THE STANLEY WORKS
2009 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. An Award
Agreement may be in an electronic medium.
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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
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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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“Full Value Award” shall
mean an Award that is settled by the issuance of Shares, other than
a Stock Option or Stock Appreciation Right.
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(k)
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“Immediate family
members” of a Participant shall mean the Participant’s
child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing
the employee’s household (other than a tenant or employee), a
trust in which these persons have more than fifty percent of the
beneficial interest, a foundation in which these persons (or the
employee) control the management of assets, and any other entity in
which these persons (or the employee) own more than fifty percent
of the voting interests.
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(l)
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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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(m)
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“1997 Plan” shall mean
the Company’s 1997 Long-Term Incentive Plan.
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(n)
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“Non-Employee Director”
shall mean any non-employee director of an Affiliate.
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(o)
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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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(p)
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“Option” shall mean an
Incentive Stock Option or a Non-Qualified Stock Option.
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(q)
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“Other Stock-Based
Award” shall mean any right granted under Section 6(f) of the
Plan.
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(r)
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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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(s)
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“Performance Award”
shall mean any Award granted under Section 6(d) of the
Plan.
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(t)
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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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(u)
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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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(v)
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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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(w)
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“Restricted Stock” shall
mean any Share granted under Section 6(c) of the Plan.
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(x)
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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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(y)
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“Salaried Employee”
shall mean any salaried employee of the Company or of any
Affiliate.
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(z)
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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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(aa)
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“Stock Appreciation
Right” shall mean any right granted under Section 6(b) of the
Plan.
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(bb)
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“2001 Plan” shall mean
the Company’s 2001 Long-Term Incentive 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
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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 five million one hundred
thousand (5,100,000). If any Shares covered by an Award granted
under the Plan or by an award granted under the 2001 Plan or 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, 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, 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 two million five hundred thousand (2,500,000)
Shares shall be cumulatively available for issuance in connection
with the payment or settlement of Full Value Awards.
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(ii)
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Accounting for Awards
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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 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
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a
different time from), or that are substituted for, other Awards or
awards granted under the 2001 Plan or the 1997 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 Sections 6(g)(vi) and
6(g)(viii), 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; provided, however, that in no event shall
the term of any Option exceed a period of ten years from the date
of its grant.
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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 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
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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 of the Participant.
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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 in cash or
Shares, at the Company’s sole discretion, 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; provided that no Stock Appreciation Right shall be
exercisable more than ten (10) years from the date of grant.
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, subject to Section 6(e), 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 of Restricted
Stock granted under the Plan, such certificate shall be registered
in the name of the Participant and shall bear
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