Document:

CEO COMPENSATION 

	Base Salary:  	$800,000 

2004 Annual Incentive
Plan:  

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 

		
	(Weight):	 
	     Revenue Growth and Operating
	     Income Margin:	40% 
	     Working Investment:	20% 
	     New Product Sales:	15% 
	     Lean Initiatives:	15% 
	     People/Process Improvement:	10% 

2005 Base Salary and Annual
Incentive Plan:   The CEO’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. 

		
	Cash Payment to Replace the Bonus that would have been 
Paid by the Executive's Former Employer:   This payment 
will not be grossed-up for taxes  	$350,000 

Long Term Incentive Plan:  

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’s annual review of market practices and the
Company’s compensation plans beginning in 2005. 

		
	Number of Stock Options:  	200,000 

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’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. 

The CEO will not receive a grant of
stock options as part of the normal annual grant cycle in 2005. 

Benefits and Perquisites:  

The CEO will receive benefits and
perquisites consistent with the Company’s current practices such as use of the
Company relocation program and executive physicals. 

Agreement:  

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. 

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
“Salary Payment”). 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 “Annual Incentive Payment”). The Annual Incentive
Payment shall be (i) determined using the Executive’s annual incentive opportunity
immediately prior to the Date of Termination and the Executive’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 “Date of Termination” shall mean the
date on which the termination of the Executive’s employment is effective. The
“Covered Period” shall mean the period of time beginning on the Date of
Termination and ending on December 3, 2007.  

2AGREEMENT  

        THIS
AGREEMENT by and between Snap-on Incorporated, a Delaware corporation (the
“Company”), and Jack D. Michaels (the “Executive”), is effective as of
December 3, 2004 (the “Effective Date”). 

        WHEREAS,
the parties are executing this Agreement to evidence the parties’ understanding with
respect to the payments and benefits that will be provided to the Executive in the event
that his employment is terminated by the Company without Cause during the Term. 

        NOW,
THEREFORE, it is hereby agreed as follows: 

        1.       DEFINITIONS 

	 	        (a)       
CAUSE.  “Cause” shall mean that prior to           the Executive’s
termination of employment, the Executive 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 Company or its           subsidiaries; (ii)
wrongfully disclosed any secret process or confidential           information of the
Company or its subsidiaries; (iii) participated without the           written consent of
the Company’s Board of Directors (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 Company or its           subsidiaries
(other than the mere ownership of less than five (5) percent of the           securities
in any enterprise and exercise of any ownership rights related           thereto); and in
any such case the act shall have been determined by the Board           to have been
materially harmful to the Company; or (iv) willfully engaged in           conduct which
is demonstrably and materially injurious to the Company or its           subsidiaries,
monetarily or otherwise. 

	 	        (b)       COVERED
PERIOD.  The “Covered Period” shall mean the period of           time
beginning on the Date of Termination and ending on December 3, 2007.  

	 	        (c)       DATE
OF TERMINATION.  The “Date of Termination” shall mean the           date on
which the termination of the Executive’s employment is effective.  

	 	        (d)       TERM.  The
“Term” shall mean the period of time beginning on the           Effective Date
and ending on December 3, 2007.  

        2.       OBLIGATIONS
OF THE COMPANY UPON TERMINATION OF EMPLOYMENT OTHER THAN FOR           CAUSE.  If the
Company terminates the Executive’s employment during the           Term for any
reason other than Cause, then, subject to the provisions of this           Agreement, the
Executive shall receive the payments and benefits described in           this Section 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 “Salary           Payment”).
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 “Annual Incentive           Payment”).
The Annual Incentive Payment shall be (i) determined using the           Executive’s
annual incentive opportunity immediately prior to the           Date of
Termination and the Executive’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 payments made hereunder shall not be included as compensation for
purposes           of calculating the Executive’s retirement benefits from the
Company.  

        3.       RESTRICTIVE
COVENANT.  

	 	        (a)       
The Executive shall be subject to the           restrictive covenant regarding
confidentiality set forth in Section 3(b) hereof           (the “Restrictive Covenant”)
and the Restrictive Covenant shall apply           indefinitely. In addition to any other
available remedies the Company may have           available to it, if the Executive
violates the Restrictive Covenant, then, (i)           to the extent that the Executive
is entitled to payment(s) under Sections 2, all           such payments which have not
yet been paid shall be immediately forfeited, and           (ii) any further continuation
of benefits (as set forth in Section 2 hereof)           shall immediately cease.  

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

        4.       NON-EXCLUSIVITY
OF RIGHTS.  Nothing in this Agreement shall limit or           otherwise
affect such rights as the Executive may have under any contract or           agreement
with the Company. Vested benefits and other amounts that the Executive           is
otherwise entitled to receive under any plan, policy, practice or program of,
          or any contract of agreement with, the Company on or after the Date of
          Termination shall be payable in accordance with the terms of each such plan,
          policy, practice, program, contract or agreement, as the case may be, except as
          explicitly modified by this Agreement.  

        5.       MISCELLANEOUS.  

	 	        (a)       
The determination of whether Cause
exists, or whether the Executive’s employment was constructively terminated because
the responsibilities of Executive’s job, or the level of the Executive’s
position within the Company is substantially reduced, shall be within the sole discretion
of the Board, which discretion shall not be exercised unreasonably. 

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

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

2 

		
		If to the Executive:       

c/o Snap-on Incorporated   

10801 Corporate Drive      

P. O. Box 1430             

Pleasant Prairie, WI  53158
	If to the Company:

Snap-on Incorporated

2801 80th Street

Kenosha, WI  53141-1430

Attention: Chief Legal Officer

or to such other address as either
party furnishes to the other in writing in accordance with this Section 5(c). Notices and
communications shall be effective when actually received by the addressee. 

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

	 	        (e)                 Notwithstanding
any other provision of this Agreement, the Company may withhold           from amounts
payable under this Agreement all federal, state, local and foreign           taxes that
are required to be withheld by applicable laws or regulations.  

	 	        (f)                 The
Executive’s or the Company’s failure to insist upon strict           compliance
with any provisions of, or to assert any right under, this Agreement           shall not
be deemed to be a waiver of such provision or right or of any other           provision
of or right under this Agreement.  

	 	        (g)                 The
Executive and the Company acknowledge that, as of the Effective Date, this
          Agreement supersedes any other agreement between them concerning the subject
          matter hereof and that, following the Effective Date, no such agreement shall
be           of any further force or effect.  

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

		SNAP-ON INCORPORATED
	

	

By:   	

/s/  Bruce S. Chelberg 

		Title:   	
Director and Chairman of the Organization and Executive 

Compensation Committee of the Board of Directors

	

	

	

/s/  Jack D. Michaels 

			EXECUTIVE

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