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. 

     "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 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 424(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. 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. The Board's administrative functions shall be ministerial in
nature in view of the Plan's explicit provisions, including those related to
eligibility for, and timing, price and amount of, Option grants. 

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 100,000 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) Biennial Option Grants. On September 30, 1994 and on every alternate
August 1st thereafter during the term of the Plan commencing August 1, 1996
(August 1, 1996, 1998, 2000, 2002 and 2004 or, if such August 1st is not a
Business Day, the first preceding Business Day), each Non-Employee Director on
that date shall automatically be granted an Option, upon the terms and
conditions specified in the Plan, to purchase 500 shares of Common Stock.

     (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 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, provided that if a
Non-Employee Director who previously received an Initial Option Grant terminates
service as a Non-Employee Director and is subsequently elected to the Board,
such Non-Employee Director shall not receive a second Initial Option Grant and
shall only receive subsequent Biennial Option Grants in accordance with Section
7(a)(i) hereof. 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 Biennial 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. For example, if a Non-Employee Director is elected to the Board on
December 15, 1997, and is first elected as a Non-Employee Director by the
shareholders at the Company's Annual Meeting of Shareholders in 1998 such
Non-Employee Director shall receive an Initial Option to purchase 1,000 shares
of Common Stock (two Biennial Option Grants for 500 shares each that such
Non-Employee Director would have received on September 30, 1994 and August 1,
1996) immediately following the Company's Annual Meeting of Shareholders in
1998. 





   (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.

     (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 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. 

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.





11.  Transfer of Awards.

     Options granted under the Plan may not be transferred except 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 Grantee's lifetime, may be
exercised only by said Grantee or by said Grantee's guardian or legal
representative. 

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, the person or persons to whom the rights under the Option are
transferred by will or the laws of descent and distribution 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.

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
shareholders 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.