Exhibit 10(i)
Revised December 20, 1989
Amended January 31, 1996
THE STANLEY WORKS
Deferred Compensation Plan For
Non-Employee Directors (the "Plan")
1. Eligibility. Each member of the Board of
Directors of The Stanley Works (the "Corporation") who is not an
employee of the Corporation or any of its subsidiaries is
eligible to participate in the Plan.
2. Participation. (a) Time of Election. Prior to the beginning
of any calendar year, commencing with calendar year 1981, each eligible Director
may elect to participate in the Plan by directing that all or any part of the
compensation (including fees payable for services as chairman or a member of a
committee of the Board) which otherwise would have been payable currently for
services as a Director during such calendar year and succeeding calendar years
shall be credited to a deferred compensation account (the "Director's account").
Any person who shall become a Director during any calendar year, and who was not
a Director of the Corporation prior to the beginning of such calendar year, may
elect, before the Director's term begins, to defer payment of all or any part of
the Director's compensation for the remainder of such calendar year and for
succeeding calendar years.
(b) Form and Duration of Election. An election to
participate in the Plan shall be made by written notice executed by the Director
and filed with the Secretary of the Corporation. Such election shall continue
until the Director terminates such election by written notice filed with the
Secretary of the Corporation. Any such termination shall become effective as of
the end of the calendar year in which such notice is given and only with respect
to fees payable for services as a Director thereafter. Amounts credited to the
Director's account prior to the effective date of termination shall not be
affected by such termination and shall be distributed only in accordance with
the terms of the Plan.
(c) Adjustment of Amount Deferred. Prior to the
beginning of any calendar year, a Director participating in the Plan may file
another written notice with the Secretary of the Corporation electing to change
the amount of compensation to be credited to the Director's account for services
as a Director commencing with such calendar year. Amounts credited to the
Director's account prior to the effective date of such change shall not be
affected by such change and shall be distributed only in accordance with the
terms of the Plan.
(d) Renewal. A Director who has terminated his
election to participate may thereafter file another election to participate for
the calendar year subsequent to the filing of such election and succeeding
calendar years.
3. The Director's Account. All compensation which a Director
has elected to defer under the Plan shall be credited to the Director's account,
either in cash or in shares of the Corporation's Common Stock (valued for
quarterly retainer payments at the mean between the highest and lowest sales
prices of the Common Stock reported as New York Stock Exchange-Composite
Transactions for the first business day of the calendar quarter and valued for
other compensation at such mean for the date such compensation would otherwise
have been paid), as elected by the Director. The Director shall not have any
interest in the cash or Common Stock until distributed in accordance with the
Plan.
Cash amounts credited to the Director's account shall accrue
interest commencing on the date such fees would otherwise have been paid, at a
rate for each calendar quarter fixed by the Treasurer of the Corporation at the
commencement of each such calendar quarter based upon the yield for five-year
U.S. Treasury Notes as reported for the last business day of the preceding
calendar quarter. Interest so determined shall be compounded at the end of each
calendar quarter and credited to the Director's account. Amounts credited to the
Director's account shall continue to accrue interest until distributed in
accordance with the Plan.
Shares credited to the Director's account shall accrue amounts
equivalent to cash or stock dividends. Such amounts shall accrue interest or
amounts equivalent to dividends in the same manner as other amounts which may be
credited to a Director's account.
4. Distribution from Accounts. (a) Form of Election. At the
time a Director makes a participation election pursuant to paragraphs 2(a), 2(c)
or 2(d), the Director shall also file with the Secretary of the Corporation a
written election with respect to the distribution of the aggregate amount of
cash and shares credited to the Director's account pursuant to such
participation election. A Director may elect to receive such amount in one
lump-sum payment or in a number of approximately equal installments (provided
the payout period does not exceed 10 years). The lump-sum payment or the first
installment shall be paid on the first business day of the calendar year
immediately following the year in which the Director ceases to be a Director of
the Corporation or on the first business day of such later calendar year as the
Director may elect. Subsequent installments shall be paid on the first business
day of each succeeding installment period until the entire amount credited to
the Director's account shall have been paid. If shares have been
credited to the Director's account, a cash payment will be made with the final
installment for any fraction of a share credited to the Director's account.
(b) Adjustment of Method of Distribution. Whether
or not a Director has filed a notice pursuant to paragraph 2(c) electing to
change the amount of compensation to be credited to the Director's account, a
Director participating in the Plan may, prior to the beginning of any calendar
year, file another written notice with the Secretary of the Corporation electing
to change the method of distribution of the aggregate amount of cash and shares
credited to the Director's account for services as a Director commencing with
such calendar year (amounts credited to the Director's account prior to the
effective date of such change shall not be affected by such change and shall be
distributed only in accordance with the election in effect at the time such
amounts were credited to the Director's account). Once made, an election may not
be changed either in amount or method of payment if the effect of such change is
to accelerate the distribution of cash and shares credited to the Director's
account; all other changes to a previously filed election may be made by filing
a written notice with the Secretary of the Corporation setting forth in detail
the change.
5. Distribution on Death. If a Director should die before all
amounts credited to the Director's account shall have been paid in accordance
with the election referred to in paragraph 4, the balance in such account shall
be paid on the first business day of the calendar year following the year of the
Director's death to the beneficiary designated in writing by the Director. Such
balance shall be paid to the estate of the Director if (a) no such designation
has been made or (b) the designated beneficiary shall have predeceased the
Director and no further designation has been made.
6. Miscellaneous. (a) The right of a Director to
receive any amount in the Director's account shall not be
transferable or assignable by the Director, except by will or by
the laws of descent and distribution, and no part of such amount
shall be subject to attachment or other legal process.
(b) The Corporation shall not be required to
reserve or otherwise set aside funds or shares of Common Stock for the payment
of its obligations hereunder. The Corporation shall make available as and when
required a sufficient number of shares of Common Stock to meet the needs of the
Plan. To the extent that registration of such shares under the Securities Act of
1933 shall be required prior to their resale, the Corporation undertakes to
either file a registration statement relating to such shares or include such
shares in another registration statement to be filed within a reasonable time.
(c) The General Counsel of the Corporation shall
interpret the Plan and make all determinations deemed necessary
or desirable for the Plan's implementation.
(d) The Board of Directors may at any time amend
or terminate the Plan. The Plan may also be amended by the Cor poration with the
approval of its Chief Executive Officer, provided that all such amendments shall
be reported to the Board. No amendment or termination shall impair the rights of
a Director with respect to amounts then in the Director's account.
(e) Each Director participating in the Plan will
receive an annual statement indicating the amount of cash and number of shares
credited to the Director's account as of the end of the preceding calendar year.
(f) If adjustments are made to outstanding shares
of Common Stock or to the capital structure of the Corporation as a result of
stock dividends, stock splits or combinations, recapitalizations, mergers,
consolidations, exchange offers, issuer tender offers, extraordinary cash
dividends, or similar events or transactions, an appropriate adjustment will
also be made in the number of shares credited to the Director's account.
7. Definition of Change in Control. For purposes of
this Plan, a "Change in Control of the Corporation" shall be
deemed to have occurred if
(a) any "person," as such term is defined in
Section 3(a)(9) and modified and used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the
Corporation, any trustee or other fiduciary holding securities under an employee
benefit plan of the Corporation (or of any subsidiary of the Corporation), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the corporation representing 25%
or more of the combined voting power of the Corporation's then outstanding
securities;
(b) during any period of two consecutive years
(not including any period prior to the adoption of this amendment to this Plan),
individuals who at the beginning of such period constitute the Board, and any
new director (other than a director designated by a person who has entered into
an agreement with the Corporation to effect a transaction described in clause
(a), (c), (d) or (e) of this definition) whose election by the Board or
nomination for election by the corporation's shareholders was approved by a vote
of at least two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or nomination
for election was previously so approved cease for any reason to constitute at
least a majority thereof;
(c) the shareholders of the Corporation approve a
merger or consolidation of the Corporation with any other corporation, other
than (1) a merger or consolidation which would result in the voting securities
of the Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 75% of the combined voting power of the voting
securities of the Corporation or such surviving entity outstanding immediately
after such merger or consolidation or (2) a merger or consolidation effected to
implement a recapitalization of the Corporation (or similar transaction) in
which no "person" (with the exceptions specified in clause (a) of this
definition) acquires 25% or more of the combined voting power of the
Corporation's then outstanding securities;
(d) the shareholders of the Corporation approve a
plan of complete liquidation of the Corporation or an agreement
for the sale or disposition by the Corporation of all or
substantially all of the Corporation's assets; or
(e) the Corporation consummates a merger,
consolidation, stock dividend, stock split or combination, extraordinary cash
dividend, exchange offer, issuer tender offer or other transaction effecting a
recapitalization of the Corporation (or similar transaction) (the "Transaction")
and, in connection with the Transaction, a Designated Downgrading occurs with
respect to the unsecured general obligations of the Corporation (the
"Securities"), as described below:
(i) If the rating of the Securities by both Rating
Agencies (defined hereinafter) on the date 60 days prior to
the public announcement of the Transaction (a "Base Date") is
equal to or higher than BBB Minus (as hereinafter defined),
then a "Designated Downgrading" means that the rating of the
Securities by either Rating Agency on the effective date of
the Transaction (or, if later, the earliest date on which the
rating shall reflect the effect of the Transaction) (as
applicable, the "Transaction Date") is equal to or lower than
BB Plus (as hereinafter defined); if the rating of the
Securities by either Rating Agency on a Base Date is lower
than BBB Minus, then a "Designated Downgrading" means that the
rating of the Securities by either Rating Agency on the
Transaction Date has decreased from the rating by such Rating
Agency on the Base Date. In determining whether the rating of
the securities has decreased, a decrease of one gradation (+
and - for S&P and 1, 2 and 3 for Moody's, or the equivalent
thereof by any substitute rating agency referred to below)
shall be taken into account;
(ii) "Rating Agency" means either Standard &
Poor's Corporation or its successor ("S&P") or Moody's
Investors Service, Inc. or its successor ("Moody's");
(iii) "BBB Minus" means, with respect to ratings by
S&P, a rating of BBB- and, with respect to ratings by Moody's,
a rating of Baa3, or the equivalent thereof by any substitute
agency referred to below;
(iv) "BB Plus" means, with respect to ratings by S&P,
a rating of BB+ and, with respect to ratings by Moody's, a
rating of BBB3, or the equivalent thereof by any substitute
agency referred to below; and
(v) The Corporation shall take all reasonable action
necessary to enable each of the Rating Agencies to provide a
rating for the Securities, but, if either or both of the
Rating Agencies shall not make such a rating available, a
nationally-recognized investment banking firm shall select a
nationally-recognized securities rating agency or two
nationally-recognized securities rating agencies to act as
substitute rating agency or substitute rating agencies, as the
case may be.
8. Accelerated Payment Following a Change in Control.
Notwithstanding any of the preceding provisions of this Plan,
as soon as possible following any Change in Control of the Corporation, a
lump-sum payment shall be made, in cash, of the entire account hereunder of any
Director. For purposes of calculating the amount of such payment, any shares of
the Corporation's common stock credited to, or accrued in, any Director's
account shall be valued at the higher of (i) the closing price of such shares as
reported on the New York Stock Exchange - Composite Transactions on the date
preceding and nearest the date the Change in Control occurred or (ii) the
highest per share price for the common stock of the Corporation actually paid in
connection with such Change in Control; provided, however, that such value shall
not exceed the amount necessary to provide a fully equitable payment of such
account, taking into consideration any adjustments made pursuant to paragraph
6(f) of the Plan with respect to any events or transactions constituting a
Change in Control of the Corporation, or a part thereof.