-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ShJBxFa29SNDj04haHsYTmW6HgE6aaJjl4cfTtogEczEf/xFqS4z3AxyTq6ijREJ ESLuZLGRYp+E+ePsx7/o7g== 0000950137-99-004183.txt : 19991117 0000950137-99-004183.hdr.sgml : 19991117 ACCESSION NUMBER: 0000950137-99-004183 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19991111 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19991116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ILLINOIS TOOL WORKS INC CENTRAL INDEX KEY: 0000049826 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT [3560] IRS NUMBER: 361258310 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-04797 FILM NUMBER: 99756897 BUSINESS ADDRESS: STREET 1: 3600 W LAKE AVE CITY: GLENVIEW STATE: IL ZIP: 60025-5811 BUSINESS PHONE: 8477247500 MAIL ADDRESS: STREET 1: 3600 WEST LAKE AVENUE CITY: GLENVIEW STATE: IL ZIP: 60025-5811 8-K 1 FORM 8-K 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 --------------------------------------------------- (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) 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- 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- 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- 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- EX-10.1 2 LETTER OF UNDERSTANDING, DATED 11/11/99 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 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 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 EX-10.2 3 EXECUTIVE NONCOMETITION AGREEMENT, DATED 11/11/99 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 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 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 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 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 EX-10.3 4 LETTER OF UNDERSTANDING, DATED 11/12/99 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 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 EX-10.4 5 EXECUTIVE NONCOMPETITION AGREEMENT, DATED 11/12/99 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 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 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 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 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 -----END PRIVACY-ENHANCED MESSAGE-----