Exhibit
4.7
THE STANLEY WORKS
2009
LONG-TERM INCENTIVE PLAN
As amended effective March 12,
2010
Section 1.
Purpose
The purposes of this Long-Term Incentive Plan (the
“
Plan
”
), as amended
effective March 12, 2010 (the “Amendment Effective Date”), 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.
Section 2.
Definitions
As used in the Plan, the following terms shall have the meanings set
forth below:
(a) “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.
(b) “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.
(c) “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.
(d) “Board of Directors” or “Board” shall mean the Board of
Directors of the Company.
(e) “Code” shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(f) “Committee” shall mean the Compensation and Organization
Committee of the Board.
(g) “Dividend Equivalent” shall mean any right granted under
Section 6(e) of the Plan.
(h) “Exchange Act” shall mean the Securities Exchange Act of
1934, as amended from time to time.
(i) “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.
(j) “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.
(k) “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.
(l) “1997 Plan” shall mean the Company’s 1997 Long-Term
Incentive Plan.
(m) “Non-Employee Director” shall mean any non-employee director
of an Affiliate.
(n) “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.
(o) “Option” shall mean an Incentive Stock Option or a
Non-Qualified Stock Option.
(p) “Other Stock-Based Award” shall mean any right granted under
Section 6(f) of the Plan.
(q) “Participant” shall mean a Salaried Employee or Non-Employee
Director designated to be granted an Award under the Plan.
(r) “Performance Award” shall mean any Award granted under
Section 6(d) of the Plan.
(s) “Person” shall mean any individual, corporation,
partnership, association, joint-stock company, trust, unincorporated
organization, or government or political subdivision thereof.
(t) “Released Securities” shall mean securities that were
Restricted Securities with respect to which all applicable restrictions have
expired, lapsed, or been waived.
(u) “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.
(v) “Restricted Stock” shall mean any Share granted under
Section 6(c) of the Plan.
(w) “Restricted Stock Unit” shall mean any right granted under
Section 6(c) of the Plan that is denominated in Shares.
(x) “Salaried Employee” shall mean any salaried employee of the
Company or of any Affiliate.
(y) “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.
(z) “Stock Appreciation Right” shall mean any right granted
under Section 6(b) of the Plan.
(aa) “2001 Plan” shall mean the Company’s 2001 Long-Term
Incentive Plan.
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 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
(a)
Shares
Available.
Subject to adjustment as provided in
Section 4(b):
(i)
Calculation of Number of Shares
Available.
The number of Shares authorized to be issued in
connection with the granting of Awards under the Plan (which, for purposes of
clarity, shall include any Shares delivered pursuant to Awards granted under the
Plan prior to the Amendment Effective Date) is thirteen million two hundred
thousand (13,200,000). 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), no more than one million
(1,000,000) Shares shall be cumulatively available for delivery pursuant to
the exercise of Incentive Stock Options. In the case of any Awards granted under
the Plan following the Amendment Effective Date, (x) each Share with
respect to which an Option or stock-settled Stock Appreciation Right is granted
under the Plan shall reduce the aggregate number of Shares that may be delivered
under the Plan by one Share and (y) each share with respect to which any
other Award denominated in Shares is granted under the Plan shall reduce the
aggregate number of Shares that may be delivered under the Plan by
2.25 Shares.
(ii)
Accounting for
Awards
. For purposes of this Section 4,
(A) 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
(B) 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 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.
(iii)
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.
(b)
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.
Section 5.
Eligibility
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.
Section 6.
Awards
(a)
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:
(i)
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).
(ii)
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.
(iii)
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.
(iv)
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.
(v)
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:
(A) permit exercise, during the Participant’s lifetime, by the
Participant
’
s
guardian or legal representative; and
(B) 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
(C) 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.
(b)
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.
(c)
Restricted
Stock and Restricted Stock Units
.
(i)
Issuance.
The
Committee is hereby authorized to grant Awards of Restricted Stock and
Restricted Stock Units to Participants.
(ii)
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.
(iii)
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 an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted Stock.
(iv)
Forfeiture
. Except
as otherwise determined by the Committee, upon termination of employment (as
determined under criteria established by the Committee) for any reason during
the applicable restriction period, all Shares of Restricted Stock and all
Restricted Stock Units still, in either case, subject to restriction shall be
forfeited and reacquired by the Company; provided, however, that the Committee
may, when it finds that a waiver would be in the best interests of the Company,
waive in whole or in part any or all remaining restrictions with respect to
Shares of Restricted Stock or Restricted Stock Units. Unrestricted Shares,
evidenced in such manner as the Committee shall deem appropriate,
shall be delivered to the holder of Restricted Stock promptly after
such Restricted Stock shall become Released Securities.
(v)
Restricted
Stock Units.
Notwithstanding anything to the contrary in the
Plan or in any Award Agreement, Restricted Stock Units shall be subject to the
following requirements. Unless previously forfeited, and subject to
Section 10(b), Restricted Stock Units shall be settled on the 30th day
following the earliest of (I) the applicable vesting date set forth in the
Award Agreement, (II) the Participant’s death, (III) the
Participant
’
s
separation from service within the meaning of Section 409A of the Code
after attaining the age of 55 and completing 10 years of service or as a
result of a disability within the meaning of Section 22(e)(3) of the Code.
If the Committee reasonably anticipates that making a payment in respect of
Restricted Stock Units may violate Federal securities laws or other applicable
law, such payment may be delayed and made in accordance with Section 409A
of the Code and
Section 1.409A-2(b)(7)(ii)
of the
Treasury Regulations thereunder.
(d)
Performance
Awards.
The Committee is hereby authorized to grant
Performance Awards to Participants. Subject to the terms of the Plan and any
applicable Award Agreement, a Performance Award granted under the Plan
(i) may be denominated or payable in cash, Shares (including without
limitation, Restricted Stock), other securities, other Awards, or other property
and (ii) shall confer on the holder thereof rights valued as determined by
the Committee and payable to, or exercisable by, the holder of the Performance
Award, in whole or in part, upon the achievement of such performance goals
during such performance periods as the Committee shall establish.
Performance goals shall be based on one or more of the following
criteria, determined in accordance with generally accepted accounting
principles, where applicable: (i) pre-tax income or after-tax income;
(ii) earnings including operating income, earnings before or after taxes,
earnings before or after interest, depreciation, amortization, or extraordinary
or special items; (iii) net income excluding amortization of intangible
assets, depreciation and impairment of goodwill and intangible assets;
(iv) operating income; (v) earnings or book value per share (basic or
diluted); (vi) return on assets (gross or net), return on investment,
return on capital, or return on equity; (vii) return on revenues;
(viii) net tangible assets (working capital plus property, plants and
equipment) or return on net tangible assets (operating income divided by average
net tangible assets) or working capital; (ix) operating cash flow
(operating income plus or minus changes in working capital less capital
expenditures); (x) cash flow, free cash flow, cash flow return on
investment (discounted or otherwise), net cash provided by operations, or cash
flow in excess of cost of capital; (xi) sales or sales growth;
(xii) operating margin or profit margin; (xiii) share price or total
shareholder return; (xiv) earnings from continuing operations;
(xv) cost targets, reductions or savings, productivity or efficiencies;
(xvi) economic value added; and (xvii) strategic business criteria,
consisting of one or more objectives based on meeting specified market
penetration or market share, geographic business expansion, customer
satisfaction, employee satisfaction, human resources management, financial
management, project management, supervision of litigation, information
technology, or goals relating to divestitures, joint ventures or similar
transactions.
Where applicable, the performance goals may be expressed in terms of
attaining a specified level of the particular criterion or the attainment of a
percentage increase or decrease in the particular criterion, and may be applied
to one or more of the Company or a parent or subsidiary of the Company, or a
division or strategic business unit of the Company, all as determined by the
Committee. The performance goals may include a threshold level of performance
below which no payment will be made (or no vesting will occur), levels of
performance at which specified payments will be paid (or specified vesting will
occur) and a maximum level of performance above which no additional payment will
be made (or at which full vesting will occur).
Subject to the terms of the Plan and any applicable Awards Agreement,
the performance goals to be achieved during any performance period, the length
of any performance period, the amount of any Performance Award granted, and the
amount of any payment or transfer to be made pursuant to any Performance Award
shall be determined by the Committee.
(e)
Dividend
Equivalents.
The Committee is hereby authorized to grant to
Participants Awards (other than Awards in respect of Options and Stock
Appreciation Rights) under which the holders thereof shall be
entitled to receive payments equivalent to dividends or interest with
respect to a number of Shares determined by the Committee, and the Committee may
provide that such amounts (if any) shall be deemed to have been reinvested in
additional Shares or otherwise reinvested. Dividend equivalents credited in
respect of an Award will vest (or be forfeited) and will settle at the same time
as the underlying Award to which they relate. Subject to the terms of the Plan
and any applicable Awards Agreement, such Awards may have such additional terms
and conditions as the Committee shall determine.
(f)
Other
Stock-Based Awards.
The Committee is hereby authorized to
grant to Participants such other Awards that are denominated or payable in,
valued in whole or in part by reference to, or otherwise based on or related to,
Shares (including, without limitation, securities convertible into Shares), as
are deemed by the Committee to be consistent with the purposes of the Plan,
provided, however, that such grants must comply with applicable law. Subject to
the terms of the Plan and any applicable Award Agreement, the Committee shall
determine the terms and conditions of such Awards. Shares or other securities
delivered pursuant to a purchase right granted under this Section 6(f)
shall be purchased for such consideration, which may be paid by such method or
methods and in such form or forms, including, without limitation, cash, Shares,
other securities, other Awards, or other property, or any combination thereof,
as the Committee shall determine, the value of which consideration, as
established by the Committee, shall not be less than the Fair Market Value of
such Shares or other securities as of the date such purchase right is granted
(or, if the Committee so determines, in the case of any such purchase 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).
(g)
General
.
(i)
No Cash
Consideration for Awards.
Awards may be granted for no cash
consideration or for such minimal cash consideration as may be required by
applicable law.
(ii)
Awards
May Be Granted Separately or Together
. Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in
tandem with, or in substitution for any other Award or any awards granted under
any other plan of the Company or any Affiliate. Awards granted in addition to or
in tandem with other Awards, or in addition to or in tandem with awards granted
under any other plan of the Company or any Affiliate, may be granted either at
the same time as or at a different time from the grant of such other Awards or
awards.
(iii)
Forms of
Payment Under Awards
. Subject to the terms of the Plan and of
any applicable Award Agreement, payments or transfers to be made by the Company
or an Affiliate upon the grant, exercise, or payment of an Award may be made in
such form or forms as the Committee shall determine, including, without
limitation, cash, Shares, other securities, other Awards, or other property, or
any combination thereof, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case in accordance with rules and
procedures established by the Committee. Such rules and procedures may include,
without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting of
Dividend Equivalents in respect of installment or deferred payments.
(iv)
Limits on
Transfer of Awards
. Except as provided in Section 6(a)
above regarding Options, no Award (other than Released Securities), and no right
under any such Award, shall be assignable, alienable, saleable, or transferable
by a Participant otherwise than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order, as defined in
the Code (or, in the case of an Award of Restricted Securities, to the Company);
provided, however, that, if so determined by the Committee, a Participant may,
in the manner established by the Committee, designate a beneficiary or
beneficiaries to exercise the rights of the Participant, and to receive any
property distributable, with respect to any Award upon the death of the
Participant. Each Award, and each right under any Award, shall be exercisable,
during the Participant’s lifetime, only by the Participant or, if permissible
under applicable law, by the Participant’s guardian or legal representative. No
Award (other than Released Securities), and no right under any such Award, may
be pledged, alienated, attached, or otherwise encumbered, and any purported
pledge, alienation, attachment, or encumbrance thereof shall be void and
unenforceable against the Company or any Affiliate. Except as
permitted under Section 409A of the Code, any deferred compensation (within
the meaning of Section 409A of the Code) payable to Participant or for a
Participant
’
s
benefit under this Plan and Awards hereunder may not be reduced by, or offset
against, any amount owing by a Participant to the Company or any Affiliate.
(v)
Terms of
Awards.
The Term of each Award shall be for such period as may
be determined by the Committee; provided, however, that in no event shall the
term of any Incentive Stock Option exceed a period of ten years from the date of
its grant.
(vi)
Per-Person Limitation on Options and
SARs
. The number of Shares with respect to which Options and
SARs may be granted under the Plan to an individual Participant in any
three-year period from January 4, 2009 through the end of the term shall
not exceed four million (4,000,000) Shares, subject to adjustment as
provided in Section 4(b).
(vii)
Share
Certificates
. All certificates for Shares or other securities
delivered under the Plan pursuant to any Award or the exercise thereof shall be
subject to such stop transfer orders and other restrictions as the Committee may
deem advisable under the Plan or the rules, regulations, and other requirements
of the Securities and Exchange Commission, any stock exchange upon which such
Shares or other securities are then listed, and any applicable Federal or state
securities laws, and the Committee may cause a legend or legends to be put on
any such certificates to make appropriate reference to such restrictions.
(viii)
Maximum
Payment Amount
. The maximum fair market value of payments to
any executive officer made in connection with any long-term performance awards
(except for payments made in connection with Options or Stock Appreciation
Rights) granted under the Plan shall not, during any three-year period, exceed
four percent of the Company’s shareholders’ equity as of the end of the
year immediately preceding the commencement of such three-year period.
Section 7. Amendment and
Termination
Except to the extent prohibited by applicable law and unless
otherwise expressly provided in an Award Agreement or in the Plan:
(a)
Amendments
to the Plan.
The Board of Directors of the Company may amend,
alter, suspend, discontinue, or terminate the Plan, including, without
limitation, any amendment, alteration, suspension, discontinuation, or
termination that would impair the rights of any Participant, or any other holder
or beneficiary of any Award theretofore granted, without the consent of any
shareholder, Participant, other holder or beneficiary of an Award, or other
Person; provided, however, that, notwithstanding any other provision of the Plan
or any Award Agreement, without the approval of the shareholders of the Company
no such amendment, alteration, suspension, discontinuation, or termination shall
be made that would:
(i) increase the total number of Shares available for Awards
under the Plan, except as provided in Section 4 hereof; or
(ii) permit Options, Stock Appreciation Rights, or other
Stock-Based Awards encompassing rights to purchase Shares to be granted with per
Share grant, purchase, or exercise prices of less than the Fair Market Value of
a Share on the date of grant thereof, except to the extent permitted under
Sections 6(a), 6(b), or 6(f) hereof.
(b)
Adjustments of Awards Upon Certain
Acquisitions.
In the event the Company or any Affiliate shall
assume outstanding employee awards or the right or obligation to make future
such awards in connection with the acquisition of another business or another
corporation or business entity, the Committee may make such adjustments, not
inconsistent with the terms of the Plan, in the terms of Awards as it shall deem
appropriate in order to achieve reasonable comparability or other equitable
relationship between the assumed awards and the Awards granted under the Plan as
so adjusted.
(c)
Adjustments of Awards Upon the
Occurrence of Certain Unusual or Nonrecurring Events
. The
Committee shall be authorized to make adjustments in the terms and conditions
of, and the criteria
included in, Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in Section 4(b)
hereof) affecting the Company, any Affiliate, or the financial statements of the
Company or any Affiliate, or of changes in applicable laws, regulations, or
accounting principles, whenever the Committee determines that such adjustments
are appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits to be made available under the Plan; provided that such
adjustments shall be consistent with the requirements of Section 162(m) of the
Code with regard to Awards subject to Section 162(m) of the Code.
(d)
Certain
Adjustments of Awards Not Permitted.
Except in connection with
an event or transaction described in subsections (b) or (c) or
Section 4(b), the terms of outstanding Awards may not be amended to reduce
the purchase price per share purchasable under an Option or the grant price of
Stock Appreciation Rights, or cancel outstanding Options or Stock Appreciation
Rights in exchange for cash, other Awards or Options or Stock Appreciation
Rights with a purchase price per share or grant price, as applicable, that is
less than the purchase price per share or grant price of the original Options or
Stock Appreciation Rights, as applicable, without shareholder approval.
(e)
Correction
of Defects, Omissions and Inconsistencies.
The Committee may
correct any defect, supply any omission, or reconcile any inconsistency in the
Plan or any Award in the manner and to the extent it shall deem desirable to
carry the Plan into effect.
Section 8. General
Provisions
(a)
No Rights
to Awards.
No Salaried Employee, Participant or other Person
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Salaried Employees, Participants, or
holders or beneficiaries of Awards under the Plan. The terms and conditions of
Awards need not be the same with respect to each recipient.
(b)
Delegation.
The
Committee may delegate to one or more officers or managers of the Company or any
Affiliate, or a committee of such officers or managers, the authority, subject
to such terms and limitations as the Committee shall determine, to grant Awards
to, or to cancel, modify, waive rights with respect to, alter, discontinue,
suspend or terminate Awards held by, Salaried Employees who are not officers of
the Company for purposes of Section 16 of the Exchange Act.
(c)
Withholding.
The
Company or any Affiliate shall be authorized to withhold from any Award granted
or any payment due or transfer made under any Award or under the Plan the
minimum amount (in cash, Shares, other securities, other Awards, or other
property) of withholding taxes due in respect of an Award, its exercise, or any
payment or transfer under such Awards or under the Plan and to take such other
action as may be necessary in the opinion of the Company or Affiliate to satisfy
all obligations for the payment of such taxes.
(d)
No Limit
on Other Compensation Arrangements
. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing in
effect other or additional compensation arrangements, and such arrangements may
be either generally applicable or applicable only in specific cases.
(e)
No Right
to Employment.
The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company or
any Affiliate. Further, the Company or an Affiliate may at any time dismiss a
Participant from employment, free from any liability, or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Award Agreement.
(f)
Governing
Law.
The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Connecticut and applicable Federal law.
(g)
Severability.
If
any provision of the Plan or any Award is or becomes or is deemed to be invalid,
illegal, or unenforceable in any jurisdiction, or as to any Person or Award, or
would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the
determination of the Committee, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction,
Person, or Award, and the remainder of the Plan and any such Award shall remain
in full force and effect.
(h)
No Trust
or Fund Created.
Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(i)
No
Fractional Shares.
No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Shares, or whether such fractional Shares or any
rights thereto shall be canceled, terminated, or otherwise eliminated.
(j)
Headings.
Headings
are given to the Sections and subsections of the Plan solely as a convenience to
facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan or any provision
thereof.
Section 9. Change in
Control
(a) Upon the occurrence of a Change in Control (as hereinafter
defined), unless otherwise determined by the Committee and set forth in an Award
Agreement:
(i) all Options and Stock Appreciation Rights, whether granted
as performance awards or otherwise, shall become immediately exercisable in full
for the remainder of their terms, and Grantees shall have the right to have the
Company purchase all or any number of such Options or Stock Appreciation Rights
for cash for a period of thirty (30) days following a Change in Control at
the Option Acceleration Price (as hereinafter defined); and
(ii) all restrictions applicable to all Restricted Stock and
Restricted Stock Units, whether such Restricted Stock and Restricted Stock Units
were granted as performance awards or otherwise, shall immediately lapse and
have no effect, and Grantees shall have the right to have the Company purchase
all or any number of such Restricted Stock Units and shares of Restricted Stock
for cash for a period of thirty (30) days following a Change in Control at
the Restricted Stock Acceleration Price (as hereinafter defined).
(iii) In addition, for each Option or Stock Appreciation Right
with a purchase price per share or grant price, as applicable, that is greater
than the consideration offered in connection with any Change in Control, the
Committee may in its sole discretion elect to cancel such Option or Stock
Appreciation Right without any payment to the person holding such Option or
Stock Appreciation Right.
(b)
(i)
The
“
Restricted Stock
Acceleration Price
”
is the highest of
the following on the date of a Change in Control:
(A) the highest reported sales price of a share of the Common
Stock within the sixty (60) days preceding the date of a Change in Control,
as reported on any securities exchange upon which the Common Stock is listed,
(B) the highest price of a share of the Common Stock reported in
a Schedule 13D or an amendment thereto as paid within the sixty
(60) days preceding the date of the Change in Control,
(C) the highest tender offer price paid for a share of the
Common Stock, and
(D) any cash merger or similar price paid for a share of the
Common Stock.
(ii) The
“
Option
Acceleration Price
”
is the excess of
the price received by shareholders of the Company for one Share pursuant to the
Change in Control over the exercise price or the grant price of the award;
provided, however, that the Option Acceleration Price is limited to the spread
between the Fair Market Value
(which shall be based on the per Share price received by the
shareholders of the Company pursuant to such Change in Control) and the exercise
price or grant price. In the event the Change in Control is effected pursuant to
a stock-for-stock transaction, the price received by shareholders of the Company
for one Share pursuant to the Change in Control shall be calculated using the
exchange ratio applied in the transaction.
(c) A
“
Change in
Control
”
shall be deemed to have occurred if the event set forth in any one of the
following paragraphs shall have occurred:
(I) any Person, as hereinafter defined, is or becomes the
Beneficial Owner, as hereinafter defined, directly or indirectly, of securities
of the Company, as hereinafter defined, (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its Affiliates) representing 25% or more of the combined voting power
of the Company’s then outstanding securities, excluding any Person who becomes
such a Beneficial Owner in connection with a transaction described in
clause (i) of paragraph (III) below; or
(II) the following individuals cease for any reason to
constitute a majority of the number of directors then serving: individuals who,
on the date hereof, constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the Company’s
shareholders was approved or recommended by a vote of at least two thirds (2/3)
of the directors then still in office who either were directors on
December 17, 2003 or whose appointment, election or nomination for election
was previously so approved or recommended; or
(III) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any other
corporation or other entity, other than (i) a merger or consolidation which
results in the voting securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity
or any parent thereof) at least 50% of the combined voting power of the
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities Beneficially Owned by such Person any securities acquired directly
from the Company or its Affiliates) representing 25% or more of the combined
voting power of the Company’s then outstanding securities; or
(IV) the shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an agreement
for the sale or disposition by the Company of all or substantially all of the
Company’s assets, other than a sale or disposition by the Company of all or
substantially all of the Company’s assets to an entity, at least 50% of the
combined voting power of the voting securities of which are owned by
shareholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale.
(V) Notwithstanding any provision of this Plan to the contrary,
to the extent an award shall be deemed to be vested or restrictions lapse,
expire or terminate upon the occurrence of a Change in Control and such Change
in Control is not described by Section 409A(a)(2)(A)(v) of the Code, then
any resulting payment permitted by Section 9 that would be considered
deferred compensation under Section 409A of the Code will instead be made
to the Participant on the 30th day following the earliest of (A) the
Participant’s
“
separation from
service
”
with
the Company (determined in accordance with Section 409A of the Code);
(B) the date payment otherwise would have been made in the absence of any
provisions in this Plan to the contrary (provided such date is permissible under
Section 409A of the Code), or (C) the Participant’s death.
(d) Solely for purposes of Section 9(c) and (d), and
notwithstanding anything to the contrary in any other provision of this Plan,
the following terms shall have the meanings indicated below:
1.
“
Beneficial
Owner
”
shall have the meaning set forth in
Rule 13d-3
under the Exchange Act.
2.
“
Company
”
shall mean
The Stanley Works.
3.
“
Person
”
shall have
the meaning given in Section 3(a)(9) of the Exchange Act, as modified and
used in Sections 13(d) and 14(d) thereof, except that such term shall not
include (i) the Company or any of its subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company.
Section 10. Compliance with
Section 409A of the Code.
(a) To the extent applicable, it is intended that this Plan and
any grants made hereunder comply with the provisions of Section 409A of the
Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code
do not apply to Participants. This Plan and any Awards granted hereunder shall
be administered in a manner consistent with this intent. Any reference in this
Plan to Section 409A of the Code will also include any regulations or any
other formal guidance promulgated with respect to such Section by the
U.S. Department of the Treasury or the Internal Revenue Service.
(b) If at the time of a Participant’s separation from service
(within the meaning of Section 409A of the Code), (i) the Participant
shall be a specified employee (within the meaning of Section 409A of the
Code and using the identification methodology selected by the Company from time
to time) and (ii) the Company shall make a good faith determination that an
amount payable hereunder constitutes deferred compensation (within the meaning
of Section 409A of the Code) the payment of which is required to be delayed
pursuant to the six-month delay rule set forth in Section 409A of the Code in
order to avoid taxes or penalties under Section 409A of the Code, then the
Company shall not pay such amount on the otherwise scheduled payment date but
shall instead pay it, without interest, on the first business day of the seventh
month after such six-month period or, if earlier, on the Participant’s death.
(c) Notwithstanding any provision of this Plan or of any Award
Agreement to the contrary, in light of the uncertainty with respect to the
proper application of Section 409A of the Code, the Company reserves the
right to make amendments to this Plan and any Award Agreements as the Company
deems necessary or desirable to avoid the imposition of taxes or penalties under
Section 409A of the Code. In any case, a Participant shall be solely
responsible and liable for the satisfaction of all taxes and penalties that may
be imposed on a Participant or for a Participant’s account in connection with
this Plan and any Award Agreements (including any taxes and penalties under
Section 409A of the Code), and neither the Company nor any of its
affiliates shall have any obligation to indemnify or otherwise hold a
Participant harmless from any or all of such taxes or penalties.
Section 11. Effective Date of
the Plan
The Plan was originally effective as of January 4, 2009. The
effective date of this amendment and restatement of the Plan shall be as
of March 12, 2010.
Section 12. Term of the
Plan
No Award shall be granted under the Plan after January 3, 2019.
However, unless otherwise expressly provided in the plan or in an applicable
Award Agreement, any Award theretofore granted may extend beyond such date, and
the authority of the Committee to amend, alter, or adjust any such Award, or to
waive any conditions or rights under any such Award, and the authority of the
Board of Directors of the Company to amend the Plan, shall extend beyond such
date.