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 March 31, 1997
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) (847) 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 April 30, 1997: 124,605,544.
<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 notes to financial statements included in the
Company's Annual Report on Form 10-K. Certain reclassifications of prior years'
data have been made to conform with current year reporting.
<PAGE>
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
STATEMENT OF INCOME
(UNAUDITED)
(In Thousands Except for
Per Share Amounts)
Three Months Ended
March 31
----------------------
1997 1996
----------------------
Operating Revenues $1,229,798 $1,136,922
Cost of revenues 807,317 755,539
Selling, administrative,
and research and develop-
ment expenses 215,689 211,071
Amortization of goodwill
and other intangible
assets 8,532 7,132
Amortization of retiree
health care 1,827 1,742
---------- ----------
Operating Income 196,433 161,438
Interest expense (5,961) (6,801)
Other income 3,583 2,118
---------- ----------
Income Before Income Taxes 194,055 156,755
Income taxes 70,800 58,000
---------- ----------
Net Income $ 123,255 $ 98,755
========== ==========
Per share of common stock:
Net Income $ .99 $ .81
===== =====
Cash dividends:
Paid $ .19 $ .17
===== =====
Declared $ .19 $ .17
===== =====
Average number of shares of
common stock outstanding
during the period 124,513 122,370
======= =======
<PAGE>
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
STATEMENT OF FINANCIAL POSITION
(UNAUDITED)
(In Thousands)
ASSETS March 31, 1997 December 31, 1996
-------------- -----------------
Current Assets:
Cash and equivalents $ 115,779 $ 137,699
Trade receivables 837,815 840,092
Inventories 515,327 526,016
Deferred income taxes 136,776 131,404
Prepaid expenses and other
current assets 67,433 65,881
---------- ----------
Total current assets 1,673,130 1,701,092
---------- ----------
Plant and Equipment:
Land 67,230 68,362
Buildings and improvements 436,200 429,686
Machinery and equipment 1,269,694 1,282,274
Equipment leased to others 105,827 109,030
Construction in progress 57,546 51,744
---------- ----------
1,936,497 1,941,096
Accumulated depreciation (1,136,793) (1,132,756)
---------- ----------
Net plant and equipment 799,704 808,340
---------- ----------
Investments 888,127 872,692
Goodwill 637,723 664,054
Deferred Income Taxes 327,247 292,152
Other Assets 445,355 467,832
---------- ----------
$4,771,286 $4,806,162
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term debt $ 309,094 $ 390,425
Accounts payable 229,164 248,062
Accrued expenses 504,020 512,927
Cash dividends payable 23,666 23,538
Income taxes payable 90,384 44,373
---------- ----------
Total current liabilities 1,156,328 1,219,325
---------- ----------
Non-current Liabilities:
Long-term debt 788,688 818,947
Other 366,760 371,865
---------- ----------
Total non-current liabilities 1,155,448 1,190,812
---------- ----------
Stockholders' Equity:
Preferred stock -- --
Common stock 276,302 273,864
Income reinvested in the business 2,216,506 2,105,144
Common stock held in treasury (1,833) (1,841)
Cumulative translation adjustment (31,465) 18,858
---------- ----------
Total stockholders' equity 2,459,510 2,396,025
---------- ----------
$4,771,286 $4,806,162
========== ==========
<PAGE>
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
STATEMENT OF CASH FLOWS
(UNAUDITED)
(In Thousands) Three Months Ended
March 31
------------------
1997 1996
-------- --------
Cash Provided by (Used for) Operating Activities:
Net income $123,255 $ 98,755
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 49,227 43,750
Change in deferred income taxes (43,644) (510)
Provision for uncollectible accounts 1,113 1,722
(Gain)loss on sale of plant and equipment 4,800 (1,202)
Income from investments (22,603) (9,143)
Gain on sale of operations and affiliates (6,096) (3,753)
Other non-cash items, net 2,848 205
-------- --------
Cash provided by operating activities 108,900 129,824
Changes in assets and liabilities:
(Increase) decrease in--
Trade receivables (30,228) (8,926)
Inventories (16,162) (1,004)
Prepaid expenses and other assets (19,096) (26,936)
Increase (decrease) in--
Accounts payable (7,651) (3,629)
Accrued expenses 3,039 8,074
Income taxes payable 45,462 31,339
Other, net 2,449 545
-------- --------
Net cash provided by operating activities 86,713 129,287
-------- --------
Cash Provided by (Used for) Investing Activities:
Acquisition of businesses (excluding cash and
equivalents) and additional interest in affiliates (26,336) (22,216)
Additions to plant and equipment (39,701) (39,969)
Purchase of investments (2,395) (294)
Proceeds from investments 5,645 30,496
Proceeds from sale of plant and equipment 2,877 16,235
Proceeds from sale of operations and affiliates 80,495 7,718
Other, net (1,440) 1,797
-------- --------
Net cash provided by (used for)
investing activities 19,145 (6,233)
-------- --------
Cash Provided by (Used for) Financing Activities:
Cash dividends paid (23,538) (19,641)
Issuance of common stock 2,158 2,056
Repayments of short-term debt (67,567) (56,355)
Proceeds from long-term debt 417 8,853
Repayments of long-term debt (31,637) (57,780)
Other, net 1,586 --
-------- --------
Net cash used for financing activities (118,581) (122,867)
-------- --------
Effect of Exchange Rate Changes on Cash and Equivalents (9,197) 1,875
-------- --------
Cash and Equivalents:
Increase (decrease) during the period (21,920) 2,062
Beginning of period 137,699 116,600
-------- --------
End of period $115,779 $118,662
======== ========
Cash Paid During the Period for Interest $ 9,105 $ 7,855
======== ========
Cash Paid During the Period for Income Taxes $ 41,450 $ 16,329
======== ========
Liabilities Assumed from Acquisitions $ 24,933 $118,896
======== ========
<PAGE>
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(1) INVENTORIES at March 31, 1997 and December 31, 1996 were as follows:
(In Thousands)
March 31, Dec. 31,
1997 1996
-------- --------
Raw material $140,275 $143,979
Work-in-process 70,229 71,641
Finished goods 304,823 310,396
-------- --------
$515,327 $526,016
======== ========
(2) NEW ACCOUNTING STANDARD:
Effective for periods ending after December 15, 1997, the Company is
required to adopt Statement of Financial Accounting Standards No. 128
("SFAS 128"), Earnings Per Share. SFAS 128 requires dual presentation of
basic and diluted net income per share on the face of the income statement.
The Company does not expect that basic and diluted net income per share
upon adoption of the new standard to be materially different from net
income per share as currently reported.
<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 products. This segment primarily serves the
construction, automotive and general industrial markets.
(Dollars in Thousands)
Three months ended
March 31
------------------
Operating
Revenues 1997 1996
-------- --------
Domestic $471,762 $412,542
International 210,761 212,424
-------- --------
Total $682,523 $624,966
======== ========
Three months ended March 31
--------------------------------
Operating 1997 1996
Income Income Margin Income Margin
-------- ------ ------- ------
Domestic $ 83,863 17.8% $61,197 14.8 %
International 25,082 11.9 23,552 11.1
-------- -------
Total $108,945 16.0 $84,749 13.6
======== =======
Domestic revenues and operating income increased compared with last year
primarily due to acquisitions in the automotive businesses and market
penetration gains with fasteners and components in the U.S. automotive markets.
Increased demand for construction products as a result of strong residential and
commercial construction markets also contributed to the revenue growth. Product
line simplification in the welding operations resulted in a decrease in revenues
versus last year which moderated the total domestic revenue growth. Margins
increased as a result of improved operating efficiencies in the automotive and
industrial components businesses, new products in the construction operations
and cost reductions in the welding group.
Internationally, revenue gains in the European automotive markets were
offset by the effect of foreign currency fluctuations and declines in the
construction markets, which remained soft. Operating income and margins
increased as a result of a reduced cost structure in the construction
operations.
<PAGE>
INDUSTRIAL SYSTEMS AND CONSUMABLES SEGMENT
Businesses in this segment manufacture longer lead-time systems and related
consumables for consumer and industrial packaging; marking, labeling and
identification systems; industrial spray coating equipment and systems; and
quality assurance equipment and systems. The largest markets served by this
segment are general industrial, food and beverage, and industrial capital goods.
(Dollars in Thousands)
Three months ended
March 31
------------------
Operating
Revenues 1997 1996
-------- --------
Domestic $300,901 $300,399
International 214,537 197,652
-------- --------
Total $515,438 $498,051
======== ========
Three months ended March 31
-------------------------------
Operating 1997 1996
Income Income Margin Income Margin
------- ------ ------- ------
Domestic $55,863 18.6% $54,985 18.3 %
International 23,155 10.8 15,352 7.8
------- -------
Total $79,018 15.3 $70,337 14.1
======= =======
Domestic revenue growth in the finishing systems, consumer packaging and
Signode businesses was offset by lower demand in the general industrial markets
for quality measurement equipment and a divestiture in the specialty packaging
operations. Operating income and margins increased largely because of new
products for the consumer packaging and finishing systems operations along with
improved manufacturing processes at Signode.
International revenues increased primarily as a result of acquisitions in
the Signode packaging operations, partially offset by lower revenues as a result
of foreign currency fluctuations and reduced revenues related to divestitures in
the European specialty packaging businesses. Operating income increased due to
successful cost reductions at the Signode and specialty packaging operations and
due to acquisitions. The sale of under-performing specialty packaging operations
along with aggressive cost reductions at the Signode and finishing systems units
led to the increase in margins.
<PAGE>
LEASING AND INVESTMENTS SEGMENT
The Company has historically had strong cash flows from its manufacturing
operations. Although most of this cash has been reinvested in the manufacturing
businesses through investments in capital equipment, acquisitions and new
products, some of the excess cash has been used to make financial investments.
These investments primarily include leveraged and direct financing leases of
equipment, mortgage-related investments, investments in properties and property
developments, and affordable housing investments.
(Dollars in Thousands)
Three months ended
March 31
------------------
1997 1996
-------- -------
Operating
revenues $31,837 $13,905
======= =======
Operating
income $ 8,470 $ 6,352
======= =======
Revenues and operating income increased primarily due to the commercial
mortgage transaction entered into at year-end 1996.
OPERATING EXPENSES
Cost of revenues as a percentage of revenues decreased to 65.6% in the
first three months of 1997 versus 66.5% in the first three months of 1996, due
to increased sales volume coupled with lower manufacturing costs. Selling,
administrative, and research and development expenses decreased to 17.5% of
revenues in the first three months of 1997 versus 18.6% in the first three
months of 1996, primarily due to expense reductions as a result of a
Company-wide objective to reduce administrative costs.
INTEREST EXPENSE
Interest expense decreased to $6.0 million in the first three months of
1997 from $6.8 million in the first three months of 1996, primarily due to
decreased commercial paper borrowings.
OTHER INCOME
Other income increased to $3.6 million for the first three months of 1997
from $2.1 million in 1996. This increase is primarily due to higher gains on the
sale of operations in 1997 and debt prepayment costs in 1996, partially offset
by losses on sale of fixed assets in 1997.
NET INCOME
Net income of $123.3 million ($0.99 per share) in the first three months of
1997 was 24.8% higher than the 1996 first quarter net income of $98.8 million
($0.81 per share).
<PAGE>
FOREIGN CURRENCY
The strengthening of the U.S. dollar against foreign currencies in 1997
decreased operating revenues by approximately $15 million. Foreign currency
fluctuations had no material impact on earnings in the first quarter of 1997
versus 1996.
FINANCIAL POSITION
Net working capital at March 31, 1997 and December 31, 1996 is summarized
as follows:
(Dollars in Thousands)
March 31, Dec. 31, Increase/
1997 1996 (Decrease)
---------- ---------- ----------
Current Assets:
Cash and equivalents $ 115,779 $ 137,699 $(21,920)
Trade receivables 837,815 840,092 (2,277)
Inventories 515,327 526,016 (10,689)
Other 204,209 197,285 6,924
---------- ---------- --------
1,673,130 1,701,092 (27,962)
---------- ---------- --------
Current Liabilities:
Short-term debt 309,094 390,425 (81,331)
Accounts payable and
accrued expenses 733,184 760,989 (27,805)
Other 114,050 67,911 46,139
---------- ---------- --------
1,156,328 1,219,325 (62,997)
---------- ---------- --------
Net Working Capital $ 516,802 $ 481,767 $ 35,035
========== ========== ========
Current Ratio 1.45 1.40
========== ==========
The decrease in short-term debt was due to a reduction in commercial paper
borrowings during the first quarter of 1997 as a result of proceeds from
divestitures.
<PAGE>
Part II - Other Information
Item 2 - Changes in Securities
(a) On May 9, 1997, the shareholders of Illinois Tool Works Inc. approved
an increase in the number of authorized shares of Common Stock to
350,000,000 from 150,000,000 and an increase in the par value of Common
Stock to $.01 per share from no par value. See Exhibit 99 for a revised
description of the capital stock of Illinois Tool Works Inc.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibit Index
Exhibit No. Description
----------- --------------------------------------------------
3(a) Restated Certificate of Incorporation of
Illinois Tool Works Inc., as amended
3(b) By-laws of Illinois Tool Works Inc., as amended
27 Financial Data Schedule
99 Description of the capital stock of
Illinois Tool Works Inc.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which this
report is filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ILLINOIS TOOL WORKS INC.
Dated: May 15, 1997 By: /s/ Michael W. Gregg
--------------------- -----------------------------------------------
Michael W. Gregg, Senior Vice President
and Controller, Accounting
(Principal Accounting Officer)
<PAGE>
RESTATED
CERTIFICATE OF INCORPORATION
OF
ILLINOIS TOOL WORKS INC.
(Originally incorporated as Illinois Tool Works, Inc. on June 19, 1961)
A Restatement of the Certificate of Incorporation was duly adopted by the
vote of the Board of Directors on April 30, 1984 in accordance with Section 245
of the Delaware General Corporation Law. As newly restated, this Restated
Certificate of Incorporation hereby reads as follows:
FIRST. The name of the corporation is Illinois Tool Works Inc.
SECOND. Its registered office in the State of Delaware is located at
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name and address of its registered agent is The Corporation
Trust Company.
THIRD. The nature of the business, or objects or purposes to be transacted,
promoted or carried on are:
To manufacture, purchase or otherwise acquire, invest in, own,
mortgage, pledge, sell, assign and transfer or otherwise dispose of,
trade, deal in and deal with goods, wares and merchandise and personal
property of every class and description.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to
undertake or assume the whole or any part of the obligations or
liabilities of any person, firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect
of, mortgage or otherwise dispose of letters patent of the United
States or any foreign country, patent rights, licenses and privileges,
inventions, improvements and processes, copyrights, trademarks and
trade names, relating to or useful in connection with any business of
this corporation.
<PAGE>
To acquire by purchase, subscription or otherwise, and to receive,
hold, own, guarantee, sell, assign, exchange, transfer, mortgage,
pledge or otherwise dispose of or deal in and with any of the shares
of the capital stock, or any voting trust certificates in respect of
the shares of capital stock, scrip, warrants, rights, bonds,
debentures, notes, trust receipts, and other securities, obligations,
chooses in action and evidences of indebtedness or interest issued or
created by any corporations, joint stock companies, syndicates,
associations, firms, trusts or persons, public or private, or by the
government of the United States of America, or by any foreign
government, or by any state, territory, province, municipality or
other political subdivision or by any governmental agency, and as
owner thereof to possess and exercise all the rights, powers and
privileges of ownership, including the right to execute consents and
vote thereon, and to do any and all acts and things necessary or
advisable for the preservation, protection, improvement and
enhancement in value thereof.
To enter into, make and perform contracts of every kind and
description with any person, firm, association, corporation,
municipality, county, state, body politic or government or colony or
dependency thereof.
To borrow or raise moneys for any of the purposes of the corporation
and, from time to time without limit as to amount, to draw, make,
accept, endorse, execute and issue promissory notes, drafts, bills of
exchange, warrants, bonds debentures and other negotiable or
non-negotiable instruments and evidences of indebtedness, and to
secure the payment of any thereof and of the interest thereon by
mortgage upon or pledge, conveyance or assignment in trust of the
whole or any part of the property of the corporation, whether at the
time owned or thereafter acquired, and to sell, pledge or otherwise
dispose of such bonds or other obligations of the corporation for its
corporate purposes.
To loan to any person, firm or corporation any of its surplus funds,
either with or without security.
To purchase, hold, sell and transfer the shares of its own capital
stock; provided it shall not use its funds or property for the
purchase of its own shares of capital stock when such use would cause
any impairment of its capital except as otherwise permitted by law,
and provided further that shares of its own capital stock belonging to
it shall not be voted upon directly or indirectly.
<PAGE>
To have one or more offices, to carry on all or any of its operations
and business and without restriction or limit as to amount to purchase
or otherwise acquire, hold, own, mortgage, sell, convey or otherwise
dispose of, real and personal property of every class and description
in any of the states, districts, territories or colonies of the United
States, and in any and all foreign countries, subject to the laws of
such state, district, territory, colony or country.
In general, to carry on any other business in connection with the
foregoing, and to have and exercise all the powers conferred by the
laws of Delaware upon corporations formed under the General
Corporation Law of the State of Delaware, and to do any or all of the
things hereinbefore set forth to the same extent as natural persons
might or could do.
The objects and purposes specified in the foregoing clauses shall,
except where otherwise expressed, be in nowise limited or restricted
by reference to, or inference from, the terms of any clause in this
Certificate of Incorporation, but the objects and purposes specified
in each of the foregoing clauses of this Article shall be regarded as
independent objects and purposes.
FOURTH.
(1) Authorized Shares. The total number of shares of stock of all
classes which the corporation shall have authority to issue is three
hundred fifty million three hundred thousand (350,300,000), of which
three hundred thousand (300,000) shall be shares of Preferred Stock,
without par value, and three hundred fifty million (350,000,000) shall
be shares of Common Stock, par value $.01 per share.
(2) Preferred Stock.
(a) The Preferred Stock shall be issuable in series, and in
connection with the issuance of any series of Preferred
Stock and to the extent now or hereafter permitted by the
laws of the State of Delaware, the Board of Directors is
authorized to fix by resolution the designation of each
series, the stated value of the shares of each series, the
dividend rate of each series and the date or dates and other
provisions respecting the payment of dividends, the
provisions, if any, for a sinking fund for the shares of
each series, the preferences of the shares of each series in
the event of liquidation or dissolution of the corporation,
the provisions, if any, respecting the redemption of the
shares of each series and subject to requirements of the
laws of the State of Delaware, the voting rights, if any,
(provided that such shares shall not have more than one vote
per share) including any special voting rights in the event
of default in the payment of preferred dividends, the terms,
if any, upon which the shares of each series shall be
convertible into or exchangeable for any other shares of
stock of the corporation and any other relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, of the
shares of each series.
<PAGE>
(b) Preferred Stock of any series redeemed, converted,
exchanged, purchased, or otherwise acquired by the
corporation shall constitute authorized but unissued
Preferred Stock.
(c) All shares of any series of Preferred Stock, as between
themselves, shall rank equally and be identical; and all
series of Preferred Stock, as between themselves, shall rank
equally and be identical except as set forth in resolutions
of the Board of Directors authorizing the issuance of such
series.
(3) Common Stock.
(a) After dividends to which the holders of Preferred Stock may
then be entitled under the resolutions creating any series
thereof have been declared and after the corporation shall
have set apart the amounts required pursuant to such
resolutions for the purchase or redemption of any series of
Preferred Stock, the holders of Common Stock shall be
entitled to have dividends declared in cash, property, or
other securities of the corporation out of any net profits
or net assets of the corporation legally available therefor.
(b) In the event of the liquidation or dissolution of the
corporation's business and after the holders of Preferred
Stock shall have received amounts to which they are entitled
under the resolutions creating such series, the holders of
Common Stock shall be entitled to receive ratably the
balance of the corporation's net assets available for
distribution.
(c) Each share of Common Stock shall be entitled to one vote,
but shall not be entitled to vote for the election of any
directors who may be elected by vote of the Preferred Stock
voting as a class.
(4) Preemptive Rights. Unless otherwise provided by the Board of
Directors, no holder of any shares of the corporation shall have any
preemptive right to subscribe for or to acquire any additional shares
of the corporation of the same or of any other class, whether now or
hereafter authorized, or any options or warrants giving the right to
purchase any such shares, or any bonds, notes, debentures or other
securities convertible into any such shares.
FIFTH. The minimum amount of capital with which the corporation will
commence business is one thousand dollars ($1,000).
<PAGE>
SIXTH. Names and places of residence of original incorporators - OMITTED.
SEVENTH. The corporation is to have perpetual existence.
EIGHTH. The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatever.
<PAGE>
NINTH.
(a) Except as provided in any certificate ("Certificate of
Rights of Preferred Stock") filed pursuant to Section 151(g)
of the Delaware General Corporation Law (or any amendment or
replacement of such Section) designating the number of
shares of Preferred Stock to be issued and the rights,
preferences, privileges and restrictions granted to and
imposed on the holders of such designated Preferred Stock,
as permitted by Article FOURTH hereof, the authorized number
of Directors of the corporation shall be not less than three
nor more than twenty. The initial number of Directors is
fixed at thirteen. The exact number of Directors within such
range may be changed from time to time by an amendment to
the By-Laws duly adopted as provided in Subsection (a) (1)
of Article ELEVENTH. No reduction in the number of Directors
shall have the effect of removing any Director prior to the
expiration of his term.
(b) Except as provided in any Certificate of Rights of Preferred
Stock, any vacancies in the Board of Directors for any
reason, and any newly created directorships resulting from
any increase in the number of directors, shall be filled
only by the Board of Directors, acting by a majority of the
directors then in office, although less than a quorum, and
any directors so chosen shall hold office until the next
annual election of directors, and until their successors
shall be elected and qualified.
(c) In furtherance and not in limitation of the powers conferred
by statute and subject to the limitations imposed by other
Articles of this Certificate of Incorporation, the Board of
Directors is expressly authorized to make, alter or repeal
the By-Laws of the corporation.
TENTH.
(a) Meetings of stockholders may be held outside the State of
Delaware, if the By-Laws so provide. The books of the
corporation may be kept (subject to any provision contained
in the statutes) outside the State of Delaware at such place
or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the corporation.
Elections of directors need not be by ballot unless the
By-Laws of the corporation shall so provide.
(b) No action shall be taken by the stockholders except at an
annual or special meeting of stockholders and no action may
be taken by written consent of the stockholders. Special
meetings of the stockholders of the corporation for any
purpose or purposes may be called at any time but only by
the chairman, the president, or by a majority of the Board
of Directors; provided, however, that if and to the extent
that any special meeting of stockholders may be called by
any other person or persons specified in any Certificate of
Rights of Preferred Stock, then such special meeting may
also be called by such person or persons in the manner, at
the times and for the purposes so specified.
<PAGE>
ELEVENTH.
(a) New By-Laws of the corporation may be adopted or the By-Laws
of the corporation may be amended or repealed either by the
affirmative vote of a majority of the Directors of the
corporation or by the affirmative vote of the holders of a
majority of the voting power of the corporation; provided,
however, that any By-Law fixing the number of Directors may
be adopted, amended or repealed only by (1) the affirmative
vote of a majority of the Directors of the corporation;
provided, however, that if there is a Substantial
Shareholder (as defined in Article FIFTEENTH), such By-Law
also must be adopted, amended or repealed by not less than
two-thirds of the Continuing Directors (as defined in
Article FIFTEENTH), or (2) the affirmative vote of the
holders of not less than 66-2/3% of the voting power of the
Corporation; provided, however, that if there is a
Substantial Shareholder, such By-Law also must be adopted,
amended or repealed by the affirmative vote of the holders
of a majority of the voting power of the corporation held by
stockholders other than the Substantial Stockholder.
(b) The corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred on stockholders herein are
granted subject to this reservation. Notwithstanding the
foregoing, the provisions set forth in Articles NINTH,
TENTH, FIFTEENTH, and this Article ELEVENTH may not be
repealed or amended in any respect, nor may any cumulative
voting provision be adopted, nor may any other provision be
amended, adopted or repealed which would have the effect of
modifying or permitting circumvention of such provisions,
unless such repeal, amendment or adoption is approved by the
affirmative vote of the holders of not less than 66-2/3% of
the voting power of the corporation; provided, however, that
if there is a Substantial Shareholder, such repeal,
amendment or adoption also must be approved by the
affirmative vote of a majority of the voting power of the
corporation held by stockholders other than the Substantial
Stockholder.
<PAGE>
TWELFTH. No contract or other transaction between the corporation and any
person, firm, association or corporation and no other act of this corporation
shall, in the absence of fraud, be invalidated or in any way affected by the
fact that any of the directors of the corporation are, directly or indirectly,
pecuniarily or otherwise interested in such contract, transaction or other act
or related to or interested in such person, firm, association or corporation as
director, stockholder, officer, employee, member or otherwise. Any director of
the corporation individually, or any firm or association of which any director
may be a member, may be a party to, or may be pecuniarily or otherwise
interested in, any contract or transaction of the corporation; provided that the
fact that he individually or such firm or association is so interested shall be
disclosed or known to the Board of Directors or a majority of such members
thereof as shall be present at any meeting of the Board of Directors, or of any
committee of directors having the powers of the full Board, at which action upon
any such contract, transaction or other act is taken, and if such fact shall be
so disclosed or known, any director of this corporation so related or otherwise
interested may be counted in determining the presence of a quorum at any meeting
of the Board of Directors or of such committee at which action upon any such
contract, transaction or act shall be taken and may vote thereat with respect to
such action with like force and effect as if he were not so related or
interested. Any director of the corporation may vote upon any contract or other
transaction between the corporation and any subsidiary or affiliated corporation
without regard to the fact that he is also a director of such subsidiary or
affiliated corporation.
THIRTEENTH. No director of the corporation shall be personally liable to
the corporation or to any of its stockholders for monetary damages for any
breach of fiduciary duty as a director provided, however, that the foregoing
shall not limit or eliminate liability for breach of a director's duty of
loyalty, for failure of a director to act in good faith, for engaging in
intentional misconduct or knowingly violating a law, for obtaining an improper
personal benefit, or for acting to pay a dividend or approving a stock
repurchase that is illegal under Section 174 of the General Corporation Law of
the State of Delaware. This Article shall apply to acts or omissions occurring
subsequent to May 4, 1987, and any repeal or modification of this Article shall
not adversely affect any right or protection existing at the time of such repeal
or modification.
FOURTEENTH. Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stock holders, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
corporation or of any creditor or stockholder thereof, or on the application of
any receiver or receivers appointed for this corporation under the provisions of
section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this corporation under
the provisions of section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders of this
corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders of this corporation,
as the case may be, agree to any compromise or arrangement and to any
reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders, of this corporation, as the case may be, and also on this
corporation.
<PAGE>
FIFTEENTH.
(a) Definitions. For the purpose of this Article FIFTEENTH:
(1) Except as provided in this Subsection and Subsection (a) (9)
below, "Affiliate" and "Associate" shall have the meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in
effect on March 2, 1984. No relative or spouse of a person (and
no relative of such spouse) who is a director or officer of the
corporation shall be an Affiliate or Associate of such person or
of the corporation solely as a result of such person being a
director or officer of the corporation.
(2) Except as provided in Subsection (a) (9) below, a Person (as
defined in Subsection (a) (7) below) shall be the "Beneficial
Owner" of (or shall "Beneficially Own") any Voting Stock (A)
which such Person beneficially owns, directly or indirectly, as
determined under Rule 13d-3 of the General Rules and Regulations
under the Security Exchange Act of 1934, as in effect on March 2,
1984 or (B) which such Person has the right to acquire (whether
such right is exercisable immediately or only after the passage
of time) upon the exercise of conversion rights, exchange rights,
warrants, options or otherwise.
(3) The term "Business Combination" shall mean any of the
following transactions:
(A) any merger or consolidation of the corporation
or any Subsidiary with or into (i) any Substantial
Stockholder irrespective of which entity is the
survivor or (ii) any other corporation which is,
or after such merger or consolidation would be, an
Affiliate or Associate of such Substantial
Stockholder; or
(B) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction
or a series of transactions) to or with any
Substantial Stockholder of any Properties or
assets of the corporation (including without
limitation any securities of a Subsidiary) or any
Subsidiary having an aggregate Fair Market Value of
more than one percent of the total gross assets of the
corporation on a consolidated basis as of the end of
the preceding fiscal year; or
(C) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction
or a series of transactions) to or with the
corporation or a Subsidiary of any properties or
assets of a Substantial Stockholder having an
aggregate Fair Market Value of more than one percent
of the total gross assets of the corporation on a
consolidated basis as of the end of the preceding
fiscal year; or
<PAGE>
(D) the issuance, transfer or delivery by the corporation
of stock or other securities of the corporation or of
any Subsidiary (in one transaction or a series of
transactions) to or with any Substantial Stockholder
(except any issuance, transfer or delivery made to
security holders generally); or
(E) the issuance, transfer or delivery by a Substantial
Stockholder of stock or other securities of such
Substantial Stockholder (in one transaction or
a series of transactions) to or with the corporation
or a Subsidiary (except any issuance, transfer or
delivery made to security holders of the
Substantial Stockholder generally); or
(F) the adoption of any plan or proposal for the
liquidation of the corporation proposed by or on
behalf of a Substantial Stockholder; or
(G) any reclassification of securities (including any
reserve stock split), or recapitalization of the
corporation, or any merger or consolidation of the
corporation with an; of its Subsidiaries or any
other transact on (whether or not with or into or
otherwise involving a Substantial Stockholder),
which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding
shares of any class of equity or convertible
securities of the corporation or any Subsidiary
which is directly or indirectly owned by any
Substantial Stockholder; or
(H) any agreement, arrangement, contract or understanding
which provides, in whole or in part, for any of the
transactions described in this Subsection (3).
(4) "Common Stock" means the issued and outstanding shares of
common stock of the corporation.
<PAGE>
(5) "Continuing Director" means any member of the Board of
Directors of the corporation who is not an Affiliate or Associate
of a Substantial Stockholder and who either (A) was a member of
the Board of Directors prior to the time that the Substantial
Stockholder became a Substantial Stockholder, or (B) was
designated a Continuing Director by not less than two-thirds of
the then Continuing Directors at the time of such director's
initial election to the Board of Directors.
(6) "Fair Market Value" means: (A) in the case of stock, the
highest closing sale price during the 30-day period immediately
preceding the date in question of a share of such stock on the
Composite Tape for the New York Stock Exchange, or, if such stock
is not quoted on the Composite Tape, on the New York Stock
Exchange, or, if such stock is not listed on such Exchange, on
the principal United States securities exchange registered under
the Securities Exchange Act of 1934 on which such stock is
listed, or, if such stock is not listed on any such exchange, the
highest closing sale price, or if none, the highest closing bid
quotation, with respect to a share of such stock during the
3O-day period preceding the date in question on the National
Association of Securities Dealers, Inc. Automated Quotations
System or any system then in use, or if no such quotations are
available, the fair market value on the date in question of a
share of such stock as determined by the Continuing Directors in
good faith; and (B) in the case of property other than cash or
stock, the fair market value of such property on the date in
question as determined by a majority of the Continuing Directors
in good faith.
(7) "Person" includes a natural person, corporation, partnership,
association, joint stock company, trust, unincorporated
association or other entity. Except as provided in Subsection (a)
(9) below, when two or more persons act as a partnership, limited
partnership, syndicate or other group for the purpose of
acquiring, holding, voting or disposing of common stock, such
syndicate or group shall be deemed a "Person".
(8) "Subsidiary" means any corporation of which a majority of any
class of equity security is beneficially owned, directly or
indirectly, by the corporation.
<PAGE>
(9) "Substantial Stockholder" means any Person (other than the
corporation 01 any Subsidiary) which, together with any and all
Affiliates or Associates of such Person after March 2, 1984,
became and then is the Beneficial Owner, directly or indirectly,
of more than 10% of the voting power of the outstanding Voting
Stock, excluding Voting Stock Beneficially Owned by such person
on March 2, 1984. In determining whether a Person is a
Substantial Stockholder, or whether a Person is an Affiliate or
Associate of a Substantial Stock- holder, or whether a Person is
included within the definition of another Person, (A) no trust
which was in existence on March 2, 1984 and was a stockholder of
the corporation on that date ("Stockholder-Trust") shall be an
Affiliate or Associate of any other Stockholder-Trust, (B) no
trustee or successor trustee of any Stockholder-Trust shall be an
Affiliate or Associate of such trust or of any other
Stockholder-Trust or of any other trustee or successor trustee of
any Stock- holder-Trust or Stockholder-Trusts (including a
trustee and himself, herself or itself if trustee of more than
one such trust) by reason of such trusteeship, (C) no trustee or
successor trustee of any Stockholder-Trust shall be the
Beneficial Owner of any Voting Stock Beneficially Owned by such
trust by reason of such trusteeship, and (D) no two or more
Stockholder-Trusts, no two or more trustees or successor trustees
of any Stockholder-Trust or Stockholder-Trusts (including a
trustee and himself, herself or itself if trustee of more than
one such trust) by reason of such trusteeship, and no trustee or
successor trustee of any Stockholder-Trust or Stockholder-Trusts
by reason of such trusteeship and any such trust or trusts shall
be deemed a Person. Except as set forth in the immediately
preceding sentence, "Substantial Stockholder" shall include any
and all Affiliates and Associates of a Substantial Stockholder,
and any Person with which a Substantial Stockholder or its
Affiliates or Associates have any understanding, agreement, or
arrangement, directly or indirectly, for the purpose of
acquiring, holding, voting or disposing of Voting Stock, and the
shares of Voting Stock Beneficially Owned by a Substantial
Stockholder shall include any shares Beneficially Owned by any
such Affiliate or Associate and any such Person. For the purposes
of determining whether a Person is a Substantial Stockholder, the
number of shares of Voting Stock deemed to be outstanding shall
include shares deemed Beneficially Owned by a Substantial
Stockholder or its Affiliates or Associates but shall not include
any other shares which may be issuable to any other Person
pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
<PAGE>
(10) "Voting Stock" means the then outstanding shares of all
classes of capital stock of the corporation which are entitled to
vote for the election of directors of the corporation generally,
but not including those which are entitled to vote for the
election of one or more directors only in the event of certain
contingencies such as dividend arrearages.
(b) Supermajority Vote Required. In addition to any affirmative
vote required by law or this Certificate, and except as provided
in Section (c) below, any Business Combination shall require (1)
the affirmative vote of the holders of not less than 66-2/3% of
the voting power of the Voting Stock, voting together as a single
class, and (2) the affirmative vote of the holders of a majority
of the voting power of the Voting Stock held by stockholders
other than the Substantial Stockholder, voting together as a
single class. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required or that a
lesser percentage may be specified by law or in any agreement
with any national securities exchange or otherwise.
(c) Supermajority Vote Not Required. The provisions of Section
(b) above shall not be applicable to any particular Business
Combination, and such Business Combination shall require only
such affirmative vote as is required by law and any other
provision of this Certificate, if any of the conditions set forth
in Subsections (c) (1) through (4) below are satisfied with
respect to such Business Combination.
(1) The Business Combination shall have been approved in writing
by not less than two-thirds of the Continuing Directors.
(2) The Business Combination shall have been approved by a duly
adopted resolution of the Board of Directors prior to the
Substantial Stockholder becoming a "Substantial Stockholder".
(3) The Business Combination is solely between the corporation
and another corporation of which more than 50% of the outstanding
shares of all classes of stock entitled to vote in an election of
directors is owned by the corporation and its Subsidiaries.
(4) All of the conditions set forth in this Subsection (c) (4)
are satisfied with respect to such Business Combination.
(A) The aggregate of the cash and the Fair Market Value of
the property, securities or other consideration
(including without limitation Common Stock of the
corporation retained by stockholders of the
corporation other than the Substantial Stockholder
or other parties to such Business Combination in the
event of a Business Combination in which the
corporation is the surviving corporation) to be
received per share by holders of Common Stock to
the corporation in the Business Combination is not
less than the highest per share price (including
brokerage commissions, transfer taxes and soliciting
dealers' fees and with appropriate adjustments for
recapitalizations and stock splits, stock dividends and
like distributions) paid by the Substantial
Stockholder in acquiring any of its holdings of the
corporation's Common Stock, without regard to whether
such holdings were acquired before or after the
Substantial Stockholder became a Substantial
Stockholder. For purposes of this Subsection (c) (4)
(A), if the consideration paid in any such
acquisition of Common Stock consisted, in whole or in
part, of consideration other than cash, then such
other consideration shall be valued at the Fair Market
Value thereof at the time of the consummation of the
Business Combination.
<PAGE>
(B) After becoming a Substantial Stockholder and prior to the
consummation of any Business Combination, such Substantial
Stockholder shall not have (i) acquired any newly issued shares
of capital stock, directly or indirectly, from the corporation
(except upon conversion of convertible securities acquired by it
prior to becoming a Substantial Stockholder or upon compliance
with the provisions of this Article FIFTEENTH or as a result of a
pro rata stock dividend or stock split), (ii) acquired any
additional shares of Voting Stock or securities convertible into
Voting Stock except as part of the transaction pursuant to which
the Substantial Stockholder became a Substantial Stockholder,
(iii) received the benefit, directly or indirectly (except
proportionally as a stockholder) of any loans, advances,
guarantees, pledges or other financial assistance or tax credits
provided by the corporation or (iv) initiated any proposals that
result in any major changes in the corporation's business or
capital structure.
(C) A proxy statement responsive to the requirements of the
Securities Exchange Act of 1934 or any successor or amendatory
statute (whether or not the corporation is then subject to such
requirements) shall be mailed to stockholders of the corporation
for the Purpose of soliciting stockholder approval of any
Business Combination and shall contain at the front thereof, in a
prominent place, any recommendations as to the advisability (or
inadvisability) of the Business Combination which the Continuing
Directors, or any of them, may choose to state and, if deemed
advisable by a majority of the Continuing Directors, an opinion
of an investment banking firm as to the fairness (or lack
thereof) of the terms of such Business Combination, from the
point of view of the remaining stock-holders of the corporation
(such investment banking firm to be selected by a majority of the
Continuing Directors and to be paid a reasonable fee for its
services by the corporation.
(d) Acts of Continuing Directors. A majority of the Continuing
Directors shall have the power and shall use their best efforts
to determine, for purposes of this Article FIFTEENTH and on the
basis of information known to them:
(1) Whether the proposed Business Combination is within the
scope of this Article FIFTEENTH;
(2) Whether a stockholder is a Substantial Stockholder;
(3) The per share value proposed to be paid to (or retained
by) the holders of Common Stock of the corporation in the
Business Combination, within the meaning of Subsection (c)
(4) above;
(4) The highest price per share paid by a Substantial
Stockholder within the meaning of Subsection (c)
(4) above; and
(5) Whether all of the conditions of Subsection (c) (4) have
been satisfied.
<PAGE>
(e) Fiduciary Obligations.
(1) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Substantial Stockholder from any
fiduciary obligation imposed by law. In addition,
nothing contained in this Article FIFTEENTH shall prevent any
stockholder of the corporation from objecting to any
Business Combination and from demanding any appraisal;
rights which may be available to such stockholder under
Section 262 of the Delaware General Corporation Law.
(2) The fact that any Business Combination complies with the
provisions of Subsection (c) (4) above shall not be
construed to impose any fiduciary duty, obligation or
responsibility on the Board of Directors or any member
thereof to approve such Business Combination or recommend
its adoption or approval to the stockholders of the
Corporation, nor shall such compliance limit, prohibit
or otherwise restrict in any manner the Board of
Directors or any member thereof with respect to
evaluations of or actions and responses taken with respect to
such Business Combination.
<PAGE>
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
<PAGE>
officer, agent or proxy as the by-laws of such corporation may prescribe, or, in
the absence of such 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 meeting of stockholders shall be at the close of
<PAGE>
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 stockholders for
any other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating 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 such adjourned
meeting at which a quorum shall be present or represented, any business
<PAGE>
may be transacted which might have been transacted at the meeting as
originally notified.
<PAGE>
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 or represented by proxy
at a meeting of stockholders and entitled to voted on the election of directors.
<PAGE>
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 ten. 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 Meeting. 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 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
<PAGE>
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
affirmative 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.
<PAGE>
SECTION 9. Committees. The Board of Directors may, by resolution passed by
a majority of the whole Board, designate one or more committees, each committee
to consist of one or more of the Directors of the corporation.
<PAGE>
(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
compensation plans, filling vacancies or newly-created
directorships on the
<PAGE>
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.
(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
<PAGE>
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) Corporate Governance and 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
Corporate Governance and Nominating Committee. This Committee
shall recommend criteria for Board membership, establish
procedures for the receipt and evaluation of suggestions of
candidates, and make recommendations to the Board concerning
nominees for Board membership. The Committee may recommend to the
Board policies and procedures relating to corporate governance
and monitor such policies and procedures when established. The
Committee may also make recommendations to the Board concerning
the number of Directors to serve on the Board and may establish
standards for 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
<PAGE>
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.
ARTICLE IV
Officers
<PAGE>
SECTION 1. Number. The officers of the corporation shall be a chairman,
vice chairman, chairman of the Executive Committee, one or several executive
vice presidents or 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 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 chairman shall: (i) 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; (ii) preside at all meetings of the
stockholders and of the Board of Directors; (iii) in the absence of the chairman
of the Executive Committee, preside at all meetings of the Executive Committee;
and (iv) perform such other duties as may be conferred by law or assigned by the
Board of Directors. 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 corporation with respect to the voting of any shares of stock owned by the
<PAGE>
corporation; have the power to appoint agents or employees as in the chairman's
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.
SECTION 6. Vice Chairman. The vice chairman shall assist the chairman in
supervising the affairs of the corporation, with special responsibility for
integrating acquired businesses into the corporation. In the absence of the
chairman, the vice chairman shall preside at all meetings of the stockholders
and the Board of Directors. In the event of the absence or disability of the
chairman, the vice chairman shall assume all of the duties and responsibilities
of that office. The vice chairman may sign any deeds, mortgages, bonds,
contracts or other instruments, except in cases where the signing is required to
be by some other officer or agent of the corporation. The vice chairman shall
perform such other duties as may be designated by the chairman or the Board of
Directors.
SECTION 7. 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 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 8. 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 9. 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.
<PAGE>
SECTION 10. 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 11. 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
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 Directors, or by the chairman, or
any vice president designated for such purpose by the chairman.
SECTION 12. 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 13. The Controller. The controller shall provide guidance and
evaluation with respect to the corporation's accounting and related functions,
control
<PAGE>
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 14. 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 15. Appointive Presidents and Vice Presidents. The chairman may
from time to time designate employees of the 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 16. 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
<PAGE>
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 (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
<PAGE>
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 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.
<PAGE>
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.
<PAGE>
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 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 registrar 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.
<PAGE>
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.
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 99
ILLINOIS TOOL WORKS INC.
DESCRIPTION OF CAPITAL STOCK
General
As of May 9, 1997, the authorized capital stock of ITW consists of
350,000,000 shares of Common Stock, par value of $.01 per share, and 300,000
shares of Preferred Stock, no par value. As of April 30, 1997, there were
124,605,544 shares of Common Stock issued and outstanding. The Board of
Directors has declared a stock split to be effected in the form of a stock
dividend of one share of Common Stock for each share of Common Stock outstanding
to shareholders of record on May 20, 1997, to be distributed on May 27, 1997. No
Preferred Stock is issued or outstanding.
Common Stock
Holders of Common Stock are entitled to one vote for each share held of
record, in person or by proxy, at all meetings of the stockholders and on all
propositions presented to such meetings(other than the election of any directors
who may be elected by vote of the Preferred Stock voting as a class). The Common
Stock does not entitle holders to cumulative voting rights in the election of
directors. Holders of Common Stock do not have preemptive rights.
All outstanding shares of Common Stock are fully paid and nonassessable.
Dividends may be paid on the Common Stock when and if declared by the Board of
Directors out of funds legally available therefor. Upon liquidation,
dissolution, or winding up of the affairs of ITW, its assets remaining, after
provision for payment of creditors and holders of any Preferred Stock, are
distributable pro rata among holders of its Common Stock.
The Common Stock is listed and traded on the New York and Chicago Stock
Exchanges. The transfer agent and registrar of the Common Stock is Harris Trust
and Savings Bank, Chicago, Illinois.
Preferred Stock
ITW's Preferred Stock is issuable in series. The Preferred Stock is senior
to the Common Stock, both as to payment of dividends and distribution of assets.
The designation, preferences and rights of each series may be established by the
Board of Directors, including voting rights, dividends, redemption features,
payments on liquidation and sinking fund provisions, if any. The Preferred Stock
may be utilized for a variety of corporate purposes, including future public
offerings to raise additional capital or to finance acquisitions. The Preferred
Stock also could be issued to persons friendly to current management with terms
that could render more difficult or discourage attempts to gain control of ITW
by means of a merger, tender offer, proxy contest or otherwise and thereby
protect the continuity of current management. The Preferred Stock also could be
used to dilute the stock ownership of persons seeking to obtain control of ITW.
<PAGE>
Special Charter and By-Law Provisions
ITW's Restated Certificate of Incorporation, as amended, and its By-Laws
contain provisions that could render more difficult a merger, tender offer,
proxy contest or attempt to gain control of the Board of Directors, or that
could dilute the voting control of a holder of a large block of stock. The
Restated Certificate of Incorporation, as amended, provides that an affirmative
vote of the holders of not less than two-thirds of the outstanding shares of
capital stock entitled to vote for directors is required to approve mergers or
consolidations between ITW (or its subsidiaries) and a Substantial Stockholder,
transfers of a substantial amount of assets or stock from ITW to a Substantial
Stockholder or vice versa, adoption of a Substantial Stockholder's proposal to
dissolve ITW, or any transaction relating to ITW's stock that results in a
Substantial Stockholder's proportionate share being increased.
The Restated Certificate of Incorporation, as amended, also requires the
approval of the foregoing transactions by the holders of at least a majority of
the outstanding shares of capital stock entitled to vote for directors,
excluding those shares owned by a Substantial Stockholder. The special voting
requirements do not apply to (i) transactions approved by not less than
two-thirds of ITW's Board of Directors,(ii) transactions approved by the Board
of Directors prior to such time as the Substantial Stockholder became a
Substantial Stockholder, (iii) transactions between ITW and its majority-owned
subsidiaries, or (iv) transactions in which a minimum price is received by ITW
stockholders. A Substantial Stockholder is defined in the Restated Certificate
of Incorporation, as amended, as a beneficial owner of more than 10% of the
capital stock of ITW entitled to vote for directors, excluding shares owned on
March 2,1984.
The Restated Certificate of Incorporation, as amended, also prohibits
stockholder action by written consent, permits only the board of Directors to
fill vacancies on the Board, whether created by an increase in the number of
directors or otherwise, and requires that the holders of two-thirds of the
voting power of ITW, and if there is a Substantial Stockholder, the holders of a
majority of the voting power (other than that of the Substantial Stockholder),
approve any amendment to, or repeal of, any of the foregoing provisions.
<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>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 115,779
<SECURITIES> 0
<RECEIVABLES> 837,815
<ALLOWANCES> 0
<INVENTORY> 515,327
<CURRENT-ASSETS> 1,673,130
<PP&E> 1,936,497
<DEPRECIATION> 1,136,793
<TOTAL-ASSETS> 4,771,286
<CURRENT-LIABILITIES> 1,156,328
<BONDS> 788,688
<COMMON> 276,302
0
0
<OTHER-SE> 2,216,506
<TOTAL-LIABILITY-AND-EQUITY> 4,771,286
<SALES> 1,229,798
<TOTAL-REVENUES> 1,229,798
<CGS> 807,317
<TOTAL-COSTS> 807,317
<OTHER-EXPENSES> 10,359
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,961
<INCOME-PRETAX> 194,055
<INCOME-TAX> 70,800
<INCOME-CONTINUING> 123,255
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 123,255
<EPS-PRIMARY> .99
<EPS-DILUTED> .99
</TABLE>
