AMENDED AND RESTATED OCTOBER 23, 1996
EFFECTIVE JANUARY 1, 1997
SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES OF THE STANLEY WORKS
BACKGROUND. A. The Stanley Works (together with its wholly-owned
U.S. subsidiaries, "Stanley") maintains certain retirement plans for its
salaried employees that are designed to meet the requirements of Section 401(a)
of the Internal Revenue Code (the "Code").
B. The benefits and contributions that may be provided under such
retirement plans are limited on account of Sections 401 and 415 of the Code and
certain other provisions of the Code.
C. Stanley maintains this Plan for Salaried Employees of The Stanley
Works (the "Supplemental Plan") to provide certain employees with benefits that
may not be provided under these retirement plans.
D. Stanley now desires to restate the Supplemental Plan.
TERMS OF THE SUPPLEMENTAL PLAN
1. EFFECTIVE DATE. This amendment and restatement shall be effective
January 1, 1997.
2. DEFINITIONS. The following terms have the meanings set forth
below.
"APPLICABLE LIMITATION" means each of:
(a) the limitation under Sections 401(a)(30) and 402(g)(1) of the Code
on the amount of pre-tax elective contributions that may be made by an employee
under the Savings Plan;
(b) the limitation in Section 401(a)(17) of the Code on the amount of
compensation of an employee that may be taken into account under the Retirement
Plan or Savings Plan;
(c) the limitation under the Savings Plan on the amount of an
employee's pre-tax elective contributions or Stanley matching contributions
imposed under the nondiscrimination rules of Section 401 of the Code;
(d) the exclusion from the "Compensation" utilized under the
Retirement Plan of earnings deferred at the election of an employee pursuant to
the Deferred Compensation Plan for Participants in Stanley's Management
Incentive Plans; and
(e) the limitations in Section 415 of the Code on the maximum
contributions that may be made under the Savings Plan and the maximum benefits
that may be provided under the
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Retirement Plan.
"COMMITTEE" means the Finance and Pension Committee of the Board of
Directors of The Stanley Works.
"ELIGIBLE EMPLOYEE" means a Highly Compensated Employee who is a
participant in Stanley's Management Incentive Plans.
"401(K) DOLLAR LIMITS" means the dollar limitation described in
paragraph (a) of the definition of Applicable Limitation.
"HIGHLY COMPENSATED EMPLOYEE" means a salaried employee of Stanley who
during the applicable Plan Year is a highly compensated employee, as defined in
Section 414(q) of the Code (i.e., earning $80,000 per year or more in W2
income, as adjusted for cost of living, including contributions to health and
dental plans and to the Savings Plan).
"PLAN YEAR" means the plan year of a Qualified Plan.
"QUALIFIED PLAN" means each of the Savings Plan and the Retirement
Plan.
"RETIREMENT PLAN" means The Stanley Works Retirement Plan.
"SAVINGS PLAN" means The Stanley Works 401(k) Savings Plan.
"SUPPLEMENTAL COMPANY CONTRIBUTION ACCOUNT" means the bookkeeping
record that reflects amounts credited under Section 4.2.
"SUPPLEMENTAL EMPLOYEE CONTRIBUTION ACCOUNT" means the bookkeeping
record that reflects amounts credited under Section 4.1.
"UNRESTRICTED QUALIFIED PLAN BENEFIT" means the benefit amount that
would be payable to an individual under the Retirement Plan but for an
Applicable Limitation.
3. PARTICIPATION IN THE SUPPLEMENTAL PLAN. 3.1. ELIGIBLE EMPLOYEE
PARTICIPATION. Each Eligible Employee shall become a participant in the
Supplemental Plan on the date as of which an amount is first credited on his
or her behalf under Section 4.
3.2. REMAINING A PARTICIPANT. Subject to Section 7, an Eligible
Employee shall remain a participant until all amounts to which he or she is
entitled have been distributed.
4. CREDITING OF BENEFITS; ELECTIONS TO DEFER. 4.1. SUPPLEMENTAL
EMPLOYEE CONTRIBUTIONS. (a) EMPLOYEE CONTRIBUTIONS EXCEEDING 401(K) DOLLAR
LIMITS. If an Eligible Employee's pre-tax elective contributions under the
Savings Plan for a Plan Year are limited by
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the 401(k) Dollar Limits, the Eligible Employee may elect to defer a portion
of compensation. The amount deferred for a Plan Year under this Section 4.1(a),
when added to the pre-tax elective contributions for the Plan Year under the
Savings Plan, shall not exceed 15% of compensation.
(b) EMPLOYEE CONTRIBUTIONS EXCEEDING OTHER LIMITS. If an Eligible
Employee may not make pre-tax elective contributions under the Savings Plan for
a Plan Year as a result of an Applicable Limitation (other than as described in
Section 4.1(a)), the Eligible Employee may elect to defer a portion of
compensation, up to the amount of such pre-tax elective contributions that
could not be made.
(c) CREDITING OF EMPLOYEE CONTRIBUTIONS. Any amount deferred under
this Section 4.1 shall be credited to a Supplemental Employee Contribution
Account.
4.2. SUPPLEMENTAL COMPANY CONTRIBUTIONS. (a) MATCHING CONTRIBUTIONS
FOR EMPLOYEE CONTRIBUTIONS EXCEEDING DOLLAR LIMITS. If an amount is credited to
a Supplemental Employee Contribution Account under Section 4.1, there shall
also be an amount credited to a Supplemental Company Contribution Account. This
amount shall equal the contribution that would have been made by Stanley under
the Savings Plan with respect to the amount credited under Section 4.1 if such
amount had been contributed to the Savings Plan.
(b) MATCHING CONTRIBUTIONS AFFECTED BY OTHER LIMITS. If a Stanley
contribution could not be made under the Savings Plan as a result of an
Applicable Limitation (other than as described in Section 4.2(a)), an amount
equal to such Stanley contribution that could not be made shall be credited to
a Supplemental Company Contribution Account.
4.3. SUPPLEMENTAL RETIREMENT PLAN BENEFITS. If an Eligible Employee's
Unrestricted Qualified Plan Benefit exceeds the benefit payable under the
Retirement Plan, the excess amount, to the extent vested under Section 5.1,
shall be provided under this Supplemental Plan.
4.4. CREDITING OF EARNINGS. A participant's Supplemental Employee
Contribution Account and Supplemental Company Contribution Account shall be
credited with the rate of return such accounts would have earned if they had
been invested under the Savings Plan. In addition, these accounts shall be
credited with any additional amount that would have been payable under the
Retirement Plan to reflect IPA benefits. For purposes of crediting the rate of
return, an amount shall be considered to be credited under Section 4.1 or 4.2
on the date on which it would have been allocated under the Savings Plan but
for an Applicable Limitation.
4.5. PROCEDURES FOR ELECTING EMPLOYEE CONTRIBUTIONS. An election to
defer compensation under Section 4.1 shall be made, and may be revoked, under
rules established by the Committee. Any election to defer compensation shall be
effective only as to compensation earned after the date of the election.
5. VESTING SCHEDULE. A participant's vested interest in a benefit
provided under this Plan
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shall be determined in accordance with the vesting provisions of the particular
Qualified Plan with respect to which the benefit is determined.
6. DISTRIBUTIONS. 6.1. TIME FOR PAYING BENEFITS. Amounts credited to a
participant's Supplemental Employee Contribution Account or Supplemental
Company Contribution Account shall be distributed upon retirement, death,
disability or earlier separation from service with Stanley unless either the
rules of Section 7.3 apply or the participant elects to have payments made on a
later date specified in an election made under Section 6.3. Amounts payable
under Section 4.3 (relating to Supplemental Retirement Plan Benefits) shall be
distributed when benefit payments commence under the Retirement Plan.
6.2. FORM OF PAYMENT. Benefits attributable to an individual's
Supplemental Employee Contribution Account and Supplemental Company
Contribution Account shall be distributed in a cash lump sum payment. The
benefit determined under Section 4.3 (relating to Supplemental Retirement Plan
Benefits) shall be paid in a life annuity unless the participant elects a lump
sum payment under Section 6.3.
6.3. ELECTIONS BY PARTICIPANTS. An election to receive a lump sum
payment of the benefit payable under Section 4.3 (relating to Supplemental
Retirement Plan Benefits) or to defer distributions of the Supplemental
Employee Contribution and Supplemental Company Contribution Accounts may be
made by a participant in writing prior to the beginning of the one year period
that ends on the date on which the participant dies, becomes disabled, or
otherwise separates from service. An election may be made after the beginning
of such one year period only with the approval of the Committee.
6.4. ADJUSTMENTS TO DISTRIBUTIONS. Upon determining that a participant
is indebted to Stanley, the Committee shall be entitled to offset such
indebtedness, including any interest accruing thereon, against any payment that
would otherwise be made on behalf of the participant.
6.5. DEATH BENEFICIARY. Upon a participant's death, any benefit
payment shall be made to the beneficiary determined under the Qualified Plan to
which the benefit relates unless the participant designated in writing a
different beneficiary to receive such benefit. The benefit shall be paid in the
manner provided in Section 6.2.
6.6. WITHHOLDING. To the extent required by law, Stanley shall
withhold taxes from any payment due under the Plan.
7. INELIGIBILITY FOR COVERAGE. 7.1. BECOMING INELIGIBLE. Amounts
shall not be credited under Section 4.1 or 4.2 upon either (a) a participant
ceasing to be an Eligible Employee or (b) the Committee, in its sole
discretion, determining that an Eligible Employee may no longer actively
participate in the Plan.
7.2. RESUMING PARTICIPATION. An individual described in Section 7.1(a)
shall resume
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active participation in the Supplemental Plan upon again becoming an Eligible
Employee. An individual described in Section 7.1(b) may again become an active
participant at the discretion of the Committee. Once an individual resumes
participation in the Supplemental Plan, amounts shall again be credited under
Section 4.1 upon the filing of an election pursuant to Section 4.5, and amounts
may also be credited under Section 4.2.
7.3. DISTRIBUTIONS TO INELIGIBLE INDIVIDUALS. An amount credited under
Section 4 on behalf of an individual for a Plan Year in which such individual
was not an Eligible Employee shall be distributed in a cash lump sum payment
upon the earliest of the following: (a) death, (b) disability, (c) other
separation from service with Stanley, or (d) the first day of the calendar year
in which the individual attains age 60. No additional amount shall be credited
to an account established in the name of an individual described in this
subsection unless such individual becomes an Eligible Employee. If the
individual becomes an Eligible Employee, amounts credited to an account
established in the name of the individual while an Eligible Employee shall be
distributed in accordance with Section 6, and other amounts shall be
distributed in the manner described above in this subsection.
8. MISCELLANEOUS. 8.1. AMENDMENT OR TERMINATION. The Committee
may at any time amend or terminate the Supplemental Plan without the consent of
any participant or beneficiary.
8.2. ADMINISTRATION OF THE SUPPLEMENTAL PLAN. The Supplemental Plan
shall be administered by the Committee. The Committee shall have the
discretionary authority to interpret the Supplemental Plan and to make all
determinations regarding eligibility for coverage and the benefits to be paid.
Any denial by the Committee of a claim for benefits under the Supplemental Plan
shall be stated in writing by the Committee and delivered or mailed to the
appropriate individual. Such notice shall set forth the specific reasons for
the denial. The Committee shall afford to any participant or beneficiary whose
claim for benefits has been denied a reasonable opportunity for a review of the
denial of the claim.
8.3. GOVERNING TEXT. The Supplemental Plan, including any amendments,
shall constitute the entire agreement between Stanley and any employee,
participant or beneficiary regarding the subject matter of the Supplemental
Plan. The Supplemental Plan, including any amendments, shall be binding on
Stanley, employees, participants, beneficiaries, and their respective heirs,
administrators, trustees, successors and assigns.
8.4. ENFORCEABILITY OF PLAN PROVISIONS. If any provision of the
Supplemental Plan shall, to any extent, be invalid or unenforceable, the
remainder of the Supplemental Plan shall not be affected, and each other
provision of the Supplemental Plan shall be valid and enforced to the fullest
extent permitted by law.
8.5. RIGHTS OF PARTICIPANT. Any person entitled to receive benefits
under the Supplemental Plan shall have the rights of an unsecured general
creditor of Stanley.
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8.6. CLAIMS OF CREDITORS. The right of any participant or beneficiary
to a benefit under the Supplemental Plan shall not be subject to attachment or
other legal process for the debts of such participant or beneficiary. Except as
provided in Section 6.4, a benefit of a participant or beneficiary shall not be
subject to anticipation, alienation, sale, transfer, assignment or encumbrance.
8.7. SPECIAL DISTRIBUTIONS. Whenever, in the opinion of the Committee,
a person entitled to receive a benefit under the Plan is unable to manage his
or her financial affairs, the Committee may direct that payment be made to a
legal representative or relative of such person for his or her benefit.
Alternatively, the Committee may direct that any payment be applied for the
benefit of such person in such manner as the Committee considers advisable. Any
payment made in accordance with this Section shall be a complete discharge of
any liability for the making of such payment under the provisions of the
Supplemental Plan.
8.8. TERMS OF EMPLOYMENT. Participation in the Supplemental Plan
shall not give an individual any right to remain in the service of Stanley,
and an individual shall remain subject to discharge to the same extent as if
the Supplemental Plan had not been adopted.
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