<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) November 11, 1999
------------------------------
ILLINOIS TOOL WORKS INC.
--------------------------------------------------
(Exact name of Registrant as specified in charter)
Delaware
----------------------------------------------
(State or other jurisdiction of incorporation)
1-4797 36-1258310
- ------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
3600 West Lake Avenue, Glenview, Illinois 60025
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(Address of principal executive offices) (Zip Code)
(847) 724-7500
----------------------------------------------------
(Registrant's telephone number, including area code)
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS
Employment Agreements
On November 11, 1999, James M. Ringler, Chairman of the Board, Chief
Executive Officer and President of Premark International, Inc. ("Premark"),
agreed to the terms of his going-forward employment relationship with Illinois
Tool Works Inc. ("ITW"). Premark has agreed to merge with a wholly owned
subsidiary of ITW pursuant to an Agreement and Plan of Merger, dated as of
September 9, 1999, among Premark, ITW and CS Merger Sub Inc. (the "Merger"). Mr.
Ringler agreed to accept $4,000,000 in lieu of amounts that would have been
payable to him under his employment agreement with Premark had he chosen to
terminate employment following the Merger. His initial annual base salary with
ITW will be $750,000 and he will have annual incentive opportunities comparable
to similarly situated employees of ITW. Mr. Ringler will receive a payment of
$1,500,000 in recognition that ITW does not maintain a long-term incentive plan
similar to the plan maintained by Premark and in consideration for his agreement
to remain employed with ITW at least through a transition period, which shall
not exceed one year. Provided that he remains employed through this transition
period, Mr. Ringler will receive ten years of pension benefit accrual service
for his pre-Merger service with Premark as well as pension benefit accrual
service for his service with ITW. The foregoing amount will be offset by the
actual benefits accrued after the Merger date under any pension plan maintained
by ITW or any of its subsidiaries, including Premark. Mr. Ringler also agreed on
November 11, 1999 to enter into a noncompetition agreement with ITW, for which
he will receive $7,160,000. The term of this noncompetition agreement is through
Mr. Ringler's period of employment and for twenty-four months thereafter.
On November 12, 1999, William Reeb, president of Wilsonart, a
subsidiary of Premark, also agreed to the terms of his employment relationship
with ITW. Mr. Reeb will receive $1,110,000 in lieu of amounts that would have
been payable to him under his employment agreement with Premark had he chosen to
terminate employment following the Merger. His initial annual base salary with
ITW will be $380,000 and he will have annual incentive opportunities comparable
to similarly situated employees of ITW. Mr. Reeb also agreed on November 12,
1999 to enter into a noncompetition agreement, for which he will receive
$3,135,000. The term of this noncompetition agreement is through Mr. Reeb's
period of employment and for twenty-four months thereafter.
Competition Law Clearances
The requisite waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act related to the Merger expired on October 24, 1999. Certain
other non-U.S. competition law clearances must be obtained prior to the closing
of the Merger.
-2-
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit No. Exhibit
- ----------- -------
10.1 Letter of Understanding, dated November 11, 1999, by and between
James M. Ringler and Illinois Tool Works Inc.
10.2 Executive Noncompetition Agreement, dated November 11, 1999, by
and between James M. Ringler and Illinois Tool Works Inc.
10.3 Letter of Understanding, dated November 12, 1999, by and between
William Reeb and Illinois Tool Works Inc.
10.4 Executive Noncompetition Agreement, dated November 12, 1999, by
and between William Reeb and Illinois Tool Works Inc.
-3-
<PAGE> 4
SIGNATURE
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.
Date: November 12, 1999 By: /s/ Stewart S. Hudnut
--------------------------------
Name: Stewart S. Hudnut
Title: Senior Vice President,
General Counsel and Secretary
-4-
<PAGE> 5
EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- -------
10.1 Letter of Understanding, dated November 11, 1999, by and between
James M. Ringler and Illinois Tool Works Inc.
10.2 Executive Noncompetition Agreement, dated November 11, 1999, by
and between James M. Ringler and Illinois Tool Works Inc.
10.3 Letter of Understanding, dated November 12, 1999, by and between
William Reeb and Illinois Tool Works Inc.
10.4 Executive Noncompetition Agreement, dated November 12, 1999, by
and between William Reeb and Illinois Tool Works Inc.
-5-
<PAGE> 1
EXHIBIT 10.1
November 11, 1999
Mr. James M. Ringler
Premark International, Inc.
1717 Deerfield Road
Deerfield, Illinois 60015-3978
Re: Letter of Understanding
Dear Mr. Ringler:
As you know, Illinois Tool Works Inc. ("ITW") and a wholly owned
subsidiary of ITW ("Merger Sub") have entered into an Agreement and Plan of
Reorganization (the "Merger Agreement") with Premark International, Inc.
("Premark") with respect to the proposed transaction (the "Transaction") whereby
Merger Sub will be merged with and into Premark. I am writing to confirm how ITW
will treat the Transaction for purposes of your Employment Agreement that
becomes effective upon a change of control of Premark (your "Change of Control
Agreement") and to briefly describe your going forward relationship with ITW. If
the approach outlined in this letter is acceptable to you, please sign it and
return it to John Karpan, Senior Vice President, Human Resources, prior to
November 12, 1999. An additional copy of this letter is enclosed for your files.
ITW acknowledges that the Transaction will result in circumstances
constituting "Good Reason" under your Change of Control Agreement that will
enable you to terminate employment immediately upon the closing and receive the
benefits thereunder. However, in order to encourage continuity following the
closing, ITW will pay you, or cause Premark to pay you, $4,000,000 on or as soon
as practicable following the closing of the Transaction. This payment is in lieu
of the amounts that would be due you under Section 6(a)(i) of your Change of
Control Agreement were you to terminate your employment for Good Reason. In
addition, if your employment is terminated within the first three years
following the closing of the Transaction for any reason other than "cause" (as
defined in your Change of Control Agreement), you will be entitled to the
benefit continuation provisions under Section 6(a)(ii) of your Change of Control
Agreement (including but not limited to lifetime medical benefits) except that
the benefits provided shall be based solely on the then existing ITW benefit
programs in which you participate at that time, as they may be amended from time
to time. Section 9 of your Change of Control Agreement will continue to apply to
all payments received from ITW or Premark, including but not limited to payments
under this letter.
Going forward, Sections 3 through 6 of your Change of Control Agreement
will no longer be in effect (except as specifically provided above) and you will
be an at-will employee of
Exh. 10.1-1
<PAGE> 2
ITW. You have agreed, however, to continue in the employ of ITW at a minimum for
such reasonable period, not in excess of one year, following the closing of the
Transaction as ITW may request (the "Transition Period"). In consideration of
the payments made under the preceding paragraph, you agree that should your
employment be terminated during the one-year period following the closing of the
Transaction, you will not be entitled to severance payments under any severance
plan of ITW. However, ITW will not be entitled to, and will not attempt to,
recoup from you any of the payments or benefits described in the preceding
paragraph of this letter even if you terminate your employment during the
Transition Period. You will be a Vice- Chairman of ITW, will have general
responsibility for the operations of those units of ITW that were previously
part of Premark and will report directly to me.
Your initial base salary will be $750,000. Your annual incentive
opportunities will be comparable to similarly situated employees of ITW. We will
make a payment to you of $1,500,000 on or as soon as practicable following the
closing of the Transaction in recognition that ITW does not maintain a long-term
incentive plan similar to the plan maintained by Premark and in consideration
for your agreement to continue in the employ of ITW through the Transition
Period.
You will receive total qualified and nonqualified pension benefits for
your years of employment with ITW which are equal to the benefit which would be
determined under the benefit formula of the ITW pension plan at the time your
employment ends (a) disregarding any limitations on considered compensation or
on benefits under the qualified ITW pension plan which are imposed by law, (b)
recognizing your prior service with Premark for vesting and early retirement
eligibility purposes, and (c) taking into account your compensation with Premark
for purposes of calculating your final average compensation. In addition,
provided that you are in the employ of ITW on the last day of the Transition
Period, you will be credited with 10 years of benefit accrual service for your
pre-Transaction service with Premark. For purposes of the preceding sentence, if
your employment is terminated by ITW without "cause" (as defined in your Change
of Control Agreement), you will be deemed to have been employed on the last day
of the Transition Period. You will also receive years of benefit accrual service
for your actual service with ITW from the closing of the Transaction forward.
The foregoing amount shall not be offset by any benefits accrued prior to the
closing of the Transaction with respect to your service with Premark prior to
such closing, but shall be offset by the actual benefits accrued after the
Transaction date under any qualified or nonqualified pension plan maintained by
ITW or any of its subsidiaries including Premark.
The terms of this letter and the Executive Noncompetition Agreement
dated as of the date hereof, set forth our entire agreement as to the terms of
your employment with ITW and your rights under the Change of Control Agreement
provided that such terms do not preclude pooling of interests accounting for the
Transaction. If it is determined that any payment pursuant thereto would
preclude such accounting treatment, such payment will not be made and ITW and
you agree to negotiate in good faith modified terms of employment which will not
preclude such accounting treatment; provided, however, that you may in that
event at your discretion elect to have your employment, and any termination
thereof, governed by the terms of your Change of Control Agreement unmodified by
this letter.
Exh. 10.1-2
<PAGE> 3
I look forward to working with you as a member of the ITW team and
expect that you will help me build ITW into an even stronger organization than
it is today. If you have any questions regarding this letter, do not hesitate to
call.
Very truly yours,
/s/ W. James Farrell
Acknowledged and agreed to W. James Farrell
this 11th day of November, 1999. Chairman and Chief Executive Officer
/s/ James M. Ringler
- -----------------------------
James M. Ringler
Exh. 10.1-3
<PAGE> 1
EXHIBIT 10.2
EXECUTIVE NONCOMPETITION AGREEMENT
THIS AGREEMENT (the "Agreement"), made and entered into this 11th day
of November 1999, by and between James M. Ringler (the "Executive") and Illinois
Tool Works Inc. ("ITW") having its principal offices at 3600 West Lake Avenue,
Glenview, Illinois 60025- 5811.
WITNESSETH THAT:
WHEREAS, it is anticipated that ITW will acquire Premark International,
Inc. and its subsidiaries ("Premark") pursuant to an Agreement and Plan of
Merger dated September 9, 1999;
WHEREAS, the Executive is entrusted with knowledge of Premark's
particular business and operations methods and will be entrusted with knowledge
of ITW's business and operations after the date of the closing of the Premark
acquisition (the "Closing Date"); and
WHEREAS, the Executive recognizes and acknowledges that by reason of
Executive's employment and service to ITW and Premark, Executive has obtained
and will obtain access to certain confidential and proprietary information
relating to the business of ITW and Premark;
NOW, THEREFORE, in return for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Consideration. ITW will pay the Executive $7,160,000 within 14 days
of the Closing Date in consideration for the Executive entering into this
Agreement.
2. Noncompetition. While he is employed by ITW or Premark (hereinafter,
the "Company") after the Closing Date and for a period of 24 months after the
termination of the Executive's employment with the Company for any reason:
(a) The Executive will not be employed by, serve as a consultant
to, or otherwise assist or directly or indirectly provide
services to a Competitor (defined below) if such employment or
services would involve the likely use of or disclosure of
Confidential Information (defined below).
(b) The Executive will not solicit or attempt to solicit any party
who is then or, during the 12-month period prior to such
solicitation or attempt by the Executive was (or was solicited
to become), a customer or supplier of the Company.
Exh. 10.2-1
<PAGE> 2
(c) The Executive shall not solicit, entice, persuade or induce
any individual who is employed by the Company (or was so
employed within 180 days prior to Executive's action) to
terminate or refrain from renewing or extending such
employment or to become employed by or enter into contractual
relations with any other individual or entity other than the
Company, and the Executive shall not approach any such
employee for any such purpose or otherwise or knowingly
cooperate with the taking of any such actions by any other
individual or entity.
(d) The Executive shall not, directly or indirectly own an
interest in or finance any Competitor (other than ownership as
a passive investment of 1% or less of the outstanding stock of
any corporation listed on the New York Stock Exchange or the
American Stock Exchange or included in the NASDAQ System).
The term "Competitor" means any enterprise (including a person, firm or
business, whether or not incorporated) during any period in which it is
materially competitive in any way with any business in which the
Company was engaged during the 12-month period prior to the Executive's
termination of employment. Nothing in this paragraph shall be construed
as limiting the Executive's duty of loyalty to the Company while he is
employed by the Company.
3. Confidentiality. The Executive agrees that while he is employed by
the Company, and at all times thereafter:
(a) Except as may be required by the lawful order of a court or
agency of competent jurisdiction, except as necessary to carry
out his duties to the Company, or except to the extent that
the Executive has express authorization from the Company, the
Executive agrees to keep secret and confidential indefinitely,
all Confidential Information, and not to disclose the same,
either directly or indirectly, to any other person, firm, or
business entity, or to use it in any way.
(b) To the extent any court or agency seeks to have the Executive
disclose Confidential Information, he shall promptly inform
the Company and he shall take such reasonable steps to prevent
disclosure of Confidential Information until the Company has
been informed of such requested disclosure, and the Company
has an opportunity to respond to such court or agency. To the
extent that the Executive obtains information on behalf of the
Company that may be subject to attorney-client privilege as to
the Company's attorneys, the Executive shall take reasonable
steps to maintain the confidentiality of such information and
to preserve such privilege.
(c) Nothing in the foregoing provisions of this paragraph 2 shall
be construed so as to prevent the Executive from using, in
connection with his employment for himself or an employer
other than the Company, knowledge which was acquired by him
during the course of his employment with the Company and which
is generally known to persons of his experience in other
companies in the industry.
Exh. 10.2-2
<PAGE> 3
For purposes of this Agreement, the term "Confidential Information"
includes, without limitation, the client and supplier lists of the
Company, their respective trade secrets, any confidential information
about (or provided by) any customer or supplier, or prospective or
former customer or supplier, of the Company, information concerning the
business or financial affairs of the Company, including books and
records, computer programs and software, cost and pricing information,
product design and development, manufacturing processes, formulas,
marketing and sales technique, commitments, procedures, plans and
prospectus, strategies or current or prospective transactions or
business and any other "inside information," (i) which has not been
disclosed publicly by the Company, (ii) which is otherwise not a matter
of public knowledge or (iii) which is a matter of public knowledge and
the Executive has reason to know that such information became a matter
of public knowledge through an unauthorized disclosure.
4. Equitable Relief.
(a) Executive acknowledges and agrees that the restrictions
contained in paragraphs 2 and 3 are reasonable and necessary
to protect and preserve legitimate interests, properties,
goodwill and business of the Company, that the Company would
not have entered into this Agreement in the absence of such
restrictions and that irreparable injury will be suffered by
the Company should Executive breach any of the provisions of
those paragraphs. Executive represents and acknowledges that
(i) Executive has been advised by the Company to consult
Executive's own legal counsel in respect of this Agreement,
(ii) Executive has had full opportunity, prior to the
execution of this Agreement, to review thoroughly this
Agreement with Executive's counsel and participated in the
negotiation thereof, and (iii) the provisions of paragraphs 2
and 3 are reasonable and these restrictions do not prevent
Executive from earning a reasonable livelihood.
(b) Executive further acknowledges and agrees that a breach of any
of the restrictions of paragraphs 2 and 3 cannot be adequately
compensated by money damages. Executive agrees that the
Company may be entitled to preliminary and permanent
injunctive relief, without the necessity of proving actual
damages, as well as provable damages and an equitable
accounting of all earnings, profits and other benefits arising
from any violation of paragraphs 2 or 3 hereof, which rights
shall be cumulative and in addition to any other rights or
remedies to which the Company may be entitled. In the event
that any of the provisions of paragraphs 2 or 3 hereof should
ever be adjudicated to exceed the time, geographic, service,
or other limitations permitted by applicable law in any
jurisdiction, it is the intention of the parties that the
provision shall be amended to the extent of the maximum time,
geographic, service, or other limitations permitted by
applicable law, that such amendment shall apply only within
the jurisdiction of the court that made such adjudication and
that the provision otherwise be enforced to the maximum extent
permitted by law.
Exh. 10.2-3
<PAGE> 4
(c) Executive irrevocably and unconditionally (i) agrees that any
suit, action or legal proceeding arising out of paragraphs 2
or 3 hereof, including without limitation, any action
commenced by the Company for preliminary and permanent
injunctive relief and other equitable relief, may be brought
in the United States District Court for the Northern District
of Illinois, or if such court does not have jurisdiction or
will not accept jurisdiction, in any court of general
jurisdiction in Chicago, Illinois, (ii) consents to the
non-exclusive jurisdiction of any such court in any such suit,
action or proceeding, and (iii) waives any objection which
Executive may have to laying of venue of any such suit, action
or proceeding in any such court.
5. Return of Information. Following the Executive's termination of
employment with the Company, the Executive agrees to return to the Company any
keys, credit cards, passes, documents (including documents in electronic format)
or material, or other property belonging to or relating to the business of the
Company, and to return all writings, files, records, correspondence, notebooks,
notes and other documents and things (including any copies thereof) containing
any trade secrets relating to the Company. For purposes of the preceding
sentence, the term "trade secrets" shall have the meaning ascribed to it under
the Illinois Trade Secrets Act or, if such act is repealed, the Uniform Trade
Secrets Act (on which the Illinois Trade Secrets Act is based).
6. Severability and Entire Agreement. The invalidity or enforceability
of any provision of this Agreement will not affect the validity or
enforceability of any other provision of this Agreement, and this Agreement
will be construed as if such invalid or unenforceable provision were omitted
(but only to the extent that such provision cannot be appropriately reformed or
modified). The Agreement is intended to be the entire agreement between the
parties regarding the subject matter hereof and shall supersede any prior
agreement to the contrary. However, nothing in this paragraph 6 shall limit
any obligation owed by the Executive to the Company under any applicable law.
7. Waiver. Any failure of the Company to demand rigid adherence to one
or more of this Agreement's terms, on one or more occasions, shall not be
construed as a waiver nor deprive the Company of the right to insist upon strict
compliance.
8. Applicable Law. The provision of this Agreement shall be construed
in accordance with the internal laws of the State of Illinois without
application of the conflict of laws provisions thereunder.
9. Successors. This Agreement shall be binding upon, and operate for
the benefit of, the Company and its successors and assigns.
10. Acknowledgment by Executive. The Executive acknowledges that he has
read this Agreement, understands the undertakings and restrictions it contains,
and intends to be fully bound by its terms. In situations where it is not
certain that an action to be taken by the Executive will comply with the terms
of this Agreement, the Executive may seek the consent of the Company before such
action is taken and such consent shall not be unreasonably withheld.
Exh. 10.2-4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed the Agreement as
of the date first above written.
ILLINOIS TOOL WORKS INC. Executive
By /s/ W. James Farrell By /s/ James M. Ringler
------------------------------------ ---------------------------
W. James Farrell
Chairman and Chief Executive Officer
Date November 11, 1999
-------------------------
Exh. 10.2-5
<PAGE> 1
EXHIBIT 10.3
November 11, 1999
Mr. William Reeb
Premark International, Inc.
1717 Deerfield Road
Deerfield, Illinois 60015-3978
Re: Letter of Understanding
Dear Mr. Reeb:
As you know, Illinois Tool Works Inc. ("ITW") and a wholly owned
subsidiary of ITW ("Merger Sub") have entered into an Agreement and Plan of
Reorganization (the "Merger Agreement") with Premark International, Inc.
("Premark") with respect to the proposed transaction (the "Transaction") whereby
Merger Sub will be merged with and into Premark. I am writing to confirm how ITW
will treat the Transaction for purposes of your Employment Agreement that
becomes effective upon a change of control of Premark (your "Change of Control
Agreement") and to briefly describe your going forward relationship with ITW. If
the approach outlined in this letter is acceptable to you, please sign it and
return it to John Karpan, Senior Vice President, Human Resources, by
November 12, 1999. An additional copy of this letter is enclosed for your files.
ITW acknowledges that the Transaction will result in circumstances
constituting "Good Reason" under your Change of Control Agreement that will
enable you to terminate employment immediately upon the closing and receive the
benefits thereunder. However, in order to encourage continuity following the
closing, ITW will pay you, or cause Premark to pay you, $1,110,000 on or as soon
as practicable following the closing of the Transaction. This payment is in lieu
of the amounts that would be due you under Section 6(a)(i) of your Change of
Control Agreement were you to terminate your employment for Good Reason. In
addition, if your employment is terminated within the first three years
following the closing of the Transaction for any reason other than "cause" (as
defined in your Change of Control Agreement), you will be entitled to the
benefit continuation provisions under Section 6(a)(ii) of your Change of Control
Agreement (including but not limited to lifetime medical benefits) except that
the benefits provided shall be based solely on the then existing ITW benefit
programs in which you participate at that time, as they may be amended from time
to time. Section 9 of your Change of Control Agreement will continue to apply to
all payments received from ITW or Premark, including but not limited to payments
under this letter.
Exh. 10.3-1
<PAGE> 2
Going forward, Sections 3 through 6 of your Change of Control Agreement
will no longer be in effect (except as specifically provided above) and you will
be an at-will employee of ITW. Your current base salary will continue as your
initial base salary after the closing of the Transaction. Your annual incentive
opportunities will be comparable to those for similarly situated employees of
ITW. You have agreed, however, to continue in the employ of ITW at a minimum for
such reasonable period, not in excess of one year, following the closing of the
Transaction as ITW may request (the "Transition Period"). In consideration of
the payments made under the preceding paragraph, you agree that should your
employment be terminated during the one-year period following the closing of the
Transaction, you will not be entitled to severance payments under any severance
plan of ITW. However, ITW will not be entitled to, and will not attempt to,
recoup from you any of the payments or benefits described in the preceding
paragraph of this letter even if you terminate your employment during the
Transition Period.
The terms of this letter and the Executive Noncompetition Agreement
dated as of the date hereof, set forth our entire agreement as to the terms of
your employment with ITW and your rights under the Change of Control Agreement
provided that such terms do not preclude pooling of interests accounting for the
Transaction. If it is determined that any payment pursuant thereto would
preclude such accounting treatment, such payment will not be made and ITW and
you agree to negotiate in good faith modified terms of employment which will not
preclude such accounting treatment; provided, however, that you may in that
event at your discretion elect to have your employment, and any termination
thereof, governed by the terms of your Change of Control Agreement unmodified by
this letter.
I look forward to working with you as a member of the ITW team. If you
have any questions regarding this letter, give John Karpan a call at (847)
657-4096.
Very truly yours,
/s/ W. James Farrell
W. James Farrell
Chairman and Chief Executive Officer
Acknowledged and agreed to
this 12th day of
November, 1999.
/s/ William Reeb
- ---------------------------
William Reeb
Exh. 10.3-2
<PAGE> 1
EXHIBIT 10.4
EXECUTIVE NONCOMPETITION AGREEMENT
THIS AGREEMENT (the "Agreement"), made and entered into this 12th day
of November 1999, by and between William Reeb (the "Executive") and Illinois
Tool Works Inc. ("ITW") having its principal offices at 3600 West Lake Avenue,
Glenview, Illinois 60025-5811.
WITNESSETH THAT:
WHEREAS, it is anticipated that ITW will acquire Premark International,
Inc. and its subsidiaries ("Premark") pursuant to an Agreement and Plan of
Merger dated September 9, 1999;
WHEREAS, the Executive is entrusted with knowledge of Premark's
particular business and operations methods and will be entrusted with knowledge
of ITW's business and operations after the date of the closing of the Premark
acquisition (the "Closing Date"); and
WHEREAS, the Executive recognizes and acknowledges that by reason of
Executive's employment and service to ITW and Premark, Executive has obtained
and will obtain access to certain confidential and proprietary information
relating to the business of ITW and Premark;
NOW, THEREFORE, in return for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Consideration. ITW will pay the Executive $3,135,000 within 14 days
of the Closing Date in consideration for the Executive entering into this
Agreement.
2. Noncompetition. While he is employed by ITW or Premark (hereinafter,
the "Company") after the Closing Date and for a period of 24 months after the
termination of the Executive's employment with the Company for any reason:
(a) The Executive will not be employed by, serve as a consultant
to, or otherwise assist or directly or indirectly provide
services to a Competitor (defined below) if such employment or
services would involve the likely use of or disclosure of
Confidential Information (defined below).
(b) The Executive will not solicit or attempt to solicit any party
who is then or, during the 12-month period prior to such
solicitation or attempt by the Executive was (or was solicited
to become), a customer or supplier of the Company.
Exh. 10.4-1
<PAGE> 2
(c) The Executive shall not solicit, entice, persuade or induce
any individual who is employed by the Company (or was so
employed within 180 days prior to Executive's action) to
terminate or refrain from renewing or extending such
employment or to become employed by or enter into contractual
relations with any other individual or entity other than the
Company, and the Executive shall not approach any such
employee for any such purpose or otherwise or knowingly
cooperate with the taking of any such actions by any other
individual or entity.
(d) The Executive shall not, directly or indirectly own an
interest in or finance any Competitor (other than ownership as
a passive investment of 1% or less of the outstanding stock of
any corporation listed on the New York Stock Exchange or the
American Stock Exchange or included in the NASDAQ System).
The term "Competitor" means any enterprise (including a person, firm or
business, whether or not incorporated) during any period in which it is
materially competitive in any way with any business in which the
Company was engaged during the 12-month period prior to the Executive's
termination of employment. Nothing in this paragraph shall be construed
as limiting the Executive's duty of loyalty to the Company while he is
employed by the Company.
3. Confidentiality. The Executive agrees that while he is employed by
the Company, and at all times thereafter:
(a) Except as may be required by the lawful order of a court or
agency of competent jurisdiction, except as necessary to carry
out his duties to the Company, or except to the extent that
the Executive has express authorization from the Company, the
Executive agrees to keep secret and confidential indefinitely,
all Confidential Information, and not to disclose the same,
either directly or indirectly, to any other person, firm, or
business entity, or to use it in any way.
(b) To the extent any court or agency seeks to have the Executive
disclose Confidential Information, he shall promptly inform
the Company and he shall take such reasonable steps to prevent
disclosure of Confidential Information until the Company has
been informed of such requested disclosure, and the Company
has an opportunity to respond to such court or agency. To the
extent that the Executive obtains information on behalf of the
Company that may be subject to attorney-client privilege as to
the Company's attorneys, the Executive shall take reasonable
steps to maintain the confidentiality of such information and
to preserve such privilege.
(c) Nothing in the foregoing provisions of this paragraph 2 shall
be construed so as to prevent the Executive from using, in
connection with his employment for himself or an employer
other than the Company, knowledge which was acquired by him
during the course of his employment with the Company and which
is generally known to persons of his experience in other
companies in the industry.
Exh. 10.4-2
<PAGE> 3
For purposes of this Agreement, the term "Confidential Information"
includes, without limitation, the client and supplier lists of the
Company, their respective trade secrets, any confidential information
about (or provided by) any customer or supplier, or prospective or
former customer or supplier, of the Company, information concerning the
business or financial affairs of the Company, including books and
records, computer programs and software, cost and pricing information,
product design and development, manufacturing processes, formulas,
marketing and sales technique, commitments, procedures, plans and
prospectus, strategies or current or prospective transactions or
business and any other "inside information," (i) which has not been
disclosed publicly by the Company, (ii) which is otherwise not a matter
of public knowledge or (iii) which is a matter of public knowledge and
the Executive has reason to know that such information became a matter
of public knowledge through an unauthorized disclosure.
4. Equitable Relief.
(a) Executive acknowledges and agrees that the restrictions
contained in paragraphs 2 and 3 are reasonable and necessary
to protect and preserve legitimate interests, properties,
goodwill and business of the Company, that the Company would
not have entered into this Agreement in the absence of such
restrictions and that irreparable injury will be suffered by
the Company should Executive breach any of the provisions of
those paragraphs. Executive represents and acknowledges that
(i) Executive has been advised by the Company to consult
Executive's own legal counsel in respect of this Agreement,
(ii) Executive has had full opportunity, prior to the
execution of this Agreement, to review thoroughly this
Agreement with Executive's counsel and participated in the
negotiation thereof, and (iii) the provisions of paragraphs 2
and 3 are reasonable and these restrictions do not prevent
Executive from earning a reasonable livelihood.
(b) Executive further acknowledges and agrees that a breach of any
of the restrictions of paragraphs 2 and 3 cannot be adequately
compensated by money damages. Executive agrees that the
Company may be entitled to preliminary and permanent
injunctive relief, without the necessity of proving actual
damages, as well as provable damages and an equitable
accounting of all earnings, profits and other benefits arising
from any violation of paragraphs 2 or 3 hereof, which rights
shall be cumulative and in addition to any other rights or
remedies to which the Company may be entitled. In the event
that any of the provisions of paragraphs 2 or 3 hereof should
ever be adjudicated to exceed the time, geographic, service,
or other limitations permitted by applicable law in any
jurisdiction, it is the intention of the parties that the
provision shall be amended to the extent of the maximum time,
geographic, service, or other limitations permitted by
applicable law, that such amendment shall apply only within
the jurisdiction of the court that made such adjudication and
that the provision otherwise be enforced to the maximum extent
permitted by law.
Exh. 10.4-3
<PAGE> 4
(c) Executive irrevocably and unconditionally (i) agrees that any
suit, action or legal proceeding arising out of paragraphs 2
or 3 hereof, including without limitation, any action
commenced by the Company for preliminary and permanent
injunctive relief and other equitable relief, may be brought
in the United States District Court for the Northern District
of Illinois, or if such court does not have jurisdiction or
will not accept jurisdiction, in any court of general
jurisdiction in Chicago, Illinois, (ii) consents to the
non-exclusive jurisdiction of any such court in any such suit,
action or proceeding, and (iii) waives any objection which
Executive may have to laying of venue of any such suit, action
or proceeding in any such court.
5. Return of Information. Following the Executive's termination of
employment with the Company, the Executive agrees to return to the Company any
keys, credit cards, passes, documents (including documents in electronic format)
or material, or other property belonging to or relating to the business of the
Company, and to return all writings, files, records, correspondence, notebooks,
notes and other documents and things (including any copies thereof) containing
any trade secrets relating to the Company. For purposes of the preceding
sentence, the term "trade secrets" shall have the meaning ascribed to it under
the Illinois Trade Secrets Act or, if such act is repealed, the Uniform Trade
Secrets Act (on which the Illinois Trade Secrets Act is based).
6. Severability and Entire Agreement. The invalidity or
unenforceability of any provision of this Agreement will not affect the
validity or enforceability of any other provision of this Agreement, and this
Agreement will be construed as if such invalid or unenforceable provision were
omitted (but only to the extent that such provision cannot be appropriately
reformed or modified). The Agreement is intended to be the entire agreement
between the parties regarding the subject matter hereof and shall supersede any
prior agreement to the contrary. However, nothing in this paragraph 6 shall
limit any obligation owed by the Executive to the Company under any applicable
law.
7. Waiver. Any failure of the Company to demand rigid adherence to one
or more of this Agreement's terms, on one or more occasions, shall not be
construed as a waiver nor deprive the Company of the right to insist upon strict
compliance.
8. Applicable Law. The provision of this Agreement shall be construed
in accordance with the internal laws of the State of Illinois without
application of the conflict of laws provisions thereunder.
9. Successors. This Agreement shall be binding upon, and operate for
the benefit of, the Company and its successors and assigns.
10. Acknowledgment by Executive. The Executive acknowledges that he has
read this Agreement, understands the undertakings and restrictions it contains,
and intends to be fully bound by its terms. In situations where it is not
certain that an action to be taken by the Executive will comply with the terms
of this Agreement, the Executive may seek the consent of the Company before such
action is taken and such consent shall not be unreasonably withheld.
Exh. 10.4-4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed the Agreement as
of the date first above written.
ILLINOIS TOOL WORKS INC. Executive
By /s/ W. James Farrell By /s/ William Reeb
- --------------------------------------------- ------------------------
Chairman and Chief Executive Officer
Date: November 12, 1999
---------------------
Exh. 10.4-5
