Exhibit 4.2
As amended May 24, 2001
THE STANLEY WORKS
BYLAWS
ARTICLE I
SHAREHOLDERS' MEETINGS
1. Annual Meeting. The Annual Meeting of the shareholders shall be held at such
time in the month of February, March or April in each year and at such place
within or without the State of Connecticut as the Board of Directors may
determine. Notice thereof shall be mailed to each shareholder to his or her
last known post office address not less than ten days nor more than sixty
days before such Meeting.
2. Special Meetings. Special Meetings of the shareholders shall be called by the
Chairman, or the President or Secretary, or by the Chairman, or the President
or Secretary upon the written request of the holders of not less than 35% of
the voting power of all shares entitled to vote on any issue proposed to be
considered at such Meeting by mailing a notice thereof to each shareholder to
his or her last known post office address not less than twenty-five days nor
more than fifty days before such Meeting.
3. Quorum. At any Meeting of shareholders the holders of not less than a
majority of the shares outstanding and entitled to vote present in person or
by proxy shall constitute a quorum. The Directors may establish a record
date for voting or other purposes in accordance with law.
4. Business to be Conducted at Annual Meeting. No business may be transacted at
an Annual Meeting of shareholders (including any adjournment thereof), other
than business that is either (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors
(or any duly authorized committee thereof), (b) otherwise properly brought
before the Annual Meeting by or at the direction of the Board of Directors
(or any duly authorized committee thereof) or (c) otherwise properly brought
before the Annual Meeting by any shareholder (i) who is a shareholder of
record on the date of the giving of the notice provided for in this Section 4
and on the record date for the determination of shareholders entitled to vote
at such Annual Meeting and (ii) who complies with the notice procedures set
forth in this Section 4.
1
In addition to any other applicable requirements, for business to be properly
brought before an Annual Meeting by a shareholder, such shareholder must have
given timely notice thereof in proper written form to the Secretary.
To be timely, a shareholder's notice to the Secretary must be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than sixty (60) days nor more than ninety (90) days prior to the
anniversary of the date on which the immediately preceding Annual Meeting of
shareholders was convened; provided, however, that in the event that the
Annual Meeting is called for a date that is not within thirty (30) days
before or after such anniversary date, notice by the shareholder in order to
be timely must be so received not later than the close of business on the
tenth (10th) day following the day on which such notice of the date of the
Annual Meeting was mailed or such public disclosure of the date of the Annual
Meeting was made, whichever first occurs.
To be in proper written form, a shareholder's notice to the Secretary must
set forth as to each matter such shareholder proposes to bring before the
Annual Meeting (i) a brief description of the business desired to be brought
before the Annual Meeting and the reasons for conducting such business at the
Annual Meeting, (ii) the name and record address of such shareholder, (iii)
the class or series and number of shares of capital stock of the Corporation
which are owned beneficially or of record by such shareholder, (iv) a
description of all arrangements or understandings between such shareholder
and any other person or persons (including their names) in connection with
the proposal of such business by such shareholder and any material interest
of such shareholder in such business and (v) a representation that such
shareholder intends to appear in person or by proxy at the Annual Meeting to
bring such business before the meeting.
No business shall be conducted at the Annual Meeting of shareholders except
business brought before the Annual Meeting in accordance with the procedures
set forth in this Section 4, provided, however, that, once business has been
properly brought before the Annual Meeting in accordance with such
procedures, nothing in this Section 4 shall be deemed to preclude discussion
by any shareholder of any such business. If the Chairman of an Annual Meeting
determines that business was not properly brought before the Annual Meeting
in accordance with the foregoing procedures, the Chairman shall declare to
the meeting that the business was not properly brought before the meeting and
such business shall not be transacted.
2
ARTICLE II
NOMINATIONS OF DIRECTOR CANDIDATES
1. Eligibility to Make Nominations. Nominations of candidates for election as
directors of the Corporation at any meeting of shareholders called for
election of directors (an "Election Meeting") may be made by the Board of
Directors or by any shareholder entitled to vote at such Election Meeting.
2. Procedure for Nominations by the Board of Directors. Nominations made by the
Board of Directors shall be made at a meeting of the Board of Directors, or
by written consent of directors in lieu of a meeting, not less than 30 days
prior to the date of the Election Meeting, and such nominations shall be
reflected in the minute books for the Corporation as of the date made. At the
request of the Secretary of the Corporation each proposed nominee shall
provide the Corporation with such information concerning himself or herself
as is required, under the rules of the Securities and Exchange Commission, to
be included in the Corporation's proxy statement soliciting proxies for his
or her election as a director.
3. Procedure for Nominations by Shareholders. Not less than 30 days prior to the
date of the Election Meeting, any shareholder who intends to make a
nomination at the Election Meeting shall deliver a notice to the Secretary of
the Corporation setting forth (i) the name, age, business address and
residence address of each nominee proposed in such notice, (ii) the principal
occupation or employment of each such nominee, (iii) the number of shares of
capital stock of the Corporation which are beneficially owned by each such
nominee and (iv) such other information concerning each such nominee as would
be required, under the rules of the Securities and Exchange Commission, in a
proxy statement soliciting proxies for the election of such nominees.
4. Substitution of Nominees. In the event that a person is validly designated as
a nominee in accordance with section 2 or 3 hereof and shall thereafter
become unable or unwilling to stand for election to the Board of Directors, a
substitute nominee may be designated as follows:
(a) by those named as proxies in proxies solicited on behalf of the Board of
Directors if the person was designated as nominee in accordance with
section 2 hereof
(b) by the shareholder who proposed such nominee if the person was designated
as a nominee in accordance with section 3 hereof.
5. Determination of Compliance with Procedure.
If the chairman of the Election Meeting determines that a nomination was not
in accordance with the foregoing procedures, such nomination shall be void.
3
ARTICLE III
DIRECTORS AND COMMITTEES
1. Directors. The business, property and affairs of this Corporation shall be
managed by or under the direction of the Board of Directors consisting of not
less than eight nor more than eighteen Directors, the exact number to be
determined by the Board of Directors from time to time. All Directors shall
be shareholders of record. The Directors shall be divided into three classes
designated Class I, Class II and Class III. Such classes shall be as nearly
equal in number as the total number of Directors constituting the entire
Board of Directors permits. One class shall be chosen annually at the Annual
Meeting of shareholders and the members of such class shall hold office until
their successors be elected and qualified. The Directors may increase the
prescribed number of Directors by the concurring vote of a majority of the
prescribed number of Directors. Any increase or decrease in the prescribed
number of Directors shall be so apportioned among the classes of Directors as
to make all the classes as nearly equal in number as possible. No reduction
of the number of Directors shall remove or shorten the term of any Director
in office. A majority of the number of Directors prescribed shall constitute
a quorum for the transaction of business.
2. Meetings. The Chairman or the President or any Vice Chairman may and upon
written application of any three Directors shall call a meeting of the Board
of Directors to be held at such time and place as may be determined by the
person calling said meeting and shall cause notice thereof to be given.
Unless waived in writing, three days verbal or written (mail) notice shall be
required provided, however, that if in the judgment of any two officers an
emergency exists, a meeting may be called forthwith by telephone or facsimile
or verbal notice and such notice shall be deemed sufficient notice
notwithstanding that some of the Directors may not have actual notice.
The Annual Meeting of the Directors for the election of officers shall be
held without notice, immediately after the Annual Meeting of shareholders.
Regular meetings of the Directors shall be held at least on a quarterly
basis.
3. Written Consent. If all the Directors, or all members of a committee of the
Board of Directors, as the case may be, severally or collectively consent in
writing to any action taken or to be taken by the Corporation, and the number
of such Directors or members constitutes a quorum for such action, such
action shall be a valid corporate action as though it had been authorized at
a meeting of the Board of Directors or committee, as the case may be. The
Secretary shall file such consents with the minutes of the Board of Directors
or of the committee, as the case may be.
4. Participation by Telephone. A Director may participate in a meeting of the
Board of Directors or of a committee by any means of communication by which
all Directors
4
participating in the meeting may simultaneously hear one another during the
meeting, and participation in a meeting pursuant to this subsection shall
constitute presence in person at such meeting.
5. Vacancies. In case any vacancy or vacancies shall exist in the Board of
Directors at any time the remaining members of the Board by majority action
may fill the vacancy or vacancies. The term of a Director elected to fill a
vacancy expires at the next shareholders meeting at which Directors are
elected.
6. Committees. The Board of Directors may from time to time appoint from its
membership such committees as it may deem necessary or desirable for the best
interests of the Corporation and may delegate to any committee all needful
authority to the extent permitted by law. The meetings of all committees are
open to all directors.
Each committee shall fix its own rules as to procedure and calling of
meetings. It shall appoint a Secretary, who need not be a member of the
committee. Such Secretary shall call meetings of the committee on the request
of the Chair of the committee or any two members and shall keep permanent
record of all of its proceedings. A majority of the members of any committee
shall constitute a quorum.
7. Executive Committee. The Directors shall appoint an Executive Committee
consisting of the Chairman, if any, the President and at least three other
Directors, but in no event shall the Committee consist of less than five
members. The Board of Directors may at any time decrease (subject to the
provisions of the preceding paragraph) or increase the size of said
Committee, may change the membership thereof and may fill vacancies therein.
During intervals between meetings of the Board of Directors, the Executive
Committee shall possess and may exercise all the powers of the Board of
Directors in the management of the business and affairs of the Corporation,
but the Committee shall have no power to declare dividends or do other things
specially reserved by law to the Directors. The Executive Committee shall
have power to appoint such subcommittees as it may deem necessary to report
and make recommendations to the Executive Committee. Any action taken by the
Executive Committee shall be subject to change, alteration and revision by
the Board of Directors, provided that no rights or acts of others shall be
affected by any such alteration or revision.
8. Finance and Pension Committee. A Finance and Pension Committee consisting of
at least three Directors shall be appointed by the Board of Directors. The
Committee shall advise and assist the Chief Financial Officer and the
Treasurer in major matters concerning the finances of the Corporation and in
matters of major policy decisions in the purchase and sale of securities. In
performance of this the Committee shall regularly review the financial
condition of the Corporation so as to counsel these officers and the
5
Board on the total financial resources, strength and capabilities of the
Corporation. In this connection, the Committee shall analyze and advise on
fundamental corporate changes in capital structure (both debt and equity);
review the capital structure of the Corporation and make recommendations with
respect to management proposals concerning financing, purchases of treasury
stock, investments, and dividend actions; review periodically the
Corporation's risk management program and its adequacy to safeguard the
Corporation against extraordinary liabilities or losses; and advise and
assist in matters such as short-term investments, credit liabilities,
financings, and hedges of foreign currency exposures.
The Committee shall oversee the Corporation's administration of its pension
plans and of the pension plans of its subsidiaries. The Committee shall be
responsible for setting (subject to the approval of the Board of Directors)
the retirement policies of the Corporation and its subsidiaries; for amending
pension plans, savings and retirement plans, stock ownership plans or any
similar plans or related trust agreements; and for approving actuarial
assumptions and investment policies for the Corporation's pension plans. It
shall report at least annually to the Board of Directors. The Committee may
delegate any or all of these functions to such employees as it, in its
judgment, deems appropriate.
Specifically, the Committee shall approve retaining or terminating the
services of actuaries, lawyers, accountants or other professionals for the
plans; shall approve annually the amount of the contributions to be made by
the Corporation to the respective plans; and shall approve appointing and
terminating trustees and investment managers and determine the allocation of
the assets of the plans among one or more trustees or investment managers.
9. Audit Committee. An Audit Committee consisting of at least three Directors
shall be appointed by the Board of Directors. Except as permitted by the
independence requirements of the New York Stock Exchange, none of the Audit
Committee members shall be officers or employees of the Corporation or any of
its affiliates. Audit Committee members shall have no relationship to the
Corporation that may interfere with the exercise of their independence from
management and the Corporation. Each member of the Audit Committee shall be
financially literate and at least one member shall have accounting or related
financial management expertise, as such qualifications are interpreted by the
Corporation's Board of Directors in its business judgment.
The responsibilities of the Audit Committee shall be to:
(a) Meet with the independent auditor prior to the audit to review the plan
and scope of the audit; meet with management and the independent auditor
to review the audited financial statements, including major issues and
developments regarding financial reporting and accounting matters; and
6
review the management letter prepared by the independent auditor and
management's responses.
(b) Discuss with the independent auditor the matters required to be
discussed on an annual or quarterly basis, as the case may be, under
generally accepted auditing standards and any other applicable laws or
regulations relating to the conduct of the audit.
(c) Meet periodically with management and the independent and internal
auditors to review the adequacy of the Corporation's system of internal
controls over financial reporting and the safeguarding of assets and
review significant risk and control exposures and the steps being taken
by management to monitor such exposures.
(d) Recommend to the Board of Directors the appointment of the independent
auditor, subject to shareholder approval, which firm is ultimately
accountable to the Audit Committee and the Board of Directors; approve
the fees to be paid to the independent auditor; receive and review with
the independent auditor periodic reports regarding the auditor's
independence and if so determined by the Audit Committee, recommend that
the Board of Directors take appropriate action to satisfy itself of the
independence of the auditor; and evaluate the performance of the
independent auditor and, if so determined by the Audit Committee,
recommend that the Board of Directors replace the independent auditor.
(e) Periodically review the audit plan, the internal audit department
responsibilities, budget, resources, skills and staffing; concur in the
appointment or replacement of the Director of Internal Audit; review at
least annually a summary of audit findings prepared by the internal
auditing department and management's responses.
(f) Review with the Corporation's General Counsel the Corporation's legal
compliance, including the Business Conduct Guidelines and legal,
regulatory or compliance matters that may have a material impact on the
financial statements.
(g) Evaluate the adequacy of the Corporation's Audit Committee Charter
annually and recommend any changes to the Board of Directors for
adoption.
(h) Perform any other oversight functions as requested by the Board of
Directors.
7
10. Compensation and Organization Committee. A Compensation and Organization
Committee consisting of at least three Directors, none of whom shall be
employees of the Corporation or any of its subsidiaries, shall be appointed
by the Board of Directors. The Committee shall review and approve major
organization and compensation structure changes as recommended by
Management. Although the Board, itself, will review the performance of the
chief executive officer and fix his or her salary, the Committee shall
approve the performance and determine the salaries of the other executive
officers of the Corporation and of other senior executives whose base salary
exceeds an amount fixed by the Board of Directors; shall determine the
compensation of all executive officers and such senior executives under the
Corporation's senior executive compensation plans; shall administer all of
the Corporation's senior executive compensation plans; and shall assure that
there is a succession plan in place.
11. Board Affairs Committee. A Board Affairs Committee consisting of at least
three directors, none of whom shall be employees of the Corporation or any
of its subsidiaries shall be appointed by the Board of Directors. The
Committee shall consider and make recommendations to the Board of Directors
as to Board of Director membership with respect to names generated by the
Committee itself or submitted by shareholders. The Committee shall consider
and make recommendations to the Board of Directors with respect to Board of
Director committee membership and chair assignments. (These will normally be
acted upon by the Board of Directors at its Annual Meeting held immediately
after the Annual Meeting of shareholders.) The Committee shall consider and
make recommendations to the Board of Directors with respect to the number of
members of the Board of Directors. (The Charter and Bylaws provide for not
less than eight nor more than eighteen as may be determined by the Board).
Annually, the Committee shall consider and recommend to the Board of
Directors the persons whom the Committee proposes that the Board of
Directors nominate for election as directors at the Annual Meeting of
shareholders. The Committee shall consider and make recommendations to the
Board of Directors with respect to remuneration of directors.
The Committee shall provide guidance to the Management on major issues in
areas of corporate social responsibility, including environmental issues and
public affairs. The Committee shall review and approve policy guidelines to
be used by Management in making charitable contributions and shall annually
review all charitable contributions made by the Corporation during the
previous twelve months and recommend to the Board the level of contributions
to be set for the ensuing year.
12. In the absence of any one or more members from a meeting of any of the
committees provided for in these Bylaws, the Chairman, or the President, may
in his or her discretion invite any member or members of the Board
(otherwise qualified to serve) to attend such meeting. Temporary members
thus appointed to attend for absentees shall act as regular members and
shall have the right to vote.
8
13. Powers of All Committees. The powers of all committees are at all times
subject to the control of the Directors, and any member of any committee
may be removed at any time at the pleasure of the Board.
ARTICLE IV
OFFICERS
1. Election of Officers. The Board of Directors shall have power to elect from
its own members or otherwise a Chairman, a President, one or more Vice
Chairmen and Vice Presidents, a Secretary, a Treasurer, one or more
Assistant Treasurers and Assistant Secretaries, and such other officers,
agents and employees as it may deem expedient, and to define the duties and
authority of all officers, employees and agents and to delegate to them such
lawful powers as may be deemed advisable.
The officers shall respectively perform all acts and duties required of such
officers by law, by the Charter and Bylaws of this Corporation, or by the
Board of Directors.
2. Chairman of the Board. If the Directors have elected a Chairman, the
Chairman shall preside at all meetings of the Board except that in the
Chairman's absence the Directors present shall designate a person to
preside. The Chairman shall have such additional duties as the Board of
Directors or the Executive Committee may assign.
3. President. The President shall be elected by the Directors and shall have
such duties as the Board of Directors or the Executive Committee may assign.
4. Chief Executive Officer. One of the officers shall be appointed Chief
Executive Officer of the Corporation by the Board of Directors. Subject to
the Board of Directors and the Executive Committee, the Chief Executive
Officer shall have general supervision and control of the policies, business
and affairs of the Corporation.
5. Vice Chairmen. Each Vice Chairman shall have such powers and perform such
duties as may be conferred upon him or her or determined by the Chief
Executive Officer.
6. Vice Presidents. Each Vice President shall have such powers and perform
such duties as may be conferred upon him or her or determined by the Chief
Executive Officer.
7. Treasurer. The Treasurer shall have the oversight and control of the funds
of the Corporation and shall have the power and authority to make and
endorse notes, drafts and checks and other obligations necessary for the
transaction of the business of the Corporation except as herein otherwise
provided.
8. Controller. The Controller shall have the oversight and control of the
accounting records of the Corporation and shall prepare such
9
accounting reports and recommendations as shall be appropriate for the
operation of the Corporation.
9. Secretary. It shall be the duty of the Secretary to make and keep records
of the votes, doings and proceedings of all meetings of the shareholders and
Board of Directors of the Corporation, and of its Committees, and to
authenticate records of the Corporation.
10. Assistant Treasurers. The Assistant Treasurers shall have such duties as
the Treasurer shall determine.
11. Assistant Secretaries. The Assistant Secretaries shall have such duties as
the Secretary shall determine.
12. Powers of All Officers. The powers of all officers are at all times subject
to the control of the Directors, and any officer may be removed at any time
at the pleasure of the Board.
ARTICLE V
INDEMNIFICATION
To the extent properly permitted by law the Board of Directors shall provide
for the indemnification and reimbursement of, and advances of expenses to,
any person made a party to any action, suit or proceeding by reason of the
fact that he or she, or a person whose legal representative or successor he
or she is,
(a) is or was a Director, officer, employee or agent of the Corporation, or
(b) served at the Corporation's request as a director, officer, employee or
agent of another corporation,
for expenses, including attorney's fees, and such amount of any
judgment, money decree, fine, penalty or settlement for which he or she
may have become liable as the Board of Directors deems reasonable,
actually incurred by him or her in connection with the defense or
reasonable settlement of any such action, suit or proceeding or any
appeal therein.
This provision of indemnification shall be in addition to any other right or
remedy which such person may have. The Corporation shall have the right to
intervene in and defend all such actions, suits or proceedings brought
against any such person.
ARTICLE VI
CORPORATE SEAL
10
The corporate seal shall be in the custody of the Secretary and either the
Secretary or any other officer shall have the power to affix the same for
the Corporation.
ARTICLE VII
STOCK CERTIFICATES
1. Signatures. Certificates of stock shall be signed by the Chairman, the
President or a Vice President and by the Secretary or the Treasurer (except
that where any such certificate is signed by a transfer agent or transfer
clerk and by the registrar, the signatures of any such Chairman, President,
Vice President, Secretary or Treasurer may be facsimiles, engraved or
printed) and shall be sealed with the seal of the corporation (or shall bear
a facsimile of such seal).
2. Lost Certificates. No certificate for shares of stock in the Corporation
shall be issued in place of any certificate alleged to have been lost, stolen
or destroyed except upon production of such evidence of such loss, theft or
destruction as the Board of Directors in its discretion may require and upon
delivery to the Corporation of a bond of indemnity in form and, unless such
requirement is waived by Resolution of the Board, with one or more sureties,
satisfactory to the Board in at least double the value of the stock
represented by said Certificate.
ARTICLE VIII
FISCAL YEAR
The Corporation's fiscal year shall close on the Saturday nearest December
31st of each year.
ARTICLE IX
INDEPENDENT AUDIT
The Board of Directors shall provide for a yearly independent audit, the form
and scope of which shall be determined by the Board from time to time.
11
ARTICLE X
AMENDMENTS
The Board of Directors of the Corporation may adopt, amend or repeal the
Bylaws of the Corporation, subject, however, to the power of the shareholders
to adopt, amend or repeal the same, provided that any notice of a meeting of
shareholders or of the Board of Directors at which Bylaws are to be adopted,
amended or repealed, shall include notice of such proposed action.
ARTICLE XI
ACQUISITIONS OF STOCK
(a) Except as set forth in subsection (b) hereof, the Corporation shall not
acquire any of its voting equity securities (as defined below) at a
price per share above the market price per share (as defined below) of
such securities on the date of such acquisition from any person actually
known by the Corporation to be the beneficial owner (as determined
pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, or any successor rule or regulation) of more than three percent
of the Corporation's voting equity securities who has been the
beneficial owner of the Corporation's voting equity securities for less
than two years prior to the date of the Corporation's acquisition
thereof, unless such acquisition (i) has been approved by a vote of a
majority of the shares entitled to vote, excluding shares owned by any
beneficial owner any of whose shares are proposed to be acquired
pursuant to the proposed acquisition that is the subject of such vote or
(ii) is pursuant to an offer made on the same terms to all holders of
securities of such class. The determination of the Board of Directors
shall be conclusive in determining the price paid per share for acquired
voting equity securities if the Corporation acquires such securities for
consideration other than cash.
(b) This provision shall not restrict the Corporation from: (i) acquiring
shares in the open market in transactions in which there has been no
prior arrangement with, or solicitation of (other than a solicitation
publicly made to all holders), any selling holder of voting equity
securities or in which all shareholders desiring to sell their shares
have an equal chance to sell their shares; (ii) offering to acquire
shares of shareholders owning less than 100 shares of any class of
voting equity securities; (iii) acquiring shares pursuant to the terms
of a stock option or similar plan that has been approved by a vote of a
majority of the Corporation's common shares represented at a meeting of
shareholders and entitled to vote thereon; (iv) acquiring shares from,
or on behalf of, any employee benefit plan maintained by the Corporation
or any subsidiary or any trustee of, or fiduciary with respect to,
12
any such plan when acting in such capacity; or (v) acquiring shares
pursuant to a statutory appraisal right or otherwise as required by law.
(c) Market price per share on a particular day means the highest sale price
on that day or during the period of five trading days immediately
preceding that day of a share of such voting equity security on the
Composite Tape for New York Stock Exchange-Listed Stocks, or if such
voting equity security is not quoted on the Composite Tape on the New
York Stock Exchange or listed on such Exchange, on the principal United
States securities exchange registered under the Securities Exchange Act
of 1934 on which such voting equity security is listed, or, if such
voting equity security is not listed on any such exchange, the highest
sales price or, if sales price is not reported, the highest closing bid
quotation with respect to a share of such voting equity security on that
day or during the period of five trading days immediately preceding that
day on the National Association of Securities Dealers, Inc. Automated
Quotations System or any system then in use, or if no such quotations
are available, the fair market value on the date in question of a share
of such voting equity security as determined by a majority of the Board
of Directors.
(d) Voting equity securities of the Corporation means equity securities
issued from time to time by the Corporation which by their terms are
entitled to be voted generally in the election of the directors of the
Corporation.
(e) The Board of Directors shall have the power to interpret the terms and
provisions of, and make any determinations with respect to, this Article
XI, which interpretations and determinations shall be conclusive.
13