SNAP ON INC
SUMMARY OF COMPENSATION ARRANGEMENT
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<DESCRIPTION>SUMMARY OF COMPENSATION ARRANGEMENT
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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>CEO COMPENSATION </FONT></H1>

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<TD WIDTH="85%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Base Salary</B></U><B>:</B> </FONT> </TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$800,000&nbsp;</FONT></TD>
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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>2004 Annual Incentive
Plan</U>: </FONT> </H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Target Opportunity is 100% of Base
Salary and will be pro-rated for the number of months, or portions thereof, as an employee
in 2004 </FONT></P>


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     <TD WIDTH="85%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Weight):</FONT></TD>
     <TD WIDTH="15%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue Growth and Operating</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income Margin:</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>40%&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Working Investment:</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>20%&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;New Product Sales:</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15%&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lean Initiatives:</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15%&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;People/Process Improvement:</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10%&nbsp;</FONT></TD></TR>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><U>2005 Base Salary and Annual
Incentive Plan</U>:</B>&nbsp;&nbsp;&nbsp;The CEO&#146;s 2005 base salary and participation in the 2005
Annual Incentive Plan will be approved by the Organization and Compensation Committee in
consultation with those independent Directors who are not members of the Committee. </FONT></P>

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     <TD WIDTH=85% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Cash Payment to Replace the Bonus that would have been <BR>Paid by the Executive's Former Employer</B>:</U>&nbsp;&nbsp;&nbsp;This payment <BR>will not be grossed-up for taxes </FONT> </TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$350,000&nbsp;</FONT></TD></TR>
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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Long Term Incentive Plan</U>: </FONT> </H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The CEO will not receive a grant
under the Long Term Incentive Plan for 2004. However, future Long Term Incentive Plan
opportunities shall be determined by the Organization and Executive Compensation Committee
in accordance with the Company&#146;s annual review of market practices and the
Company&#146;s compensation plans beginning in 2005. </FONT></P>


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     <TD WIDTH=85% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Number of Stock Options</B></U><B>:</B> </FONT> </TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>200,000&nbsp;</FONT></TD></TR>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The options will vest at the rate of
one-half on the first anniversary of the effective date of the grant and one-half on the
second anniversary of the effective date of the grant. The options will be incentive stock
options to the extent permitted by law and the terms of such options shall be as set forth
in the Company&#146;s standard form of stock option agreement. Any non-qualified stock
options shall be transferable and remain exercisable for ten years after Retirement,
subject to the earlier expiration of such options. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The CEO will not receive a grant of
stock options as part of the normal annual grant cycle in 2005. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Benefits and Perquisites</U>: </FONT> </H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The CEO will receive benefits and
perquisites consistent with the Company&#146;s current practices such as use of the
Company relocation program and executive physicals. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Agreement</U>: </FONT> </H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company will enter into an
agreement with the Executive that will provide that the Executive will receive the payments and
benefits set forth below if his employment is terminated by the Company without Cause (as
defined in the agreement) prior to December 3, 2007. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company shall pay to the
Executive an amount that is equal to the base salary that the Executive would have been
paid during the Covered Period, using the rate that had been in effect immediately prior
to the Date of Termination, had the termination of employment not occurred (the
&#147;Salary Payment&#148;). The Salary Payment shall be paid, in the sole discretion of
the Company, in a lump sum payment within ten (10) business days following the Date of
Termination or in substantially equal monthly payments over the Covered Period. The
Company shall also pay to the Executive an annual incentive payment for each fiscal year
of the Covered Period (the &#147;Annual Incentive Payment&#148;). The Annual Incentive
Payment shall be (i) determined using the Executive&#146;s annual incentive opportunity
immediately prior to the Date of Termination and the Executive&#146;s performance as
assessed by the Board, and (ii) paid within sixty (60) days after the Annual Incentive
Payment is calculated for the applicable fiscal year. During the Covered Period the
Company shall also provide the Executive with continued health, disability, life and other
insurance benefits substantially similar to the benefits provided during such period to
the elected officers of the Company. The &#147;Date of Termination&#148; shall mean the
date on which the termination of the Executive&#146;s employment is effective. The
&#147;Covered Period&#148; shall mean the period of time beginning on the Date of
Termination and ending on December 3, 2007.  </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2 </FONT></P>

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