Exhibit
10
ILLINOIS
TOOL WORKS INC.
EXECUTIVE
CONTRIBUTORY RETIREMENT INCOME PLAN
Illinois
Tool Works Inc. hereby amends and restates, effective as of January 1,
2010, the Illinois Tool Works Inc. Executive Contributory Retirement Income
Plan, originally established April 1, 1993 and previously amended and
restated effective as of January 1, 2008. The Company intends for the
Plan to comply with Section 409A of the Internal Revenue Code of 1986, as
amended, and the applicable regulations (“Section 409A”); and to satisfy the
applicable grandfather rules so that each Participant’s Pre-1/1/2005 Sub-Account
will not be subject to Section 409A.
ARTICLE
I.
DEFINITIONS
1.1 “Account” means the
account(s) maintained on the books of the Company for each Participant or
Beneficiary pursuant to Article II. Except as otherwise indicated,
any reference in the Plan to a Participant’s or Beneficiary’s Account shall be
deemed to refer to the aggregate of his/her Pre-1/1/2005 and Post-1/1/2005
Sub-Accounts, as such terms are defined in Article II.
1.2 “Basic Compensation”
means any pay that could be deferred as “Compensation” under the ITW Savings and
Investment Plan (without regard to the Code Section 415 and Code Section
401(a)(17) limits), except for pay otherwise defined as Incentive under this
Plan.
1.3 “Beneficiary” means
the person or persons so designated by a Participant pursuant to Section
3.6.
1.4 “Board” means the
Board of Directors of the Company.
1.5 “CEO” means the Chief
Executive Officer of the Company.
1.6 “Code” means the
Internal Revenue Code of 1986, as amended.
1.7 “Committee” means the
Employee Benefits Steering Committee of the Company.
1.8 “Company” means
Illinois Tool Works Inc., a Delaware corporation, and any successor thereto, and
any corporation or other entity that together with Illinois Tool Works Inc. is a
member of a controlled group of corporations under Code Section 414(b) or a
group of trades or businesses under common control pursuant to Code Section
414(c).
1.9 “Company Basic
Contribution” means the contribution made by the Company to a
Participant’s applicable Post-1/1/2005 Sub-Account pursuant to Section
2.5.
1.10 “Company Matching
Contribution” means the contribution made by the Company to a
Participant’s applicable Post-1/1/2005 Sub-Account pursuant to Section
2.4.
1.11 “Corporate Change”
shall mean either a “Change in Ownership,” “Change in Effective Control” or a
“Change of Ownership of a Substantial Portion of Assets” as defined in Section
409A and summarized herein. A “Change in Ownership” occurs on the
date that any one person, or more than one person acting as a group (as defined
in Section 409A), acquires ownership of stock of the Company that, together with
stock held by such person or group, constitutes more than 50% of the total fair
market value or total voting power of the stock of the Company. A
“Change in Effective Control” occurs on the date that either (i) any one person,
or more than one person acting as a group, acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition by such person
or persons) ownership of stock of the Company possessing 35% or more of the
total voting power of the stock of the Company; or (ii) a majority of members of
the Board is replaced during any 12-month period by directors whose appointment
or election is not endorsed by a majority of the members of the Board prior to
the date of the appointment or election. A “Change of Ownership of a
Substantial Portion of Assets” occurs on the date that any one person, or more
than one person acting as a group, acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such person or
persons) assets from the Company that have a total gross fair market value equal
to or more than 40% of the total gross fair market value of all of the assets of
the Company immediately prior to such acquisition or acquisitions.
1.12 “Deferral Year” means
any calendar year.
1.13 “Determination Date”
means the date on which the amount of a Participant’s or Beneficiary’s Account
is determined as provided in Article II which, effective July 1, 2005,
shall be each business day.
1.14 “Disability” means the
Participant’s Separation from Service because he/she (i) is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, or (ii) is,
by reason of any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a
period of not less than three months under a Company-sponsored accident and
health plan. Notwithstanding the foregoing, with respect to a
Participant’s Pre-1/1/2005 Sub-Account, “Disability” shall have the same meaning
as “Disabled” under the ITW Retirement Accumulation Plan as in effect on
October 3, 2004.
1.15 “Early Retirement
Date” means the date of a Participant’s Separation from Service on or
after attaining age 55 and 10 or more years of service before attaining age
65.
1.16 “Eligible Executive”
means any Company executive designated as eligible for Plan participation by the
CEO. The CEO or the Board can subsequently determine that an
executive is not an Eligible Executive. Such determination shall only
apply on a prospective basis (i.e., with respect to future deferrals) and any
Basic Compensation or Incentive previously deferred by such executive shall be
paid in accordance with the terms of the Plan. Notwithstanding
the foregoing, an Eligible Executive shall only be considered such if he/she is
part of a “select group of management or highly compensated employees” within
the meaning of Sections 201, 301 and 401 of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”).
1.17 “Incentive” means any
performance-based bonus or other amount(s) earned during a calendar year by the
Participant under any incentive plan sponsored by the Company.
(a)
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“Retirement Interest
Yield” means 130 percent of Moody’s, but in no event shall the
Retirement Interest Yield pursuant to this Plan exceed 15.6%; provided,
however, that for all deferrals and Company contributions credited to a
separate Post-1/1/2005 Sub-Account after December 31, 2009, “Retirement
Interest Yield” shall mean 100% of Moody’s with a maximum of
12%.
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(b)
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“Termination Interest
Yield” means 100 percent of Moody’s. The maximum Termination
Interest Yield pursuant to this Plan shall be
12%.
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“Moody’s”
means the average of the monthly Moody’s Long-Term Corporate Bond Yields for the
preceding calendar quarter as determined from the Moody’s Bond Record published
by Moody’s Investor’s Service, Inc. (or any successor thereto).
1.19 “Normal Retirement
Date” means the date of a Participant’s Separation from Service on or
after attaining age 65 and 5 or more years of service.
1.20 “Participant” means an
Eligible Executive who has commenced Basic Compensation and/or Incentive
deferrals pursuant to Article II and any other individual (other than a
Beneficiary) who has an Account.
1.21 “Plan” means the
Illinois Tool Works Inc. Executive Contributory Retirement Income Plan as
amended from time to time.
1.22 “Retirement Benefit”
means the payment of the Participant’s or Beneficiary’s Account pursuant to
Sections 3.1 and 3.2.
1.23 “Separation from
Service” means the Participant’s cessation of services with the Company
for any reason.
1.24 “Unforeseeable
Emergency” means a severe financial hardship to a Participant resulting
from an illness or accident of the Participant, or the Participant’s spouse,
Beneficiary, or dependent (as defined in Code Section 152 without regard to Code
Sections 152(b)(1), (b)(2), and (d)(1)(B)); loss of the Participant’s property
due to casualty (including the need to rebuild a home following damage to a home
not otherwise covered by insurance, for example, not as a result of a natural
disaster) or other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the Participant.
1.25 “Vesting Service” has
the meaning set forth in the ITW Savings and Investment Plan.
ARTICLE
II.
DEFERRAL ELECTIONS AND
COMPANY MATCH
(a)
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General. In
order to participate in the Plan, an Eligible Executive must submit
(according to the method prescribed by the Company) a deferral election as
to Basic Compensation and/or Incentive prior to the first day of the
Deferral Year in which he/she will perform services related to the amount
to be deferred. Such election shall be effective with respect
to Basic Compensation and/or Incentive related to services to be performed
during the Deferral Year to which the deferral election
relates. Deferral elections may be amended or revoked at any
time prior to the first day of the Deferral Year to which the election
relates. Notwithstanding the foregoing, any deferral election
with respect to an Incentive that qualifies as “performance-based”
compensation under Section 409A may be made with respect to such Incentive
on or before the date that is six months before the end of the performance
period, provided that (i) the Participant provides services continuously
from the later of the beginning of the performance period or the date the
Incentive criteria are established through the date of the deferral
election, and (ii) that in no event may an election to defer Incentive be
made after such Incentive has become readily ascertainable.
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(b)
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New
Participants. A Company executive designated as an
Eligible Executive by the CEO during a Deferral Year and who desires to
become a Participant prior to the commencement of the next Deferral Year
must submit a deferral election no later than 30 days after the date
he/she receives notice of designation as an Eligible Executive. Such
election shall be effective with respect to Basic Compensation and/or
Incentive related to services to be performed subsequent to the date of
the election.
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(c)
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Unforeseeable
Emergency/Hardship. A Participant’s deferral election
with respect to the then-current Deferral Year shall be cancelled in the
event that the Participant receives a payment pursuant to Section 3.5 due
to an Unforeseeable Emergency or due to a hardship withdrawal under the
ITW Savings and Investment Plan.
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2.3 Timing of Deferral
Credits. The amount of Basic Compensation and Incentive that a
Participant elects to defer shall cause an equivalent reduction in the
Participant’s Basic Compensation and Incentive. Basic Compensation and Incentive
deferrals shall be credited to a Participant’s applicable Post-1/1/2005
Sub-Account at the end of each calendar quarter with respect to deferrals for
periods prior to July 1, 2005, and thereafter as of the date the deferred Basic
Compensation or Incentive would have otherwise been paid to the Participant or
as soon as reasonably practicable thereafter.
2.4 Company Matching
Contributions. All Participants shall be immediately eligible
for Company Matching Contributions. Each Participant shall be fully and
immediately vested in his/her Company Matching Contributions. If a
Participant defers compensation under this Plan, the Participant will be
ineligible for Company Matching Contributions with respect to the same type of
compensation, i.e. Basic Compensation or Incentive, that is deferred during the
applicable Deferral Year under the ITW Savings and Investment Plan or any other
plan that would be considered a defined contribution plan under Code Section
414(i) regardless of whether such plan or agreement constitutes a qualified plan
under Code Section 401(a). Each Participant shall be designated as a
“Group I” or “Group II” Participant according to the provisions of the ITW
Savings and Investment Plan. Any such change in designation shall
only be made on a prospective basis (i.e., with respect to future
deferrals).
(a)
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Group I
Participants. A Group I Participant shall be credited
with a Company Matching Contribution equal to 3.5% of his/her Basic
Compensation for each payroll period during which he/she is deferring at
least 6% of Basic Compensation. A Group I Participant also shall be
credited with a Company Matching Contribution equal to 3.5% of his/her
Incentive, provided the Group I Participant elects to defer at least 6% of
such Incentive. For purposes of this Section 2.4(a), the term
“Incentive” shall not include any payment made under a long-term incentive
plan.
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(b)
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Group II
Participants. A Group II Participant shall be credited
with a Company Matching Contribution equal to 4.5% of his/her Basic
Compensation for each payroll period during which he/she is deferring at
least 6% of Basic Compensation. A Group II Participant shall
also be credited with a Company Matching Contribution equal to 4.5% of
his/her Incentive, provided the Group II Participant elects to defer at
least 6% of such Incentive. For purposes of this Section
2.4(b), the term “Incentive” shall not include any payment made under a
long-term incentive plan.
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Company
Matching Contributions shall be allocated to a Participant’s applicable
Post-1/1/2005 Sub-Account.
2.5 Company Basic
Contributions. Each Group II Participant with one year of
service, including any Group II Participants who do not elect to defer Basic
Compensation or Incentive under Section 2.2, shall be eligible to receive a
Company Basic Contribution for each payroll period equal to the difference
between (i) the Company Basic Contribution paid to the Group II Participant
under the ITW Savings and Investment Plan for such payroll period and (ii) the
Company Basic Contribution that would be payable under the ITW Savings and
Investment Plan for such payroll period if the ITW Savings and Investment Plan
included deferrals under Section 2.2 in the calculation of the Company Basic
Contribution and the limits under Code Section 401(a)(17) and Code Section 415
did not apply. Company Basic Contributions shall be allocated to a
Group II Participant’s applicable Post-1/1/2005 Sub-Account. A Group
II Participant shall be fully vested in his/her Company Basic Contributions upon
completion of three years of Vesting Service.
2.6 Determination of Account
Balance.
(a)
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Sub-Accounts
Generally. A Participant’s or Beneficiary’s Account
shall be comprised of multiple “Sub-Accounts.” Unless the
Company determines otherwise, each Participant’s Account shall include a
“Pre-1/1/2005 Sub-Account” and multiple “Post-1/1/2005 Sub-Accounts.” Each
Sub-Account may provide for a different Interest Yield, form of payment
and payment commencement date pursuant to Sections 1.18, 3.1 and
3.2. The Company reserves the right to add additional
Post-1/1/2005 Sub-Accounts and new rules applicable
thereto.
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(b)
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Pre-1/1/2005
Sub-Account. A Participant’s or Beneficiary’s
Pre-1/1/2005 Sub-Account shall consist of his/her Account balance as of
December 31, 2004, if any, adjusted as of each Determination Date to
include interest based on the Termination Interest Yield in effect from
time to time, or based on the Retirement Interest Yield if the Participant
or Beneficiary had satisfied the eligibility requirements for a Retirement
Benefit on or before December 31,
2004.
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(c)
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Post-1/1/2005
Sub-Accounts. A Participant’s or Beneficiary’s
Post-1/1/2005 Sub-Accounts shall be credited with his/her deferrals from
Basic Compensation and/or Incentive made pursuant to an applicable
deferral election with respect to services rendered after December 31,
2004, and any related Company Matching Contributions and Basic Company
Contributions. Each Post-1/1/2005 Sub-Account shall be adjusted as of each
Determination Date to include interest based on the Termination Interest
Yield in effect from time to time, or based on the Retirement Interest
Yield applicable to that Post-1/1/2005 Sub-Account if the Participant or
Beneficiary has satisfied the eligibility requirements for a Retirement
Benefit. In addition, when any Participant or Beneficiary who was not
eligible for a Retirement Benefit on December 31, 2004 becomes so
eligible, his/her initial Post-1/1/2005 Sub-Account shall be credited with
the additional amount of interest that would previously have been
allocated to both the Participant’s Pre-1/1/2005 Sub-Account and initial
Post-1/1/2005 Sub-Account using the Retirement Interest Yields applicable
to such Sub-Accounts through such date. Any such additional
interest earned on the Pre-1/1/2005 Sub-Account and credited to the
initial Post-1/1/2005 Sub-Account in accordance with this Section 2.6(c)
shall be distributed in the form elected for distribution of the initial
Post-1/1/2005 Sub-Account. However, in the event that any such additional
interest is credited to this Plan after the initial Post-1/1/2005
Sub-Account has been fully distributed, the resulting initial
Post-1/1/2005 Sub-Account balance shall be payable in a single lump sum in
March of the calendar year following the calendar year in which the
earnings are credited to the initial Post-1/1/2005
Sub-Account.
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(d)
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Interest While
Receiving Installments. A Participant’s or Beneficiary’s
Sub-Account that is being paid in the form of installments shall continue
to be credited with interest using the Retirement Interest Yield
applicable to such Sub-Account during the period that payments are being
made.
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ARTICLE
III.
PAYMENT OF
BENEFITS
3.1 Retirement Benefit Payment
Election for Pre-1/1/2005
Sub-Account. In the event of a Participant’s Early or Normal
Retirement Date, or death or Separation from Service on account of Disability
prior to either date, a Participant’s Pre-1/1/2005 Sub-Account shall be paid out
in accordance with the payment form and commencement of payment date elected for
his/her Pre-1/1/2005 Sub-Account. In the absence of an applicable
payment form and commencement of payment election, a Participant’s Pre-1/1/2005
Sub-Account shall be paid in a lump sum on the first day of the month following
Separation from Service. A Participant may elect, at least 13 months
prior to the payment commencement date of his/her Pre-1/1/2005 Sub-Account, to
change the method of distribution previously elected for the Pre-1/1/2005 Sub-Account to either a lump sum or
monthly installments over two to 20 years. A Participant may elect to defer
payment commencement of his/her Pre-1/1/2005 Sub-Account to a date later than
Separation from Service up to his/her 70th birthday provided (i) that the
duration of any installment payments to the Participant shall provide for full
payment of the Pre-1/1/2005 Sub-Account
prior to the Participant’s
85th birthday, and (ii) that Separation from Service occurs prior to his/her
Normal Retirement Date. Any election made within 13 months of the
Participant’s
payment commencement date shall be void and his/her most recent prior election
shall be reinstated. The Participant’s election
may be subject to Committee approval.
3.2 Retirement Benefit Payment
Elections for Post-1/1/2005
Sub-Accounts. In the event of a Participant’s Early or Normal
Retirement Date, or death or Separation from Service on account of Disability
prior to either date, a Participant’s Post-1/1/2005 Sub-Accounts shall be paid
out in accordance with the payment form and commencement of payment elections
for his/her Post-1/1/2005 Sub-Accounts. At the time an Eligible
Executive submits his/her initial deferral election for a Post 1/1/2005
Sub-Account, he/she shall elect (i) the form of payment in which that
Post-1/1/2005 Sub-Account shall be paid, which may be either a lump sum or
monthly installments over two to 20 years, and (ii) a payment commencement date,
which may be later than Separation from Service and up to his/her 70th birthday.
Following are additional rules applicable to the payment of a
Participant’s Post-1/1/2005 Sub-Accounts:
(a)
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Change to Prior
Election. A Participant may elect to change a form of
payment previously elected with respect to any of his/her Post-1/1/2005
Sub-Accounts, or to elect another payment commencement date that is
subsequent to Separation from Service but no later than his/her 70th
birthday, provided (i) such new election does not take effect until at
least 12 months after the date the election is made, (ii) if commencement
of payment is not related to the Participant’s Separation from Service on
account of Disability or death, the first payment with respect to which
such new election is effective is deferred for a period of five years from
the date such payment would otherwise have commenced, and (iii) if a
Participant previously elected a payment commencement date that is
subsequent to Separation from Service, a change to that date may not be
made within the 12-month period prior
thereto.
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(b)
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Company Basic
Contribution Participants. In the event that an Eligible
Executive elects not to defer Basic Compensation and/or Incentive under
Section 2.1(a) but is a Group II Participant eligible to receive Company
Basic Contributions pursuant to Section 2.5, such Eligible Executive shall
be considered a Participant for purposes of this Plan and shall have the
opportunity to make a form and commencement of payment election with
respect to his Post-1/1/2005 Sub-Accounts in accordance with the timing
rules for deferral elections set forth in Section
2.1.
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(c)
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Default
Election. In the absence of a valid payment form and
commencement of payment election upon the Participant’s Early or Normal
Retirement Date, or death or Separation from Service on account of
Disability prior to either date, a Participant’s Post-1/1/2005
Sub-Account(s) shall be paid out in a lump sum on the first day of the
month following Separation from
Service.
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(d)
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Key
Employees. Payments to a Participant who is a key
employee (as defined in Section 409A)
with respect to his/her Post-1/1/2005 Sub-Accounts shall commence on the first day of the seventh
month following the
date of the Participant’s Separation from Service (other
than due to death) or such later date as elected by the Participant under
this Section 3.2. If commencement is delayed pursuant to this Section
3.2(d) and not because of the Participant’s election under Section 3.2(a),
his/her initial payment shall include all amounts that would have been
paid had there been no six-month delay and the retroactive payments shall
be credited with interest at the Retirement Interest Yields applicable to
the respective Post 1/1/2005 Sub-Accounts through the delayed payment
commencement date.
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3.3 Termination Benefit.
Upon a Participant's Separation from Service prior to becoming eligible for a
Retirement Benefit, the Company shall pay a lump sum to the Participant on the
first day of the month following Separation from Service of his/her Account
determined under Section 2.6
using the Termination Interest Yield. A Participant who is a key
employee (as defined in Section 409A) shall not receive the
portion of his/her lump sum consisting of his/her Post-1/1/2005 Sub-Accounts until the first day of the seventh month commencing after
the date of the Participant’s Separation from Service (other than due to death).
The delayed portion of the lump sum payment shall be credited with interest at
the Termination Interest Yield through the delayed payment commencement
date.
3.4 Return of Deferrals.
At the time that a Participant submits a deferral election for any Deferral
Year, he/she may elect irrevocably to receive a return of his/her deferrals for
such Deferral Year. The return of deferral election does not apply to Company
Matching Contributions, Company Basic Contributions, or the interest credited to
the Participant’s Account for such Deferral Year. The return of deferral
election shall specify the calendar year in which payment shall be made, which
may be no earlier than the calendar year that commences five or more calendar
years after the Deferral Year in which the Basic Compensation and/or Incentive
deferral was initially credited to the Participant’s Account. Return
of Deferral payments shall be made in July of the specified calendar
year. Notwithstanding the foregoing, a Participant’s return of
deferral election shall be void if his/her Separation from Service occurs prior
to the return of deferral payment date and the participant’s deferrals shall
instead be paid in accordance with the payment form and commencement of payment
election made by the Participant for his/her applicable
sub-account. Company Matching Contributions, Basic Company
Contributions, and interest credits for such Deferral Year.
3.5 Emergency Benefit. In
the event that the Company, upon a request by a Participant according to the
method prescribed by the Company, determines in its sole discretion, that the
Participant has suffered an Unforeseeable Emergency, the Company may pay to the
Participant, as soon as practicable following such determination, an amount, not
in excess of the Participant’s Account, necessary to satisfy the emergency, plus
amounts necessary to pay taxes reasonably anticipated as a result of the
payment, after taking into account the extent to which such hardship is or may
be relieved through reimbursement or compensation by insurance or otherwise, by
liquidation of the Participant’s assets (to the extent the liquidation of such
assets would not itself cause severe financial hardship), or by cessation of
deferrals under the Plan.
3.6 Payment to
Beneficiary. If a Participant dies prior to the commencement or
completion of payments (and was not awaiting payment of a termination benefit
under Section 3.3), then the Participant’s Account (determined using the
Retirement Interest Yields applicable to the Pre-1/1/2005 and Post-1/1/2005
Sub-Accounts) shall be paid (or continue to be paid if payments had previously
commenced) to his/her Beneficiary on the first day of the month following the
date of the Participant’s death (i) pursuant to the applicable payment election
made by the Participant or (ii) in a lump sum if the Participant had not elected
a form of payment. The Participant may designate (or change) a Beneficiary
according to the method prescribed by the Company. If no designation is in
effect or if an existing designation is determined to be invalid or ineffective
at the time any payments under this Plan become due, the Beneficiary shall be
the spouse of the Participant, or if no spouse is then living, the Participant’s
estate.
3.7 Small Benefits.
Notwithstanding anything in this Article III to the contrary, if the aggregate
balance of a Participant’s Account is $25,000 or less on the Participant’s
Separation from Service or death, such amount shall be paid in a lump sum to the
Participant or his/her Beneficiary on the first day of the month following the
Participant’s Retirement Date or death in full settlement of his/her benefits
under this Plan.
3.8 Forfeiture of
Benefits. If, prior to a Corporate Change, a Participant shall
be discharged for gross misconduct or a Participant or Beneficiary shall at any
time, regardless of whether before or after the Participant’s Early or Normal
Retirement Date, divulge confidential Company information to other persons or
otherwise act against the business interests of the Company, the portion of the
Participant’s or Beneficiary’s Account attributable to Company Basic
Contributions and Company Matching Contributions may be forfeited by the
Committee or the CEO.
3.9 Payment on Specified
Date. For purposes of this Article III, a payment shall be
treated as made (or commencing) on the payment commencement date specified in
Section 3.2, 3.3, 3.4 or 3.6, as applicable, if the payment is made (or
commences) on (i) such date, (ii) a later date within the same taxable year of
the Participant, or (iii) if later, by the fifteenth day of the third calendar
month following such date, provided that the Participant is not permitted,
directly or indirectly, to designate the taxable year of the
payment.
ARTICLE
IV.
CLAIMS
PROCEDURE
4.1 Claim for Benefits.
All claims for benefits shall be submitted in writing to the Committee which
shall process them and approve or disapprove them within 90 days following the
date that the claim is received by the Committee. If special circumstances arise
and the Committee cannot process the claim within 90 days, the Committee shall
notify the claimant on or before the close of the initial 90-day period that the
time for making the decision is extended for up to 90 additional days. If the
Committee fails to notify the claimant within the applicable period, the claim
is considered denied. If the Committee makes a determination to deny benefits to
a claimant, the denial shall be stated in writing by the Committee and delivered
or mailed to the claimant. Such notice shall set forth the specific reasons for
the denial; be written in a manner that may be understood by the claimant; refer
to the specific Plan provisions upon which denial is based; and describe the
steps necessary for appeal.
4.2 Request for Review of a
Claim
Denial.
The claimant whose claim for benefits has been denied shall have a period of 60
days from the date of the Committee’s denial in which to appeal in writing to the Committee. The claimant
or his/her duly authorized representative shall have an opportunity to review
pertinent documents and submit additional information, issues and comments to
the Committee.
4.3 Decision Upon Review of
a Claim Denial. The Committee
(or its delegate) shall review all evidence submitted by the claimant and shall
communicate its decision to the claimant in writing within 60 days of the date
on which the request for review was received, unless special circumstances
require an extension of time for processing, in which case a decision shall be
rendered as soon as possible, but not later than 120 days after receipt of a
request for review. The Committee’s decision regarding the claim shall be final
and binding.
4.4 Timing of Judicial
Action. No action at law or in equity may be brought to
recover benefits under the Plan until the Participant has exercised all appeal
rights and the Plan benefits requested in such appeal have been denied in whole
or in part. Benefits under the Plan shall be paid only if the
Committee, in its discretion, determines that a claimant is entitled to
them. If a judicial proceeding is undertaken to appeal the denial of
a claim or bring any other action under ERISA other than a breach of fiduciary
duty claim, the evidence presented will be strictly limited to the evidence
timely presented to the Committee. In addition, any such judicial
proceeding must be filed within 180 days after the Committee’s final
decision.
ARTICLE
V.
ADMINISTRATION
The
Committee, which shall administer the Plan, shall have the power and duty to
adopt such rules and regulations consistent with Plan terms; to maintain records
concerning the Plan; to construe and interpret the Plan and resolve all
questions arising under the Plan; to direct the payment of Plan benefits; and to
comply with the requirements of any applicable federal or state law. Neither the
Company, nor any employee or Board or Committee member shall be liable to any
Eligible Executive, active or former Participant, Beneficiary or any other
person for any claim, loss, liability or expense incurred in connection with the
Plan.
ARTICLE
VI.
AMENDMENT AND
TERMINATION
6.1 Amendment. The Board
may amend the Plan in whole or in part at any time, including without limitation
an amendment to discontinue future deferrals. Any amendment shall
comply with Section 409A. Specifically, no amendment may decrease the
balance of a Participant’s or Beneficiary’s Account (except as required by
Section 409A), and no amendment shall be made if it would constitute a material
modification, as defined under Section 409A, of the Plan terms in effect on
October 3, 2004 which govern payment of the Pre-1/1/2005 Sub-Account as set
forth in Article III.
6.2 Termination. The
Board may terminate the Plan at any time, subject to the termination
restrictions of Code Section 409A. Upon termination, a Participant’s or
Beneficiary’s Pre-1/1/2005 Sub-Account, if any, shall be paid to him/her in
monthly installments over a period of not more than 15 years, except that the
Company in its sole discretion may pay out such benefit in a lump sum or in
installments over a period shorter than 15 years. A Participant’s or
Beneficiary’s Post-1/1/2005 Sub-Accounts shall be paid to the Participant or
Beneficiary in a lump sum upon Plan termination, provided that (i) the
termination and liquidation of the Plan does not occur proximate to a downturn
in the financial health of the Company; (ii) the Company terminates all
non-qualified deferred compensation arrangements of the same type at the same
time that this Plan is terminated; (iii) the Company makes no payments to
Participants and Beneficiaries for 12 months but makes all payments within 24
months; and (iv) the Company adopts no new non-qualified deferred compensation
arrangement of the same type for three years. Upon termination of the
Plan, any Participant who has not incurred a Separation from Service and was not
previously eligible for a Retirement Benefit shall have the applicable
Retirement Interest Yields credited to his/her post-1/1/2005 Sub-Accounts
pursuant to Section 2.6(c) as if the Participant then became eligible for a
Retirement Benefit.
6.3 Corporate Change. The
Board may terminate the Plan in conjunction with a Corporate Change, provided
that (i) the Company terminates the Plan within the 30 days preceding or the 12
months following a Corporate Change; and (ii) the Company terminates all
non-qualified deferred compensation arrangements of the same type at the same
time that this Plan is terminated with respect to each Participant that
experienced Corporate Change. Following such termination, each
current Participant, former Participant and Beneficiary shall receive a lump-sum
payment of his/her Account within the 12 months following the termination of the
Plan. Account balances shall be determined under Section 2.6 as of
the applicable payment date as if each such Participant and Beneficiary was then
eligible for a Retirement Benefit hereunder.
ARTICLE
VII.
MISCELLANEOUS
7.1 Corporate Successor.
The Plan shall not terminate, but shall continue, upon a
transfer or sale of assets of the Company or upon the reorganization, merger or consolidation
of the Company into or with any other corporation or other entity; provided that it is not terminated
pursuant to Section 6.3 and the transferee, purchaser or successor
agrees to continue the Plan. In the event that the transferee, purchaser or
successor does not continue the Plan, then the Plan shall terminate to the
extent permitted under Section 6.2 and the applicable restrictions under Section
409A.
7.2 No Implied Rights.
Neither the establishment of the Plan nor any amendment thereof shall be
construed as giving any Participant, Beneficiary or any other person any legal
or equitable right unless such right shall be specifically provided for in the
Plan or conferred by specific action of the Committee in accordance with the
terms and provisions of the Plan. Except as expressly provided in this Plan, the
Company shall not be required or be liable to make any payment under this Plan.
The provisions of this Plan document supersede and preempt any prior
understandings, agreements or representations by or between the Company and any
Participant or Beneficiary, written or oral, which may have related in any
manner to the subject matter hereof.
7.3 No Right to Company
Assets. Neither the Participant nor any other person shall acquire by
reason of the Plan any right in or title to any assets, funds or property of the
Company including, without limitation, any specific funds, assets or other
property that the Company, in its sole discretion, may set aside in anticipation
of a liability hereunder. Any benefits which become payable hereunder shall be
paid from the general assets of the Company. The Participant shall have only a
contractual right to the amounts, if any, payable hereunder unsecured by any
asset of the Company. In order to provide for the payments hereunder, the
Company has established an irrevocable trust, the assets of which are part of
the Company’s general assets and therefore subject to the claims of the
Company’s general creditors in the event of insolvency. To the extent any
Plan-required payments are made from the trust, the Company shall have no
further obligations to pay such amounts directly to the Participant or
Beneficiary.
7.4 No Employment Rights.
Nothing herein shall constitute a contract of employment or of continuing service or in
any manner obligate the Company to continue the services of the Participant or
obligate the Participant to continue in the service of the Company, or as a
limitation of the right of the Company to discharge any of its employees, with
or without cause.
7.5 Offset. If, at the
time payments are to be made hereunder, a Participant or Beneficiary or both are
indebted or obligated to the Company, then such payments may at the discretion
of the Committee be reduced by the amount of such indebtedness or obligation;
provided, however, that an election by the Committee not to reduce any such
payments shall not constitute a waiver of its claim for such indebtedness or
obligation. In the event of an overpayment of benefits under the ITW Retirement
Accumulation Plan or any other Company-sponsored plan, the Committee may
determine that all or part of the amount of the overpayment may be recovered by
an offset to any payment to be made pursuant to this Plan.
7.6 Non-Assignability.
Neither the Participant nor any other person shall have any voluntary or
involuntary right to commute, sell, assign, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate or convey in advance of actual receipt
the amounts, if any, payable hereunder, or any part thereof, which are expressly
declared to be unassignable and non-transferable. No part of the amounts payable
shall be, prior to actual payment, subject to the payment of any debts,
judgments, alimony or separate maintenance owed by the Participant or any other
person, or be transferable by operation of law in the event of the Participant’s
or any other person’s bankruptcy or insolvency. This Section shall
not apply to the creation, assignment, or recognition of a right of any benefit
payable pursuant to a domestic relations order, if such order (i) meets the
requirements of Section 414(p)(1)(B) of the Code, and (ii) does not require the
payment of a benefit to an alternate payee prior to the time benefits are
payable pursuant to Article III, as determined by the Committee.
7.7 Incapacity of
Recipient. If a current or former Participant or a Beneficiary is deemed
by the Committee to be incapable of personally receiving any payment under the
Plan, then, unless and until claim therefor shall have been made by a duly
appointed guardian or other legal representative of such person, the Committee
may provide for such payment or any part thereof to be made to any other person
or institution providing for the care and maintenance of such person. Any such
payment shall be for the account of such person and shall be a complete
discharge of any liability of the Company and the Plan therefor.
7.8 Withholding of Taxes.
The Company shall withhold any federal, state or local taxes applicable to any
payments pursuant to the Plan. Notwithstanding any other Plan provision to the
contrary, the payment of any Participant’s benefit may be accelerated by the
Company to the extent of any required FICA withholdings applicable to such
benefit (plus any other withholdings applicable to the withheld FICA
amount).
7.9 Governing Laws.
Except to the extent not pre-empted by ERISA or other federal law, the Plan
shall be construed and administered according to the laws of the State of
Illinois.
7.10 Severability.
Whenever possible, each provision of this Plan shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Plan is held to be invalid, illegal or unenforceable in any respect
under applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
any other provision of this Plan or the validity, legality or enforceability of
such provision in any other jurisdiction, but this Plan shall be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
ILLINOIS TOOL WORKS
INC.
By: ___________________________________
Senior
Vice President, Human Resources
Date:
__________________________________