FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________
Commission file number 1-4797
ILLINOIS TOOL WORKS INC.
(Exact name of registrant as specified in its charter)
Delaware 36-1258310
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3600 West Lake Avenue, Glenview, IL 60025-5811
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (708) 724-7500
Former address:
(Former name, former address and former fiscal year,
if changed since last report.)
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 .
----- -----
The number of shares of registrant's common stock, without par value,
outstanding at October 31, 1995: 117,555,428.
<PAGE>
Part I - Financial Information
Item 1
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
FINANCIAL STATEMENTS
The unaudited financial statements included herein have been prepared by
Illinois Tool Works Inc. and Subsidiaries (the "Company"). In the
opinion of management, the interim financial statements reflect all
adjustments of a normal recurring nature necessary for a fair statement
of the results for interim periods. It is suggested that these
financial statements be read in conjunction with the financial
statements and comments on financial statements included in the
Company's Annual Report on Form 10-K.
<PAGE>
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
STATEMENT OF INCOME
(UNAUDITED)
(In Thousands Except for
Per Share Amounts)
Three Months Ended Nine Months Ended
September 30 September 30
30 -------------------- ----------------------
1995 1994 1995 1994
---------- -------- ---------- ----------
Operating Revenues $1,045,134 $870,911 $3,064,932 $2,523,392
Operating costs 689,018 579,917 2,011,459 1,684,091
Selling, administrative,
and research and develop-
ment expenses 184,233 159,128 554,999 474,020
Amortization of goodwill
and other intangible
assets 6,086 5,529 18,242 16,515
--------- ------- ---------- ----------
Operating Income 165,797 126,337 480,232 348,766
Interest expense (8,448) (6,453) (22,545) (21,103)
Amortization of retiree
health care (1,742) (1,742) (5,226) (5,226)
Other income (expense) 5,659 (2,043) 1,184 (8,596)
---------- -------- ---------- ----------
Income Before Income Taxes 161,266 116,099 453,645 313,841
Income taxes 61,250 44,700 172,350 120,800
---------- -------- ---------- ----------
Net Income $ 100,016 $ 71,399 $ 281,295 $ 193,041
========== ======== ========== ==========
Per share of common stock:
Net Income $ .85 $ .63 $2.40 $1.70
===== ===== ===== =====
Cash dividends:
Paid $ .15 $ .13 $ .45 $ .39
===== ===== ===== =====
Declared $ .17 $ .15 $ .47 $ .41
===== ===== ===== =====
Average number of shares of
common stock outstanding
during the period 117,508 113,291 117,396 113,247
======= ======= ======= =======
<PAGE>
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
STATEMENT OF FINANCIAL POSITION
(UNAUDITED)
(In Thousands)
ASSETS September 30, 1995 December 31, 1994
------------------ -----------------
Current Assets:
Cash and equivalents $ 102,220 $ 76,867
Trade receivables 729,634 612,638
Inventories 511,769 439,486
Deferred income taxes 82,633 72,728
Prepaid expenses and other
current assets 68,925 61,214
---------- ----------
Total current assets 1,495,181 1,262,933
---------- ----------
Plant and Equipment:
Land 68,510 66,577
Buildings 347,688 317,714
Machinery and equipment 1,011,428 915,198
Equipment leased to others 71,773 69,162
Construction in progress 48,933 32,143
---------- ----------
1,548,332 1,400,794
Accumulated depreciation (868,939) (759,559)
---------- ----------
Net plant and equipment 679,393 641,235
---------- ----------
Investment in Leases 90,113 55,413
Goodwill 475,293 394,233
Deferred Income Taxes 91,173 --
Other Assets 275,087 226,684
---------- ----------
$3,106,240 $2,580,498
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term debt $ 147,443 $ 67,002
Accounts payable 199,622 174,748
Accrued expenses 406,597 317,031
Cash dividends payable 19,977 17,094
Income taxes payable 20,684 52,558
---------- ----------
Total current liabilities 794,323 628,433
---------- ----------
Non-current Liabilities:
Long-term debt 281,775 272,987
Deferred income taxes -- 69,516
Other 204,598 68,041
---------- ----------
Total non-current liabilities 486,373 410,544
---------- ----------
Stockholders' Equity:
Preferred stock -- --
Common stock 229,797 201,166
Income reinvested in the business 1,583,603 1,344,172
Common stock held in treasury (1,866) (1,952)
Equity adjustment from foreign
currency translation 14,010 (1,865)
---------- ----------
Total stockholders' equity 1,825,544 1,541,521
---------- ----------
$3,106,240 $2,580,498
========== ==========
<PAGE>
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
STATEMENT OF CASH FLOWS
(UNAUDITED)
(In Thousands) Nine Months Ended
September 30
------------------
1995 1994
-------- --------
Cash Provided by (Used for) Operating Activities:
Net income $281,295 $193,041
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 112,736 103,143
Change in deferred income taxes (12,122) (2,301)
Gain on sale of plant and equipment,
and equipment under a leveraged lease (3,840) (1,657)
(Income) loss from investment properties (9,665) 557
Gain on sale of operations and affiliates (496) (4,372)
Other non-cash items, net 16,998 9,415
-------- --------
Cash provided by operating activities 384,906 297,826
Changes in assets and liabilities:
(Increase) decrease in--
Trade receivables (40,167) (71,943)
Inventories (30,096) (3,507)
Prepaid expenses and other assets 7,200 8,560
Increase (decrease) in--
Accounts payable (24,973) 5,262
Accrued expenses 21,982 56,055
Income taxes payable (33,608) (4,125)
Other, net 6,875 4,263
-------- --------
Net cash provided by operating activities 292,119 292,391
-------- --------
Cash Provided by (Used for) Investing Activities:
Acquisition of subsidiaries (excluding cash and
equivalents) and additional interest in affiliates (146,598) (24,059)
Additions to plant and equipment (106,760) (92,118)
Additions to investment in leases (40,307) --
Proceeds from sale of plant and equipment,
investment properties, and equipment under a
leveraged lease 27,028 16,403
Proceeds from sale of operations and affiliates 2,254 15,721
Other, net (1,374) 646
-------- --------
Net cash used for investing activities (265,757) (83,407)
-------- --------
Cash Provided by (Used for) Financing Activities:
Cash dividends paid (51,799) (44,166)
Issuance of common stock 6,453 2,603
Proceeds (repayments) of short-term debt 47,936 (144,687)
Proceeds from long-term debt 105 1,800
Repayments of long-term debt (1,361) (4,163)
Other, net (5,846) --
-------- --------
Net cash used for financing activities (4,512) (188,613)
-------- --------
Effect of Exchange Rate Changes on Cash and Equivalents 3,503 2,228
-------- --------
Cash and Equivalents:
Increase during the period 25,353 22,599
Beginning of period 76,867 35,395
-------- --------
End of the period $102,220 $ 57,994
======== ========
Cash Paid During the Period for Interest $ 21,783 $ 20,413
======== ========
Cash Paid During the Period for Income Taxes $213,693 $126,588
======== ========
Liabilities Assumed from Acquisitions $144,546 $ 3,696
======== ========
<page
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
COMMENTS ON FINANCIAL STATEMENTS
(UNAUDITED)
(1) OTHER INCOME (EXPENSE), consists of the following:
(In Thousands)
Three Months Ended Nine Months Ended
September 30 September 30
------------------ ------------------
1995 1994 1995 1994
-------- ------- ------- -------
Interest income $2,976 $ 1,385 $ 8,599 $ 3,352
Income from unconsolidated
affiliates 211 452 679 1,403
Net reserves for disposition,
relocation and reorganization
of certain facilities,
revaluation of non-operating
assets to realizable value, and
nonrecurring costs unrelated to
operations 377 (2,532) (19,337) (16,228)
Income (loss)from investment
properties 3,242 (159) 9,665 (557)
Gain (loss) on sale of operations
and affiliates (6) 131 496 4,372
Gain on sale of equipment
under a leveraged lease -- -- 3,996 --
Gain (loss) on sale of plant and
equipment (484) (213) (156) 1,657
Other, net (657) (1,107) (2,758) (2,595)
------ ------- ------- -------
$5,659 $(2,043) $ 1,184 $(8,596)
====== ======= ======= =======
<PAGE>
(2) INVENTORIES at September 30, 1995 and December 31, 1994 were as
follows:
(In Thousands)
Sept. 30, Dec. 31,
1995 1994
-------- --------
Raw Material $138,721 $126,730
Work-in-process 91,514 66,505
Finished goods 281,534 246,251
-------- --------
$511,769 $439,486
======== ========
(3) NONCASH TRANSACTION:
During 1995, the Company exchanged a minority interest in a subsidiary
for certain investments in debt securities. This transaction, along with
the associated tax effects, has not been reflected in the Statement of
Cash Flows, as it had no cash impact.
<PAGE>
Item 2 - Management's Discussion and Analysis
ENGINEERED COMPONENTS SEGMENT
Businesses in this segment manufacture short lead-time plastic and metal
components, fasteners and assemblies; industrial fluids and adhesives;
fastening tools and welding equipment. This segment primarily serves the
construction, automotive and general industrial markets.
(Dollars in millions)
Three months ended Nine months ended
Sept 30 Sept 30
------------------ -----------------
Operating
Revenues 1995 1994 1995 1994
-------- -------- ------- -------
Domestic $332 $302 $1,025 $ 897
International 178 154 546 441
---- ---- ------ ------
Total $510 $456 $1,571 $1,338
==== ==== ====== ======
Three months ended Sept 30 Nine months ended Sept
30 ----------------------------- -----------------------
Operating 1995 1994 1995 1994
Income Income Margin Income Margin Income Margin Income Margin
------ ------ ------ ------ ------ ------ ------ ------
Domestic $56 16.9 % $50 16.6 % $172 16.8 % $143 15.9 %
International 25 14.0 21 13.6 76 13.9 52 11.8
--- --- ---- ----
Total $81 15.9 $71 15.6 $248 15.8 $195 14.6
=== === ==== ====
Domestic revenues, operating income and margins for the three-month period
increased largely due to increased volume in residential construction markets
along with continued gains in non-residential construction markets. Increased
penetration in a soft domestic automotive market also contributed to the
improved results. Although Miller slightly contributed to the increase in
revenues, it moderated operating income and margin growth due to a seasonal
slowdown in the welding markets. For the nine-month period, the improved
performance in revenues was led by strong performances in non-residential
construction and welding markets followed by modest gains in automotive
businesses. Operating income and margins increased due to the increased volume
in construction markets and continued improvement in the automotive businesses.
The improved results internationally for the three-month period were due to
continued penetration gains in the European automotive markets. Growth was
moderated during this period due to soft Australian and German construction
markets. For the nine-month period, strong performances in European automotive
markets largely contributed to the improved results followed by the European
construction businesses.
<PAGE>
INDUSTRIAL SYSTEMS AND CONSUMABLES SEGMENT
Businesses in this segment manufacture longer lead-time systems and related
consumables for consumer and industrial packaging, industrial spray coating
equipment and systems, and quality assurance application equipment and systems.
The largest markets served by this segment are general industrial, food and
beverage, and industrial capital goods.
(Dollars in millions)
Three months ended Nine months ended
Sept 30 Sept 30
------------------ -----------------
Operating
Revenues 1995 1994 1995 1994
------- ------- ------- -------
Domestic $300 $256 $ 893 $ 745
International 235 159 601 440
---- ---- ------ ------
Total $535 $415 $1,494 $1,185
==== ==== ====== ======
Three months ended Sept 30 Nine months ended Sept 30
------------------------------- -------------------------------
Operating 1995 1994 1995 1994
Income Income Margin Income Margin Income Margin Income Margin
------ ------- ------ ------ ------ ------ ------ -------
Domestic $55 18.3 % $39 15.2 % $162 18.1 % $116 15.6 %
International 30 12.8 16 10.1 70 11.6 38 8.6
--- --- ---- ----
$85 15.9 $55 13.3 $232 15.5 $154 13.0
Total === === ==== ====
Continued demand for new products in industrial packaging and increased
penetration in domestic beverage markets for the consumer packaging businesses
led to the increase in domestic revenues and operating income for the three-
month and nine-month periods. For the same
time period, margins increased due to new product introductions and continuous
cost reductions in industrial packaging.
International revenues and operating income for the three-month and nine-month
periods increased due to the consumer and industrial packaging businesses.
During the three-month period, new product introductions, acquisitions and
continued cost reductions in industrial packaging businesses led in the margin
increase along with consumer packaging, which benefitted from increased volume
in the European beverage markets. Margins increased for the nine-month period
due to new products in the industrial packaging and finishing systems
businesses.
<PAGE>
OPERATING EXPENSES
Operating costs as a percentage of revenues decreased to 65.6% in the first
nine months of 1995 versus 66.7% in the first nine months of 1994. Selling,
administrative, and research and development expenses were 18.1% of revenues in
the first nine months of 1995 versus 18.8% in the first nine months of 1994.
These ratios were lower because of cost reductions as a result of a Company-
wide objective to reduce costs.
INTEREST EXPENSE
Interest expense increased slightly to $22.5 million in the first nine months
of 1995 from $21.1 million in the first nine months of 1994, primarily due to
increased foreign debt assumed from newly acquired companies.
OTHER INCOME (EXPENSE)
Other income (expense) increased to net other income of $1.2 million for the
first nine months of 1995 from net other expense of $8.6 million in 1994.
The increase in income is primarily due to an increase in
interest income and income from investment properties, along with a gain on
sale of equipment under a leverage lease.
NET INCOME
Net income of $281.3 million ($2.40 per share) in the first nine months of 1995
was 45.7% higher than the 1994 first nine months net income of $193.0 million
($1.70 per share). Foreign currency had no material impact on earnings in the
first nine months of 1995 versus 1994.
<PAGE>
FINANCIAL POSITION
Net working capital at September 30, 1995 and December 31, 1994 is summarized
as follows:
(Dollars in Thousands)
Sept 30, Dec. 31, Increase
1995 1994 (Decrease)
---------- ---------- ----------
Current Assets:
Cash and equivalents $ 102,220 $ 76,867 $ 25,353
Trade receivables 729,634 612,638 116,996
Inventories 511,769 439,486 72,283
Other 151,558 133,942 17,616
---------- ---------- --------
$1,495,181 $1,262,933 $232,248
---------- ---------- --------
Current Liabilities:
Short-term debt $ 147,443 $ 67,002 $ 80,441
Accounts payable and
accrued expenses 606,219 491,779 114,440
Other 40,661 69,652 (28,991)
---------- ---------- --------
$ 794,323 $ 628,433 $165,890
---------- ---------- --------
Net Working Capital $ 700,858 $ 634,500 $ 66,358
========== ========== ========
Current Ratio 1.88 2.01
========== ==========
The increase in trade receivables in the third quarter of 1995 was primarily
due to acquisitions and stronger revenues in the third quarter of 1995 versus
the fourth quarter of 1994. Current year acquisitions combined with overall
business growth contributed to the increase in inventories from year-end 1994
to third quarter 1995. The increase in short-term debt was mainly due to
additional commercial paper borrowings to fund 1995 acquisitions. Accounts
payable and accrued expenses increased at September 30, 1995 versus year-end
1994 as a result of overall business growth and acquisitions.
<PAGE>
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibit Index
Exhibit No. Description
----------- -----------
3 By-laws of Illinois Tool Works Inc., as amended.
10 Amendment to the Illinois Tool Works Inc.
Stock Incentive Plan, dated May 5, 1995.
27 Financial Data Schedule.
(b) Reports on Form 8-K
A report on Form 8-K dated July 18, 1995 was filed during the period.
The Form describes various acquisitions by Illinois Tool Works Inc.,
(ITW) and presents unaudited pro forma information for ITW and the
combined pooled companies.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ILLINOIS TOOL WORKS INC.
Dated: November 6, 1995 By: /s/ Michael W. Gregg
---------------- ----------------------------------------
Michael W. Gregg, Senior Vice President
and Controller, Accounting
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF INCOME (UNAUDITED) AND THE STATEMENT OF FINANCIAL
POSITION (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<PERIOD-TYPE> 9-MOS
<CASH> 102,220
<SECURITIES> 0
<RECEIVABLES> 729,634
<ALLOWANCES> 0
<INVENTORY> 511,769
<CURRENT-ASSETS> 1,495,181
<PP&E> 1,548,332
<DEPRECIATION> 868,939
<TOTAL-ASSETS> 3,106,240
<CURRENT-LIABILITIES> 794,323
<BONDS> 281,775
<COMMON> 229,797
0
0
<OTHER-SE> 1,583,603
<TOTAL-LIABILITY-AND-EQUITY> 3,106,240
<SALES> 3,064,932
<TOTAL-REVENUES> 3,064,932
<CGS> 2,011,459
<TOTAL-COSTS> 2,011,459
<OTHER-EXPENSES> 18,242
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,545
<INCOME-PRETAX> 453,645
<INCOME-TAX> 172,350
<INCOME-CONTINUING> 281,295
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 281,295
<EPS-PRIMARY> 2.40
<EPS-DILUTED> 2.40
</TABLE>
EXHIBIT 3
BY-LAWS
OF
ILLINOIS TOOL WORKS INC.
ARTICLE I
Offices
SECTION 1. Registered Office. The registered office shall be
in the City of Wilmington, County of New Castle, State of Delaware.
SECTION 2. Other Offices. The corporation may also have
offices in Chicago, Illinois, and offices at such other places as the
Board of Directors or officers may from time to time determine.
ARTICLE II
Stockholders
SECTION 1. Annual Meeting. The annual meeting of the
stockholders shall be in the month of April or May of each year. The
place, date and time of the meeting shall be fixed by the Board of
Directors and stated in the notice of the meeting.
SECTION 2. Special Meetings. Special meetings of the
stockholders may be called by the chairman or by a majority of the
Board of Directors.
SECTION 3. Place of Meeting. The Board of Directors may
designate any place, either within or without Delaware, as the place
of meeting for any meeting of the stockholders (annual or special)
called by the Board of Directors. If a special meeting is otherwise
called, the place of meeting shall be in Chicago, Illinois as
designated in the notice.
SECTION 4. Notice of Meetings. Written or printed notice
stating the place, day and hour of the meeting shall be delivered
either personally or by mail, by or at the direction of the chairman
or persons calling the meeting to each stockholder of record entitled
to vote at such meeting. If mailed, such notice shall be deemed to
be delivered when deposited in the United States mails in a sealed
envelope addressed to the stockholder at his address as it appears
on the records of the corporation, with postage thereon prepaid.
SECTION 5. Voting of Shares by Certain Holders. Shares of
stock standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent or proxy as the by-laws
of such corporation may prescribe, or, in the absence of such
<PAGE>
provision, as the Board of Directors of such corporation may
determine.
Shares of stock standing in the name of a deceased person may be
voted by his administrator or executor, either in person or by proxy.
Persons holding stock in a fiduciary capacity shall be entitled to
vote the shares so held. Persons whose stock is pledged shall be
entitled to vote, unless in the transfer by the pledgor on the books
of the corporation he has expressly empowered the pledgee to vote
thereon, in which case only the pledgee, or his proxy, may represent
such stock and vote thereon.
Shares of stock standing in the name of a receiver may be voted by
such receiver, and shares of stock held by or under the control of a
receiver may be voted by such receiver without the transfer thereof
into his name if authority so to do be contained in an appropriate
order of the court by which such receiver was appointed.
SECTION 6. Fixing of Record Date. Unless any statute requires
otherwise, for the purpose of determining (a) stockholders entitled
to notice of or to vote at any meeting of stockholders, or
(b) stockholders entitled to receive payment of any dividend, or (c)
stockholders, with respect to any lawful action, the Board of
Directors may fix in advance a date as the record date for any such
determination of stockholders, such date in any case to be not more
than sixty days and, in case of a meeting of stockholders, not less
than ten days. If no record date is fixed: (1) the record date for
determining stockholders entitled to notice of or to vote at a meet-
ing of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived,
at the close of business on the day next preceding the day on which
the meeting is held; (2) the record date for determining stock-
holders for any other purpose shall be at the close of business on
the day on which the Board of Directors adopts the resolution relat-
ing thereto. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
SECTION 7. Quorum. The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present in person
or represented by proxy, shall constitute a quorum at all meetings of
the stockholders for the transaction of business except as otherwise
provided by statute, by the Certificate of Incorporation or by these
by-laws. If, however, such quorum shall not be present or represented
at any meeting of the stockholders, the stockholders entitled to vote
thereat, present in person or represented by proxy, shall have power
to adjourn the meeting from time to time until a quorum shall be
present or represented. No notice other than an announcement at the
meeting need be given unless the adjournment is for more than thirty
days or a new record date is to be fixed for the adjourned meeting. At
<PAGE>
such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
When a quorum is present at any meeting, the vote of the holders of
a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which by express provision
of the statutes or of the Certificate of Incorporation or of these
by-laws, a different vote is required in which case such express
provision shall govern and control the decision of such question.
SECTION 8. Proxies. At all meetings of stockholders, a
stockholder may vote by proxy executed in writing by the stockholder
or by his duly authorized attorney-in-fact. Such proxy shall be filed
with the secretary of the corporation before or at the time of the
meeting. Proxies shall be valid only with respect to the meeting or
meetings and any adjournment thereof, for which they are given.
SECTION 9. Voting. Each stockholder shall have one vote in
person or by proxy for each share of stock having voting power
registered in his name on the books of the corporation at the record
date.
SECTION 10. Stockholder Nominations for Directors. Any
stockholder entitled to vote in the election of directors may nominate
one or more persons for election as directors, provided written notice
of such stockholder's nomination has been received by the Secretary
of the Company not later than (i) the close of business on the last
business day of December prior to the annual meeting of stockholders
in April or May, or (ii) the close of business on the tenth day following
the date on which notice of a special meeting of stockholders is first
given to stockholders for an election of directors to be held at such
meeting.
Such notice must contain: (a) the name and address of the
stockholder who intends to make the nomination; (b) the name, age,
and business and residential addresses of each person to be nominated;
(c) the principal occupation or employment of each nominee; (d) the
number of shares of capital stock of the corporation beneficially
owned by each nominee; (e) a statement that the nominee is willing to
be nominated and serve as a director; and (f) such other information
regarding each nominee as would be required to be included in a
proxy statement filed pursuant to the proxy rules of the Securities and
Exchange Commission had the Board of Directors nominated such
nominee.
Nothing in this Section shall preclude the Board of Directors or the
Nominating Committee either from making nominations for the
election of directors or from excluding the person nominated by a
stockholder from the slate of directors presented to the meeting.
SECTION 11.Election of Directors. Directors shall be elected by a
plurality of the votes of the shares present in person
<PAGE>
or represented by
proxy at a meeting of stockholders and entitled to voted on the
election of directors.
ARTICLE III
Directors
SECTION 1. General Powers. The business and affairs of the
corporation shall be managed by its Board of Directors.
SECTION 2. Number, Tenure and Qualifications. The number of
Directors of the corporation is established at fifteen. Each Director
shall hold office for the term for which such Director is elected or until
a successor shall have been chosen and shall have qualified or until
such Director's earlier death, resignation, retirement, disqualification
or removal.
SECTION 3. Regular Meetings. A regular meeting of the Board
of Directors shall be held without other notice than this by-law,
immediately after, and at the same place as, the annual meeting of
stockholders. The Board of Directors may provide, by resolution, the
time and place, either within or without Delaware, for the holding of
additional regular meetings without other notice than such resolution.
SECTION 4. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the chairman or any
two directors. The person or persons authorized to call special
meetings of the Board of Directors may fix any place, either within or
without Delaware, as the place for holding any special meeting of the
Board of Directors called by them.
SECTION 5. Notice. Notice of any special meeting shall be given
at least two days previously thereto by written notice delivered
personally, by mail or telegram, to each Director at his business
address or at such other address as he shall have previously requested
in writing. If mailed, such notice shall be deemed to be delivered two
days after being deposited in the United States mails in a sealed
envelope so addressed, with postage thereon prepaid. If notice is
given by telegram, such notice shall be deemed to be delivered when
the telegram is delivered to the telegraph company. Neither the
business to be transacted at, nor the purpose of, any regular or special
meeting of the Board of Directors need be specified in the notice or
waiver of notice of such meeting, unless otherwise required by law.
SECTION 6. Quorum. A majority of the Board of Directors shall
constitute a quorum for the transaction of business at any meeting of
the Board of Directors, provided that if less than a majority of the
Directors are present at said meeting, a majority of the Directors
<PAGE>
present may adjourn the meeting from time to time without further
notice. The act of the majority of the Directors present at a meeting
at which a quorum is present shall be the act of the Board of Directors
unless a greater number is required by the Certificate of Incorporation
or these by-laws.
SECTION 7. Interested Directors. Except as may otherwise be
provided in the Certificate of Incorporation, no contract or transaction
between the corporation and one or more of its Directors or officers,
or between the corporation and any other corporation, partnership,
association, or other organization in which one or more of its
Directors or officers are Directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or solely
because the Director or officer is present at or participates in the
meeting of the Board or committee thereof which authorizes the
contract or transaction, or solely because his or their votes are
counted for such purpose, if:
(a) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board or committee in good faith
authorizes the contract or transaction by the affirma- tive votes of a
majority of the disinterested Directors, even though the disinterested
Directors be less than a quorum; or
(b) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by the vote of the stockholders; or
(c) The contract or transaction is fair as to the corporation as of the
time it is authorized, approved or ratified, by the Board of Directors,
a committee thereof, or the stockholders.
Common or interested Directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a
committee which authorizes the contract or transaction.
SECTION 8. Vacancies. If vacancies occur in the Board of
Directors caused by death, resignation, retirement, disqualification or
removal from office of any Director or Directors or otherwise, or if
any new Directorship is created by any increase in the authorized
number of Directors, a majority of the Directors then in office, though
less than a quorum, may choose a successor or successors, or fill the
newly created Directorship and the Directors so chosen shall hold
office until the next annual election of Directors and until their
successors shall be duly elected and qualified, unless sooner displaced.
SECTION 9. Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one
<PAGE>
or more committees, each committee to consist of one or more of the
Directors of the corporation.
(a) The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or
disqualified member, at any meeting of the committee. In the absence
or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business
and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to
amending the certificate of incorporation, adopting an agreement of
merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's
property and assets, recommending to the stockholders a dissolution
of the corporation or a revocation of a dissolution, or amending the
by-laws of the corporation; and, unless the resolution or the certificate
of incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the
issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution
adopted by the Board of Directors. Each committee shall keep
regular minutes of its meetings and report the same to the Board of
Directors when required.
(b) Executive Committee. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate two or more
Directors to constitute an Executive Committee and one or more
Directors as alternates thereof. Subject to the limitations provided in
these by-laws and such further limitation as might be required by law
or by the Certificate of Incorporation or by further resolution of the
Board of Directors, the Executive Committee may, during intervals
between meetings of the Board of Directors, exercise the powers of
the Board of Directors in the management of the business and affairs
of the corporation (including the corporation's dealings with its
foreign subsidiaries, affiliates, and licensees) and may authorize the
seal of the corporation to be affixed to all papers which may require
it. The Committee shall not be empowered to take action with respect
to: issuing bonds, debentures; increasing or reducing the capital of the
corporation; authorizing commitments and expenditures in excess of
the total amount or amounts provided in the capital budgets approved
or otherwise authorized by the Board of Directors; borrowing of
monies, except within limits expressly approved by the Board of
Directors; electing officers; fixing the compensation of officers;
establishment of stock option plans, profit sharing or similar types of
<PAGE>
compensation plans, filling vacancies or newly-created directorships
on the Board of Directors; removing officers or directors of the
corporation; dissolution, or any other action specifically reserved to
the Board of Directors including all matters requiring the approval of
stockholders. The Committee may also from time to time formulate
and recommend to the Board for approval general policies regarding
management of the business and affairs of the corporation. The
designation of the Committee and the delegation thereto of authority
shall not operate to relieve the Board of Directors or any member
thereof of any responsibility imposed upon it or him by operation of
law. The secretary of the corporation (or in his absence a person
designated by the Executive Committee) shall act as secretary at all
meetings of the Executive Committee. A majority of the Committee,
from time to time, shall constitute a quorum for the transaction of
business and the act of a majority of the Directors present at a meeting
in which a quorum is present shall be the act of the Committee,
provided that in the absence or disqualification of any member of the
Committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or
disqualified member. Regular meetings of the Committee may be held
without notice at such times and at such places as shall be fixed by
resolution adopted by a majority of the Committee. Special meetings
may be called by any member of the Committee on twenty-four hours'
prior written or telegraphic notice.
(c) Compensation Committee. The Board of Directors, by
resolution adopted by a majority of the whole Board, may designate
not less than two Directors to constitute a Compensation Committee
and one or more directors as alternate members thereof, none of
whom shall be employees of the corporation. In the absence or
disqualification of any member of the Committee, the member or
members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member,
provided that the majority of the Committee, as then constituted, shall
not be employees of the corporation. The Compensation Committee
shall review and determine from time to time the salaries and other
compensation of all elected officers of the corporation and shall
submit to the Board of Directors such reports in such form and at
such time as the Board of Directors may request. The Compensation
Committee shall also submit recommendations from time to time to
the Board of Directors as to the granting of stock options.
<PAGE>
(d) Audit Committee. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate two or more
Directors who are not employees of the corporation to constitute an
Audit Committee and one or more Directors who are not employees
of the corporation as alternate members thereof, which Committee
shall review the selection and qualifications of the independent public
accountants employed from time to time to audit the financial
statements of the corporation and the scope and adequacy of their
audits. The Committee shall also consider recommendations made by
such independent public accountants. The Committee may also make
such review of the internal financial audits of the corporation as it
considers desirable and shall report to the Board any additions or
changes which it deems advisable. In the absence or disqualification
of any member of the Committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or
not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors who is not an employee of the
corporation to act at the meeting in the place of any such absent or
disqualified member.
(e)Employee Benefits Committee. The Board of Directors, by
resolution adopted by a majority of the whole Board, may designate
three (3) or more individuals, any or all of whom may be non-director
employees of the Company, to constitute an Employee Benefits
Committee. The Committee shall select, retain or remove the
investment managers, advisors, consultants and persons otherwise
employed by the Company as named fiduciaries under the Company's
employee benefit plans, which actions it shall report to the Board of
Directors. The Committee shall review the performance of the trustee
or trustees, investment managers, advisors and consultants under said
plans with respect to the investment of plan assets. The Committee
shall be responsible for the administration of the Company's employee
benefit plans and, in fulfilling that responsibility, may delegate to
others, whether Company employees or otherwise, specific
assignments in administering the plans.
(f) Nominating Committee. The Board of Directors, by resolution
adopted by a majority vote of the whole Board, may designate two or
more Directors to constitute a Nominating Committee. This
Committee shall establish procedures for the receipt and evaluation of
suggestions of candidates for membership on the Board of Directors
and shall make recommendations to the Board concerning nominees
for such membership. The Committee may evaluate the various
committees of the Board and make recommendations to the Board of
Directors concerning the number, size, membership and
responsibilities of such committees. The Committee may also make
recommendations to the Board of Directors concerning the number of
Directors to serve on the Board and may establish standards for
<PAGE>
evaluation of the performance of the Directors in order to make
recommendations with regard thereto.
(g)Finance Committee. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate two or more
directors to constitute a Finance Committee and one or more directors
as alternate members thereof. The duties and responsibilities of the
Finance Committee shall be to review, upon the request of the
Chairman or the President, management's proposals with respect to:
the corporation's debt and equity financing; recommendations to the
Board with respect to dividend policy and payments; acquisitions and
divestitures exceeding the standing authority management has by
virtue of the resolution dated December 10, 1993, or its successors;
recommendations to the Board concerning the corporation's
investment portfolio; the corporation's real estate investments; and
other financing and investment matters.
SECTION 10. Consent in Lieu of Meeting. Unless otherwise
restricted by the Certificate of Incorporation or these by-laws, any
action required or permitted to be taken at any meeting of the Board
of Directors or any committee thereof may be taken without a meeting
if all members of the Board or committee thereof, as the case may be,
consent thereto in writing, and the writing or writings are filed with
the minutes of the proceedings of the Board or committee.
SECTION 11. Compensation. Directors who are also full time
employees of the corporation shall not receive any compensation for
their services as Directors but they may be reimbursed for reasonable
expenses of attendance. By resolution of the Board of Directors, all
other Directors may receive, as compensation for their services any
combination of: an annual fee; a fee for each meeting attended; shares
of stock; or other forms of compensation; together with
reimbursement of expenses of attendance, if any, at each regular or
special meeting of the Board of Directors or any committee of the
Board of Directors; provided, that nothing herein contained shall be
construed to preclude any Director from serving the corporation in
any other capacity and receiving compensation therefor.
SECTION 12. Meeting by Conference Telephone. Unless otherwise
restricted by the Certificate of Incorporation, members of the Board
of Directors or any committee designated by such Board may
participate in a meeting of such Board or committee by means of
conference telephone or similar communication equipment by means
of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant hereto shall constitute
presence in person at such meeting. Unless otherwise required by law,
no notice shall be required if a quorum of the Board or any committee
is participating.
<PAGE>
ARTICLE IV
Officers
SECTION 1. Number. The officers of the corporation shall be a
chairman, vice chairman, president, chairman of the Executive
Committee, one or several vice presidents or executive vice presidents
(the number thereof to be determined by the Board of Directors), one
or several of the vice presidents may be designated "senior vice
president" by the Board of Directors and one of whom may be elected
as chief financial officer of the corporation, a treasurer, a controller,
a secretary, and other such officers as may be elected in accordance
with the provisions of this article. Any two or more offices may be
held by the same person.
SECTION 2. Election and Term of Office. The officers of the
corporation shall be elected annually by the Board of Directors at the
first meeting of the Board of Directors held after each annual meeting
of stockholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently
may be. Vacancies may be filled or new offices created and filled at
any meeting of the Board of Directors. Each officer shall hold office
until his successor shall have been duly elected and shall have qualified
or until his death or until he shall resign or shall have been removed in
the manner hereinafter provided.
SECTION 3. Removal. Any officer or agent elected or appointed
by the Board of Directors may be removed by the Board of Directors
whenever in its judgment the best interests of the corporation would
be served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed.
SECTION 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by
the Board of Directors for the unexpired portion of the term.
SECTION 5. Chairman. The chairman shall preside at all meetings
of the stockholders, and of the Board of Directors; and in the absence
of the president and of the chairman of the Executive Committee shall
also preside at all meetings of the Executive Committee; the chairman
shall provide leadership to the Board in reviewing and advising upon
matters which exert major influence on the manner in which the
corporation's business is conducted; he/she shall act in an advisory
capacity to the president in all matters concerning the interest and
management of the corporation; and he shall perform such other
duties as may be conferred by law or assigned to him by the Board of
Directors. The chairman shall, in the event of the absence or the
disability of the president, assume all duties and responsibilities of that
office. The chairman may sign, with the secretary or other proper
officer of the corporation thereunto authorized by the Board of
Directors, stock certificates of the corporation, any deeds, mortgages,
bonds, contracts, or other instruments, except in cases where the
signing or execution thereof shall be expressly delegated by the Board
of Directors or by these by-laws to some other officer or agent of the
corporation, or shall be required by law to be otherwise signed or
executed. The chairman may also execute proxies on behalf of the
<PAGE>
corporation with respect to the voting of any shares of stock owned
by the corporation. He shall have the power to appoint agents or
employees as in his judgment may be necessary or appropriate for the
transaction of the business of the corporation, and in general shall
perform all duties incident to the office of chairman, and such other
duties as may be prescribed by the Board of Directors.
SECTION 7. President. The president shall be the chief executive
officer of the corporation and shall have general supervision over all
of the affairs of the corporation and shall determine and administer the
policies of the corporation as established by the Board of Directors or
by the Executive Committee. The president shall undertake and
faithfully discharge such duties as assigned by the Board or by the
Executive Committee and shall administer the policies of the Company
as established by the Board or by the Executive Committee. In the
absence of the chairman, the president shall preside at all meetings of
the stockholders and of the Board and shall perform the duties and
exercise the authority of the chairman. In the absence of the chairman
of the Executive Committee, the president shall preside at all meetings
of the Executive Committee. The president may sign, with the
secretary or other proper officer of the corporation thereunto
authorized by the Board, stock certificates of the Company, any
deeds, mortgages, bonds, contracts or other instruments, except in
cases where the signing or execution thereof shall be expressly
delegated by the Board or by these by-laws to some other officer or
agent of the Company, or shall be required by law to be otherwise
signed or executed. The president may also execute proxies on behalf
of the Company with respect to the voting of any shares of stock
owned by the Company. The president shall have the power to
appoint agents or employees as in his/her judgment may be necessary
or appropriate for the transaction of the business of the Company and
in general shall perform all duties incident to the office of president,
and such other duties as may be prescribed by the Board.
SECTION 8. Chairman of the Executive Committee. The chairman
of the Executive Committee shall preside at all meetings of the
Executive Committee; in the absence of the chairman and vice
chairman, he shall preside at all meetings of the stockholders and the
Board of Directors; he shall act in an advisory capacity to the
chairman in all matters concerning the interest and management of the
corporation, and he shall perform such other duties as may be assigned
to him by the Board of Directors, the Executive Committee or the
chairman. In the event of the absence or disability of the chairman and
<PAGE>
vice chairman, he shall assume all the duties and responsibilities of the
office of the chairman. The chairman of the Executive Committee
may sign, with the secretary or other proper officer of the corporation
thereunto authorized by the Board of Directors, stock certificates of
the corporation, any deeds, mortgages, bonds, contracts, or other
instruments delegated by the Board of Directors or by these by-laws
to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed. The chairman of the
Executive Committee may also execute proxies on behalf of the
corporation with respect to the voting of any shares of stock owned
by the corporation.
SECTION 9. Executive Vice President(s). The executive vice
president or executive vice presidents (if elected by the Board of
Directors) shall perform such duties not inconsistent with these
by-laws as may be assigned to him or them by the chairman or the
Board of Directors. In the event of absence or disability of the
chairman, and vice chairman and chairman of the Executive
Committee, the executive vice president (or in the event there be more
than one, the executive vice president determined in the order of
election) shall assume all the duties and responsibilities of the office of
the chairman.
SECTION 10. Chief Financial Officer. The chief financial officer (if
elected by the Board of Directors) shall have general supervision over
the financial affairs of the corporation.
SECTION 11. The Vice President(s). The Board of Directors may
designate any vice president as a senior vice president. In the event
of absence or disability of the chairman and vice chairman, the
chairman of the Executive Committee and all executive vice
presidents, the senior vice president)) or the vice president(s) in the
order of election, shall assume all the duties and responsibilities of the
office of the chairman. Any senior vice president or any vice president
may sign, with the secretary or an assistant secretary, stock certificates
of the corporation; and shall perform such other duties as from time
to time may be assigned to him by the chairman or by the Board of
Directors. In general, the vice president (or vice presidents, including
the senior vice president or senior vice presidents) shall perform such
duties not inconsistent with these by-laws as may be assigned to him
(or them) by the chairman, the executive vice presidents or by the
Board of Directors.
SECTION 12. The Treasurer. If required by the Board of
Directors, the treasurer shall give a bond for the faithful discharge of
his duties in such sum and with such surety or sureties as the Board of
Directors shall determine. He shall: (a) have charge and custody of
and be responsible for all funds and securities of the corporation;
receive and give receipts for monies due and payable to the
corporation from any source whatsoever, and deposit all such monies
in the name of the corporation in such banks, trust companies or other
<PAGE>
depositaries as shall be selected in accordance with the provisions of
Article VI of these by-laws; (b) in general perform all duties incident
to the office of treasurer and such other duties not inconsistent with
these by-laws as from time to time may be assigned to him by the
Board of Direc- tors, or by the chairman, or any vice president
designated for such purpose by the chairman.
SECTION 13. The Secretary. The secretary shall: (a) keep the
minutes of the stockholders' and the Board of Directors' meetings in
one or more books provided for that purpose; (b) see that all notices
are duly given in accordance with the provisions of these by-laws or
as required by law; (c) be custodian of the corporate records and of
the seal of the corporation and see that the seal of the corporation is
affixed to all stock certificates prior to the issue thereof and to all
documents, the execution of which on behalf of the corporation under
its seal is required; (d) keep a register of the post office address of
each stockholder which shall be furnished to the secretary by such
stockholder; (e) sign with a vice president, or the chairman, stock
certificates of the corporation, the issue of which shall have been
authorized by resolution of the Board of Directors; (f) have general
charge of the stock transfer books of the corporation; (g) act as
secretary at all meetings of the Executive Committee; and (h) in
general perform all duties incident to the office of secretary and such
other duties not inconsistent with these by-laws as from time to time
may be assigned to him by the chairman or by the Board of Directors.
SECTION 14. The Controller. The controller shall provide
guidance and evaluation with respect to the corporation's accounting
and related functions, control and procedures systems, budget
programs, and coordinate same on a divisional and overall corporate
level. The controller shall report to such officer or officers of the
corporation and perform such other duties incident to the office of
controller as may be prescribed from time to time by the chairman,
chief financial officer, or by the Board of Directors.
SECTION 15. Assistant Treasurers and Assistant Secretaries. The
chairman may appoint one or more assistant treasurers and one or
more assistant secretaries who shall serve as such until removed by the
chairman or the Board of Directors. The assistant treasurers may be
required to give bonds for the faithful discharge of their duties in such
sums and with such sureties as the chairman shall determine. The
assistant treasurers and assistant secretaries, in general, shall perform
such duties as shall be assigned to them by the treasurer or the
secretary, respectively, or by the chairman, but shall not be considered
to be officers of the corporation solely by reason of such appointments
or titles.
SECTION 16. Appointive Presidents and Vice Presidents. The
chairman may from time to time designate employees of the
<PAGE>
corporation who are managing one or several groups, divisions, or
other operations of the corporation as "President", "Vice President",
or similar title, which employees shall not be considered to be officers
of the corporation solely by reason of such appointments or titles.
The chairman shall report such appointments to the Compensation
Committee at least annually.
SECTION 17. Salaries. The salaries of the officers shall be fixed
from time to time by the Board of Directors on a monthly basis and no
officer shall be prevented from receiving such salary by reason of the
fact that he is also a Director of the corporation.
ARTICLE V
Indemnification of Officers, Directors
Employees and Agents
SECTION 1. Non-Derivative Actions and Criminal Prosecutions.
To the extent permitted by applicable law from time to time in effect,
the corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right
of the corporation) by reason of the fact that he is or was a Director,
officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a Director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was
unlawful.
SECTION 2. Derivative Actions. The corporation shall indemnify
any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by reason
of the fact that he is or was a Director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation
as a Director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
<PAGE>
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the
corporation unless and only to the extent that the court in which such
action or suit was brought shall determine upon application that
despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity
for such expenses which such court shall deem proper.
SECTION 3. Right to Indemnification. To the extent that a
Director, officer, employee or agent of the corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Sections 1 and 2 of this Article, or in defense
of any claim, issue or matter therein, he shall be indemnified by the
corporation against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
SECTION 4. Where No Adjudication. Any indemnification under
Sections 1 and 2 of this Article (unless ordered by a court) shall be
made by the corporation only as authorized in the specific case upon
a determination that indemnification of the Director, officer, employee
or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in said Sections 1 and 2.
Such determination shall be made (i) by the Board of Directors by a
majority vote of a quorum consisting of Directors who were not
parties to such action, suit or proceeding, or (ii) if such a quorum is
not obtainable, or, even if obtainable and a quorum of disinterested
Directors so directs, by independent legal counsel (compensated by
the corporation) in a written opinion, or (iii) by the stockholders.
SECTION 5. Expenses. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors in the specific case upon receipt
of an undertaking by or on behalf of the Director, officer, employee
or agent to repay such amount unless it shall ultimately be determined
that he is entitled to be indemnified by the corporation as authorized
in this Article.
SECTION 6. Non-exclusive. The indemnification provided by this
Article shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any by-law,
agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a
<PAGE>
person who has ceased to be a Director, officer, employee, or agent
and shall inure to the benefit of the heirs, executors and administrators
of such a person.
SECTION 7. Insurance. The corporation may purchase and
maintain insurance on behalf of any person who is or was a Director,
officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a Director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether
or not the corporation would have the power to indemnify him against
such liability under the provisions of this Article or of applicable law.
ARTICLE VI
Contracts, Loans, Checks and Deposits
SECTION 1. Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or
execute and deliver any instrument in the name of any on behalf of the
corporation, and such authority may be general or confined to specific
instances.
SECTION 2. Loans. No loans shall be contracted on behalf of the
corporation and no evidence of indebtedness shall be issued in its
name unless authorized by a resolution of the Board of Directors.
Such authority may be general or confined to specific instances.
SECTION 3. Checks, Drafts, etc. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness
issued in the name of the corporation, shall be signed by such officer
or officers, agent or agents of the corporation and in such manner as
shall from time to time be determined by resolution of the Board of
Directors.
SECTION 4. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the
corporation in such banks, trust companies or other depositaries as the
Board of Directors may select.
ARTICLE VII
Stock Certificates
SECTION 1. Stock Certificates. Certificates representing shares of
stock of the corporation shall be in such form as may be determined
<PAGE>
by the Board of Directors, shall be numbered and shall be entered in
the books of the corporation as they are issued. They shall exhibit the
holder's name and number of shares and shall be signed by the
chairman, the chairman of the Executive Committee, or a vice
president and the treasurer or an assistant treasurer or the secretary or
an assistant secretary, and shall be sealed with the seal of the
corporation. If a stock certificate is countersigned (a) by a transfer
agent other than the corporation or its employee, or (b) by a registrar
other than the corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer
agent or regis-trar at the date of issue.
SECTION 2. Lost Certificates. The Board of Directors may from
time to time make such provision as it deems appropriate for the
replacement of lost, stolen or destroyed stock certificates, including
the requirement to furnish an affidavit and an indemnity.
SECTION 3. Transfers of Stock. Upon surrender to the
corporation or the transfer agent of the corporation of a stock
certificate duly endorsed or accompanied by proper evidence of
succession, assignment of authority to transfer, it shall be the duty of
the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon the
books of the corporation. The person in whose name shares of stock
stand on the books of the corporation shall be deemed the owner
thereof for all purposes as regards the corporation.
SECTION 4. Transfer Agents and Registrars. The Board of
Directors may appoint one or more transfer agents and registrars and
may thereafter require all stock certificates to bear the signature of a
transfer agent and registrar.
SECTION 5. Rules of Transfer. The Board of Directors shall have
the power and authority to make all such rules and regulations as they
may deem expedient concerning the issue, transfer and registration of
stock certificates of the corporation.
ARTICLE VIII
Fiscal Year
The fiscal year of the corporation shall begin on the first day of
January in each year and end on the thirty-first of December in each
year.
<PAGE>
ARTICLE IX
Dividends
The Board of Directors may from time to time, declare, and the
corporation may pay, dividends on its outstanding shares of stock in
the manner and upon the terms and conditions provided by law and its
Certificate of Incorporation.
ARTICLE X
Seal
The Board of Directors shall provide a corporate seal which shall be
in the form of a circle and shall have inscribed thereon the name of the
corporation and the words "Corporate Seal, Delaware".
ARTICLE XI
Waiver of Notice
Whenever any notice whatever is required to be given under the
provisions of these by-laws or under the provisions of the Certificate
of Incorporation or under the provisions of The General Corporation
Law of Delaware, waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
Attendance of any person at a meeting for which any notice whatever
is required to be given under the provisions of these by-laws, the
Certificate of Incorporation or The General Corporation Law of
Delaware shall constitute a waiver of notice of such meeting, except
when the person attends for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because
the meeting is not lawfully called or convened.
<PAGE>
EXHIBIT 10
AMENDMENT TO THE ILLINOIS TOOL WORKS INC. STOCK INCENTIVE PLAN
May 5, 1995 BOD
RESOLVED: that,
1. Section 12(g) of the Company's Stock Incentive Plan is amended,
effective immediately, by adding the following sentence at the end thereof:
"Any holder of a stock incentive may elect to surrender shares of Common
Stock previously issued to the holder or to have the Company withhold shares
that would have otherwise been issued to the holder pursuant to the exercise
of an Option or in connection with any other stock incentive, the number of
such withheld or surrendered shares to be sufficient to satisfy all or a
portion of the holder's income tax liability that arises upon the exercise,
vesting, distribution or other event giving rise to income tax liability with
respect to the stock incentive."
2. Management is authorized to do or cause to be done any and all further
acts, including the execution and delivery in the name and on behalf of the
Company and under its corporate seal of any certificates, instruments,
documents, and filings, as such officer may, with the advice of counsel, deem
necessary or desirable to carry out the purpose and intent of these resolutions
relating and to comply with all legal requirements thereto.
