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Exhibit 10(a)




Illinois Tool Works Inc.



1996 Stock Incentive Plan




Approved by the Board of Directors on February 16, 1996

and by the Stockholders on May 3, 1996



Amended by the Board of Directors on

December 12, 1997, October 29, 1999, January 3, 2003,

March 18, 2003, January 2, 2004 and December 10, 2004





 









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	Section 1. Purpose.
	 	 	1	 
	Section 2. Definitions.
	 	 	1	 
	Section 3. Administration.
	 	 	3	 
	Section 4. Common Stock Subject to Plan.
	 	 	3	 
	Section 5. Options.
	 	 	4	 
	Section 6. Stock Awards.
	 	 	4	 
	Section 7. Performance Units.
	 	 	5	 
	Section 8. Stock Appreciation Rights.
	 	 	5	 
	Section 9. Termination of Employment.
	 	 	6	 
	Section 10. Adjustment Provisions.
	 	 	7	 
	Section 11. Term.
	 	 	7	 
	Section 12. Corporate Change.
	 	 	7	 
	Section 13. General Provisions.
	 	 	7	 
	Section 14. Amendment or Discontinuance of the Plan.
	 	 	9	 
	Section 15. Options Granted Under the Premark Plan.
	 	 	9	 






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Illinois Tool Works Inc.

1996 Stock Incentive Plan








Section 1. Purpose.




     The purpose of the Plan is to encourage Key Employees to have a greater financial investment
in the Company through ownership of its Common Stock. The Plan is an amendment and restatement of
the 1979 Stock Incentive Plan (the “1979 Plan”). The terms of the Plan will apply to all
outstanding Incentives granted under the 1979 Plan, including those pertaining to a Corporate
Change and termination of employment as described below. No additional Incentives will be granted
under the 1979 Plan.



     Effective May 9, 2003, the Premark International, Inc. 1994 Incentive Plan (the “Premark
Plan”) is merged into the 1996 Stock Incentive Plan. Section 15 of the 1996 Stock Incentive Plan
sets forth the terms applicable to the merged Premark Plan and the Options granted thereunder.







Section 2. Definitions.




     Board: The Board of Directors of the Company.



     Code: The Internal Revenue Code of 1986, as amended.



     Committee: The Compensation Committee of the Board or such other committee as shall be
appointed by the Board to administer the Plan pursuant to Section 3.



     Common Stock: The Common Stock, without par value, of the Company or such other class of
shares or other securities as may be applicable pursuant to the provisions of Section 10.



     Company: Illinois Tool Works Inc., a Delaware corporation, and any successor thereto.



     Corporate Change: Any of the following: (i) the dissolution of the Company; (ii) the merger,
consolidation, or reorganization of the Company with any other corporation after which the holders
of Common Stock immediately prior to the effective date thereof hold less than 70% of the
outstanding common stock of the surviving or resulting entity; (iii) the sale of all or
substantially all of the assets of the Company to any person or entity other than a wholly owned
subsidiary; (iv) any person or group of persons acting in concert, other than descendants of Byron
L. Smith and trusts for the benefit of such descendants, or entity becomes the beneficial owner,
directly or indirectly, of more than 30% of the outstanding Common Stock; or (v) the individuals
who, as of the close of the most recent annual meeting of the Company’s stockholders, are members
of the Board (the “Existing Directors”) cease for any reason to constitute more than 50% of the
Board; provided, however, that if the election, or nomination for election, by the Company’s
stockholders of any new director was approved by a vote of at least 50% of the Existing Directors,
such new director shall be considered an Existing Director;



 









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provided further, however, that no individual shall be considered an Existing Director if such individual initially
assumed office as a result of either an actual or threatened “Election Contest” (as described
in Rule 14a-11 under the Securities Exchange Act of 1934) or other actual or threatened
solicitation of proxies by or on behalf of anyone other than the Board (a “Proxy Contest”),
including by reason of any agreement intended to avoid or settle any Election Contest or Proxy
Contest.




     Covered Employee: A Key Employee who is or is expected to be a “covered employee” within the
meaning of Code Section 162(m) and the related regulations for the year in which an Incentive is
taxable to such employee and for whom the Committee intends that such Incentive qualify as
performance-based compensation under Code Section 162(m).



     Disability: Eligible for Social Security disability benefits or disability benefits under the
Company’s long-term disability plan, based upon a determination by the Committee that the condition
arose prior to termination of employment.



     Fair Market Value: The average of the highest and lowest price at which Common Stock was
traded on the relevant date, as reported in the “NYSE-Composite Transactions” section of the
Midwest Edition of The Wall Street Journal, or, if no sales of Common Stock were reported for that
date, on the most recent preceding date on which Common Stock was traded.



     Incentive Stock Option: As defined in Code Section 422.



     Incentives: Options (including Incentive Stock Options), Stock Awards, Performance Units and
Stock Appreciation Rights.



     Key Employee: An employee of the Company approved by the Committee for participation in the
Plan on the basis of his or her ability to contribute significantly to the growth and profitability
of the Company.



     Option: An option to purchase shares of Common Stock granted to a Key Employee pursuant to
Section 5.



     Performance Unit: A unit representing a cash sum or one or more shares of Common Stock that
is granted to a Key Employee pursuant to Section 7.



     Plan: The Illinois Tool Works Inc. 1996 Stock Incentive Plan, as amended from time to time.



     Restricted Shares: Shares of Common Stock issued subject to restrictions pursuant to Section
6(b).



     Retirement: Termination of employment while eligible for retirement as defined by the
Company’s tax-qualified defined benefit retirement plan.



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     Stock Appreciation Right or Right: An award granted to a Key Employee pursuant to Section 8.



     Stock Award: An award of Common Stock granted to a Key Employee pursuant to Section 6.



     Stock Ownership Guidelines: The stock ownership guidelines adopted by the Board, as amended
from time to time.







Section 3. Administration.




     (a) Committee. The Plan shall be administered by the Committee. To the extent
required to comply with Rule 16b-3 under the Securities Exchange Act of 1934, each member of the
Committee shall qualify as a “non-employee director” as defined therein. To the extent required to
comply with Code Section 162(m) and the related regulations, each member of the Committee shall
qualify as an “outside director” as defined therein.



     (b) Authority of the Committee. The Committee shall have the authority to approve Key
Employees for participation; to construe and interpret the Plan; to establish, amend or waive rules
and regulations for its administration; and to accelerate the exercisability of any Incentive or
the termination of any restriction under any Incentive. Incentives may be subject to such
provisions as the Committee shall deem advisable, and may be amended by the Committee from time to
time; provided that no such amendment may adversely affect the rights of the holder of an Incentive
without such holder’s consent, and no amendment, as it applies to any Covered Employee, shall be
made that would cause an Incentive granted to such Covered Employee to fail to satisfy the
performance-based compensation exemption under Code Section 162(m) and the related regulations.







Section 4. Common Stock Subject to Plan.




     Subject to Section 10, the aggregate shares of Common Stock that may be issued under the Plan,
including Common Stock authorized but not issued or reserved for issuance under the 1979 Plan,
shall not exceed 10,000,000. In the event of a lapse, expiration, termination, forfeiture or
cancellation of any Incentive granted under the Plan or the 1979 Plan without the issuance of
shares or payment of cash, the Common Stock subject to or reserved for such Incentive may be used
again for a new Incentive hereunder; provided that in no event may the number of shares of Common
Stock issued hereunder exceed the total number of shares reserved for issuance. Any shares of
Common Stock withheld or surrendered to pay withholding taxes pursuant to Section 13(e) or
surrendered in full or partial payment of the exercise price of an Option pursuant to Section 5(e)
shall be added to the aggregate of shares of Common Stock available for issuance.



     The 10,000,000 shares of Common Stock authorized for issuance pursuant to the 1996 Stock
Incentive Plan increased to 20,000,000 shares pursuant to the stock split in 1997. Effective May
9, 2003, the number of shares of Common Stock authorized for issuance shall be



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30,930,193 shares, which number reflects the merger of the Premark Plan into the 1996 Stock Incentive Plan and an
additional 3,000,000 shares.








Section 5. Options.




     (a) Price. The exercise price per share of an Option shall be not less than the Fair
Market Value on the grant date.



     (b) Limitations. The exercise price of Incentive Stock Options exercisable for the
first time by a Key Employee during any calendar year shall not exceed $100,000. Options for more
than 500,000 shares of Common Stock may not be granted in any calendar year to any Key Employee.
No Incentive Stock Options may be granted after April 30, 2006.



     (c) Required Period of Employment. The Committee may condition the exercisability of
any Option on the completion of a minimum period of employment.



     (d) Duration. Each Option shall expire at such time as the Committee may determine at
the time of grant, provided that Incentive Stock Options must expire not later than ten years from
the grant date.



     (e) Payment. The exercise price of an Option shall be paid in full at the time of
exercise in cash, or by the surrender of Common Stock previously acquired from the Company that has
been held by the Incentive holder for a period of at least six months and that has a value equal to
the exercise price, or by a combination of the foregoing.



     (f) Grant of Restorative Options. The Committee shall grant to any Key Employee a
restorative Option to purchase additional shares of Common Stock equal to the number of shares
delivered by the Key Employee in payment of the exercise price of an Option. The terms of a
restorative Option shall be identical to the terms of the exercised Option, except that the
exercise price shall be not less than the Fair Market Value on the grant date of the restorative
Option.







Section 6. Stock Awards.




     (a) Grant of Stock Awards. Stock Awards may be made on terms and conditions fixed by
the Committee. Stock Awards may be in the form of Restricted Shares authorized pursuant to Section
6(b). Officers who are covered by the Stock Ownership Guidelines may elect to receive up to 50% of
their Executive Incentive Plan awards in shares of Common Stock. The recipient of Common Stock
pursuant to a Stock Award shall be a stockholder of the Company with respect thereto, fully
entitled to receive dividends, vote and exercise all other rights of a stockholder except to the
extent otherwise provided in the Stock Award. Stock Awards (including Restricted Share awards) for
more than 500,000 shares of Common Stock may not be granted in any calendar year to any Key
Employee.



     (b) Restricted Shares. Restricted Shares may not be sold by the holder, or subject to
execution, attachment or similar process, until the lapse of the applicable restriction period or



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satisfaction of other conditions specified by the Committee. If the Committee intends the
Restricted Shares granted to any Covered Employee to satisfy the performance-based compensation
exemption under Code Section 162(m) (“Qualifying Restricted Shares”), the extent to which the Qualifying Restricted Shares will vest shall be based on the attainment of
performance goals established in writing prior to commencement of the performance period by the
Committee from the list in Section 7(a). The level of attainment of such performance goals and the
corresponding number of vested Qualifying Restricted Shares shall be certified by the Committee in
writing pursuant to Code Section 162(m) and the related regulations.








Section 7. Performance Units.




     (a) Value of Performance Units. Prior to the commencement of the performance period,
the Committee shall establish in writing an initial target value or number of shares of Common
Stock for the Performance Units to be granted to a Key Employee, the duration of the performance
period, and the specific performance goals to be attained, including performance levels at which
various percentages of Performance Units will be earned and, for Covered Employees, the minimum
level of attainment to be met to earn any portion of the Performance Units. If the Committee
intends the Performance Units granted to any Covered Employee to satisfy the performance-based
compensation exemption under Code Section 162(m) (“Qualifying Performance Units”), the performance
goals shall be based on one or more of the following objective criteria: generation of free cash,
earnings per share, revenues, market share, stock price, cash flow, retained earnings, results of
customer satisfaction surveys, aggregate product price and other product price measures, safety
record, acquisition activity, management succession planning, improved asset management, improved
gross margins, increased inventory turns, product development and liability, research and
development integration, proprietary protections, legal effectiveness, handling SEC or
environmental issues, manufacturing efficiencies, system review and improvement, service
reliability and cost management, operating expense ratios, total stockholder return, return on
sales, return on equity, return on capital, return on assets, return on investment, net income,
operating income, and the attainment of one or more performance goals relative to the performance
of other corporations.



     (b) Payment of Performance Units. After the end of a performance period, the
Committee shall certify in writing the extent to which performance goals have been met and shall
compute the payout to be received by each Key Employee. With respect to Qualifying Performance
Units, for any calendar year, the maximum amount payable in cash to any Covered Employee shall be
$5,000,000, and the aggregate shares of Common Stock that may be issued to any Covered Employee is
500,000. The Committee may not adjust upward the amount payable to any Covered Employee with
respect to Qualifying Performance Units.







Section 8. Stock Appreciation Rights.




     (a) Grant of Stock Appreciation Rights. Stock Appreciation Rights may be granted in
connection with an Option (at the time of the grant or at any time thereafter) or may be granted
independently. Stock Appreciation Rights for more than 500,000 shares of Common Stock may not be
granted to any Key Employee in any calendar year.



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     (b) Value of Stock Appreciation Rights. The holder of a Stock Appreciation Right
granted in connection with an Option, upon surrender of that Option, will receive cash or shares of Common Stock equal in value to the lesser of (i) the excess of the Fair Market Value on the
exercise date over the Option’s exercise price or (ii) the exercise price of the Option that is
surrendered, multiplied by the number of shares covered by such Option. The holder of a Stock
Appreciation Right granted independently of an Option, upon exercise of that Right, will receive
cash or shares of Common Stock equal in value to the lesser of (i) the excess of the Fair Market
Value on the exercise date over the Fair Market Value on the grant date or (ii) the Fair Market
Value on the grant date, multiplied by the number of shares covered by such Right.







Section 9. Termination of Employment.




     (a) Forfeiture of Incentives Upon Termination of Employment. Except as may be
determined otherwise by the Committee, all unvested Options, Rights and Stock Awards and all unpaid
Performance Units shall be forfeited upon termination of employment for reasons other than
Retirement, Disability or death.



     (b) Vesting Upon Retirement, Disability or Death. Subject to Section 13(g), upon
termination of employment by reason of Retirement, Disability or death, all unvested Options,
Rights and Stock Awards shall become fully vested and any Performance Units shall become payable to
the extent provided in Section 9(c)(ii). Notwithstanding the foregoing, the Restricted Shares
granted effective January 2, 2003 and January 2, 2004 shall not become fully vested upon
termination of employment by reason of Retirement, Disability or death, unless the Compensation
Committee determines otherwise.



     (c) Treatment of Incentives Following Termination.




(i) Options and Stock Appreciation Rights.




(A) Termination Due to Retirement, Disability or Death. Upon termination of
employment by reason of Retirement or Disability, Options shall be exercisable not
later than the earlier of five years after the termination date or the expiration of
the term of the Options. Options held by a Key Employee who dies while employed by
the Company or after terminating by reason of Retirement or Disability shall be
exercisable by the Key Employee’s beneficiary not later than the earliest of two
years after the date of death, five years after the date of termination due to
Retirement or Disability, or the expiration of the term of the Options.




(B) Termination for Other Reasons. Upon termination of employment for any
reason other than Retirement, Disability or death, all unvested Options shall be
forfeited as provided in Section 9(a) and any Options vested prior to such
termination may be exercised by a Key Employee during the three-month period
commencing on the date of termination, but not later than the expiration of the



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term of the Options. If a Key Employee dies during such post-employment period, such Key
Employee’s beneficiary may exercise the Options (to the extent such Options were
vested and exercisable at the date of termination of employment), but not later than the earlier of two years after the date of death or the
expiration of the term of the Options.




(C) Stock Appreciation Rights. Sections 9(c)(i)(A) and (B) shall apply in
the same manner to Stock Appreciation Rights.




(ii) Performance Units. If a Key Employee terminates employment by reason
of Retirement, Disability or death, the Key Employee or such Key Employee’s
beneficiary in the event of death shall receive a prorated payment of the Key
Employee’s Performance Units based on the number of full months of service completed
by the Key Employee during the applicable performance period, adjusted based on the
achievement of performance goals during the performance period. Payment shall be
made at the time payments would have been made had the Key Employee not terminated
by reason of Retirement, Disability or death.







Section 10. Adjustment Provisions.




     In the event of a stock split, stock dividend, recapitalization, reclassification or
combination of shares, merger, sale of assets or similar event, the Committee shall adjust
equitably (a) the number and class of shares or other securities that are reserved for issuance
under the Plan, (b) the number and class of shares or other securities that have not been issued
under outstanding Incentives, and (c) the appropriate Fair Market Value and other price
determinations applicable to Incentives.







Section 11. Term.




     The Plan shall be deemed adopted and shall become effective on the date it is approved by the
stockholders of the Company and shall continue until terminated by the Board or no Common Stock
remains available for issuance under Section 4, whichever occurs first.







Section 12. Corporate Change.




     In the event of a Corporate Change, all Incentives shall vest in each Key Employee, and the
maximum value of each Key Employee’s Performance Units, prorated for the number of full months of
service completed by the Key Employee during the applicable performance period, shall immediately
be paid in cash to the Key Employee.







Section 13. General Provisions.




     (a) Employment. Nothing in the Plan or in any related instrument shall confer upon
any employee any right to continue in the employ of the Company or shall affect the right of the
Company to terminate the employment of any employee with or without cause.



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     (b) Legality of Issuance of Shares. No Common Stock shall be issued pursuant to an
Incentive unless and until all legal requirements applicable to such issuance have been satisfied.



     (c) Ownership of Common Stock Allocated to Plan. No employee (individually or as a
member of a group), and no beneficiary or other person claiming under or through such employee,
shall have any right, title or interest in or to any Common Stock allocated or reserved for
purposes of the Plan or subject to any Incentive except as to shares of Common Stock, if any, as
shall have been issued to such employee.



     (d) Governing Law. The Plan, and all agreements hereunder, shall be construed in
accordance with and governed by the laws of the State of Illinois.



     (e) Withholding of Taxes. The Company may withhold, or allow an Incentive holder to
remit to the Company, any Federal, state or local taxes applicable to any grant, exercise, vesting,
distribution or other event giving rise to income tax liability with respect to an Incentive. In
order to satisfy all or a portion of the income tax liability that arises with respect to any
Incentive, the holder of the Incentive may elect to surrender previously acquired Common Stock or
to have the Company withhold Common Stock that would otherwise have been issued pursuant to the
exercise of an Option or in connection with any other Incentive; provided that any withheld Common
Stock, or any surrendered Common Stock previously acquired from the Company and held by the
Incentive holder for less than six months, may only be used to satisfy the minimum tax withholding
required by law.



     (f) Non-transferability; Exceptions. Except as provided in this Section 13(f), no
Incentive may be assigned or subjected to any encumbrance, pledge or charge of any nature. Under
such rules and procedures as the Committee may establish, the holder of an Incentive may transfer
such Incentive to members of the holder’s immediate family (i.e., children, grandchildren and
spouse) or to one or more trusts for the benefit of such family members or to partnerships in which
such family members are the only partners, provided that (i) the agreement, if any, with respect to
such Incentives, expressly so permits or is amended to so permit, (ii) the holder does not receive
any consideration for such transfer, and (iii) the holder provides such documentation or
information concerning any such transfer or transferee as the Committee may reasonably request.
Any Incentives held by any transferees shall be subject to the same terms and conditions that
applied immediately prior to their transfer. The Committee may also amend the agreements
applicable to any outstanding Incentives to permit such transfers. Any Incentive not granted
pursuant to any agreement expressly permitting its transfer or amended expressly to permit its
transfer shall not be transferable. Such transfer rights shall in no event apply to any Incentive
Stock Option.



     (g) Forfeiture of Incentives. Except for an Incentive that becomes vested pursuant to
Section 12, the Committee may immediately forfeit an Incentive, whether vested or unvested, if the
holder competes with the Company or engages in conduct that, in the opinion of the Committee,
adversely affects the Company.



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     (h) Beneficiary Designation. Under such rules and procedures as the Committee may
establish, each Key Employee may designate a beneficiary or beneficiaries to succeed to any rights
which the Key Employee may have with respect to Options, Stock Appreciation Rights, Stock Awards or Performance Units at the time of his or her death. The designation may be changed
or revoked by the Key Employee at any time. No such designation, revocation or change shall be
effective unless made in writing on a form provided by the Company and delivered to the Company
prior to the Key Employee’s death. If a Key Employee does not designate a beneficiary or no
designated beneficiary survives the Key Employee, then his or her beneficiary shall be the Key
Employee’s estate.







Section 14. Amendment or Discontinuance of the Plan.




     (a) Amendment or Discontinuance. The Plan may be amended or discontinued by the Board
from time to time, provided that without the approval of stockholders, no amendment shall be made
which (i) amends Section 4 to increase the aggregate Common Stock that may be issued pursuant to
Incentives, (ii) amends the provisions of Section 12, (iii) permits any person who is not a Key
Employee to be granted an Incentive, (iv) permits Common Stock to be valued at, or permits the
exercise price of Options at the grant date to be, less than Fair Market Value, (v) amends the
provisions of Section 8 to change the method of establishing the amount the Company shall
distribute upon exercise of a Stock Appreciation Right, (vi) amends the provisions of Section 7(b)
to increase the value which may be specified for Performance Units or amends any other provision of
the Plan, the amendment of which would require stockholder approval in order to continue to satisfy
the performance-based compensation exemption under Code Section 162(m) and the related regulations
with respect to any Incentive awarded to any Covered Employee, (vii) changes the maximum number of
shares of Common Stock that may be awarded to any employee in any year pursuant to Options, Stock
Awards or Stock Appreciation Rights, or (viii) amends this Section 14.



     (b) Effect of Amendment or Discontinuance on Incentives. No amendment or
discontinuance of the Plan by the Board or the stockholders of the Company shall adversely affect
any Incentive theretofore granted without the consent of the holder.







Section 15. Options Granted Under the Premark Plan.




     Pursuant to the merger of the Premark Plan into the 1996 Stock Incentive Plan effective May 9,
2003, each Option granted under the Premark Plan prior to such date shall be assumed by the 1996
Stock Incentive Plan and shall be subject to the requirements set forth below.



     (a) Administration by the Committee. The Committee shall have the full power,
discretion and authority to interpret and administer the Options previously granted under the
Premark Plan in a manner which is consistent with the provisions of the 1996 Stock Incentive Plan,
the terms of the applicable Option agreements, and the requirements of applicable law.



     (b) Option Grants. Any grants of Options to individuals who had previously been
eligible for grants under the Premark Plan prior to the Company’s merger with Premark



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International, Inc. have been made under the 1996 Stock Incentive Plan subsequent to the merger and
will continue to be granted pursuant to the terms of the 1996 Stock Incentive Plan.




     (c) Option Agreements. Each Option granted under the Premark Plan is evidenced by an
Option agreement, the terms of which shall continue in effect.



     (d) Premark Plan Provisions. Except as set forth in this Section 15 or in any
outstanding Option agreement, the provisions of the Premark Plan shall terminate and have no effect
as of May 9, 2003.





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