convert Revolving Credit Advances into, Eurocurrency Rate
Advances shall be suspended until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no longer exist; provided
that, if the circumstances set forth in clause (ii) above are applicable, the
Borrower may elect, by notice to the Agent and the Lenders, to continue such
Advances in such Committed Currency for Interest Periods of not longer than one
month, which Advances shall thereafter bear interest at a rate per annum equal
to the Applicable Margin plus, for each Lender, the cost to such Lender
(expressed as a rate per annum) of funding its Eurocurrency Rate Advances by
whatever means it reasonably determines to be appropriate. Each Lender shall
certify its cost of funds for each Interest Period to the Agent and the Borrower
as soon as practicable (but in any event not later than ten Business Days after
the first day of such Interest Period).

(c) If the Borrower shall fail to select the duration of any Interest
Period for any Eurocurrency Rate Advances in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01, the Agent will
forthwith so notify the Borrower and the Lenders and such Advances will
automatically, on the last day of the then existing Interest Period therefor, be
continued as Eurocurrency Rate Advances having an interest period of one month.

(d) On the date on which the aggregate unpaid principal amount of
Eurocurrency Rate Advances comprising any Borrowing shall be reduced, by payment
or prepayment or otherwise, to less than $10,000,000, such Advances shall
automatically Convert into Base Rate Advances.

(e) Upon the occurrence and during the continuance of any Event of Default,
(i) each Eurocurrency Rate Advance will automatically, on the last day of the
then existing Interest Period therefor, (A) if such Eurocurrency Rate Advances
are denominated in Dollars, be Converted into Base Rate Advances and (B) if such
Eurocurrency Rate Advances are denominated in any Committed Currency, be
redenominated into an Equivalent amount of Dollars and be Converted into Base
Rate Advances and (ii) the obligation of the Lenders to make, or to Convert
Advances into, Eurocurrency Rate Advances shall be suspended; provided that
Borrower may elect, by notice to the Agent and the Lenders within one Business
Day of such Event of Default, to continue such Advances in such Committed
Currency, whereupon the Agent may require that each Interest Period relating to
such Eurocurrency Rate Advances shall bear interest at the Overnight
Eurocurrency Rate for a period of three Business Days and thereafter, each such
Interest Period shall have a duration of not longer than one month. "Overnight
Eurocurrency Rate" means the rate per annum applicable to an overnight period
beginning on one Business Day and ending on the next Business Day equal to the
sum of 1%, the Applicable Interest Rate Margin and the average, rounded upward
to the nearest whole multiple of 1/16 of 1%, if such average is not such a
multiple, of the respective rates per annum quoted by each Reference Bank to the
Agent on request as the rate at which it is offering overnight deposits in the
relevant currency in amounts comparable to such Reference Bank's Eurocurrency
Rate Advances.

(f) If Dow Jones Markets Telerate Page 3750 is unavailable and fewer than
two Reference Banks furnish timely information to the Agent for determining the
Eurocurrency Rate or LIBO Rate for any Eurocurrency Rate Advances or LIBO Rate
Advances, as the case may be,

(i) the Agent shall forthwith notify the Borrower and the Lenders that
the interest rate cannot be determined for such Eurocurrency Rate Advances
or LIBO Rate Advances, as the case may be,

(ii) with respect to Eurocurrency Rate Advances, each such Advance
will automatically, on the last day of the then existing Interest Period
therefor, (A) if such Eurocurrency Rate Advance is denominated in Dollars,
be prepaid by the Borrower or be automatically Converted into a Base Rate

17

Advance and (B) if such Eurocurrency Rate Advance is denominated in any
Committed Currency, be prepaid by the Borrower or be automatically
redenominated into an Equivalent amount of Dollars and be Converted into a
Base Rate Advance (or if such Advance is then a Base Rate Advance, will
continue as a Base Rate Advance), and

(iii) the obligation of the Lenders to make Eurocurrency Rate Advances
or LIBO Rate Advances or to Convert Revolving Credit Advances into
Eurocurrency Rate Advances shall be suspended until the Agent shall notify
the Borrower and the Lenders that the circumstances causing such suspension
no longer exist.

SECTION 2.09. Optional Conversion of Revolving Credit Advances. The
Borrower may on any Business Day, upon notice given to the Agent not later than
11:00 A.M. (New York City time) on the third Business Day prior to the date of
the proposed Conversion and subject to the provisions of Sections 2.08 and 2.12,
Convert all Revolving Credit Advances denominated in Dollars of one Type
comprising the same Borrowing into Revolving Credit Advances denominated in
Dollars of the other Type; provided, however, that any Conversion of
Eurocurrency Rate Advances into Base Rate Advances shall be made only on the
last day of an Interest Period for such Eurocurrency Rate Advances, any
Conversion of Base Rate Advances into Eurocurrency Rate Advances shall be in an
amount not less than the minimum amount specified in Section 2.02(b) and no
Conversion of any Revolving Credit Advances shall result in more separate
Revolving Credit Borrowings than permitted under Section 2.02(b). Each such
notice of a Conversion shall, within the restrictions specified above, specify
(i) the date of such Conversion, (ii) the Dollar denominated Revolving Credit
Advances to be Converted, and (iii) if such Conversion is into Eurocurrency Rate
Advances, the duration of the initial Interest Period for each such Advance.
Each notice of Conversion shall be irrevocable and binding on the Borrower.

SECTION 2.10. Prepayments of Revolving Credit Advances. (a) Optional. The
Borrower may, upon notice at least two Business Days' prior to the date of such
prepayment, in the case of Eurocurrency Rate Advances, and not later than 11:00
A.M. (New York City time) on the date of such prepayment, in the case of Base
Rate Advances, to the Agent stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given the Borrower shall, prepay
the outstanding principal amount of the Revolving Credit Advances comprising
part of the same Revolving Credit Borrowing in whole or ratably in part without
premium or penalty, together with accrued interest to the date of such
prepayment on the principal amount prepaid; provided, however, that (x) each
partial prepayment shall be in an aggregate principal amount of $10,000,000 or
an integral multiple of $1,000,000 in excess thereof or the Equivalent thereof
in a Committed Currency (determined on the date notice of prepayment is given)
and (y) in the event of any such prepayment of a Eurocurrency Rate Advance, the
Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant
to Section 8.04(c).

(b) Mandatory Prepayments. (i) If the Agent notifies the Borrower that, on
any interest payment date, the sum of (A) the aggregate principal amount of all
Advances denominated in Dollars then outstanding plus (B) the Equivalent in
Dollars (determined on the third Business Day prior to such interest payment
date) of the aggregate principal amount of all Advances denominated in Foreign
Currencies then outstanding exceeds 103% of the aggregate Commitments of the
Lenders on such date, the Borrower shall, within two Business Days after receipt
of such notice, prepay the outstanding principal amount of any Advances owing by
the Borrower in an aggregate amount sufficient to reduce such sum to an amount
not to exceed 100% of the aggregate Commitments of the Lenders on such date.

(ii) Each prepayment made pursuant to this Section 2.10(b) shall be made
together with any interest accrued to the date of such prepayment on the
principal amounts prepaid and, in the case of any prepayment of a Eurocurrency
Rate Advance, a LIBO Rate Advance or a Local Rate Advance on a date other than
the last day of an Interest Period or at its maturity, any additional amounts
which the Borrower shall be obligated to reimburse to the Lenders in respect
thereof pursuant to Section 8.04(c). The Agent shall give prompt notice of any
prepayment required under this Section 2.10(b) to the Borrower and the Lenders.

SECTION 2.11. Increased Costs. (a) If, due to either (i) the introduction
of or any change in or in the interpretation of any law or regulation or (ii)
the compliance with any guideline or request issued by any central bank or other
governmental authority including, without limitation, any agency of the European
Union or

18

similar monetary or multinational authority after the date hereof (whether or
not having the force of law), there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining Eurocurrency Rate
Advances or LIBO Rate Advances (excluding for purposes of this Section 2.11 any
such increased costs resulting from (i) Taxes or Other Taxes (as to which
Section 2.14 shall govern) and (ii) changes in the basis of taxation of overall
net income or overall gross income by the United States or by the foreign
jurisdiction or state under the laws of which such Lender is organized or is
otherwise subject to tax), then the Borrower shall from time to time, upon
demand by such Lender (with a copy of such demand to the Agent), pay to the
Agent for the account of such Lender additional amounts sufficient to compensate
such Lender for such increased cost, provided that the Borrower shall not be
required to pay any such additional amounts to the extent such additional
amounts accrued prior to the date that is six months prior to the date of such
notice. A certificate as to the amount of such increased cost, submitted to the
Borrower and the Agent by such Lender, shall be conclusive and binding for all
purposes, absent manifest error.

(b) If any Lender determines that compliance with any law or regulation or
any guideline or request from any central bank or other governmental authority
(whether or not having the force of law) affects or would affect the amount of
capital required or expected to be maintained by such Lender or any corporation
controlling such Lender and that the amount of such capital is increased by or
based upon the existence of such Lender's commitment to lend hereunder and other
commitments of this type, then, upon demand by such Lender (with a copy of such
demand to the Agent), the Borrower shall pay to the Agent for the account of
such Lender, from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender or such corporation in the light of such
circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender's commitment
to lend hereunder. A certificate as to such amounts submitted to the Borrower
and the Agent by such Lender shall be conclusive and binding for all purposes,
absent manifest error.

SECTION 2.12. Illegality. Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is unlawful,
for any Lender or its Eurocurrency Lending Office to perform its obligations
hereunder to make Eurocurrency Rate Advances in Dollars or any Committed
Currency or LIBO Rate Advances in Dollars or any Foreign Currency or to fund or
maintain Eurocurrency Rate Advances in Dollars or any Committed Currency or LIBO
Rate Advances in Dollars or any Foreign Currency hereunder, (a) each
Eurocurrency Rate Advance or LIBO Rate Advance, as the case may be, will
automatically, upon such demand, (i) if such Eurocurrency Rate Advance or LIBO
Rate Advance is denominated in Dollars, be Converted into a Base Rate Advance or
an Advance that bears interest at the rate set forth in Section 2.07(a)(i), as
the case may be, and (ii) if such Eurocurrency Rate Advance or LIBO Rate Advance
is denominated in any Foreign Currency, be redenominated into an Equivalent
amount of Dollars and be Converted into a Base Rate Advance or an Advance that
bears interest at the rate set forth in Section 2.07(a)(i), as the case may be,
and (b) the obligation of the Lenders to make Eurocurrency Rate Advances or LIBO
Rate Advances or to Convert Revolving Credit Advances into Eurocurrency Rate
Advances shall be suspended until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no longer exist.

SECTION 2.13. Payments and Computations. (a) The Borrower shall make each
payment hereunder, except with respect to principal of, interest on, and other
amounts relating to, Advances denominated in a Foreign Currency, not later than
11:00 A.M. (New York City time) on the day when due in Dollars to the Agent at
the applicable Agent's Account in same day funds. The Borrower shall make each
payment hereunder with respect to principal of, interest on, and other amounts
relating to, Advances denominated in a Foreign Currency, not later than 11:00
A.M. (at the Payment Office for such Foreign Currency) on the day when due in
such Foreign Currency to the Agent, by deposit of such funds to the applicable
Agent's Account in same day funds. The Agent will promptly thereafter cause to
be distributed like funds relating to the payment of principal or interest or
facility fees ratably (other than amounts payable pursuant to Section 2.03,
2.11, 2.14 or 8.04(c)) to the Lenders for the account of their respective
Applicable Lending Offices, and like funds relating to the payment of any other
amount payable to any Lender to such Lender for the account of its Applicable
Lending Office, in each case to be applied in accordance with the terms of this
Agreement. Upon any Assuming Lender becoming a Lender hereunder as a result of
an extension of the Termination Date pursuant to Section 2.18, and upon the
Agent's receipt of such Lender's Assumption Agreement and recording of the
information contained therein in the Register, from and after the applicable
Extension Date, the Agent shall make all payments hereunder and under any Notes
issued in connection therewith in respect of the interest assumed thereby to the
Assuming Lender. Upon its acceptance of an Assignment

19

and Acceptance and recording of the information contained therein in the
Register pursuant to Section 8.07(c), from and after the effective date
specified in such Assignment and Acceptance, the Agent shall make all payments
hereunder and under the Notes in respect of the interest assigned thereby to the
Lender assignee thereunder, and the parties to such Assignment and Acceptance
shall make all appropriate adjustments in such payments for periods prior to
such effective date directly between themselves.

(b) The Borrower hereby authorizes each Lender, if and to the extent
payment owed to such Lender is not made when due hereunder or under the Note
held by such Lender, to charge from time to time against any or all of the
Borrower's accounts with such Lender any amount so due. Each Lender that charges
an account of the Borrower in accordance with this Section agrees to promptly so
notify the Borrower, provided that the failure to give such notice shall not
affect the validity of such charge.

(c) All computations of interest based on the Base Rate shall be made by
the Agent on the basis of a year of 365 or 366 days, as the case may be, all
computations of interest based on the Eurocurrency Rate or the Federal Funds
Rate and of facility fees shall be made by the Agent on the basis of a year of
360 days and computations in respect of Competitive Bid Advances shall be made
by the Agent or the Sub-Agent, as the case may be, as specified in the
applicable Notice of Competitive Bid Borrowing (or, in each case of Advances
denominated in Foreign Currencies where market practice differs, in accordance
with market practice), in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or facility fees are payable. Each determination by the Agent of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.

(d) Whenever any payment hereunder or under the Notes shall be stated to be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or facility fee, as the case
may be; provided, however, that, if such extension would cause payment of
interest on or principal of Eurocurrency Rate Advances or LIBO Rate Advances to
be made in the next following calendar month, such payment shall be made on the
next preceding Business Day.

(e) Unless the Agent shall have received notice from the Borrower prior to
the date on which any payment is due to the Lenders hereunder that the Borrower
will not make such payment in full, the Agent may assume that the Borrower has
made such payment in full to the Agent on such date and the Agent may, in
reliance upon such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the Agent,
each Lender shall repay to the Agent forthwith on demand such amount distributed
to such Lender together with interest thereon, for each day from the date such
amount is distributed to such Lender until the date such Lender repays such
amount to the Agent, at (i) the Federal Funds Rate in the case of Advances
denominated in Dollars or (ii) the cost of funds incurred by the Agent in
respect of such amount in the case of Advances denominated in Foreign
Currencies.

SECTION 2.14. Taxes. (a) Any and all payments by the Borrower hereunder or
under the Notes shall be made, in accordance with Section 2.13, free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Agent, taxes imposed on
its overall net income, and franchise taxes imposed on it in lieu of net income
taxes, by the jurisdictions in which such Lender or the Agent (as the case may
be) is otherwise subject to tax (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities in respect of payments
hereunder or under the Notes being hereinafter referred to as "Taxes"). If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Note to any Lender or the Agent, (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.14) such Lender or the Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law.

(b) In addition, the Borrower shall pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or under

20

the Notes or from the execution, delivery or registration of, performing under,
or otherwise with respect to, this Agreement or the Notes (hereinafter referred
to as "Other Taxes").

(c) The Borrower shall indemnify each Lender and the Agent for and hold it
harmless against the full amount of Taxes or Other Taxes (including, without
limitation, taxes of any kind imposed by any jurisdiction on amounts payable
under this Section 2.14) imposed on or paid by such Lender or the Agent (as the
case may be) and any liability (including penalties, interest and expenses not
incurred by reason of gross negligence or willful misconduct on the part of such
Lender or the Agent) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date such Lender or the
Agent (as the case may be) makes written demand therefor.

(d) Within 30 days after the date of any payment of Taxes, the Borrower
shall furnish to the Agent, at its address referred to in Section 8.02(a), the
original or a certified copy of a receipt evidencing such payment. In the case
of any payment hereunder or under the Notes by or on behalf of the Borrower
through an account or branch outside the United States or by or on behalf of the
Borrower by a payor that is not a United States person, if the Borrower
determines that no Taxes are payable in respect thereof, the Borrower shall
furnish, or shall cause such payor to furnish, to the Agent, at such address, an
opinion of counsel as requested by and acceptable to the Agent stating that such
payment is exempt from Taxes. For purposes of this subsection (d) and subsection
(e), the terms "United States" and "United States person" shall have the
meanings specified in Section 7701 of the Internal Revenue Code.

(e) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Initial Lender and on the date of the Assumption
Agreement or the Assignment and Acceptance pursuant to which it becomes a Lender
in the case of each other Lender, and from time to time thereafter as requested
in writing by the Borrower (but only so long as such Lender remains lawfully
able to do so), shall provide each of the Agent and the Borrower with two
original Internal Revenue Service forms 1001 or 4224, as appropriate, or any
successor or other form prescribed by the Internal Revenue Service, certifying
that such Lender is exempt from or entitled to a reduced rate of United States
withholding tax on payments pursuant to this Agreement or the Notes. If the form
provided by a Lender at the time such Lender first becomes a party to this
Agreement indicates a United States interest withholding tax rate in excess of
zero, withholding tax at such rate shall be considered excluded from Taxes
unless and until such Lender provides the appropriate forms certifying that a
lesser rate applies, whereupon withholding tax at such lesser rate only shall be
considered excluded from Taxes for periods governed by such form; provided,
however, that, if at the date of the Assignment and Acceptance pursuant to which
a Lender assignee becomes a party to this Agreement, the Lender assignor was
entitled to payments under subsection (a) in respect of United States
withholding tax with respect to interest paid at such date, then, to such
extent, the term Taxes shall include (in addition to withholding taxes that may
be imposed in the future or other amounts otherwise includable in Taxes) United
States withholding tax, if any, applicable with respect to the Lender assignee
on such date. In addition, each Lender agrees that from time to time after the
Effective Date, when a change in circumstances renders the previous
certification obsolete or inaccurate in any material respect, it will deliver to
the Borrower and the Agent two new accurate and complete original signed copies
of Internal Revenue Service Form 4224 or 1001, as the case may be, and such
other forms as may be required in order to confirm or establish the entitlement
of such Lender to a continued exemption from or reduction in United States
withholding tax with respect to payments under this Agreement or any Note,
unless any change in treaty, law or regulation has occurred after the date such
Lender becomes a party hereunder which renders all such forms inapplicable or
which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the Agent.
If any form or document referred to in this subsection (e) requires the
disclosure of information, other than information necessary to compute the tax
payable and information required on the date hereof by Internal Revenue Service
form 1001 or 4224, that the Lender reasonably considers to be confidential, the
Lender shall give notice thereof to the Borrower and shall not be obligated to
include in such form or document such confidential information.

(f) Each Initial Lender hereby confirms as of the Effective Date, and each
other Lender confirms as of the effective date of the Assignment and Acceptance
pursuant to which it becomes a party hereto, in favor of the Agent and the
Borrower that either (i) such Lender is not resident in the United Kingdom and
is beneficially entitled to the

21

Advances and the interest thereon or (ii) it is a bank as defined for the
purposes of Section 349 of the Income and Corporation Taxes Act of 1988 of the
United Kingdom and is beneficially entitled to the Advances and the interest
thereon, and each Lender agrees to notify the Agent if there is any change in
its position from that set forth in this clause (f).

(g) For any period with respect to which a Lender has failed to provide the
Borrower with the appropriate form described in Section 2.14(e) (other than if
such failure is due to a change in law occurring subsequent to the date on which
a form originally was required to be provided, or if such form otherwise is not
required under subsection (e) above), such Lender shall not be entitled to
indemnification under Section 2.14(a) or (c) with respect to Taxes imposed by
the United States by reason of such failure; provided, however, that should a
Lender become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as the Lender shall reasonably
request to assist the Lender to recover such Taxes.

(h) Any Lender claiming any additional amounts payable pursuant to this
Section 2.14 agrees to use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
Eurocurrency Lending Office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts that may thereafter
accrue and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender.

SECTION 2.15. Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Revolving Credit Advances owing to it
(other than pursuant to Section 2.11, 2.14 or 8.04(c)) in excess of its ratable
share of payments on account of the Revolving Credit Advances obtained by all
the Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the Revolving Credit Advances owing to them as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
each Lender shall be rescinded and such Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery together with an amount
equal to such Lender's ratable share (according to the proportion of (i) the
amount of such Lender's required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.15 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.

SECTION 2.16. Evidence of Debt. (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Revolving Credit
Advance owing to such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder in respect of Revolving Credit Advances. The Borrower agrees that upon
notice by any Lender to the Borrower (with a copy of such notice to the Agent)
to the effect that a Revolving Credit Note is required or appropriate in order
for such Lender to evidence (whether for purposes of a permitted pledge,
enforcement or otherwise) the Revolving Credit Advances owing to, or to be made
by, such Lender, the Borrower shall promptly execute and deliver to such Lender
a Revolving Credit Note payable to the order of such Lender in a principal
amount up to the Commitment of such Lender.

(b) The Register maintained by the Agent pursuant to Section 8.07(d) shall
include a control account, and a subsidiary account for each Lender, in which
accounts (taken together) shall be recorded (i) the date and amount of each
Borrowing made hereunder, the Type of Advances comprising such Borrowing and, if
appropriate, the Interest Period applicable thereto, (ii) the terms of each
Assumption Agreement and each Assignment and Acceptance delivered to and
accepted by it, (iii) the amount of any principal or interest due and payable or
to become due and payable from the Borrower to each Lender hereunder and (iv)
the amount of any sum received by the Agent from the Borrower hereunder and each
Lender's share thereof.

(c) Entries made in good faith by the Agent in the Register pursuant to
subsection (b) above, and by each Lender in its account or accounts pursuant to
subsection (a) above, shall be prima facie evidence of the amount of principal
and interest due and payable or to become due and payable from the Borrower to,
in the case of the Register, each Lender and, in the case of such account or
accounts, such Lender, under this Agreement, absent manifest error; provided,
however, that the failure of the Agent or such Lender to make an entry, or any
finding that

22

an entry is incorrect, in the Register or such account or accounts shall not
limit or otherwise affect the obligations of the Borrower under this Agreement.

SECTION 2.17. Use of Proceeds. The proceeds of the Advances shall be
available (and the Borrower agrees that it shall use such proceeds) solely for
general corporate purposes of the Borrower and its Subsidiaries.

SECTION 2.18. Extension of Termination Date. (a) At least 30 days but not
more than 45 days prior to the Termination Date, the Borrower, by written notice
to the Agent, may request an extension of the Termination Date in effect at such
time by 364 days from its then scheduled expiration; provided, however, that the
Borrower shall not have made the Term Loan Election for Revolving Credit
Advances outstanding on such Termination Date prior to such time. The Agent
shall promptly notify each Lender of such request, and each Lender shall in
turn, in its sole discretion, not later than 20 days prior to the Termination
Date, notify the Borrower and the Agent in writing as to whether such Lender
will consent to such extension. If any Lender shall fail to notify the Agent and
the Borrower in writing of its consent to any such request for extension of the
Termination Date at least 20 days prior to the Termination Date, such Lender
shall be deemed to be a Non-Consenting Lender with respect to such request. The
Agent shall notify the Borrower not later than 15 days prior to the Termination
Date of the decision of the Lenders regarding the Borrower's request for an
extension of the Termination Date.

(b) If all the Lenders consent in writing to any such request in accordance
with subsection (a) of this Section 2.18, the Termination Date in effect at such
time shall, effective as at the Termination Date (the "Extension Date"), be
extended for 364 days; provided that on each Extension Date the applicable
conditions set forth in Article III shall be satisfied. If less than all of the
Lenders consent in writing to any such request in accordance with subsection (a)
of this Section 2.18, the Termination Date in effect at such time shall,
effective as at the applicable Extension Date, be extended as to those Lenders
that so consented (each a "Consenting Lender") but shall not be extended as to
any other Lender (each a "Non-Consenting Lender"). To the extent that the
Termination Date is not extended as to any Lender pursuant to this Section 2.18
and the Commitment of such Lender is not assumed in accordance with subsection
(c) of this Section 2.18 on or prior to the applicable Extension Date, the
Commitment of such Non-Consenting Lender shall automatically terminate in whole
on such unextended Termination Date without any further notice or other action
by the Borrower, such Lender or any other Person; provided that such
Non-Consenting Lender's rights under Sections 2.11, 2.14 and 8.04, and its
obligations under Section 7.05, shall survive the Termination Date for such
Lender as to matters occurring prior to such date. It is understood and agreed
that no Lender shall have any obligation whatsoever to agree to any request made
by the Borrower for any requested extension of the Termination Date.

(c) If less than all of the Lenders consent to any such request pursuant to
subsection (a) of this Section 2.18, the Agent shall promptly so notify the
Consenting Lenders, and each Consenting Lender may, in its sole discretion, give
written notice to the Agent not later than 10 days prior to the Termination Date
of the amount of the Non-Consenting Lenders' Commitments for which it is willing
to accept an assignment. If the Consenting Lenders notify the Agent that they
are willing to accept assignments of Commitments in an aggregate amount that
exceeds the amount of the Commitments of the Non-Consenting Lenders, such
Commitments shall be allocated among the Consenting Lenders willing to accept
such assignments in such amounts as are agreed between the Borrower and the
Agent. If after giving effect to the assignments of Commitments described above
there remains any Commitments of Non-Consenting Lenders, the Borrower may
arrange for one or more Consenting Lenders or other Eligible Assignees (each, an
"Assuming Lender") to assume by execution of an assumption agreement in form and
substance satisfactory to the Borrower and the Agent (each, an "Assumption
Agreement"), effective as of the Extension Date, any Non-Consenting Lender's
remaining Commitment and all of the obligations of such Non-Consenting Lender
under this Agreement thereafter arising, without recourse to or warranty by, or
expense to, such Non-Consenting Lender; provided, however, that the amount of
the Commitment of any such Assuming Lender as a result of such substitution
shall in no event be less than $10,000,000 unless the amount of the Commitment
of such Non-Consenting Lender is less than $10,000,000, in which case such
Assuming Lender shall assume all of such lesser amount; and provided further
that:

(i) any such Consenting Lender or Assuming Lender shall have paid to
such Non-Consenting Lender (A) the aggregate principal amount of, and any
interest accrued and unpaid to the effective date of the assignment on, the
outstanding Advances, if any, of such Non-Consenting Lender plus

23

(B) any accrued but unpaid facility fees owing to such Non-Consenting
Lender as of the effective date of such assignment;

(ii) all additional costs reimbursements, expense reimbursements and
indemnities payable to such Non-Consenting Lender, and all other accrued
and unpaid amounts owing to such Non-Consenting Lender hereunder, as of the
effective date of such assignment shall have been paid to such
Non-Consenting Lender; and

(iii) with respect to any such Assuming Lender, the applicable
processing and recordation fee required under Section 8.07(a) for such
assignment shall have been paid;

provided further that such Non-Consenting Lender's rights under Sections 2.11,
2.14 and 8.04, and its obligations under Section 7.05, shall survive such
substitution as to matters occurring prior to the date of substitution and at
least three Business Days prior to any Extension Date, (A) each such Assuming
Lender, if any, shall have delivered to the Borrower and the Agent an Assumption
Agreement, duly executed by such Assuming Lender, such Non-Consenting Lender,
the Borrower and the Agent, (B) any such Consenting Lender shall have delivered
confirmation in writing satisfactory to the Borrower and the Agent as to the
increase in the amount of its Commitment and (C) each Non-Consenting Lender
being replaced pursuant to this Section 2.18 shall have delivered to the Agent
any Note or Notes held by such Non-Consenting Lender. Upon the payment or
prepayment of all amounts referred to in clauses (i), (ii) and (iii) of the
immediately preceding sentence, each such Consenting Lender or Assuming Lender,
as of the Extension Date, will be substituted for such Non-Consenting Lender
under this Agreement and shall be a Lender for all purposes of this Agreement,
without any further acknowledgment by or the consent of the other Lenders, and
the obligations of each such Non-Consenting Lender hereunder shall, by the
provisions hereof, be released and discharged.

(d) If Lenders holding Commitments equal to not less than 50% of the
Commitments outstanding immediately prior to the Extension Date (after giving
effect to any assignments pursuant to subsection (b) of this Section 2.18)
consent in writing to a requested extension (whether by execution or delivery of
an Assumption Agreement or otherwise) not later than one Business Day prior to
such Extension Date, the Agent shall so notify the Borrower, and, so long as no
Default shall have occurred and be continuing as of such Extension Date, or
shall occur as a consequence thereof, the Termination Date then in effect shall
be extended for the additional one-year period as described in subsection (a) of
this Section 2.18, and all references in this Agreement, and in the Notes, if
any, to the "Termination Date" shall, with respect to each Consenting Lender and
each Assuming Lender for such Extension Date, refer to the Termination Date as
so extended. Promptly following each Extension Date, the Agent shall notify the
Lenders (including, without limitation, each Assuming Lender) of the extension
of the scheduled Termination Date in effect immediately prior thereto and shall
thereupon record in the Register the relevant information with respect to each
such Consenting Lender and each such Assuming Lender.

ARTICLE III

CONDITIONS TO EFFECTIVENESS AND LENDING

SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01 and
2.03. Sections 2.01 and 2.03 of this Agreement shall become effective on and as
of the first date (the "Effective Date") on which the following conditions
precedent have been satisfied:

(a) There shall have occurred no Material Adverse Change since
December 31, 2002.

(b) There shall exist no action, suit, investigation, litigation or
proceeding affecting the Borrower or any of its Subsidiaries pending or
threatened before any court, governmental agency or arbitrator that (i)
would be reasonably likely to have a Material Adverse Effect other than the
matters described on Schedule 3.01(b) hereto (the "Disclosed Litigation")
or (ii) purports to affect the legality, validity or enforceability of this
Agreement or any Note or the consummation of the transactions contemplated
hereby, and there shall have been no adverse change in the status, or
financial effect on the

24

Borrower or any of its Subsidiaries, of the Disclosed Litigation from that
described on Schedule 3.01(b) hereto.

(c) Nothing shall have come to the attention of the Lenders during the
course of their due diligence investigation to lead them to believe that
the Information Memorandum was or has become misleading, incorrect or
incomplete in any material respect; without limiting the generality of the
foregoing, the Lenders shall have been given such access to the management,
records, books of account, contracts and properties of the Borrower and its
Subsidiaries as they shall have reasonably requested.

(d) All governmental and third party consents and approvals necessary
in connection with the transactions contemplated hereby shall have been
obtained (without the imposition of any conditions that are not acceptable
to the Lenders) and shall remain in effect, and no law or regulation shall
be applicable in the reasonable judgment of the Lenders that restrains,
prevents or imposes materially adverse conditions upon the transactions
contemplated hereby.

(e) The Borrower shall have notified each Lender and the Agent in
writing as to the proposed Effective Date.

(f) The Borrower shall have paid all accrued fees and expenses of the
Agent and the Lenders (including the accrued fees and expenses of counsel
to the Agent).

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

(i) The representations and warranties contained in Section 4.01
are correct on and as of the Effective Date, and

(ii) No event has occurred and is continuing that constitutes a
Default.

(h) The Agent shall have received on or before the Effective Date the
following, each dated such day, in form and substance satisfactory to the
Agent and (except for the Revolving Credit Notes) in sufficient copies for
each Lender:

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

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

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

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

(v) A favorable opinion of Shearman & Sterling LLP, counsel for
the Agent, in form and substance satisfactory to the Agent.

25

SECTION 3.02. Conditions Precedent to Each Revolving Credit Borrowing and
Extension Date. The obligation of each Lender to make a Revolving Credit Advance
on the occasion of each Revolving Credit Borrowing and each extension of
Commitments pursuant to Section 2.18 shall be subject to the conditions
precedent that the Effective Date shall have occurred and on the date of such
Revolving Credit Borrowing or the applicable Extension Date (a) the following
statements shall be true (and each of the giving of the applicable Notice of
Revolving Credit Borrowing, request for Commitment Extension and the acceptance
by the Borrower of the proceeds of such Revolving Credit Borrowing shall
constitute a representation and warranty by the Borrower that on the date of
such Borrowing or such Extension Date such statements are true):

(i) the representations and warranties contained in Section 4.01
(except, in the case of Revolving Credit Borrowings, the representations
set forth in the last sentence of subsection (e) thereof and in subsection
(f)(i) thereof) are correct on and as of such date, before and after giving
effect to such Revolving Credit Borrowing or such Extension Date and to the
application of the proceeds therefrom, as though made on and as of such
date,

(ii) no event has occurred and is continuing, or would result from
such Revolving Credit Borrowing, such Extension Date or from the
application of the proceeds therefrom, that constitutes a Default, and

(iii) after giving effect to such Revolving Credit Borrowing, the
aggregate amount of the Borrower's Debt (not including other transactions
relating to Snap-on Credit LLC) from any bank or financial institution or
under any commercial paper facility or debt securities or securitization
program outstanding will not exceed $550,000,000 or, if greater, the amount
authorized by resolutions of the Board of Directors in effect on the date
of such Revolving Credit Borrowing;

and (b) the Agent shall have received such other approvals, opinions or
documents as any Lender through the Agent may reasonably request.

SECTION 3.03. Conditions Precedent to Each Competitive Bid Borrowing. The
obligation of each Lender that is to make a Competitive Bid Advance on the
occasion of a Competitive Bid Borrowing to make such Competitive Bid Advance as
part of such Competitive Bid Borrowing is subject to the conditions precedent
that (i) the Agent shall have received the written confirmatory Notice of
Competitive Bid Borrowing with respect thereto, (ii) on or before the date of
such Competitive Bid Borrowing, but prior to such Competitive Bid Borrowing, the
Agent shall have received a Competitive Bid Note payable to the order of such
Lender for each of the one or more Competitive Bid Advances to be made by such
Lender as part of such Competitive Bid Borrowing, in a principal amount equal to
the principal amount of the Competitive Bid Advance to be evidenced thereby and
otherwise on such terms as were agreed to for such Competitive Bid Advance in
accordance with Section 2.03, and (iii) on the date of such Competitive Bid
Borrowing the following statements shall be true (and each of the giving of the
applicable Notice of Competitive Bid Borrowing and the acceptance by the
Borrower of the proceeds of such Competitive Bid Borrowing shall constitute a
representation and warranty by the Borrower that on the date of such Competitive
Bid Borrowing such statements are true):

(a) the representations and warranties contained in Section 4.01 are
correct on and as of the date of such Competitive Bid Borrowing, before and
after giving effect to such Competitive Bid Borrowing and to the
application of the proceeds therefrom, as though made on and as of such
date,

(b) no event has occurred and is continuing, or would result from such
Competitive Bid Borrowing or from the application of the proceeds
therefrom, that constitutes a Default,

(c) no event has occurred and no circumstance exists as a result of
which the information concerning the Borrower that has been provided to the
Agent and each Lender by the Borrower in connection herewith would include
an untrue statement of a material fact or omit to state any material fact
or any fact necessary to make the statements contained therein, in the
light of the circumstances under which they were made, not misleading, and

26

(d) after giving effect to such Competitive Bid Borrowing, the
aggregate amount of the Borrower's Debt (not including other transactions
relating to Snap-on Credit LLC) from any bank or financial institution or
under any commercial paper facility or debt securities or securitization
program outstanding will not exceed $550,000,000 or, if greater, the amount
authorized by resolutions of the Board of Directors in effect on the date
of such Competitive Bid Borrowing;.

SECTION 3.04. Determinations Under Section 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the Agent responsible for the transactions contemplated by this Agreement
shall have received notice from such Lender prior to the date that the Borrower,
by notice to the Lenders, designates as the proposed Effective Date, specifying
its objection thereto. The Agent shall promptly notify the Lenders of the
occurrence of the Effective Date.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Borrower. The Borrower
represents and warrants as follows:

(a) The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.

(b) The execution, delivery and performance by the Borrower of this
Agreement and the Notes to be delivered by it, and the consummation of the
transactions contemplated hereby, are within the Borrower's corporate
powers, have been duly authorized by all necessary corporate action, and do
not contravene (i) the Borrower's charter or by-laws or (ii) law or any
contractual restriction binding on or affecting the Borrower.

(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any other
third party is required as a condition to the due execution, delivery and
performance by the Borrower of this Agreement or the Notes to be delivered
by it.

(d) This Agreement has been, and each of the Notes to be delivered by
it when delivered hereunder will have been, duly executed and delivered by
the Borrower. This Agreement is, and each of the Notes when delivered
hereunder will be, the legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with their respective terms.

(e) The Consolidated balance sheet of the Borrower and its
Subsidiaries as at December 31, 2002, and the related Consolidated
statements of income and cash flows of the Borrower and its Subsidiaries
for the fiscal year then ended, accompanied by an opinion of Deloitte &
Touche LLP, independent public accountants, and the Consolidated balance
sheet of the Borrower and its Subsidiaries as at June 30, 2003, and the
related Consolidated statements of income and cash flows of the Borrower
and its Subsidiaries for the six months then ended, duly certified by the
chief financial officer of the Borrower, copies of which have been
furnished to each Lender, fairly present, subject, in the case of said
balance sheet as at June 30, 2003, and said statements of income and cash
flows for the six months then ended, to year-end audit adjustments, the
Consolidated financial condition of the Borrower and its Subsidiaries as at
such dates and the Consolidated results of the operations of the Borrower
and its Subsidiaries for the periods ended on such dates, all in accordance
with generally accepted accounting principles consistently applied. Since
December 31, 2002, there has been no Material Adverse Change.

(f) There is no pending or threatened action, suit, investigation,
litigation or proceeding, including, without limitation, any Environmental
Action, affecting the Borrower or any of its Subsidiaries

27

before any court, governmental agency or arbitrator that (i) would be
reasonably likely to have a Material Adverse Effect (other than the
Disclosed Litigation) or (ii) purports to affect the legality, validity or
enforceability of this Agreement or any Note or the consummation of the
transactions contemplated hereby, and there has been no materially adverse
change in the status, or financial effect on the Borrower or any of its
Subsidiaries, of the Disclosed Litigation from that described on Schedule
3.01(b) hereto.

(g) The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning
of Regulation U issued by the Board of Governors of the Federal Reserve
System), and no proceeds of any Advance will be used to purchase or carry
any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.

(h) The Borrower is not an "investment company", or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.

ARTICLE V

COVENANTS OF THE BORROWER

SECTION 5.01. Affirmative Covenants. So long as any Advance shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower will:

(a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all applicable and
material laws, rules, regulations and orders, such compliance to include,
without limitation, compliance with ERISA and Environmental Laws.

(b) Payment of Taxes, Etc. Pay and discharge, and cause each of its
Subsidiaries to pay and discharge, before the same shall become delinquent,
(i) all taxes, assessments and governmental charges or levies imposed upon
it or upon its property and (ii) all lawful claims that, if unpaid, might
by law become a Lien upon its property; provided, however, that neither the
Borrower nor any of its Subsidiaries shall be required to pay or discharge
any such tax, assessment, charge or claim that is being contested in good
faith and by proper proceedings and as to which appropriate reserves are
being maintained, unless and until any Lien resulting therefrom attaches to
its property and becomes enforceable against its other creditors.

(c) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks
as is usually carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which the Borrower or such
Subsidiary operates; provided, however, that the Borrower and its
Subsidiaries may self-insure to the same extent as other companies engaged
in similar businesses and owning similar properties in the same general
areas in which the Borrower or such Subsidiary operates and to the extent
consistent with prudent business practice.

(d) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each of its Subsidiaries to preserve and maintain,
its corporate existence, rights (charter and statutory) and franchises;
provided, however, that the Borrower and its Subsidiaries may
consummate any merger or consolidation permitted under Section 5.02(b)
and provided further that neither the Borrower nor any of its
Subsidiaries shall be required to preserve any right or franchise if
the Board of Directors of the Borrower or such Subsidiary shall
determine that the preservation thereof is no longer desirable in the
conduct of the business of the Borrower or such Subsidiary, as the case
may be, and that the loss thereof is not disadvantageous in any
material respect to the Borrower, such Subsidiary or the Lenders.

(e) Visitation Rights. At any reasonable time and from time to time
and, so long as no Default has occurred and is continuing, upon reasonable
notice, permit the Agent or any of the Lenders or any agents or
representatives thereof, to examine and make copies of and abstracts from
the records and

28

books of account of, and visit the properties of, the Borrower and any of
its Subsidiaries, and to discuss the affairs, finances and accounts of the
Borrower and any of its Subsidiaries with any of their officers or
directors and with their independent certified public accountants.

(f) Keeping of Books. Keep, and cause each of its Subsidiaries to
keep, proper books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of
the Borrower and each such Subsidiary in accordance with generally accepted
accounting principles in effect from time to time.

(g) Maintenance of Properties, Etc. Maintain and preserve, and cause
each of its Subsidiaries to maintain and preserve, all of its properties
that are used or useful in the conduct of its business in good working
order and condition, ordinary wear and tear excepted.

(h) Transactions with Affiliates. Conduct, and cause each of its
Subsidiaries to conduct, all transactions otherwise permitted under this
Agreement with any of their Affiliates on terms that are fair and
reasonable and no less favorable to the Borrower or such Subsidiary than it
would obtain in a comparable arm's-length transaction with a Person not an
Affiliate, provided that the Borrower and its Subsidiaries may transact
business with Snap-On Credit LLC on a basis consistent with past practice.

(i) Reporting Requirements. Furnish to the Agent:

(i) as soon as available and in any event within 60 days after
the end of each of the first three quarters of each fiscal year of the
Borrower, the Consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such quarter and Consolidated statements
of income and cash flows of the Borrower and its Subsidiaries for the
period commencing at the end of the previous fiscal year and ending
with the end of such quarter, duly certified (subject to year-end
audit adjustments) by the chief financial officer or treasurer of the
Borrower as having been prepared in accordance with generally accepted
accounting principles and certificates of the chief financial officer
or treasurer of the Borrower as to compliance with the terms of this
Agreement and setting forth in reasonable detail the calculations
necessary to demonstrate compliance with Section 5.03, provided that
in the event of any change in GAAP used in the preparation of such
financial statements, the Borrower shall also provide, if necessary
for the determination of compliance with Section 5.03, a statement of
reconciliation conforming such financial statements to GAAP;

(ii) as soon as available and in any event within 120 days after
the end of each fiscal year of the Borrower, a copy of the annual
audit report for such year for the Borrower and its Subsidiaries,
containing the Consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such fiscal year and Consolidated
statements of income and cash flows of the Borrower and its
Subsidiaries for such fiscal year, in each case accompanied by an
opinion acceptable to the Required Lenders by Deloitte & Touche LLP or
other independent public accountants acceptable to the Required
Lenders, provided that in the event of any change in GAAP used in the
preparation of such financial statements, the Borrower shall also
provide, if necessary for the determination of compliance with Section
5.03, a statement of reconciliation conforming such financial
statements to GAAP;

(iii) as soon as possible and in any event within five days after
the occurrence of each Default continuing on the date of such
statement, a statement of the chief financial officer or treasurer of
the Borrower setting forth details of such Default and the action that
the Borrower has taken and proposes to take with respect thereto;

(iv) promptly after the sending or filing thereof, copies of all
reports that the Borrower sends to any of its securityholders as such,
and copies of all reports and registration

29

statements that the Borrower or any Subsidiary files with the
Securities and Exchange Commission or any national securities
exchange;

(v) promptly after the commencement thereof, notice of all
actions and proceedings before any court, governmental agency or
arbitrator affecting the Borrower or any of its Subsidiaries of the
type described in Section 4.01(f);

(vi) promptly after the adoption thereof, notice of the increased
amount of the Borrower's Debt (not including other transactions
relating to Snap-on Credit LLC) from any bank or financial institution
or under any commercial paper facility or debt securities or
securitization program authorized to be outstanding, together with
certified copies of the resolutions of the Board of Directors of the
Borrower approving such increase; and

(vii) such other information respecting the Borrower or any of
its Subsidiaries as any Lender through the Agent may from time to time
reasonably request.

SECTION 5.02. Negative Covenants. So long as any Advance shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower will not:

(a) Liens, Etc. Create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any Lien on or with respect to
any of its properties, whether now owned or hereafter acquired, or assign,
or permit any of its Subsidiaries to assign, any right to receive income,
other than:

(i) Permitted Liens,

(ii) purchase money Liens upon or in any real property or
equipment acquired or held by the Borrower or any Subsidiary in the
ordinary course of business to secure the purchase price of such
property or equipment or to secure Debt incurred solely for the
purpose of financing the acquisition of such property or equipment, or
Liens existing on such property or equipment at the time of its
acquisition (other than any such Liens created in contemplation of
such acquisition that were not incurred to finance the acquisition of
such property) or extensions, renewals or replacements of any of the
foregoing for the same or a lesser amount, provided, however, that no
such Lien shall extend to or cover any properties of any character
other than the real property or equipment being acquired, and no such
extension, renewal or replacement shall extend to or cover any
properties not theretofore subject to the Lien being extended, renewed
or replaced, provided further that the aggregate principal amount of
the indebtedness secured by the Liens referred to in this clause (ii)
shall not exceed $25,000,000,

(iii) the Liens existing on the Effective Date and described on
Schedule 5.02(a) hereto,

(iv) Liens on property of a Person existing at the time such
Person is merged into or consolidated with the Borrower or any
Subsidiary of the Borrower or becomes a Subsidiary of the Borrower;
provided that such Liens were not created in contemplation of such
merger, consolidation or acquisition and do not extend to any assets
other than those of the Person so merged into or consolidated with the
Borrower or such Subsidiary or acquired by the Borrower or such
Subsidiary,

(v) other Liens securing Debt in an aggregate principal amount
not to exceed $50,000,000 at any time outstanding,

(vi) sales of accounts receivable arising in connection a
transaction described in the proviso to the definition of "Debt" in
Section 1.01, and

30

(vii) the replacement, extension or renewal of any Lien permitted
by clause (iii) or (iv) above upon or in the same property theretofore
subject thereto or the replacement, extension or renewal (without
increase in the amount or change in any direct or contingent obligor)
of the Debt secured thereby.

(b) Mergers, Etc. Merge or consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to, any Person, or permit any of its
Subsidiaries to do so, except that (i) any Subsidiary of the Borrower may
merge or consolidate with or into, or dispose of assets to, any other
Subsidiary of the Borrower, (ii) any Subsidiary of the Borrower may merge
into or dispose of assets to the Borrower and (iii) the Borrower may merge
into a wholly owned Subsidiary of the Borrower that has no material assets
or liabilities for the sole purpose of changing the state of incorporation
of the Borrower if the surviving corporation shall expressly assume the
liabilities of the Borrower under this Agreement and the Notes, provided,
in each case, that no Default shall have occurred and be continuing at the
time of such proposed transaction or would result therefrom.

(c) Accounting Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in accounting policies or
reporting practices, except as required or permitted by generally accepted
accounting principles.

(d) Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any material change in the nature of the business of
the Borrower and its Subsidiaries taken as a whole as carried on at the
date hereof.

SECTION 5.03. Financial Covenant. So long as any Advance shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower will
maintain a ratio of Consolidated Debt to the sum of Consolidated Debt plus
shareholders' equity of not greater than 0.60:1.00.

ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.01. Events of Default. If any of the following events ("Events of
Default") shall occur and be continuing:

(a) The Borrower shall fail to pay any principal of any Advance when
the same becomes due and payable; or the Borrower shall fail to pay any
interest on any Advance or make any other payment of fees or other amounts
payable under this Agreement or any Note within three Business Days after
the same becomes due and payable; or

(b) Any representation or warranty made by the Borrower herein or by
the Borrower (or any of its officers) in connection with this Agreement
shall prove to have been incorrect in any material respect when made; or

(c) (i) The Borrower shall fail to perform or observe any term,
covenant or agreement contained in Section 5.01(d), (e) or (i), 5.02 or
5.03, or (ii) the Borrower shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be
performed or observed if such failure shall remain unremedied for 30 days
after written notice thereof shall have been given to the Borrower by the
Agent or any Lender; or

(d) The Borrower or any of its Subsidiaries shall fail to pay any
principal of or premium or interest on any Debt that is outstanding in a
principal or net amount of at least $25,000,000 in the aggregate (but
excluding Debt outstanding hereunder) of the Borrower or such Subsidiary
(as the case may be), when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration,

31

demand or otherwise), and such failure shall continue after the applicable
grace period, if any, specified in the agreement or instrument relating to
such Debt; or any other event shall occur or condition shall exist under
any agreement or instrument relating to any such Debt and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or
to permit the acceleration of, the maturity of such Debt; or any such Debt
shall be declared to be due and payable, or required to be prepaid or
redeemed (other than by a regularly scheduled required prepayment or
redemption), purchased or defeased, or an offer to prepay, redeem, purchase
or defease such Debt shall be required to be made, in each case prior to
the stated maturity thereof; or

(e) The Borrower or any of its Subsidiaries shall generally not pay
its debts as such debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against
the Borrower or any of its Subsidiaries seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for
it or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 60 days, or
any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of
a receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or the Borrower or any of
its Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this subsection (e); or

(f) Judgments or orders for the payment of money in excess of
$25,000,000 in the aggregate shall be rendered against the Borrower or any
of its Subsidiaries with respect to which (i) enforcement proceedings shall
have been commenced by any creditor upon such judgments or orders or (ii)
there shall be any period of 10 consecutive days during which a stay of
enforcement of such judgments or orders, by reason of a pending appeal or
otherwise, shall not be in effect; provided, however, that any such
judgment or order shall not be an Event of Default or included in the
calculation of the aggregate amount of judgments or orders under this
Section 6.01(f) if and for so long as (i) the amount of such judgment or
order is covered by a valid and binding policy of insurance between the
defendant and the insurer covering payment thereof and (ii) such insurer,
which shall be rated at least "A" by A.M. Best Company, has been notified
of, and has not disputed the claim made for payment of, the amount of such
judgment or order; or

(g) Any non-monetary judgment or order shall be rendered against the
Borrower or any of its Subsidiaries that would be reasonably expected to
have a Material Adverse Effect, and there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect;
or

(h) (i) Any Person or two or more Persons acting in concert (other
than any Related Person) shall have acquired beneficial ownership (within
the meaning of Rule 13d-3 of the Securities and Exchange Commission under
the Securities Exchange Act of 1934), directly or indirectly, of Voting
Stock of the Borrower (or other securities convertible into such Voting
Stock) representing 15% or more of the combined voting power of all Voting
Stock of the Borrower; or (ii) during any period of up to 24 consecutive
months, commencing after the date of this Agreement, individuals who at the
beginning of such 24-month period were directors of the Borrower shall
cease for any reason to constitute a majority of the board of directors of
the Borrower; or (iii) any Person or two or more Persons acting in concert
(other than any Related Person) shall have acquired by contract or
otherwise, or shall have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of the power to
exercise, directly or indirectly, a controlling influence over the
management or policies of the Borrower; or

(i) The Borrower or any of its ERISA Affiliates shall incur, or shall
be reasonably likely to incur liability in excess of $25,000,000 in the
aggregate as a result of one or more of the following: (i) the occurrence
of any ERISA Event; (ii) the partial or complete withdrawal of the Borrower
or any of its

32

ERISA Affiliates from a Multiemployer Plan; or (iii) the reorganization or
termination of a Multiemployer Plan;

then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
Advances, all interest thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Advances, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided, however, that in the
event of an actual or deemed entry of an order for relief with respect to the
Borrower under the Federal Bankruptcy Code, (A) the obligation of each Lender to
make Advances shall automatically be terminated and (B) the Advances, all such
interest and all such amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.

ARTICLE VII

THE AGENT

SECTION 7.01. Authorization and Action. Each Lender hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers and discretion as are reasonably
incidental thereto. As to any matters not expressly provided for by this
Agreement (including, without limitation, enforcement or collection of the
Notes), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding upon all Lenders
and all holders of Notes; provided, however, that the Agent shall not be
required to take any action that exposes the Agent to personal liability or that
is contrary to this Agreement or applicable law. The Agent agrees to give to
each Lender prompt notice of each notice given to it by the Borrower pursuant to
the terms of this Agreement.

SECTION 7.02. Agent's Reliance, Etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Agent: (i) may treat the
Lender that made any Advance as the holder of the Debt resulting therefrom until
the Agent receives and accepts an Assumption Agreement entered into by an
Assuming Lender as provided in Section 2.18 or an Assignment and Acceptance
entered into by such Lender, as assignor, and an Eligible Assignee, as assignee,
as provided in Section 8.07; (ii) may consult with legal counsel (including
counsel for the Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection with this
Agreement; (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement on the part of the Borrower or to inspect the property (including the
books and records) of the Borrower; (v) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; and (vi) shall incur no liability under or in respect
of this Agreement by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telecopier, telegram or telex) believed
by it to be genuine and signed or sent by the proper party or parties.

SECTION 7.03. Citibank and Affiliates. With respect to its Commitment, the
Advances made by it and the Note issued to it, Citibank shall have the same
rights and powers under this Agreement as any other Lender and may exercise the
same as though it were not the Agent; and the term "Lender" or "Lenders" shall,
unless otherwise expressly indicated, include Citibank in its individual
capacity. Citibank and its Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, accept investment banking engagements from
and generally engage in any kind of business with, the Borrower, any of its
Subsidiaries and any Person who may do

33

business with or own securities of the Borrower or any such Subsidiary, all as
if Citibank were not the Agent and without any duty to account therefor to the
Lenders.

SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements referred to in Section 4.01 and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.

SECTION 7.05. Indemnification. The Lenders agree to indemnify the Agent (to
the extent not reimbursed by the Borrower), ratably according to the respective
principal amounts of the Revolving Credit Advances then owed to each of them (or
if no Revolving Credit Advances are at the time outstanding, ratably according
to the respective amounts of their Commitments), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against the Agent in any way relating to or
arising out of this Agreement or any action taken or omitted by the Agent under
this Agreement (collectively, the "Indemnified Costs"), provided that no Lender
shall be liable for any portion of the Indemnified Costs resulting from the
Agent's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse the Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including reasonable counsel
fees) incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, to the extent that
the Agent is not reimbursed for such expenses by the Borrower. In the case of
any investigation, litigation or proceeding giving rise to any Indemnified
Costs, this Section 7.05 applies whether any such investigation, litigation or
proceeding is brought by the Agent, any Lender or a third party.

SECTION 7.06. Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower and may be removed at any
time with or without cause by the Required Lenders. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint a successor Agent
with the consent, not to be unreasonably withheld or delayed, of the Borrower so
long as no Default has occurred and is continuing. If no successor Agent shall
have been so appointed by the Required Lenders, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of notice of
resignation or the Required Lenders' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lenders and with the consent, not to be
unreasonably withheld or delayed, of the Borrower so long as no Default has
occurred and is continuing, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, discretion, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article VII shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.

SECTION 7.07. Sub-Agent. The Sub-Agent has been designated under this
Agreement to carry out duties of the Agent. The Sub-Agent shall be subject to
each of the obligations in this Agreement to be performed by the Sub-Agent, and
each of the Borrower and the Lenders agrees that the Sub-Agent shall be entitled
to exercise each of the rights and shall be entitled to each of the benefits of
the Agent under this Agreement as relate to the performance of its obligations
hereunder.

SECTION 7.08. Other Agents. Each Lender hereby acknowledges that neither
the syndication agent nor any other Lender designated as any "Co-Agent" on the
signature pages hereof has any liability hereunder other than in its capacity as
a Lender.

ARTICLE VIII

34

MISCELLANEOUS

SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement or the Revolving Credit Notes, nor consent to any departure by
the Borrower therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Required Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by all the Lenders, do any of the following: (a)
waive any of the conditions specified in Section 3.01, (b) increase the
Commitments of the Lenders or subject the Lenders to any additional obligations,
(c) reduce the principal of, or interest on, the Revolving Credit Advances or
any fees or other amounts payable hereunder, (d) postpone any date fixed for any
payment of principal of, or interest on, the Revolving Credit Advances or any
fees or other amounts payable hereunder, (e) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Revolving Credit
Advances, or the number of Lenders, that shall be required for the Lenders or
any of them to take any action hereunder or (f) amend this Section 8.01; and
provided further that no amendment, waiver or consent shall, unless in writing
and signed by the Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Agent under this Agreement or any
Note.

SECTION 8.02. Notices, Etc. (a) All notices and other communications
provided for hereunder shall be (x) in writing (including telecopier,
telegraphic or telex communication) and sent by reputable overnight courier,
telecopied, telegraphed, telexed or delivered or (y) as and to the extent set
forth in Section 8.02(b) and in the proviso to this Section 8.02(a), if to the
Borrower, at its address at 10801 Corporate Drive, Pleasant Prairie, Wisconsin
53158, Attention: Martin M. Ellen, Senior Vice President and Chief Financial
Officer, and Jeffrey F. Kostrzewa, Director Treasury Operations and Finance,
with copies to 10801 Corporate Drive, Pleasant Prairie, Wisconsin 53158,
Attention: Susan F. Marrinan, General Counsel; if to any Initial Lender, at its
Domestic Lending Office specified opposite its name on Schedule I hereto; if to
any other Lender, at its Domestic Lending Office specified in the Assumption
Agreement or the Assignment and Acceptance pursuant to which it became a Lender;
and if to the Agent, at its address at Two Penns Way, New Castle, Delaware
19720, Attention: Bank Loan Syndications Department; or, as to the Borrower or
the Agent, at such other address as shall be designated by such party in a
written notice to the other parties and, as to each other party, at such other
address as shall be designated by such party in a written notice to the Borrower
and the Agent, provided that materials required to be delivered pursuant to
Section 5.01(i)(i), (ii) or (iv) shall be delivered to the Agent as specified in
Section 8.02(b) or as otherwise specified to the Borrower by the Agent. All such
notices and communications shall, when mailed, telecopied, telegraphed or
e-mailed, be effective when deposited in the mails, telecopied, delivered to the
telegraph company or confirmed by e-mail, respectively, except that notices and
communications to the Agent pursuant to Article II, III or VII shall not be
effective until received by the Agent. Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or the
Notes or of any Exhibit hereto to be executed and delivered hereunder shall be
effective as delivery of a manually executed counterpart thereof.

(b) So long as Citibank or any of its Affiliates is the Agent,
notwithstanding anything to the contrary herein, materials required to be
delivered pursuant to Section 5.01(i)(i), (ii) and (iv) shall be delivered to
the Agent in an electronic medium in a format acceptable to the Agent and the
Lenders by e-mail at oploanswebadmin@citigroup.com. The Borrower agrees that the
Agent may make such materials, as well as any other written information,
documents, instruments and other material relating to the Borrower, any of its
Subsidiaries or any other materials or matters relating to this Agreement, the
Notes or any of the transactions contemplated hereby (collectively, the
"Communications") available to the Lenders by posting such Communications on
Intralinks, "e-Disclosure", the Agent's internet delivery system that is part of
Fixed Income Direct, Global Fixed Income's primary web portal, or a
substantially similar electronic system (the "Platform"). The Borrower
acknowledges that (i) the distribution of material through an electronic medium
is not necessarily secure and that there are confidentiality and other risks
associated with such distribution, (ii) the Platform is provided "as is" and "as
available" and (iii) neither the Agent nor any of its Affiliates warrants the
accuracy, adequacy or completeness of the Communications or the Platform and
each expressly disclaims liability for errors or omissions in the Communications
or the Platform. No warranty of any kind, express, implied or statutory,
including, without limitation, any warranty of merchantability, fitness for a
particular purpose, non-infringement of third party rights or freedom from
viruses or other code defects, is made by the Agent or any of its Affiliates in
connection with the Platform.

35

(c) Each Lender agrees that any notice to it (as provided in the next
sentence) (a "Notice") specifying that any Communications have been posted to
the Platform shall constitute effective delivery of such information, documents
or other materials to such Lender for purposes of this Agreement; provided that
if requested by any Lender the Agent shall deliver a copy of the Communications
to such Lender by email or telecopier. Each Lender agrees (i) to notify the
Agent in writing of such Lender's e-mail address to which a Notice may be sent
by electronic transmission (including by electronic communication) on or before
the date such Lender becomes a party to this Agreement (and from time to time
thereafter to ensure that the Agent has on record an effective e-mail address
for such Lender) and (ii) that any Notice may be sent to such e-mail address.

SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender or
the Agent to exercise, and no delay in exercising, any right hereunder or under
any Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to pay on demand
all costs and expenses of the Agent in connection with the preparation,
execution, delivery, administration, modification and amendment of this
Agreement, the Notes and the other documents to be delivered hereunder,
including, without limitation, (A) all due diligence, syndication (including
printing, distribution and bank meetings), transportation, computer,
duplication, appraisal, consultant, and audit expenses and (B) the reasonable
fees and expenses of counsel for the Agent with respect thereto and with respect
to advising the Agent as to its rights and responsibilities under this
Agreement. The Borrower further agrees to pay on demand all costs and expenses
of the Agent and the Lenders, if any (including, without limitation, reasonable
counsel fees and expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement, the Notes and
the other documents to be delivered hereunder, including, without limitation,
reasonable fees and expenses of counsel for the Agent and each Lender in
connection with the enforcement of rights under this Section 8.04(a).

(b) The Borrower agrees to indemnify and hold harmless the Agent and each
Lender and each of their Affiliates and their officers, directors, employees,
agents and advisors (each, an "Indemnified Party") from and against any and all
claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable fees and expenses of counsel) incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection
with any investigation, litigation or proceeding or preparation of a defense in
connection therewith) (i) the Notes, this Agreement, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of the
Advances or (ii) the actual or alleged presence of Hazardous Materials on any
property of the Borrower or any of its Subsidiaries, except to the extent (x)
such claim, damage, loss, liability or expense resulted from such Indemnified
Party's gross negligence or willful misconduct or (ii) such claim, damage, loss
or expense arises from a litigation or proceeding among Lenders. In the case of
an investigation, litigation or other proceeding to which the indemnity in this
Section 8.04(b) applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by the Borrower, its
directors, shareholders or creditors or an Indemnified Party or any other Person
or any Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated. The Borrower also agrees not
to assert any claim for special, indirect, consequential or punitive damages
against the Agent, any Lender, any of their Affiliates, or any of their
respective directors, officers, employees, attorneys and agents, on any theory
of liability, arising out of or otherwise relating to the Notes, this Agreement,
any of the transactions contemplated herein or the actual or proposed use of the
proceeds of the Advances.

(c) If any payment of principal of, or Conversion of, any Eurocurrency Rate
Advance, LIBO Rate Advance or Local Rate Advance is made by the Borrower to or
for the account of a Lender other than on the last day of the Interest Period
for such Advance, as a result of a payment or Conversion pursuant to Section
2.08(d) or (e), 2.10 or 2.12, acceleration of the maturity of the Notes pursuant
to Section 6.01 or for any other reason, or by an Eligible Assignee to a Lender
other than on the last day of the Interest Period for such Advance upon an
assignment of rights and obligations under this Agreement pursuant to Section
8.07 as a result of a demand by the Borrower pursuant to Section 8.07(a), the
Borrower shall, upon demand by such Lender (with a copy of such demand to the
Agent), pay to the Agent for the account of such Lender any amounts required to
compensate such Lender for any additional losses, costs or expenses that it may
reasonably incur as a result of such payment or Conversion, including, without
limitation, any loss (including loss of anticipated profits), cost or expense
incurred 

36

by reason of the liquidation or reemployment of deposits or other funds acquired
by any Lender to fund or maintain such Advance.

(d) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
Sections 2.11, 2.14 and 8.04 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under the Notes.

SECTION 8.05. Right of Set-off. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of Section 6.01,
each Lender and each of its Affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender or such
Affiliate (but not including any insurance premiums) to or for the credit or the
account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under this Agreement and the Note held by such Lender,
whether or not such Lender shall have made any demand under this Agreement or
such Note and although such obligations may be unmatured. Each Lender agrees
promptly to notify the Borrower after any such set-off and application, provided
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Lender and its Affiliates under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Lender and its Affiliates may
have.

SECTION 8.06. Binding Effect. This Agreement shall become effective (other
than Sections 2.01 and 2.03, which shall only become effective upon satisfaction
of the conditions precedent set forth in Section 3.01) when it shall have been
executed by the Borrower and the Agent and when the Agent shall have been
notified by each Initial Lender that such Initial Lender has executed it and
thereafter shall be binding upon and inure to the benefit of the Borrower, the
Agent and each Lender and their respective successors and assigns, except that
the Borrower shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Lenders.

SECTION 8.07. Assignments and Participations. (a) Each Lender may and, if
demanded by the Borrower (so long as no Default shall have occurred and be
continuing and following a demand by such Lender pursuant to Section 2.11 or
2.14 or a notice given by such Lender pursuant to Section 2.12) upon at least
five Business Days' notice to such Lender and the Agent, will assign to one or
more Persons all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment, the
Revolving Credit Advances owing to it and the Revolving Credit Note or Notes
held by it); provided, however, that (i) each such assignment shall be of a
constant, and not a varying, percentage of all rights and obligations under this
Agreement (other than any right to make Competitive Bid Advances, Competitive
Bid Advances owing to it and Competitive Bid Notes), (ii) except in the case of
an assignment to a Person that, immediately prior to such assignment, was a
Lender or an assignment of all of a Lender's rights and obligations under this
Agreement, the amount of the Commitment of the assigning Lender being assigned
pursuant to each such assignment (determined as of the date of the Assignment
and Acceptance with respect to such assignment) shall in no event be less than
$10,000,000 or an integral multiple of $1,000,000 in excess thereof, (iii) each
such assignment shall be to an Eligible Assignee, (iv) each such assignment made
as a result of a demand by the Borrower pursuant to this Section 8.07(a) shall
be arranged by the Borrower after consultation with the Agent and shall be
either an assignment of all of the rights and obligations of the assigning
Lender under this Agreement or an assignment of a portion of such rights and
obligations made concurrently with another such assignment or other such
assignments that together cover all of the rights and obligations of the
assigning Lender under this Agreement, (v) no Lender shall be obligated to make
any such assignment as a result of a demand by the Borrower pursuant to this
Section 8.07(a) unless and until such Lender shall have received one or more
payments from either the Borrower or one or more Eligible Assignees in an
aggregate amount at least equal to the aggregate outstanding principal amount of
the Advances owing to such Lender, together with accrued interest thereon to the
date of payment of such principal amount and all other amounts payable to such
Lender under this Agreement, and (vi) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with any Revolving Credit Note
subject to such assignment and a processing and recordation fee of $3,500. Upon
such execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, (x) the assignee thereunder
shall be a party hereto and,

37

to the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations of a
Lender hereunder and (y) the Lender assignor thereunder shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).

(b) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi)
such assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement as
are delegated to the Agent by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the obligations that
by the terms of this Agreement are required to be performed by it as a Lender.

(c) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
together with any Revolving Credit Note or Notes subject to such assignment, the
Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower.

(d) The Agent shall maintain at its address referred to in Section 8.02 a
copy of each Assumption Agreement and each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of the
Advances owing to, each Lender from time to time (the "Register"). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice. (e) Each Lender may sell participations to one or more
banks or other entities (other than the Borrower or any of its Affiliates) in or
to all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment, the Advances
owing to it and any Note or Notes held by it); provided, however, that (i) such
Lender's obligations under this Agreement (including, without limitation, its
Commitment to the Borrower hereunder) shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) such Lender shall remain the holder of any such Note
for all purposes of this Agreement, (iv) the Borrower, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
(v) no participant under any such participation shall have any right to approve
any amendment or waiver of any provision of this Agreement or any Note, or any
consent to any departure by the Borrower therefrom, except to the extent that
such amendment, waiver or consent would reduce the principal of, or interest on,
the Notes or any fees or other amounts payable hereunder, in each case to the
extent subject to such participation, or postpone any date fixed for any payment
of principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation. The
Borrower agrees that each

38

participant shall be entitled to the benefits of Sections 2.11, 2.14 and 8.04(b)
and (c) to the same extent as if it were a Lender and had acquired its interest
by assignment pursuant to this Section 8.07; provided that no participant shall
be entitled to receive any greater amount pursuant to any such section than the
transferor Lender would have been entitled to receive in respect of the amount
of the participation transferred by such transferor Lender to such participant
had no such participation occurred.

(f) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 8.07, disclose to
the assignee or participant or proposed assignee or participant, any information
relating to the Borrower furnished to such Lender by or on behalf of the
Borrower; provided that, prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree to preserve the
confidentiality of any Confidential Information relating to the Borrower
received by it from such Lender.

(g) Notwithstanding anything to the contrary contained herein, any Lender
(a "Granting Bank") may grant to any of its Affiliates (a "Funding Agent"),
identified as such in writing from time to time by the Granting Bank to the
Agent and the Borrower, the option to provide to the Borrower all or any part of
any Advance that such Granting Bank would otherwise be obligated to make to the
Borrower pursuant to this Agreement; provided that (i) nothing herein shall
constitute a commitment by any Funding Agent to make any Advance, (ii) if a
Funding Agent elects not to exercise such option or otherwise fails to provide
all or any part of such Advance, the Granting Bank shall be obligated, as a
principal and not as a surety, to make such Advance pursuant to the terms
hereof. The making of an Advance by a Funding Agent hereunder shall utilize the
Commitment of the Granting Bank to the same extent, and as if, such Advance were
made by such Granting Bank. Each party hereto hereby agrees that no Funding Bank
shall be liable for any indemnity or similar payment obligation under this
Agreement (all liability for which shall remain with the Granting Bank).
Notwithstanding the foregoing, neither any such grant made hereunder nor the
holding of interest hereunder by any Funding Agent shall increase any of the
Borrower's obligations and/or liabilities (including without limitation tax
liabilities and other indemnities) which the Borrower has but for such grant or
holding of interest ("Funding Agent Liabilities") and the Granting Bank shall
hold the Borrower harmless and indemnify the Borrower from and against any and
all Funding Agent Liabilities. Each party hereto agrees that the Granting Bank
shall, for all purposes, including any amendment, waiver or modification of this
Agreement, the Notes, or any document related thereto, remain the lender of
record hereunder.

(h) Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time create a security interest in all or any portion of its
rights under this Agreement (including, without limitation, the Advances owing
to it and any Note or Notes held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System.

SECTION 8.08. Confidentiality. Neither the Agent nor any Lender shall
disclose any Confidential Information to any other Person without the consent of
the Borrower, other than (a) to the Agent's or such Lender's Affiliates and
their officers, directors, employees, agents and advisors and, as contemplated
by Section 8.07(f), to actual or prospective assignees and participants, and
then only on a confidential basis, (b) as required by any law, rule or
regulation or judicial process, and (c) as requested or required by any state,
federal or foreign authority or examiner regulating banks or banking.
Notwithstanding anything herein to the contrary, the Agent and the Lenders may
disclose to any and all Persons, without limitation of any kind, the U.S. tax
treatment and tax structure of the transactions contemplated hereby and all
materials of any kind (including opinions or other tax analyses) that are
provided to the Agent or any Lender relating to such U.S. tax treatment and tax
structure.

SECTION 8.09. Governing Law. This Agreement and the Notes shall be governed
by, and construed in accordance with, the laws of the State of New York.

SECTION 8.10. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.

39

SECTION 8.11. Judgment. (a) If for the purposes of obtaining judgment in
any court it is necessary to convert a sum due hereunder in Dollars into another
currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Agent could purchase Dollars with
such other currency at Citibank's principal office in London at 11:00 A.M.
(London time) on the Business Day preceding that on which final judgment is
given.

(b) If for the purposes of obtaining judgment in any court it is necessary
to convert a sum due hereunder in a Foreign Currency into Dollars, the parties
agree to the fullest extent that they may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures the Agent could purchase such Foreign Currency with Dollars at
Citibank's principal office in London at 11:00 A.M. (London time) on the
Business Day preceding that on which final judgment is given.

(c) The obligation of the Borrower in respect of any sum due from it in any
currency (the "Primary Currency") to any Lender or the Agent hereunder shall,
notwithstanding any judgment in any other currency, be discharged only to the
extent that on the Business Day following receipt by such Lender or the Agent
(as the case may be), of any sum adjudged to be so due in such other currency,
such Lender or the Agent (as the case may be) may in accordance with normal
banking procedures purchase the applicable Primary Currency with such other
currency; if the amount of the applicable Primary Currency so purchased is less
than such sum due to such Lender or the Agent (as the case may be) in the
applicable Primary Currency, the Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such Lender or the Agent (as the
case may be) against such loss, and if the amount of the applicable Primary
Currency so purchased exceeds such sum due to any Lender or the Agent (as the
case may be) in the applicable Primary Currency, such Lender or the Agent (as
the case may be) agrees to remit to the Borrower such excess.

SECTION 8.12. Jurisdiction, Etc. (a) Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or the Notes, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in any such New York State court or, to the extent permitted by law,
in such federal court. The Borrower hereby irrevocably consents to the service
of process in any action or proceeding in such courts by the mailing thereof by
any parties hereto by registered or certified mail, postage prepaid, with an
additional notice by telecopier or by reputable overnight delivery service, to
the Borrower at its address specified pursuant to Section 8.02. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any party may otherwise have to bring any action or
proceeding relating to this Agreement or the Notes in the courts of any
jurisdiction.

(b) Each of the parties hereto irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the Notes in any New
York State or federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

SECTION 8.13. Substitution of Currency. If a change in any Foreign Currency
occurs pursuant to any applicable law, rule or regulation of any governmental,
monetary or multi-national authority, this Agreement (including, without
limitation, the definitions of Eurocurrency Rate and LIBO Rate) will be amended
to the extent determined by the Agent (acting reasonably and in consultation
with the Borrower) to be necessary to reflect the change in currency and to put
the Lenders and the Borrower in the same position, so far as possible, that they
would have been in if no change in such Foreign Currency had occurred. No such
change in currency nor any economic consequences resulting therefrom shall (a)
give rise to any right to terminate prematurely, contest, cancel, rescind,
alter, modify or renegotiate the provisions of this Agreement or (b) discharge,
excuse or otherwise affect the performance of any obligations of any of the
Borrower or the Lenders under this Agreement.

40

SECTION 8.14. Waiver of Jury Trial. Each of the Borrower, the Agent and the
Lenders hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Agreement or the Notes or the actions of the
Agent or any Lender in the negotiation, administration, performance or
enforcement thereof.

41

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

SNAP-ON INCORPORATED

By /s/ Martin M. Ellen
-----------------------------------------
Title: Senior Vice President-Finance and 
Chief Financial Officer

THE AGENT

CITIBANK, N.A.,
as Agent

By: /s/ Illegible
-----------------------------------------
Title:

INITIAL LENDERS 

CITIBANK, N.A.,

By: /s/ Illegible          
-----------------------------------------
Title:

BANK ONE, NA

By: /s/ Jenny A. Gilpin    
-----------------------------------------
Title:   Managing Director

BARCLAYS BANK PLC

By: /s/ Nicholas Bell     
-----------------------------------------
Title: Director

MIZUHO CORPORATE BANK, LTD.

By: /s/ Greg Illegible     
-----------------------------------------
Title:   Vice President

ROYAL BANK OF CANADA

By: /s/ Sheryl Greenberg   
-----------------------------------------
Title:   Senior Manager

42

SVENSKA HANDELSBANKEN AB (PUBL)

By: /s/ Mikael Westerback  
-----------------------------------------
Title:   Vice President

By: /s/ Jonas Daun          
-----------------------------------------
Title:   Senior Vice President

BANK OF AMERICA, N.A.

By: /s/ Tim Cassidy                 
-----------------------------------------
Title:   Vice President

THE NORTHERN TRUST COMPANY

By: /s/ Melissa A. Whitson 
-----------------------------------------
Title:   Vice President

SANPAOLO IMI S.p.A.

By: /s/ Illegible          
-----------------------------------------
Title:   CEO for The Americas

By: /s/ Illegible          
-----------------------------------------
Title:   Vice President

SOCIETE GENERALE

By: /s/ Paul D. Buie                
-----------------------------------------
Title: Associate

By: /s/ Betty Burg         
-----------------------------------------
Title: Director

U.S. BANK NATIONAL ASSOCIATION

By: /s/ Janell W. Stanosz  
-----------------------------------------
Title: Vice President

43

SCHEDULE I
TO THE
AMENDMENT AND RESTATEMENT

COMMITMENTS AND APPLICABLE LENDING OFFICES
------------------------------------------

---------------------------------------------------------------------------------------------------------------------
Name of Initial Lender            Commitment           Domestic Lending Office       Eurocurrency Lending Office
---------------------------------------------------------------------------------------------------------------------

Bank of America, N.A.          $17,000,000             1850 Gateway Blvd.              1850 Gateway Blvd.
Concord, CA 94520               Concord, CA 94520
Attn: Debbie Conchongco         Attn: Debbie Conchongco
T: 925 675-8913                 T: 925 675-8913
F: 925 675-7539                 F: 925 675-7539
---------------------------------------------------------------------------------------------------------------------
Barclays Bank PLC              $20,000,000             200 Park Avenue                 200 Park Avenue
New York, NY 10166              New York, NY 10166
Attn: Eddie Cotto               Attn: Eddie Cotto
T: 212 412-3701                 T: 212 412-3701
F: 212 412-5308                 F: 212 412-5308
---------------------------------------------------------------------------------------------------------------------
Bank One, NA                   $20,000,000             1 Bank One                      1 Bank One
Plaza, Suite 0088               Plaza, Suite 0088
Chicago, IL 60670               Chicago, IL 60670
Attn: Edna Guerra               Attn: Edna Guerra
T: 312 732-9609                 T: 312 732-9609
F: 312 732-2715                 F: 312 732-2715
---------------------------------------------------------------------------------------------------------------------
Citibank, N.A.                 $22,000,000             Two Penns Way                   Two Penns Way
New Castle, DE 19720            New Castle, DE 19720
Attn: Maureen Prytula           Attn: Maureen Prytula
T: 302 894-6089                 T: 302 894-6089
F: 302 894-6120                 F: 302 894-6120
---------------------------------------------------------------------------------------------------------------------
Mizuho Corporate Bank, Ltd.    $20,000,000             10 S. Wacker Drive              10 S. Wacker Drive
Chicago, IL 60608               Chicago, IL 60608
Attn: Michael Pleasants         Attn: Michael Pleasants
T: 312 715-6361                 T: 312 715-6361
F: 312 876-2011                 F: 312 876-2011
---------------------------------------------------------------------------------------------------------------------
The Northern Trust Company     $17,000,000             50 S. LaSalle Street            50 S. LaSalle Street
Chicago, IL  60675              Chicago, IL  60675
Attn:  Linda Honda              Attn:  Linda Honda
T:  312 444-3532                T:  312 444-3532
F:  312 630-1566                F:  312 630-1566
---------------------------------------------------------------------------------------------------------------------
Royal Bank of Canada           $20,000,000             One Liberty Plaza, 3rd Floor    One Liberty Plaza, 3rd Floor
165 Broadway                    165 Broadway
New York, NY  10006             New York, NY  10006
Attn:  Loans Administration     Attn:  Loans Administration
T:  212 428-6369                T:  212 428-6369
F:  212 428-2372                F:  212 428-2372
---------------------------------------------------------------------------------------------------------------------
Sanpaolo IMI S.p.A.            $17,000,000             245 Park Avenue                 245 Park Avenue
New York, NY  10167             New York, NY  10167
Attn:  Manuela Insana           Attn:  Manuela Insana
T:  212 692-3128                T:  212 692-3128
F:  212 692-3178                F:  212 692-3178
---------------------------------------------------------------------------------------------------------------------

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

Societe Generale               $17,000,000             560 Lexington Avenue            560 Lexington Avenue
New York, NY  10022             New York, NY  10022
Attn:  Sylvia Pace              Attn:  Sylvia Pace
T:  212 278-6931                T:  212 278-6931
F:  212 278-7343                F:  212 278-7343
---------------------------------------------------------------------------------------------------------------------
Svenska Handelsbanken AB       $20,000,000             153 East 53rd Street            153 East 53rd Street
(publ)                                                 New York, NY 10022              New York, NY 10022
Attn: Mikael Westerback         Attn: Mikael Westerback
T: 212 326-5144                 T: 212 326-5125
F: 212 326-2705                 F: 212 326-5151
---------------------------------------------------------------------------------------------------------------------
U.S. Bank National             $10,000,000             777 E. Wisconsin Ave.           777 E. Wisconsin Ave.
Association                                            Milwaukee, WI 53202             Milwaukee, WI 53202
Attn: Janell Stanosz            Attn: Janell Stanosz
T: 414 765-4419                 T: 414 765-4419
F: 414 765-5367                 F: 414 765-5367
---------------------------------------------------------------------------------------------------------------------

Total Commitment           =   U.S. $200,000,000

EXHIBIT A-1 - FORM OF
REVOLVING CREDIT
PROMISSORY NOTE

U.S.$_______________                               Dated:  _______________, 200_

FOR VALUE RECEIVED, the undersigned, SNAP-ON INCORPORATED, a Delaware
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
_________________________ (the "Lender") for the account of its Applicable
Lending Office on the later of the Termination Date and the Maturity Date (each
as defined in the Credit Agreement referred to below) the principal sum of
U.S.$[amount of the Lender's Commitment in figures] or, if less, the aggregate
principal amount of the Revolving Credit Advances made by the Lender to the
Borrower pursuant to the Amended and Restated 364-Day Credit Agreement dated as
of August 1, 2003 among the Borrower, the Lender and certain other lenders
parties thereto, Citigroup Global Markets Inc., as Lead Arranger and Book
Manager, Banc One Capital Markets Inc., as Co-Arranger, Bank One, NA, as
Syndication Agent, and Citibank, N.A. as Agent for the Lender and such other
lenders (as amended or modified from time to time, the "Credit Agreement"; the
terms defined therein being used herein as therein defined) outstanding on such
date.

The Borrower promises to pay interest on the unpaid principal amount of
each Revolving Credit Advance from the date of such Revolving Credit Advance
until such principal amount is paid in full, at such interest rates, and payable
at such times, as are specified in the Credit Agreement.

Both principal and interest in respect of each Revolving Credit Advance (i)
in Dollars are payable in lawful money of the United States of America to the
Agent at its account maintained at 388 Greenwich Street, New York, New York
10013, in same day funds and (ii) in any Committed Currency are payable in such
currency at the applicable Payment Office in same day funds. Each Revolving
Credit Advance owing to the Lender by the Borrower pursuant to the Credit
Agreement, and all payments made on account of principal thereof, shall be
recorded by the Lender and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Promissory Note.

This Promissory Note is one of the Revolving Credit Notes referred to in,
and is entitled to the benefits of, the Credit Agreement. The Credit Agreement,
among other things, (i) provides for the making of Revolving Credit Advances by
the Lender to the Borrower from time to time in an aggregate amount not to
exceed at any time outstanding the U.S. dollar amount first above mentioned, the
indebtedness of the Borrower resulting from each such Revolving Credit Advance
being evidenced by this Promissory Note, (ii) contains provisions for
determining the Dollar Equivalent of Revolving Credit Advances denominated in
Committed Currencies and (iii) contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified.

SNAP-ON INCORPORATED

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

ADVANCES AND PAYMENTS OF PRINCIPAL

---------------------------------------------------------------------------------------------------------------------
Amount of
Date                    Amount of             Principal Paid           Unpaid Principal             Notation
Advance                or Prepaid                 Balance                   Made By
---------------------------------------------------------------------------------------------------------------------

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

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

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

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

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

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

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

EXHIBIT A-2 - FORM OF
COMPETITIVE BID
PROMISSORY NOTE

U.S.$_______________                               Dated:  _______________, 200_

FOR VALUE RECEIVED, the undersigned, SNAP-ON INCORPORATED, a Delaware
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
_________________________ (the "Lender") for the account of its Applicable
Lending Office (as defined in the Amended and Restated 364-Day Credit Agreement
dated as of August 1, 2003 among the Borrower, the Lender and certain other
lenders parties thereto, Citigroup Global Markets Inc., as Lead Arranger and
Book Manager, Banc One Capital Markets Inc., as Co-Arranger, Bank One, NA, as
Syndication Agent, and Citibank, N.A., as Agent for the Lender and such other
lenders (as amended or modified from time to time, the "Credit Agreement"; the
terms defined therein being used herein as therein defined)), on
_______________, 200_, the principal amount of [U.S.$_______________] [for a
Competitive Bid Advance in a Foreign Currency, list currency and amount of such
Advance].

The Borrower promises to pay interest on the unpaid principal amount hereof
from the date hereof until such principal amount is paid in full, at the
interest rate and payable on the interest payment date or dates provided below:

Interest Rate: _____% per annum (calculated on the basis of a year of _____
days for the actual number of days elapsed).

Both principal and interest are payable in lawful money of ________________
to Citibank, as agent, for the account of the Lender at the office of
_________________________, at _________________________ in same day funds.

This Promissory Note is one of the Competitive Bid Notes referred to in,
and is entitled to the benefits of, the Credit Agreement. The Credit Agreement,
among other things, contains provisions for acceleration of the maturity hereof
upon the happening of certain stated events.

The Borrower hereby waives presentment, demand, protest and notice of any
kind. No failure to exercise, and no delay in exercising, any rights hereunder
on the part of the holder hereof shall operate as a waiver of such rights.

This Promissory Note shall be governed by, and construed in accordance
with, the laws of the State of New York.

SNAP-ON INCORPORATED

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

EXHIBIT B-1 - FORM OF NOTICE OF
REVOLVING CREDIT BORROWING

Citibank, N.A., as Agent
for the Lenders parties
to the Credit Agreement
referred to below
Two Penns Way
New Castle, Delaware 19720

[Date]

Attention: Bank Loan Syndications Department

Ladies and Gentlemen:

The undersigned, SNAP-ON INCORPORATED, refers to the Amended and Restated
364-Day Credit Agreement, dated as of August 1, 2003 (as amended or modified
from time to time, the "Credit Agreement", the terms defined therein being used
herein as therein defined), among the undersigned, certain Lenders parties
thereto, Citigroup Global Markets Inc., as Lead Arranger and Book Manager, Banc
One Capital Markets Inc., as Co-Arranger, Bank One, NA, as Syndication Agent,
and Citibank, N.A., as Agent for said Lenders, and hereby gives you notice,
irrevocably, pursuant to Section 2.02 of the Credit Agreement that the
undersigned hereby requests a Revolving Credit Borrowing under the Credit
Agreement, and in that connection sets forth below the information relating to
such Revolving Credit Borrowing (the "Proposed Revolving Credit Borrowing") as
required by Section 2.02(a) of the Credit Agreement:

(i) The Business Day of the Proposed Revolving Credit Borrowing is
_______________, 200_.

(ii) The Type of Advances comprising the Proposed Revolving Credit
Borrowing is [Base Rate Advances] [Eurocurrency Rate Advances].

(iii) The aggregate amount of the Proposed Revolving Credit Borrowing
is [$_______________] [for a Revolving Credit Borrowing in a Committed
Currency, list currency and amount of Revolving Credit Borrowing].

[(iv) The initial Interest Period for each Eurocurrency Rate Advance
made as part of the Proposed Revolving Credit Borrowing is _____ month[s].]

The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed Revolving Credit
Borrowing:

(A) the representations and warranties contained in Section 4.01 of
the Credit Agreement (except the representations set forth in the last
sentence of subsection (e) thereof and in subsection (f)(i) thereof) are
correct, before and after giving effect to the Proposed Revolving Credit
Borrowing and to the application of the proceeds therefrom, as though made
on and as of such date;

(B) no event has occurred and is continuing, or would result from such
Proposed Revolving Credit Borrowing or from the application of the proceeds
therefrom, that constitutes a Default; and

(C) after giving effect to such Proposed Revolving Credit Borrowing,
the aggregate amount of the Borrower's Debt (not including other
transactions relating to Snap-on Credit LLC) from any bank or financial
institution or under any commercial paper facility or debt securities or
securitization program outstanding will not exceed $550,000,000 or, if
greater, the amount authorized by resolutions of the Board of Directors in
effect on the date of such Proposed Revolving Credit Borrowing..

Very truly yours,

SNAP-ON INCORPORATED

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

EXHIBIT B-2 - FORM OF NOTICE OF
COMPETITIVE BID BORROWING

Citibank, N.A., as Agent
for the Lenders parties
to the Credit Agreement
referred to below
Two Penns Way
New Castle, Delaware 19720

[Date]

Attention: Bank Loan Syndications Department

Ladies and Gentlemen:

The undersigned, SNAP-ON INCORPORATED, refers to the Amended and Restated
364-Day Credit Agreement, dated as of August 1, 2003 (as amended or modified
from time to time, the "Credit Agreement", the terms defined therein being used
herein as therein defined), among the undersigned, certain Lenders parties
thereto, Citigroup Global Markets Inc., as Lead Arranger and Book Manager, Banc
One Capital Markets Inc., as Co-Arranger, Bank One, NA, as Syndication Agent,
and Citibank, N.A., as Agent for said Lenders, and hereby gives you notice,
irrevocably, pursuant to Section 2.03 of the Credit Agreement that the
undersigned hereby requests a Competitive Bid Borrowing under the Credit
Agreement, and in that connection sets forth the terms on which such Competitive
Bid Borrowing (the "Proposed Competitive Bid Borrowing") is requested to be
made:

(A)  Date of Competitive Bid Borrowing    ________________________
(B)  Amount of Competitive Bid Borrowing  ________________________
(C)  [Maturity Date] [Interest Period]    ________________________
(D)  Interest Rate Basis                  ________________________
(E)  Day Count Convention                 ________________________
(F)  Interest Payment Date(s)             ________________________
(G)  Currency                             ________________________
(H)  Borrower's Account Location          ________________________
[(I) Prepayments Permitted                ________________________]
(J)  ___________________                  ________________________

The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed Competitive Bid
Borrowing:

(a) the representations and warranties contained in Section 4.01 are
correct, before and after giving effect to the Proposed Competitive Bid
Borrowing and to the application of the proceeds therefrom, as though made
on and as of such date;

(b) no event has occurred and is continuing, or would result from the
Proposed Competitive Bid Borrowing or from the application of the proceeds
therefrom, that constitutes a Default;

(c) no event has occurred and no circumstance exists as a result of
which the information concerning the undersigned that has been provided to
the Agent and each Lender by the undersigned in connection with the Credit
Agreement would include an untrue statement of a material fact or omit to
state any material fact or any fact necessary to make the statements
contained therein, in the light of the circumstances under which they were
made, not misleading;

(d) the aggregate amount of the Proposed Competitive Bid Borrowing, if
accepted by the Borrower, and all other Borrowings to be made on the same
day under the Credit Agreement is within the aggregate amount of the unused
Commitments of the Lenders, and

(e) after giving effect to the Proposed Competitive Bid Borrowing, the
aggregate amount of the Borrower's Debt (not including other transactions
relating to Snap-on Credit LLC) from any bank or financial institution or
under any commercial paper facility or debt securities or securitization
program outstanding will not exceed $550,000,000 or, if greater, the amount
authorized by resolutions of the Board of Directors in effect on the date
of the Proposed Competitive Bid Borrowing.

Very truly yours,

SNAP-ON INCORPORATED

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

EXHIBIT C - FORM OF
ASSIGNMENT AND ACCEPTANCE

Reference is made to the Amended and Restated 364-Day Credit Agreement
dated as of August 1, 2003 (as amended or modified from time to time, the
"Credit Agreement") among Snap-On Incorporated, a Delaware corporation (the
"Borrower"), the Lenders (as defined in the Credit Agreement), Citigroup Global
Markets Inc., as Lead Arranger and Book Manager, Banc One Capital Markets Inc.,
as Co-Arranger, Bank One, NA, as Syndication Agent, and Citibank, N.A., as agent
for the Lenders (the "Agent"). Terms defined in the Credit Agreement are used
herein with the same meaning.

The "Assignor" and the "Assignee" referred to on Schedule I hereto agree as
follows:

1. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, an interest in and to the
Assignor's rights and obligations under the Credit Agreement as of the date
hereof (other than in respect of Competitive Bid Advances and Competitive Bid
Notes) equal to the percentage interest specified on Schedule 1 hereto of all
outstanding rights and obligations under the Credit Agreement (other than in
respect of Competitive Bid Advances and Competitive Bid Notes). After giving
effect to such sale and assignment, the Assignee's Commitment and the amount of
the Revolving Credit Advances owing to the Assignee will be as set forth on
Schedule 1 hereto.

2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under the
Credit Agreement or any other instrument or document furnished pursuant thereto;
and (iv) attaches the Revolving Credit Note, if any held by the Assignor.

3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 4.01 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) represents to the Assignor, the Agent and the Borrower that it
is an Eligible Assignee; (iv) appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
the Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers and discretion as are reasonably incidental thereto;
(v) agrees that it will perform in accordance with their terms all of the
obligations that by the terms of the Credit Agreement are required to be
performed by it as a Lender; and (vi) attaches any U.S. Internal Revenue Service
forms required under Section 2.14 of the Credit Agreement.

4. Following the execution of this Assignment and Acceptance, it will be
delivered to the Agent for acceptance and recording by the Agent. The effective
date for this Assignment and Acceptance (the "Effective Date") shall be the date
of acceptance hereof by the Agent, unless otherwise specified on Schedule 1
hereto.

5. Upon such acceptance and recording by the Agent, as of the Effective
Date, (i) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.

i

6. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement and
the Revolving Credit Notes in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and facility
fees with respect thereto) to the Assignee. The Assignor and Assignee shall make
all appropriate adjustments in payments under the Credit Agreement and the
Revolving Credit Notes for periods prior to the Effective Date directly between
themselves.

7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of New York.

8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance.

IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to
this Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date specified thereon.

ii

Schedule 1
to
Assignment and Acceptance

Percentage interest assigned:                                                      _____%

Assignee's Commitment:                                                       $__________

Aggregate outstanding principal amount of Revolving Credit Advances assigned:$__________

Principal amount of Revolving Credit Note payable to Assignee:               $__________

Principal amount of Revolving Credit Note payable to Assignor:               $__________

Effective Date*:  _______________, 200_

[NAME OF ASSIGNOR], as Assignor

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

Dated:  _______________, 200_

[NAME OF ASSIGNEE], as Assignee

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

Dated:  _______________, 200_

Domestic Lending Office:
[Address]

Eurocurrency Lending Office:
[Address]

-----------
*    This date should be no earlier than five Business Days after the delivery
of this Assignment and Acceptance to the Agent.

iii

Accepted [and Approved]* this

__________ day of _______________, 200_

CITIBANK, N.A., as Agent

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

[Approved this __________ day

of _______________, 200_

SNAP-ON INCORPORATED

By                                          ]**
------------------------------------------
Title:

-----------
*    Required if the Assignee is an Eligible Assignee solely by reason of clause
(iii) of the definition of "Eligible Assignee".

**   Required if the Assignee is an Eligible Assignee solely by reason of clause
(iii) of the definition of "Eligible Assignee".

iv

Exhibit (12)

SNAP-ON INCORPORATED
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Amounts in millions)

Three Months Ended                      Nine Months Ended
-------------------------------        -------------------------------
Sept. 27,             Sept. 28,        Sept. 27,             Sept. 28,
2003                  2002             2003                  2002
---------             ---------        ---------             ---------

Net Earnings                                    $  17.7               $  19.2          $  61.4               $  72.9

Add (Deduct):
Income taxes                                   5.2                  10.9             28.7                  39.4
Minority interest in earnings
of consolidated subsidiaries                  .8                    .9              1.9                   2.0
Cumulative effect                                -                     -                -                  (2.8)
-------               -------          -------               -------

Net Earnings as defined                              23.7                  31.0             92.0                 111.5

Fixed Charges:
Interest on debt                               5.8                   6.9             18.2                  22.2
Interest element of rentals                    1.3                   1.3              3.9                   3.9
-------               -------          -------               -------

Total Fixed Charges                                 7.1                   8.2             22.1                  26.1
-------               -------          -------               -------
Total Adjusted Earnings Available
for Payment of Fixed Charges                  $  30.8               $  39.2          $ 114.1               $ 137.6
=======               =======          =======               =======
Ratio of Earnings to Fixed Charges                  4.3                   4.8              5.2                   5.3
=======               =======          =======               =======

For purpose of computing this ratio, "Net Earnings" consists of (a) income from
continuing operations before income taxes and adjusted for minority interest,
and (b) "Fixed Charges," which consists of interest on debt and the estimated
interest portion of rents.

EXHIBIT 31.1
------------
CERTIFICATIONS

I, Dale F. Elliott, Chief Executive Officer of Snap-on Incorporated, certify
that:

1. I have reviewed this quarterly report on Form 10-Q of Snap-on Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.

Date: October 29, 2003

/s/ Dale F. Elliott
-----------------------
Dale F. Elliott
Chief Executive Officer

EXHIBIT 31.2
------------
CERTIFICATIONS

I, Martin M. Ellen, Principal Financial Officer of Snap-on Incorporated, certify
that:

1. I have reviewed this quarterly report on Form 10-Q of Snap-on Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.

Date: October 29, 2003

/s/ Martin M. Ellen
---------------------------
Martin M. Ellen
Principal Financial Officer

EXHIBIT 32.1
------------

Certification of Chief Executive Officer Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Snap-on Incorporated (the "Company")
on Form 10-Q for the period ending September 27, 2003, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), Dale F.
Elliott as Chief Executive Officer of the Company, hereby certifies, pursuant to
18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002, to the best of his knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

/s/ Dale F. Elliot
-----------------------
Dale F. Elliott
Chief Executive Officer
October 29, 2003

A signed original of this written statement required by Section 906 has been
provided to Snap-on Incorporated and will be retained by Snap-on Incorporated
and furnished to the Securities and Exchange Commission or its staff upon
request.

EXHIBIT 32.2
------------

Certification of Principal Financial Officer
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Snap-on Incorporated (the "Company")
on Form 10-Q for the period ending September 27, 2003, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), Martin M.
Ellen as Principal Financial Officer of the Company, hereby certifies, pursuant
to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act
of 2002, to the best of his knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

/s/ Martin M. Ellen
---------------------------
Martin M. Ellen
Principal Financial Officer
October 29, 2003

A signed original of this written statement required by Section 906 has been
provided to Snap-on Incorporated and will be retained by Snap-on Incorporated
and furnished to the Securities and Exchange Commission or its staff upon
request.