As amended October 17,
2008
THE STANLEY WORKS
1997 LONG-TERM INCENTIVE PLAN
The purposes of
this Long-Term Incentive Plan (the “Plan”) are to
encourage selected salaried employees of The Stanley Works
(together with any successor thereto, the “Company”)
and selected salaried employees and non-employee directors of its
Affiliates (as defined below) to acquire a proprietary interest in
the growth and performance of the Company, to generate an increased
incentive to contribute to the Company’s future success and
prosperity, thus enhancing the value of the Company for the benefit
of its shareholders, and to enhance the ability of the Company and
its Affiliates to attract and retain exceptionally qualified
individuals upon whom, in large measure, the sustained progress,
growth and profitability of the Company depend.
As used in the
Plan, the following terms shall have the meanings set forth
below:
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(a)
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“Affiliate” shall mean
(i) any entity that, directly or through one or more
intermediaries, is controlled by the Company and (ii) any
entity in which the Company has a significant equity interest, as
determined by the Committee.
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(b)
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“Award” shall mean any
Option, Stock Appreciation Right, Restricted Stock, Restricted
Stock Unit, Performance Award, Dividend Equivalent, or Other
Stock-Based Award granted under the Plan.
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(c)
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“Award Agreement” shall
mean any written agreement, contract, or other instrument or
document evidencing any Award granted under the Plan.
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(d)
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“Board of Directors” or
“Board” shall mean the Board of Directors of the
Company.
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(e)
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“Code” shall mean the
Internal Revenue Code of 1986, as amended from time to
time.
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(f)
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“Committee” shall mean
the Compensation and Organization Committee of the
Board.
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(g)
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“Dividend Equivalent”
shall mean any right granted under Section 6(e) of the
Plan.
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(h)
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“Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended from time to
time.
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(i)
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“Fair Market Value”
shall mean, with respect to any property other than Shares, the
fair market value of such property determined by such methods or
procedures as shall be established from time to time by the
Committee, and with respect to Shares, shall mean the mean average
of the high and the low price of a Share as quoted on the New York
Stock Exchange Composite Tape on the date as of which fair market
value is to be determined or, if there is no trading of Shares on
such date, such mean average of the high and the low price on the
next preceding date on which there was such trading.
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(j)
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“Immediate family
members” of a Participant shall mean the Participant’s
children, grandchildren and spouse.
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(k)
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“Incentive Stock Option”
shall mean an option granted under Section 6(a) of the Plan that is
intended to meet the requirements of Section 422 of the Code,
or any successor provision thereto.
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(l)
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“1990 Plan” shall mean
the Company’s 1990 Stock Option Plan.
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(m)
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“Non-Employee Director”
shall mean any non-employee director of an Affiliate.
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(n)
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“Non-Qualified Stock
Option” shall mean an option granted under Section 6(a) of
the Plan that is not intended to be an Incentive Stock
Option.
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(o)
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“Option” shall mean an
Incentive Stock Option or a Non-Qualified Stock Option.
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(p)
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“Other Stock-Based
Award” shall mean any right granted under Section 6(f) of the
Plan.
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(q)
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“Participant” shall mean
a Salaried Employee designated to be granted an Award under the
Plan.
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(r)
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“Performance Award”
shall mean any Award granted under Section 6(d) of the
Plan.
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(s)
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“Person” shall mean any
individual, corporation, partnership, association, joint-stock
company, trust, unincorporated organization, or government or
political subdivision thereof.
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(t)
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“Released Securities”
shall mean securities that were Restricted Securities with respect
to which all applicable restrictions have expired, lapsed, or been
waived.
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(u)
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“Restricted Securities”
shall mean securities covered by Awards of Restricted Stock or
other Awards under which issued and outstanding Shares are held
subject to certain restrictions.
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(v)
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“Restricted Stock” shall
mean any Share granted under Section 6(c) of the Plan.
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(w)
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“Restricted Stock Unit”
shall mean any right granted under Section 6(c) of the Plan that is
denominated in Shares.
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(x)
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“Salaried Employee”
shall mean any salaried Employee of the Company or of any
Affiliate.
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(y)
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“Shares” shall mean
shares of the common stock of the Company, par value $2.50 per
share, and such other securities or property as may become the
subject of Awards, or become subject to Awards, pursuant to an
adjustment made under Section 4(b) of the Plan.
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(z)
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“Stock Appreciation
Right” shall mean any right granted under Section 6(b) of the
Plan.
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Section 3. Administration
Except as
otherwise provided herein, the Plan shall be administered by the
Committee. Subject to the terms of the Plan and applicable law, the
Committee shall have full power and authority to:
(i) designate Participants; (ii) determine the type or
types of Awards to be granted to each Participant under the Plan;
(iii) determine the number of Shares to be covered by (or with
respect to which payments, rights, or other matters are to be
calculated in connection with) Awards; (iv) determine the terms and
conditions of any Award; (v) determine whether, to what
extent, and under what circumstances Awards may be settled or
exercised in cash, Shares, other securities, other Awards, or other
property, or canceled, forfeited, or suspended, and the method or
methods by which Awards may be settled, exercised, canceled,
forfeited, or suspended; (vi) determine in accordance with the
requirements of Section 409A of the Code whether, to what
extent, and under what circumstances cash, Shares, other
securities, other Awards, other property and other amounts payable
with respect to an Award under the Plan shall be deferred either
automatically or at the election of the holder thereof or of the
Committee; (vii) interpret and administer the Plan and any
instrument or agreement relating to, or Award made under, the Plan;
(viii) establish, amend, suspend, or waive such rules and
regulations and appoint such agents as it shall deem appropriate
for the proper administration of the Plan; and (ix) make any
other determination and take any other action that the Committee
deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with
respect to the Plan or any Award shall be within the sole
discretion of the Committee, may be made at any time, and shall be
final, conclusive, and binding upon all Persons, including the
Company, any Affiliate, any Participant, any holder or beneficiary
of any Award, any shareholder, and any employee of the Company or
of any Affiliate. All elective deferrals permitted pursuant to this
Section 3 shall be accomplished by the delivery of a written,
irrevocable election by the Participant on a form provided by the
Company. All deferrals shall be made in accordance with
administrative guidelines established by the Committee to ensure
that such deferrals comply with all applicable requirements of
Section 409A of the Code. The Committee may credit interest,
at such rates to be determined by the Committee, on cash payments
that are deferred and credit dividends or dividend equivalents on
deferred payments denominated in the form of Shares. The Committee
may, in its discretion, require deferral of payment of any Award
(other than an Option or Stock Appreciation Right) or portion
thereof if the deduction with
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respect to such
payment would, or could in the reasonable anticipation of the
Committee, not be permitted due to the application of Section
162(m) of the Code.
Section 4. Shares Available for
Awards
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(a)
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Shares Available.
Subject to adjustment as
provided in Section 4(b):
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(i)
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Calculation of Number of Shares
Available. The number of Shares authorized to
be issued in connection with the granting of Awards under the Plan
is four million (4,000,000), and the number of Shares available for
granting Awards under the Plan in each fiscal year or, in the case
of the years 1997 and 2007, part thereof shall be two percent (2%)
of the issued Shares (including, without limitation, treasury
Shares) as of the first day of such year; provided, however, that
the number of Shares available for granting Awards in any year
shall be increased in any such year by the number of Shares
available under the Plan in previous years but not covered by
Awards granted under the Plan in such years. Further, if any Shares
covered by an Award granted under the Plan or by an award granted
under the 1990 Plan, or to which such an Award or award relates,
are forfeited, or if an Award or award otherwise terminates without
the delivery of Shares or of other consideration, or if upon the
termination of the 1990 Plan there are Shares remaining that were
authorized for issuance under that Plan but with respect to which
no awards have been granted, then the Shares covered by such Awards
or award, or to which such Award or award relates, or the number of
Shares otherwise counted against the aggregate number of Shares
available under the Plan with respect to such Award or award, to
the extent of any such forfeiture or termination, or which were
authorized for issuance under the 1990 Plan but with respect to
which no awards were granted as of the termination of the 1990 Plan
shall again be, or shall become available for granting Awards under
the Plan. Notwithstanding the foregoing but subject to adjustment
as provided in Section 4(b), no more than one million (1,000,000)
Shares shall be cumulatively available for delivery pursuant to the
exercise of Incentive Stock Options.
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(ii)
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Accounting for Awards.
For purposes of this
Section 4,
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(A)
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if
an Award (other than a Dividend Equivalent) is denominated in
Shares, the number of Shares covered by such Award, or to which
such Award relates, shall be counted on the date of grant of such
Award against the aggregate number of Shares available for granting
Awards under the Plan; and
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(B)
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Dividend Equivalents and Awards not
denominated in Shares shall be counted against the aggregate number
of Shares available for granting Awards under the Plan, if at all,
only in such amount and at such time as the Committee shall
determine under procedures adopted by the Committee consistent with
the purposes of the Plan;
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provided,
however, that Awards that operate in tandem with (whether granted
simultaneously with or at a different time from), or that are
substituted for, other Awards or awards granted under the 1990 Plan
may be counted or not counted under procedures adopted by the
Committee in order to avoid double counting. Any Shares that are
delivered by the Company, and any Awards that are granted by, or
become obligations of, the Company through the assumption by the
Company or an Affiliate of, or in substitution for, outstanding
awards previously granted by an acquired company, shall not be
counted against the Shares available for granting Awards under the
Plan.
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(iii)
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Sources of Shares Deliverable Under
Awards. Any
Shares delivered pursuant to an Award may consist, in whole or in
part, of authorized and unissued Shares or of treasury
Shares.
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(b)
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Adjustments. In the event that the Committee
shall determine that any dividend or other distribution (whether in
the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation split-up, spin-off, combination repurchase,
or exchange of Shares or other securities of the Company, issuance
of warrants or other rights to purchase Shares or other securities
of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the
Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such
manner as it may deem equitable, adjust any or all of (i) the
number and type of Shares (or other securities or property) which
thereafter may be made the subject of Awards, (ii) the number
and type of Shares (or other securities or property) subject to
outstanding Awards, (iii) the number and type of Shares (or
other securities or property) specified as the annual
per-participant limitation under Section 6(g)(vi), and
(iv) the grant, purchase, or exercise price with respect to
any Award, or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award; provided, however,
in each case, that with respect to Awards of Incentive Stock
Options no such adjustment shall be authorized to the extent that
such authority would cause the Plan to violate
Section 422(b)(1) of the Code or any successor provision
thereto; and provided further, however, that the number of Shares
subject to any Award denominated in Shares shall always be a whole
number.
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Any Salaried
Employee, including any officer or employee-director of the Company
or of any Affiliate, and any Non-Employee Director, who is not a
member of the Committee shall be eligible to be designated a
Participant.
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(a)
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Options. The Committee is hereby authorized
to grant Options to Participants with the following terms and
conditions and with such additional terms and conditions, in either
case not inconsistent with the provisions of the Plan, as the
Committee shall determine:
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(i)
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Exercise Price.
The purchase price per
Share purchasable under an Option shall be determined by the
Committee; provided, however, that such purchase price shall not be
less than the Fair Market Value of a Share on the date of grant of
such Option (or, if the Committee so determines, in the case of any
Option retroactively granted in tandem with or in substitution for
another Award or any outstanding award granted under any other plan
of the Company, on the date of grant of such other Award or
award).
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(ii)
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Option Term. The term of each Option shall be
fixed by the Committee.
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(iii)
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Time and Method of
Exercise. The
Committee shall determine the time or times at which an Option may
be exercised in whole or in part, and the method or methods by
which, and the form or forms, including, without limitation, cash,
Shares, other Awards, or other property, or any combination
thereof, having a Fair Market Value on the exercise date equal to
the relevant exercise price, in which, payment of the exercise
price with respect thereto may be made or deemed to have been
made.
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(iv)
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Incentive Stock Options.
The terms of any
Incentive Stock Option granted under the plan shall comply in all
respects with the provisions of Section 422 of the Code, or
any successor provision thereto, and any regulations promulgated
thereunder. No Incentive Stock Option shall be granted to any
Non-Employee Director who is not otherwise an employee of the
Company or any of its Affiliates.
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(v)
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Transferability.
An Option shall not be
transferable other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order,
as defined in the Code, and, during the Participant’s
lifetime, shall be exercisable only by the Participant, except that
the Committee may:
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(A)
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permit exercise, during the
Participant’s lifetime, by the Participant’s guardian
or legal representative; and
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(B)
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permit transfer, upon the
Participant’s death, to beneficiaries designated by the
Participant in a manner authorized by the Committee, provided that
the Committee determines that such exercise and such transfer are
consonant with requirements for exemption from Section 16(b) of the
Exchange Act and, with respect to an Incentive Stock Option, the
requirements of Section 422(b)(5) of the Code; and
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(C)
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grant Non-Qualified Stock Options
that are transferable, or amend outstanding Non-Qualified Stock
Options to make them so transferable, without payment of
consideration, to immediate family members of the Participant or to
trusts or partnerships for such family members.
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(b)
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Stock Appreciation
Rights. The
Committee is hereby authorized to grant Stock Appreciation Rights
to Participants. Subject to the terms of the Plan and any
applicable Award Agreement, a Stock Appreciation Right granted
under the Plan shall confer on the holder thereof a right to
receive, upon exercise thereof, the excess of (i) the Fair
Market Value of one Share on the date of exercise over
(ii) the grant price of the right as specified by the
Committee, which shall not be less than the Fair Market Value of
one Share on the date of grant of the Stock Appreciation Right (or,
if the Committee so determines, in the case of any Stock
Appreciation Right retroactively granted in tandem with or in
substitution for another Award or any outstanding award granted
under any other plan of the Company, on the date of grant of such
other Award or award). Subject to the terms of the Plan and any
applicable Award Agreement, the grant price, term, methods of
exercise, methods of settlement, and any other terms and conditions
of any Stock Appreciation Right shall be as determined by the
Committee. The Committee may impose such conditions or restrictions
on the exercise of any Stock Appreciation Right as it may deem
appropriate.
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(c)
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Restricted Stock and Restricted
Stock Units.
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(i)
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Issuance. The Committee is hereby authorized
to grant Awards of Restricted Stock and Restricted Stock Units to
Participants.
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(ii)
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Restrictions.
Shares of Restricted
Stock and Restricted Stock Units shall be subject to such
restrictions as the Committee may impose (including, without
limitation, any limitation on the right to vote a Share of
Restricted Stock or the right to receive any dividend or other
right or property), which restrictions may lapse separately or in
combination at such time or times, in such installments or
otherwise, as the Committee may deem appropriate.
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(iii)
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Registration.
Any Restricted Stock
granted under the Plan may be evidenced in such manner as the
Committee may deem appropriate, including, without limitation,
book-entry registration or issuance of a stock certificate or
certificates. In the event any stock certificate is issued in
respect of Shares
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