As amended October 17,
2008
THE STANLEY WORKS
2001 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 shareowners, 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.
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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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“1997 Plan” shall mean
the Company’s 1997 Long-Term Incentive 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 or non-employee director 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 shareowner, 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 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 ten million (10,000,000). If
any Shares covered by an Award granted under the Plan or by an
award granted under the 1997 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 1997 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 1997 Plan but with respect to which no awards were
granted as of the termination of the 1997 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), (A) no more than one million (1,000,000)
Shares shall be cumulatively available for delivery pursuant to the
exercise of Incentive Stock Options and (B) no more than one
million (1,000,000) Shares shall be cumulatively available for
granting as Restricted Stock or Restricted Stock Units.
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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; 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 1997 Plan may be counted or not counted
under procedures adopted by the Committee in order to avoid double
counting. Any Shares
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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 issuan
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