EXHIBIT 10(xxi)
Adopted by the Board of Directors September 17, 1997
Amended by the Board of Directors February 25, 1998
[Adopted by the shareholders April 15, 1998]
THE STANLEY WORKS
1997 LONG-TERM INCENTIVE PLAN
Section 1. Purpose
The purposes of this Long-Term Incentive Plan (the "Plan") are to
encourage selected salaried employees of The Stanley Works (together with any
successor thereto, the "Company") and 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.
(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 children, grandchildren and spouse.
(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) "1990 Plan" shall mean the Company's 1990 Stock Option
Plan.
(m) "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.
(n) "Option" shall mean an Incentive Stock Option or a Non-
Qualified Stock Option.
(o) "Other Stock-Based Award" shall mean any right granted
under Section 6(f) of the Plan.
(p) "Participant" shall mean a Salaried Employee designated
to be granted an Award under the Plan.
(q) "Performance Award" shall mean any Award granted under
Section 6(d) of the Plan.
(r) "Person" shall mean any individual, corporation,
partnership, association, joint-stock company, trust,
unincorporated organization, or government or political
subdivision thereof.
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(s) "Released Securities" shall mean securities that were
Restricted Securities with respect to which all applicable
restrictions have expired, lapsed, or been waived.
(t) "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.
(u) "Restricted Stock" shall mean any Share granted under
Section 6(c) of the Plan.
(v) "Restricted Stock Unit" shall mean any right granted under
Section 6(c) of the Plan that is denominated in Shares.
(w) "Salaried Employee" shall mean any salaried Employee of
the Company or of any Affiliate.
(x) "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.
(y) "Stock Appreciation Right" shall mean any right granted
under Section 6(b) of the 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 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
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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.
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 is four million (4,000,000), and the
number of Shares available for granting Awards under the Plan in
each fiscal year or, in the case of the years 1997 and 2007,
part thereof shall be two percent (2%) of the issued Shares
(including, without limitation, treasury Shares) as of the first
day of such year; provided, however, that the number of Shares
available for granting Awards in any year shall be increased in
any such year by the number of Shares available under the Plan
in previous years but not covered by Awards granted under the
Plan in such years. Further, if any Shares covered by an Award
granted under the Plan or by an award granted under the 1990
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, or if upon the
termination of the 1990 Plan there are Shares remaining that
were authorized for issuance under that Plan but with respect to
which no awards have been granted, 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,
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to the extent of any such forfeiture or termination, or which
were authorized for issuance under the 1990 Plan but with
respect to which no awards were granted as of the termination of
the 1990 Plan 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.
(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 and Awards not denominated in Shares
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 1990 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.
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(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 Section 6(g)(vi), 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, 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
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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.
(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.
(v) Transferability. An Option shall not be transferable other than
by will or the laws of descent and distribution or pursuant to a
qualified 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
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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 members of the Participant or to trusts or
partnerships for such family members.
(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, upon exercise thereof, the
excess of (i) the Fair Market Value of one Share on the date of
exercise or, if the Committee shall so determine in the case of
any such right other than one related to any Incentive Stock
Option, at any time during a specified period before or after
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. 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.
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(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 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.
(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
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(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. 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 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. Subject to
the terms of the Plan and any applicable Awards Agreement, such
Awards may have such 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
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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 shall 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
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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 demand 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.
(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
September 17, 1997 through the end of the term shall not exceed
3,000,000 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
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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 1997 Plan shall not, during any three-year period,
exceed two percent of Stanley'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.
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(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.
(d) 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,
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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 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
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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);
(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 RestrictedStock 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).
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(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 Restricted
Stock Acceleration Price over the exercise price of the award,
except that for Incentive Stock Options, the Option Acceleration
Price is limited to the spread between the Fair Market Value on
the date of exercise and the option price.
(c) A "Change in Control" is the occurrence of any one of the following
events:
(i) 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 Exchange
Act (other than a Grantee, the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company (or of any subsidiary of the Company), or any
corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their
ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the
Company's then outstanding securities;
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(ii) during any period of two consecutive years 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 Company to effect a
transaction described in clause (i), (iii), (iv) or (v) of this
definition) whose election by the Board or nomination for
election by the Company'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;
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other
than (A) a merger or consolidation which would result in the
voting securities of the Company 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 Company or such surviving entity outstanding
immediately after such merger or consolidation or (B) a merger
or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no "person" (with the
exceptions specified in clause (i) of this definition) acquires
25% or more of the combined voting power of the Company's then
outstanding securities;
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets; or
(v) the Company 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 Company (or similar
transaction) (the "Transaction") and, in connection with the
Transaction, a Designated Downgrading occurs with respect to the
unsecured general obligations of the Company (the
"Securities"), as described below:
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(A) 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;
(B) "Rating Agency" means either Standard & Poor's Corporation
or its successor ("S&P") or Moody's Investor Service, Inc.
or its successor ("Moody's");
(C) "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;
(D) "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;
(E) The Company 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
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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.
Section 10. Effective Date of the Plan
The Plan shall be effective as of September 17, 1997.
Section 11. Term of the Plan
No Award shall be granted under the Plan after September 16, 2007.
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.
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