EXHIBIT 10(xvii)
Adopted--September 28, 1994
Amended--March 1, 1995
Approved by shareholders--April 19, 1995
Amended--December 18, 1996
THE STANLEY WORKS
STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE.
The purpose of The Stanley Works Stock Option Plan for Non-Employee
Directors (the "Plan") is to promote the interests of The Stanley Works (the
"Company") and its shareholders by encouraging Non-Employee Directors of the
Company to have a direct and personal stake in the performance of the Company's
Common Stock.
2. DEFINITIONS.
Unless the context clearly indicates otherwise, the following terms have
the meanings set forth below. Whenever applicable, the masculine pronoun shall
include the feminine pronoun and the singular shall include the plural.
"Biennial Option" or "Biennial Option Grant" means an Option granted
to a Non-Employee Director in accordance with Section 7(a)(i) of the
Plan.
"Board of Directors" or "Board" means the Board of Directors of the
Company.
"Business Day" shall mean any day except Saturday, Sunday or a legal
holiday in the State of Connecticut.
"Code" means the Internal Revenue Code of 1986, as amended, now in
effect or as amended from time to time and any successor provisions
thereto.
"Common Stock" means the common stock, par value $2.50 per share, of
the Company.
"Fair Market Value" of a share of Common Stock on any particular date
means the mean average of the high and the low price of a share of
the Common Stock 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 Common Stock on such date, such mean average of the
high and the low price on the next preceding date on which there was
such trading.
"Grant Date", as used with respect to a particular Option, means the
date on which such Option is granted pursuant to Section 7(a) of the
Plan.
"Grantee" means the Non-Employee Director to whom an Option is
granted pursuant to the Plan.
"Immediate Family Members" shall mean the spouse, children and
grandchildren of a Grantee.
"Initial Option" or "Initial Option Grant" means the Option granted
to a Non-Employee Director who is first elected or appointed to the
Board after September 30, 1994 and prior to December 18, 1996 in
accordance with Section 7(a)(ii) of the Plan.
"Option" means an Initial Option or Biennial Option granted pursuant
to the Plan to purchase shares of Common Stock which shall be a
non-qualified stock option not intended to qualify as an incentive
stock option under Section 422 of the Code.
"Non-Employee Director" shall mean a member of the Board of Directors
who is not an employee of the Company or any Subsidiary.
"Plan" means The Stanley Works Stock Option Plan for Non-Employee
Directors as set forth herein and as amended from time to time.
"Retirement", as applied to a Non-Employee Director, shall mean when
such director ceases to serve as a member of the Board following
attaining sixty (60) years of age and having served as a member of
the Board for a period of at least sixty months.
"Subsidiary" shall mean a "subsidiary corporation" of the Company as
defined in Section 425(f) of the Code.
"1934 Act" means the Securities Exchange Act of 1934, as amended, now
in effect or as amended from time to time and any successor
provisions thereto.
3. ADMINISTRATION.
The Plan shall be administered by the Board, which shall have full power
and authority, subject to the provisions of the Plan, to supervise
administration of the Plan and interpret the provisions of the Plan and any
Options granted hereunder. Any decision by the Board shall be final and binding
on all parties.
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No member of the Board shall be liable for any determination, decision or
action made in good faith with respect to the Plan or any Option under
the Plan.
4. ELIGIBILITY.
The persons eligible to receive Options under the Plan are the
Non-Employee Directors.
5. EFFECTIVE DATE AND TERM OF THE PLAN.
The Plan shall become effective upon its adoption by the Board of
Directors, provided, that no Option granted pursuant to the Plan will vest or
shall be exercised prior to the approval of the Plan by the Company's
shareholders within twelve (12) months of its adoption by the Board. Unless
previously terminated by the Board, the term during which awards may be granted
under the Plan shall expire on the tenth anniversary of the adoption of the
Plan by the Board of Directors.
6. SHARES SUBJECT TO THE PLAN.
The shares of Common Stock that may be delivered upon the exercise of
Options under the Plan shall be shares of the Company's authorized Common Stock
and may be unissued shares or reacquired shares, as the Board of Directors may
from time to time determine. Subject to adjustment as provided in Section 13
hereof, the aggregate number of shares to be delivered under the Plan shall not
exceed 200,000 shares. If any shares are subject to an Option which for any
reason expires or terminates during the term of the Plan prior to the issuance
of such shares, the shares subject to but not delivered under such Option shall
be available for issuance under the Plan. If, on any Grant Date, the aggregate
number of shares of Common Stock subject to Option grants on that date exceeds
the remaining number of shares reserved for issuance under the Plan, the number
of Option shares awarded to each Non-Employee Director to whom an Option shall
be granted on such date shall be reduced pro rata so that the aggregate number
of Option shares awarded to such Non-Employee Directors equals the number of
reserved shares of Common Stock remaining under the Plan.
7. OPTIONS.
(a) Grant of Options.
(i) The 1994 and 1996 Option Grants. On September 30, 1994 and August 1,
1996, each Non-Employee Director on that date shall automatically be granted an
Option, upon the terms and conditions specified in the Plan, to purchase 1,000
shares of Common Stock.
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(ii) Initial Option Grants to Newly-Elected Non- Employee Directors. Any
person who is elected as a Non-Employee Director for the first time after
September 30, 1994 and prior to December 18, 1996 shall automatically be
granted an Initial Option, upon the terms and conditions specified in the Plan,
immediately following the first Annual Meeting of the Company's Shareholders at
which such person is first elected a Non-Employee Director by the Shareholders.
The number of shares of Common Stock subject to such Initial Option shall equal
the number of shares of Common Stock such Non-Employee Director would have
received under option grants under the Plan if such Non-Employee Director had
been a Non-Employee Director at all times between September 1, 1994 and the
date of such person's election as a Non-Employee Director.
(iii) Discretionary Option Grants. On and after December 18, 1996,
Non-Employee Directors may be granted Options, upon the terms and conditions
specified in the Plan, to purchase shares of Common Stock in amounts as may be
determined by the Board of Directors.
(b) Terms of Options. Each Option granted under the Plan shall have the
following terms and conditions:
(i) Price. The exercise price per share of each Option shall equal
the greater of one hundred percent (100%) of the Fair Market
Value of a share of Common Stock on the Grant Date or the par
value per share of the Common Stock on the date of exercise of
such option.
(ii) Term. The term of each Option shall be for a period of ten (10)
years from the Grant Date unless terminated earlier in
accordance with Section 12 of the Plan.
(iii) Time of Vesting and Exercise. An Option shall vest and become
nonforfeitable when, and only if, the Grantee continues to serve
as a Non-Employee Director for a period of six (6) months
following the Grant Date of such Option. Unless the time of its
exercisability is accelerated in accordance with the Plan, each
Option that has vested shall be exercisable in full on or after
the first anniversary of its Grant Date.
(iv) Acceleration of Exercisability. Notwithstanding the provisions
of subparagraph (iii) hereof, an Option that has vested shall
become fully exercisable upon the occurrence of the Grantee's
death or withdrawal from the Board of Directors by reason of
such Non-Employee Director's Retirement.
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(v) Option Agreement. Each Option shall be evidenced by an Option
Agreement substantially in the form attached to this Plan as
Appendix A.
8. EXERCISE OF OPTIONS.
(a) Each Option granted shall be exercisable in whole or in part at any
time, or from time to time, during the Option term as specified in the Plan,
provided that the election to exercise an Option shall be made in accordance
with applicable Federal laws and regulations. Each Option may be exercised by
delivery of a written notice to the Company stating the number of shares to be
exercised and accompanied by the payment of the Option exercise price therefor
in accordance with this Section. The Grantee shall furnish the Company, prior
to the delivery of any shares upon the exercise of an Option, with such other
documents and representations as the Company may require, to assure compliance
with applicable laws and regulations.
(b) No Option may at any time be exercised with respect to a fractional
share. In the event that shares are issued pursuant to the exercise of an
Option, no fractional shares shall be issued and cash equal to the Fair Market
Value of such fractional share on the date of the delivery of the exercise
notice shall be given in lieu of such fractional shares.
(c) No shares shall be delivered pursuant to the exercise of any Option,
in whole or in part, until qualified for delivery under such securities laws
and regulations as the Committee may deem to be applicable thereto and until
payment in full of the Option price is received by the Company in cash, by
check or in shares of Common Stock as provided in Section 9 hereof. Neither the
holder of an Option nor such holder's transferee, legal representative,
legatee, or distributee shall be or be deemed to be a holder of any shares
subject to such Option unless and until a certificate or certificates therefor
is issued in his or her name or a person designated by him or her.
9. STOCK AS FORM OF EXERCISE PAYMENT.
A Grantee who owns shares of Common Stock may elect to use the previously
acquired shares, valued at the Fair Market Value on the last Business Day
preceding the date of delivery of such shares, to pay all or part of the
exercise price of an Option, provided, however, that such form of payment shall
not be permitted unless at least one hundred shares of such previously acquired
shares are required and delivered for such purpose and the shares delivered
have been held by the Grantee for at least six months.
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10. WITHHOLDING TAXES FOR AWARDS.
Each Grantee exercising an Option as a condition to such exercise shall
pay to the Company the amount, if any, required to be withheld from
distributions resulting from such exercise under applicable Federal and State
income tax laws ("Withholding Taxes"). Such Withholding Taxes shall be payable
as of the date income from the award is includable in the Grantee's gross
income for Federal income tax purposes (the "Tax Date"). The Grantee may
satisfy this requirement by remitting to the Company in cash or by check the
amount of such Withholding Taxes or a number of previously owned shares of
Common Stock having an aggregate Fair Market Value as of the last Business Day
preceding the Tax Date equal to the amount of such Withholding Taxes. For the
purposes of this Section 10, the exercise of an Option by a transferee of such
Option pursuant to Section 11(b) hereof, shall be deemed to be an exercise of
the Option by the Grantee.
11. TRANSFER OF AWARDS.
(a) Options granted under the Plan may not be transferred except (i) by
will or the laws of descent and distribution (ii) pursuant to a qualified
domestic relations order, as defined in the Code, or (iii) pursuant to the
provisions of Subsection (b) below, and, except as provided in Subsection (b)
below, during the Grantee's lifetime, may be exercised only by said Grantee or
by said Grantee's guardian or legal representative.
(b) A Grantee may transfer all or a portion of the Options granted to the
Grantee to (i) an Immediate Family Member or Immediate Family Members, (ii) a
trust or trusts for the exclusive benefit of an Immediate Family Member or
Immediate Family Members, or (iii) a partnership or partnerships in which an
Immediate Family Member or Immediate Family Members is the only partner or are
the only partners, provided that (y) there shall be no consideration for such
transfer, and (z) subsequent transfers of transferred Options shall be
prohibited except those in accordance with subsection (a) above. Following a
transfer, any such transferred Options shall continue to be subject to the same
terms and conditions as were applicable immediately prior to transfer, provided
that for the purposes of Sections 9 and 15, hereof, the term "Grantee" shall be
deemed to refer to the transferee. The events of termination of director status
in Section 12 hereof shall continue to be applied with respect to the original
Grantee, following which the Options shall be exercisable by the transferee
only to the extent, and for the periods specified in Section 12. Neither the
Board, the Company nor any agent, employee or representative thereof shall be
under any duty under the Plan or otherwise to notify any transferee, pursuant
to the terms of either subsection (a) above or this subsection (b), of any
event which might have an impact on the value or exercisability of a
transferred Option, including,
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without limitation, early termination of the Option on account of termination
of the original Grantee's director status.
12. TERMINATION OF DIRECTOR STATUS.
Upon the termination of a Grantee's service as a member of the Board of
Directors for any reason other than death or Retirement, the Grantee may
exercise an Option that has vested to the full extent of the number of the
shares of Common Stock remaining under such Option, regardless of whether such
Option was previously exercisable, until the earlier of the expiration of its
original term or one year after the date of such termination. Upon the
termination of Board membership of any such Grantee due to Retirement, the
Grantee may purchase some or all of the shares covered by the Grantee's Options
that have vested prior to such termination, regardless of whether such Option
was previously exercisable, until the expiration of such Option's original
term. Upon the death of any such Grantee while serving on the Board or of any
retired Grantee, may exercise some or all of the Grantee's Options that have
vested prior to such termination of Board membership, regardless of whether
such Option was previously exercisable, until the expiration of such Option's
original term.
13. CHANGES IN COMMON STOCK.
In the event of a merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, or other changes in corporate structure or
capitalization affecting the Common Stock, such appropriate adjustment shall be
made in the number, kind, option price, etc., of shares subject to Options
granted under the Plan, including appropriate adjustment in the maximum number
of shares referred to in Section 6 of the Plan, as may be determined by the
Board.
14. LEGAL RESTRICTIONS.
The Company will not be obligated to issue shares of Common Stock or make
any payment if counsel to the Company determines that such issuance or payment
would violate any law or regulation of any governmental authority or any
agreement between the Company and any national securities exchange on which the
Common Stock is listed. In connection with any stock issuance or transfer, the
person acquiring the shares shall, if requested by the Company, give assurances
satisfactory to counsel to the Company regarding such matters as the Company
may deem desirable to assure compliance with all legal requirements. The
Company shall in no event be obliged to take any action in order to cause the
exercise of any award under the Plan.
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15. NO RIGHTS AS SHAREHOLDERS.
No Grantee and no beneficiary or other person claiming through a Grantee
shall have any interest in any shares of Common Stock allocated for the
purposes of the Plan or subject to any award until such shares of Common Stock
shall have been transferred to the Grantee or such person. Furthermore, the
existence of awards under the Plan shall not affect: the right or power of the
Company or its stockholders to make adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure; the
dissolution or liquidation of the Company, or the sale or transfer of any part
of its assets or business; or any other corporate act, whether of a similar
character or otherwise.
16. BOARD MEMBERSHIP.
Nothing in the Plan or in any Option shall confer upon any Grantee any
right to continue as a director of the Company or interfere in any way with the
right of the Company's shareholders to remove a director at any time.
17. CHOICE OF LAW.
The validity, interpretation and administration of the Plan and of any
rules, regulations, determinations or decisions made thereunder, and the rights
of any and all persons having or claiming to have any interest therein or
thereunder, shall be determined exclusively in accordance with the laws of the
State of Connecticut.
18. AMENDMENT AND DISCONTINUANCE.
Subject to the limitation that the provisions of the Plan shall not be
amended more than once every six months other than to comport with changes in
the Code or regulations thereunder, the Board of Directors may alter, suspend,
or discontinue the Plan, but may not, without the approval of a majority of the
holders of the Common Stock, make any alteration or amendment thereof which
operates (a) to increase the total number of shares which may be granted under
the Plan, (b) to extend the term of the Plan or the option periods provided in
the Plan, (c) to decrease the option price provided in the Plan, or otherwise
materially increase the benefits accruing to Grantees through awards under the
Plan, or (d) to modify the eligibility requirements for participation in the
Plan.
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APPENDIX A
STOCK OPTION AGREEMENT
UNDER
THE STANLEY WORKS STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
Pursuant to Section 7 of The Stanley Works Stock Option Plan for
Non-Employee Directors (the "Plan"), The Stanley Works (the "Company"), this
day of , 199 , hereby grants to
("Director") a non-qualified stock option to purchase an aggregate of
[One Thousand (1,000) shares (in the case of a 1994 or 1996 Option)]
[ shares (in the case of an Initial Option)]
[ shares (in the case of a discretionary Option)] of
the Common Stock of the Company at $ per share, on the terms and
conditions hereinafter set forth and set forth in the Plan. This option
will expire at the Company's close of business on , 19 ,
unless sooner terminated in accordance with the terms of the Plan.
1. The Company hereby grants to Director a non-qualified stock option
(the "Option") to purchase on or before the expiration date indicated above, at
the purchase price stated above, the number of shares of the Company's Common
Stock set forth above. No option granted under the Plan shall be exercised or
will vest unless and until the Plan is approved by the Company's shareholders.
2. The term of this Option shall commence on the date of this
Agreement and shall terminate, unless sooner terminated by the terms of the
Plan, at the close of business on the day preceding the tenth anniversary of
the date of this Agreement as set forth above, if the Company is open for
business on such day, or the close of the Company's business on the next
preceding day that the Company is open for business. This Option shall vest and
become nonforfeitable when, and only if, the Grantee continues to serve as a
Non-Employee Director for a period of six (6) months following the Grant Date
of this Option set forth above. No stock may be purchased hereunder until one
year after the Grant Date of this Option set forth above. Thereafter, this
Option may be exercised in whole or in part in accordance with the terms of the
Plan during the term of the Option, unless sooner terminated by the terms of
the Plan. This Option shall become immediately exercisable under the
circumstances described in Section 7(b)(iv) of the Plan.
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3. This Option may be exercised, in whole or in part, by written
notification delivered in person or by mail to the Secretary of the Company at
its world headquarters at 1000 Stanley Drive, New Britain, Connecticut. Such
notification shall specify the number of shares with respect to which the
Option is being exercised and shall be accompanied by payment for such shares.
The Secretary of the Company will provide Director with a form of exercise
notice upon request. The Option may not be exercised with respect to a
fractional share. Payment is to be made by check payable to the order of the
Company or by one of the alternative methods of payment described in the Plan.
No shares shall be sold or delivered hereunder until full payment for such
shares has been made and all checks delivered in payment therefor have been
collected. Director shall not have any rights of a shareholder with respect to
any Common Stock received upon exercise of the Option until certificates for
such Common Stock have been actually issued to Director in accordance with the
terms hereof.
4. The Company shall not be required to issue or deliver any certificate
or certificates for shares of its Common Stock purchased upon the exercise of
any part of this Option prior to (i) the admission of such shares to listing on
any stock exchange on which the Common Stock may then be listed, (ii) the
completion of any registration or other qualification of such shares under any
applicable law, rule or regulation, (iii) the obtaining of any consent or
approval or other clearance from any governmental agency which the Company
determines to be necessary or advisable, and (iv) the payment to the Company,
upon its demand, of any amount requested by the Company for the purpose of
satisfying its liability, if any, to withhold federal, state or local income or
earnings tax or any other applicable tax or assessment (plus interest or
penalties thereon, if any, caused by a delay in making such payment) incurred
by reason of the exercise of this Option or the transfer of such shares
thereupon. The Option shall be exercised and shares of the Company's Common
Stock issued only upon compliance with the Securities Act of 1933, as amended
(the "Act"), and any other applicable securities laws, and Director agrees to
comply with any requirements imposed by the Committee.
5. This Option is not transferrable by Director otherwise than (a) by will
or by the laws of descent and distribution (b) pursuant to a qualified domestic
relations order, as defined in the Code, or (c) pursuant to the immediately
following sentence and is exercisable, except as provided in the immediately
following sentence, during Director's life, only by Director or by Director's
guardian or legal representative. The Director may transfer all or a portion of
this Option to (i) an Immediate Family Member or Immediate Family Members, (ii)
a trust or trusts for the exclusive benefit of such Immediate Family Member or
Immediate Family Members, or (iii) a partnership or partnerships in which such
Immediate Family Member or Immediate Family Members
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is the only partner or are the only partners, all in accordance with and
subject to the provisions of Section 11 of the Plan. Any attempted assignment,
transfer, pledge, hypothecation or other disposition of the Option contrary to
the provisions hereof shall be null and void. This Option does not confer upon
Director any right with respect to continuation of Director's service as a
director of the Company or any of its subsidiaries, and will not interfere in
any way with the right of the Company's shareholders or the shareholders of any
of its subsidiaries to terminate Director's service as a director.
6. Upon the termination of Director's service as a member of the Board of
Directors, the Director or his or her transferee may exercise this Option,
provided that it has vested, to the full extent of the number of the shares of
Common Stock remaining under such Option, regardless of whether such Option was
previously exercisable, in accordance with the conditions of Section 12 of the
Plan.
7. This Option shall be irrevocable during the Option period and its
validity and construction shall be governed by the laws of the State of
Connecticut. The terms and conditions herein set forth are subject in all
respects to the terms and conditions of the Plan, which shall be controlling.
You agree to execute such other agreements, documents or assignments as may be
necessary or desirable to effect the purposes of this Agreement.
8. The grant of this Option shall be binding and effective only if this
Agreement is executed by or on behalf of the Company and by you and a signed
copy is returned to the Company.
9. All capitalized terms used in this Agreement which are not defined
herein shall have the meaning given to them in the Plan unless the context
clearly requires otherwise.
THE STANLEY WORKS
By
----------------------------------
Its
- -----------------------------------------------------------------
I hereby acknowledge receipt of the Stock Option (the "Option") granted on
the date shown above, which has been issued
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to me under the terms and conditions of The Stanley Works Stock Option Plan for
Non-Employee Directors. I agree to conform to all of the terms and conditions
of the Option and the Plan.
Date: Your Signature:
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