Document:

ITW Exhibit 10.3

Exhibit 10.3

Retention and Incentive Award

Illinois Tool Works Inc. (“ITW”) is considering strategic alternatives that may result in the separation of the Industrial Packaging Segment (the “Business”) from the rest of ITW (any such separation is referred to in this letter agreement as, the “Transaction”).  In appreciation for your continued support and dedication to the Business, which includes the successful execution and closing of the Transaction (the “Closing”); ITW is offering you a Retention and Incentive Award (“Award”).

		
	1.
	Eligibility for payment.  You are eligible to receive a Retention and Incentive Award and P&O Bonus as set forth and subject to additional conditions in Sections 2 and 3, if after the closing of the Transaction your employment transfers to the successor interest of the business, and you remain employed by and fully engaged in the Business until payment date(s).  If, however, prior to payment date, your employment is involuntarily terminated by ITW, the Business or any successor in interest to the Business for any reason other than for Cause or you leave employment for Good Reason you will receive the payment.

		
	2.
	Retention and Incentive Award.  The Award will consist of two components, as described below:

		
	a)
	ITW Long Term Incentive Plan ("LTIP").     Effective upon the Closing of the Transaction, the following modifications shall be made to any stock options, company  growth  plan  ("CGP")  awards,  and  performance restricted  stock  units ("PRSUs") you possess under the ITW Long Term Incentive Plan ("LTIP") granted prior to 2014:

		
	i.
	100% Vesting acceleration

		
	ii.
	Stock Option Exercise Period: You will then have one (1) year following the Closing of the Transaction to exercise any outstanding stock option grant including options  subject  to the vesting acceleration  provision  set forth  in Section 1(a)(i) herein (unless a provision under the original grant agreement (e.g. in case of Death or Disability) would have provided for longer than one (1) year, in which case the original grant agreement shall govern the exercise period); however, in no case will such extension to the exercise period extend beyond the original grant life.

		
	iii.
	PRSU:  Shares will be delivered after the performance period based on the payout level certified by the Compensation Committee.

		
	iv.
	CGP Payment:  Any unvested CGP grant subject to the vesting acceleration provision will be paid at the target level within 90 days following the Closing.

		
	b)   
	Cash Bonus Award.  The Award will also include a cash bonus payment in the amount of $600,000 (“Cash Bonus Award”).

The value of the award will not be adjusted based upon any future changes to your annual base salary or other compensation.  The Cash Bonus Award is payable in a lump sum payment less all taxes or other applicable deductions that are normally  deducted or in  accordance with applicable legal requirements and will be paid as soon as administratively  possible following six (6) months after the Closing of the Transaction.

3.  ITW Executive Incentive Program ("P&O Bonus").  Participants in the ITW Executive Incentive Program ("P&O Bonus") are normally required to be employed at the end of the award year to be eligible 

for any P&O Bonus.  In the event that the Closing occurs prior to the end of the award year, you will be eligible for a P&O Bonus for the award year, paid on a pro-rata basis covering the period from January 1 to the Closing.  The P&O Bonus will be paid as soon as administratively possible following the final settlement of the closing balance sheet and related adjustments, if any, or according to the standard timeline indicated in the ITW Executive Incentive Program, whichever is sooner.  The pro-rata P&O Bonus will be calculated at Closing as follows:  the P Factor will be calculated using Year-to­-Date actual performance as of most recent completed month-end prior to Closing compared to the corresponding period of time in the prior year and the O Factor will be calculated based on year-to-date achievement of your O Factors (as determined by ITW).  To be eligible for a pro-rata P&O Bonus, you must remain actively employed by fully engaged in the Business following the Closing and (1) until the completion of the final settlement of the closing balance sheet and related adjustments, and (2) on the P&O Bonus payment date.

4.  Termination of Your Employment

		
	a)
	You will not be entitled to any Award or P&O Bonus if, prior to payment, (1) you voluntarily terminate your employment without “Good Reason,” (2) you die, or (3) your employment is terminated for "Cause".   

		
	b)
	For purposes of this agreement, “Good Reason” means (i) a 10% reduction in your salary and/or bonus opportunity, (ii) a material adverse change in your role, duties or responsibilities, (iii) reassignment to a work location more than 30 miles from your current principal place of employment, (iv) not being offered continued employment with any successor in interest to the Business, (v) declining continued employment with any successor in interest to the Business because the proposed terms of employment would trigger “Good Reason,” or (vi) any other material breach of this Severance Agreement or the Retention and Severance Award.  

 
		
	c)
	For purposes of this Severance Agreement, "Cause" means (i) your commission  of an act of dishonesty, fraud, misrepresentation,  embezzlement  or actua1/attempted intentional physical violence or other offensive contact  against ITW, the Business, any successor  in interest to the Business, or any of their respective employees, clients, or suppliers; (ii) your material breach of any of your obligations  under this Severance Agreement, or any other agreement  between you and ITW, the Business or any successor in interest to the Business; (iii) a material violation of the written  policies of  ITW, the  Business  or any  successor  in interest  to the Business which is likely to cause ITW, the Business or a successor to suffer economic or reputational injury;  (iv)  your  willful refusal to  perform your essential duties  for ITW or the Business  or any successor in interest  to the Business, or to follow the lawful written directions of ITW, the Business or any successor in interest to the Business; (v) your conviction  of, or plea of no contest to, any felony or any crime involving  moral turpitude; (vi) any willful act or reckless omission by you which is, or is reasonably likely to be, injurious to the financial condition or business reputation of ITW, the Business, any successor in interest to the Business, or any of their respective employees, clients, or suppliers; (viii) your inability, as a result  of alcohol or drug use, to perform the essential duties and/or responsibilities of your position.  Notwithstanding the foregoing, no act omission which is curable shall constitute grounds for “Cause,” unless you 

have receive detailed written notice of the alleged act or omission and failed to cure within ten (10) business days.

5.          Impact on Other Bonus and Benefits.   Any Award or P&O Bonus will be in addition to any other bonus or benefit to which you may be entitled under any ITW plan or program in which you are a current participant.

6.    Protection of Information.   In further consideration of the foregoing agreements by ITW:

a)   During  and  after  your  employment,  you  agree not to  directly  or  indirectly  utilize or disclose to anyone outside of ITW trade secrets or other confidential information of ITW or the Business (including confidential  information entrusted  to ITW by any third party or which was developed in the course of, or as a result of your employment with ITW) so long as such information is not generally known to the public.  Examples of confidential information  include, but are not limited to, customer and supplier lists, pricing, margins, business  and marketing  plans  and  strategy,  technical  know-how,  formulae,  processes, designs, manufacturing techniques and software.

b)   You acknowledge  and agree that (i) ITW, through its various subsidiaries, divisions  and affiliates,   designs,  engineers,   manufactures   and  sells   its  products  and  services   to customers throughout the world; (ii) ITW has expended a great deal of time, money  and effort to develop and maintain its confidential,  proprietary and trade secret information, the misuse or disclosure of which could be very harmful to ITW's  business; and (iii) you have had access to  ITW's  confidential,  proprietary and trade secret information  in the course of your employment.

c)   You acknowledge and agree, in light of the scope of ITW's businesses and its legitimate interests in protecting its businesses, confidential information, customer relationships and customer  goodwill that the provisions contained  in section (a) above are reasonable  and should be fully enforceable.

7.          Confidentiality.    You undertake to keep the existence of this letter agreement and the terms and conditions of this letter agreement and Award, and the circumstances giving rise to the payment confidential.

You may, however, divulge the terms of this letter agreement to members of your immediate family, and legal, tax or financial advisors, provided you ensure their compliance with this confidentiality provision.  Any breach of this confidentiality provision by you or anyone connected to you will cause you to forfeit any and all payments under this letter agreement.

8.          Please acknowledge your agreement with the terms of this letter agreement by signing and returning all pages of this letter agreement not later than seven (7) calendar days from the date of this letter agreement (or such later date as may be required by local law).

9.     Other Important Information.

		
	a)   
	Plan Interpretations.  You agree that ITW has full and complete authority, in good faith, (i) to construe, interpret and implement this letter agreement and any related document, including, for example, eligibility for and entitlement to benefits; and (ii)  to   make  all  determinations  

necessary or advisable in administering  this  letter agreement.  The good faith actions of ITW on all matters relating to this letter agreement will be final, binding and conclusive on all parties.

		
	b)   
	Non Assignability.     Except as otherwise determined by ITW, you may not assign or transfer this letter agreement or any payments or benefits under this letter agreement to anyone.

		
	c)   
	No Right to Continued Employment.  Nothing in this letter agreement constitutes an offer to  you  of  any  fixed  period  of  employment  up  to  the  Closing,  the  Closing  date  or thereafter.   Except as specifically provided herein, this letter agreement does not affect the terms of your employment with ITW or the Business or ITW's or the Business's rights in any way.

d)   Counterparts.  This letter agreement may be executed in separate counterparts, each such counterpart being deemed  to  be an original  instrument,  and all such counterparts  will together constitute the same agreement.

		
	e)   
	Governing Law.  This letter agreement and all actions taken under this letter agreement will be governed by, and construed in accordance with, the laws of the country in which you  currently  maintain  your  primary  residence  without  regard  to the  conflict  of  law principles thereof. This letter agreement may be modified by ITW in its discretion, if needed, in order to be compliant by applicable law and regulations.

		
	f)    
	Section 409A.   All amounts payable under this Agreement are intended to comply with the "short term deferral" exception from Section 409A of the Internal Revenue Code ('"Section 409A") specified in Treas. Reg.§409A-l(b)(4) (or any successor provision) or the separation pay Agreement exception specified in Treas. Reg.§409A-l(bX9) (or any successor  provision), and shall be interpreted in a manner consistent with those exceptions. Notwithstanding the foregoing, to the extent that any amounts payable in accordance with this Agreement are subject to Section 409A, the Agreement shall be interpreted and administered in such a way as to comply with the applicable provisions of Section 409A to the maximum extent possible.    To  the extent  that  the Agreement  is subject to Section 409A and fails to comply with the requirements of Section 409A, ITW or Affiliates reserve the right (without any obligation to do so) to amend or terminate the Agreement to comply with the applicable provisions of Section 409A or not be subject to Section 409A.  If  payment of any amount of "deferred compensation" (as defined under Section 409A ) is triggered  by a separation from service that occurs while the employee is a "specified  employee"  (as  defined  under Section  409A)    with  respect  to  ITW  or Affiliates,  and if such amount  is scheduled to be paid within six (6) months after such separation  from service,  the amount shall accrue without  interest and shall  be paid the first  business day after the end of such six-month  period, or, if earlier, within 15 days after the appointment of the personal representative or executor of the Employee's estate following  the Employee's death.   Each payment of compensation under the Agreement shall be treated as a separate payment of compensation for purposes of applying Section 409A.    "Termination  of  employment,''  "resignation", "separation" or words  of similar import, as used in this Agreement shall mean, with respect to any payments of deferred compensation  subject  to Section  409A  of the Code, the employee's   ''separation  from service" as defined in Section 409A.

We believe that you are, and continue to be, a key player in the success of the Business and will be instrumental in the successful completion of the contemplated Transaction.

Regards,
ILLINOIS TOOL WORKS INC.

By: /s/ E. Scott Santi                     5/1/13                
       E. Scott Santi                    Date
President and Chief Executive Officer    
    

I accept the terms and conditions of this letter agreement:

/s/Craig Hindman                    4/30/13                
Craig Hindman                    Date
Executive Vice PresidentITW Exhibit 10.4

Exhibit 10.4

Severance Agreement

To provide you with a greater sense of security, Illinois  Tool  Works  Inc. ("ITW" or  the "Company) is offering  you this Severance Agreement in the event the  Industrial  Packaging  Segment (the "Business") separates from the rest of ITW (any such separation  from ITW is referred to in this Severance Agreement as the "Transaction") and if you are terminated within twenty-four (24)   months after the close date of the Transaction (including continued employment with its successor in interest  in the Business, if any), subject  to the terms  and  conditions described below.  Any severance benefits contained herein are contingent upon the execution of a signed release on behalf of the Employee in a form as determined by the Company.

Severance Benefit

A.   Eligibility for Severance Benefits.  You will be eligible for severance benefits on the terms and conditions set forth below if any of the following conditions is met:
		
	1)
	You are terminated without cause or resign for Good Reason prior to a Transaction but after an executed letter of intent; or

		
	2)
	There is a Transaction, and within 24 months of such Transaction, you are subsequently terminated without Cause or you resign for Good Reason. 

B.   Amount and Form of Severance Benefits. Your severance benefit will be a lump sum cash payment equa1 to two times the sum of your annual base salary plus your target annual bonus (e.g.  80% achievement of your P&O Bonus opportunity) at the rate in effect the date of your separation from ITW, less all taxes or other applicable deductions that are normally deducted or in accordance with applicable legal requirements; provided that any reduction in base pay triggering the right to resign for Good Reason will not be taken into account when determining base pay hereunder.  You shall also receive any annual bonus from the previously completed year that has not yet been paid at the time of your termination and full vesting of any outstanding grant under the ITW Long-term Incentive Plan provided, however, that the amount of any such cash payments shall be reduced by an amount equal to the aggregate amount of any other cash payments in the nature of severance payments paid or payable by the Company or any other Employer or any Subsidiary pursuant to any agreement, policy, program, arrangement or requirement of statutory or common law (other than this Policy or cash payments received in lieu of stock incentives):  

C.   Impact on Other Severance Benefits. This severance benefit will be reduced by the value of any other severance, separation or other termination benefit from the Business or its ultimate parent corporation or any affiliate thereof under any plan or program.

D.   Termination of your Employment.  You will not be entitled to any severance benefit if (1) you voluntarily terminate your employment without “Good Reason,” (2) you die, or (3) your employment is terminated for "Cause".   For purposes of this Severance Agreement, “Good Reason” means (i) a material reduction of more than 20% in aggregate in your salary and/or bonus opportunity, (ii) a material adverse change in your role, duties or responsibilities, (iii) reassignment to a work location more than 30 miles from your current principal place of employment, (iv) not being offered continued employment with any successor in interest to the Business, (v) declining continued employment with any successor in interest to the Business because the proposed terms of employment would trigger “Good Reason,” or (vi) any other material breach of this Severance Agreement or the Retention and Severance Award.   For purposes of this Severance Agreement, "Cause" means (i) your commission of an act of dishonesty, fraud, misrepresentation,  

embezzlement  or actua1/attempted intentional physical violence or other offensive contact  against ITW, the Business, any successor  in interest to the Business, or any of their respective employees, clients, or suppliers; (ii) your material breach of any of your obligations  under this Severance Agreement, or any other agreement  between you and ITW, the Business or any successor in interest to the Business; (iii) a material violation of the written  policies of  ITW, the  Business  or any  successor  in interest  to the Business which is likely to cause ITW, the Business or a successor to suffer economic or reputational injury;  (iv)  your  willful refusal to  perform your essential duties for ITW or the Business  or any successor in interest  to the Business, or to follow the lawful written directions of ITW, the Business or any successor in interest to the Business; (v) your conviction  of, or plea of no contest to, any felony or any crime involving  moral turpitude; (vi) any willful act or reckless omission by you which is, or is reasonably likely to be, injurious to the financial condition or business reputation of ITW, the Business, any successor in interest to the Business, or any of their respective employees, clients, or suppliers; (viii) your inability, as a result  of alcohol or drug use, to perform the essential duties and/or responsibilities of your position.  Notwithstanding the foregoing, no act omission which is curable shall constitute grounds for “Cause,” unless you have receive detailed written notice of the alleged act or omission and failed to cure within ten (10) business days.

E.   Expiration.  This Severance Agreement and any benefits and entitlements set forth herein shall automatically expire, be null and void and of no further value on the date that is twenty-four (24) months following any Transaction that is consummated. 

Confidentiality

You agree to keep the existence of this Severance Agreement and the terms and conditions of this Severance Agreement confidential.  You may, however, divulge the terms of this Severance Agreement  to members  of  your  immediate  family,  and  legal,  tax  or  financial  advisors,  provided  you  ensure  their compliance  with this confidentiality  provision.   Any breach of this confidentiality provision by you or anyone connected to you will cause you to forfeit any and all payments under this Severance Agreement.

Other Important Information

A.   Assignability.  You may not assign or transfer this Severance Agreement or any payments or benefits under this Severance agreement to anyone.   You understand and agree that the Company  may assign  or transfer  its obligations,  rights  and  interests  in this  Severance  Agreement  to a successor   in interest to all, or a portion, of the Business.

B.  No Right to Continued Employment.   Nothing in this Severance Agreement constitutes an offer to you of any fixed period of employment up to the closing date of the Transaction, the Transaction closing date or thereafter.    This Severance Agreement does not limit in any way the right of the Business to  change  your  compensation  or  other  benefits  or to terminate  your  employment  or other  service  in compliance  with your current terms of employment and/or under applicable law; provided any payment due under the terms of this Severance Agreement has been satisfied.

C.  Counterparts.  This Severance Agreement may be executed in separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement.

D.   Governing Law.  This  Severance  Agreement  and  all  actions  taken  under  this  Severance Agreement  will  be  governed  by, and  construed  in accordance  with, the laws  of the State of  Illinois 

without regard to the conflict of law principles thereof    This Severance Agreement may be modified,  if needed, in order to be compliant by applicable law and regulations.

Please acknowledge  your agreement with the terms of this Severance Agreement by signing  and returning  all pages of this Severance Agreement not later than seven (7) calendar days from the date set forth above (or such later date as may be required by local law).

We believe that you are, and continue to be, a key player in the success of the Business and hope this arrangement provides you with a greater sense of security and motivation to continue to drive its growth and performance.

Regards,
ILLINOIS TOOL WORKS INC.

By: /s/ E. Scott Santi                    5/1/13                
E. Scott Santi                    Date
President and Chief Executive Officer        
    

I accept the terms and conditions of this Severance Agreement:

/s/ Craig Hindman                    4/30/13                
Craig Hindman                    Date
Executive Vice President

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