SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report(Date of earliest event reported): January 2, 1997
The Stanley Works
(Exact name of registrant as specified in charter)
Connecticut 1-5224 06-058860
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1000 Stanley Drive, New Britain, Connecticut 06053
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(860) 225-5111
Not Applicable
(Former name or former address, if changed since last report)
Exhibit Index is located on Page 4
Item 5. Other Events.
1. On January 2, 1997, the Registrant issued a
press release announcing the election of John M. Trani as
chairman and chief executive officer, replacing Richard H. Ayers,
who announced his retirement in April 1996.
Attached as Exhibit (20)(i) is a copy of the
Registrant s press release. This Exhibit is incorporated herein
by reference.
2. On December 31, 1996, the Registrant entered
into an Employment Agreement (the JMT Employment Agreement )
with John M. Trani, the Registrant's newly elected chairman and
chief executive officer and director. As of December 31, 1996
the Registrant entered into an Employment Agreement (the
RHA Employment Agreement ) with Richard H. Ayers, providing for the
resignation of Mr. Ayers as chairman and chief executive officer
and as a director and for the continued employment of Mr. Ayers
until November 1, 1997. Attached as Exhibits to this Report are
a copy of the JMT Employment Agreement and the RHA Employment
Agreement.
Attached as Exhibit (10)(i) is a copy of the
JMT Employment Agreement; attached as Exhibit (10)(ii) is a copy of
the RHA Employment Agreement. These Exhibits are incorporated
herein by reference.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(c) 10(i) Employment Agreement with John M. Trani.
10(ii) Employment Agreement with Richard H.
Ayers.
20(i) Press release dated January 2, 1997
reporting on Stanley naming John M. Trani
Chairman and Chief Executive Officer.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized
THE STANLEY WORKS
Date: January 2, 1997 By: Stephen S. Weddle
Name: Stephen S. Weddle
Title: Vice President, General
Counsel and Secretary
EXHIBIT INDEX
Current Report on Form 8-K
Dated January 2, 1997
Exhibit No. Page
10(i) 5-29
10 (ii) 30-34
20(i) 35-36
<PAGE>
Exhibit 10(i)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement"), entered into on
December 31, 1996 (the "Execution Date") to take effect as of
December 27, 1996 (the "Effective Date"), between The Stanley
Works, a Connecticut corporation (the "Company"), and John M.
Trani (the "Executive").
WHEREAS, the Company desires to provide for the service
and employment of the Executive with the Company and the
Executive wishes to perform services for the Company, all in
accordance with the terms and conditions provided herein;
NOW, THEREFORE, in consideration of the premises and
the respective covenants and agreements of the parties herein
contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Employment. The Company hereby agrees to employ
the Executive, and the Executive hereby agrees to serve the
Company, on the terms and conditions set forth herein.
2. Term. The term of employment of the Executive by
the Company hereunder (the "Term") will commence as of the
Execution Date and will end on December 31, 1999, unless further
extended or sooner terminated as hereinafter provided. Com-
mencing on January 1, 2000, and on the first day of each year
thereafter, the Term shall automatically be extended for one
additional year unless either party shall have given notice to
the other party, at least six months prior to such January 1,
that it does not wish to extend the Term. References herein to
the Term shall refer to both the initial term and any extended
term hereunder. The Term shall end on the Date of Termination
(as hereinafter defined).
3. Nature of Performance.
(a) Position and Duties. Commencing as of the
Execution Date and continuing during the Term, the Executive
shall serve as Chairman of the Board of Directors of the Company
(the "Board") and Chief Executive Officer of the Company and
shall have such responsibilities, duties and authority as are
customary to such position. The Executive shall report directly
to the Board. The Executive shall devote substantially all of
his working time and efforts to the business and affairs of the
Company and shall not engage in activities that significantly
interfere with such performance; provided, however, that this
Agreement shall not be interpreted to prohibit the Executive from
managing his personal investments and affairs, engaging in chari-
table activities or, subject to prior approval of the Board,
serving on the board of directors of any other corporation so
long as such activities do not significantly interfere with the
performance of his duties hereunder. Effective as of the
Execution Date, the Company shall appoint the Executive to the
Board, and shall use its best efforts to have the Executive
elected to the Board for the duration of the Term. Notwithstand-
ing the foregoing, upon the termination of the Executive's em-
ployment with the Company for any reason, the Executive shall
resign from the Board if requested to do so by the Company.
(b) Indemnification. To the fullest extent permitted
by law and the Company's certificate of incorporation and by-
laws, the Company shall promptly indemnify the Executive for all
amounts (including, without limitation, judgments, fines, settle-
ment payments, losses, damages, costs and expenses (including
reasonable attorneys' fees)) incurred or paid by the Executive in
connection with any action, proceeding, suit or investigation
(the "Proceeding") arising out of or relating to the performance
by the Executive of services for, or acting as a fiduciary of any
employee benefit plans, programs or arrangements of the Company
or as a director, officer or employee of, the Company or any
subsidiary thereof. The Company shall advance to the Executive
all reasonable costs and expenses incurred by him in connection
with a Proceeding within 15 days after receipt by the Company of
a written request from the Executive for such advance. Such
request shall include an undertaking by the Executive to timely
repay the amount of such advance if it shall ultimately be
determined that he is not entitled to be indemnified against such
costs and expenses. The Company also agrees to maintain a
director's and officers' liability insurance policy covering the
Executive to the extent the Company provides such coverage for
its other executive officers. Following the Term, the Company
shall continue to indemnify and maintain such insurance for the
benefit of the Executive with respect to such services performed
during the Term, to the same extent as the Company indemnifies or
maintains such insurance for its officers, directors, employees
and fiduciaries, as applicable.
4. Place of Performance. In connection with the
Executive's employment by the Company, the Executive shall be
based at the principal executive offices of the Company in the
city of New Britain, Connecticut, except for travel as reasonably
required on the Company's business.
5. Compensation and Related Matters.
(a) Annual Compensation.
(i) Base Salary. Commencing as of the
Execution Date and continuing during the Term, the Company
shall pay to the Executive an annual base salary ("Base
Salary") at a rate not less than $800,000, such salary to be
paid in conformity with the Company's policies relating to
salaried employees. This salary may be (but is not required
to be) increased from time to time, subject to and in accor-
dance with the annual executive performance review proce-
dures of the Company.
(ii) Annual Bonus. Commencing with
respect to the Company's 1997 fiscal year and continuing
during the Term, the Executive shall be eligible to par-
ticipate in the Company's annual bonus plan as in effect
from time to time, and shall be entitled to receive such
amounts (each, a "Bonus") as may be authorized, declared
and paid by the Company pursuant to the terms of such
plan. Notwithstanding the foregoing, with respect to
each of the Company's 1997, 1998 and 1999 fiscal years,
the minimum annual Bonus that the Executive shall re-
ceive shall not be less than 90% of the Executive's Base
Salary for such year, provided that the Executive is
employed with the Company on the last day of such year,
such Bonus to be paid when bonuses are paid to other
senior executives with respect to each of those years.
(b) Stock Options. On the Execution Date,
the Executive shall be granted a ten-year option (the "Op-
tion") to acquire 1,000,000 shares of common stock of the
Company ("Shares") pursuant to the Company's 1990 Stock Op-
tion Plan (the "1990 Plan") which grant shall be subject
to approval by the shareholders of the Company (the "Share-
holders"), at the Company's Annual Meeting of Shareholders
next following the Effective Date, of amendments to the 1990
Plan necessary or appropriate in connection with such grant.
The Option price per Share shall be equal to the "Fair Market
Value" (as defined in the 1990 Plan) of a Share as of the
Execution Date, and the Option shall be fully vested as of
the date of grant, subject to approval by the Shareholders
and shall become fully exercisable six months following the
Execution Date. The Option shall be evidenced by a stock op-
tion agreement in the form attached hereto as Exhibit A.
In addition, at such time during each of the
Company's 1997, 1998 and 1999 fiscal years as options are
normally granted by the Company to its senior executives, the
Executive shall be granted a ten-year option to acquire not
fewer than 200,000 Shares, pursuant to the terms and condi-
tions of the 1990 Plan or any successor thereto, as from time
to time in effect, provided that the Executive is then em-
ployed with the Company. The option price per Share shall be
equal to the Fair Market Value of a Share as of the date of
grant. Each such option shall be evidenced by a stock option
agreement consistent with the Company's standard stock option
agreements and shall contain such other terms and conditions
as are set forth in the 1990 Plan (or any successor thereto)
and such stock option agreements. Commencing after the
Company's 1999 fiscal year, the Executive shall be eligible
for such option grants as the Compensation and Organization
Committee of the Board shall determine, pursuant to the terms
of the 1990 Plan, any successor thereto or otherwise,
provided that the Executive is then employed with the
Company.
(c) Share Units. As of the Effective Date,
the Executive shall be granted 200,000 share units (the
"Share Units"), each of which shall represent the right to
receive one Share upon the terms and conditions set forth
herein. The Share Units shall be fully vested as of the Ef-
fective Date, and the Shares represented thereby shall be
distributed to the Executive in three equal annual
installments commencing in January 2000. Notwithstanding the
foregoing, (i) all such undistributed Shares shall be dis-
tributed immediately prior to a Change in Control (as de-
scribed in Section 6(f) hereof) and (ii) such undistributed
Shares shall be distributed as soon as practicable following
the Executive's Date of Termination. The Share Units shall
include dividend equivalent rights that shall entitle the
Executive to receive payments at the same time and in the
same amount and kind as dividends are paid on Shares. In the
event of a merger, consolidation, reorganization, recapital-
ization, stock dividend, stock split or other change in
corporate structure or capitalization affecting the Shares,
the number of undistributed Share Units (and underlying
Shares) shall be equitably adjusted to reflect the occurrence
of such event.
(d) Company Defined Benefit Plans. During
the Term, the Executive shall be entitled to participate in
all "defined benefit plans" (as defined in Section 3(35) of
the Employee Retirement Income Security Act of 1974, as
amended) or plans, including excess benefit or supplemental
retirement plans or agreements, maintained by the Company, as
now or hereinafter in effect, that are applicable to the
Company's employees generally or to its executive officers,
subject to and on a basis consistent with the terms, condi-
tions and overall administration of such plans, programs and
arrangements; provided, however, that effective as of the
Effective Date, the Executive shall be credited with ten (10)
years of service for purposes of eligibility for partici-
pation, vesting and benefit accrual under such plans. Bene-
fits payable under such defined benefit plans shall not com-
mence prior to the last day of the Severance Period (as
hereinafter defined).
(e) Split Dollar Life Insurance. The Company
and the Executive shall promptly take such actions as are
necessary or appropriate to cause the Company to assume the
obligations of the Executive's prior employer (the "Prior Em-
ployer") with respect to the policies (set forth in Exhibit B
hereto) in effect for the Executive under the split dollar
life insurance program provided by the Prior Employer immedi-
ately prior to the Execution Date, including, without limita-
tion, prompt payment of all required premiums thereunder and
prompt payment to the Prior Employer of amounts that the
Prior Employer has a right to receive under such program by
reason of the Executive's ceasing to be employed by the Prior
Employer. The obligations of the Company to pay premiums
under such policies shall continue for the Term and shall
continue thereafter (1) in the event that the Executive's
employment is terminated by the Company (other than for Cause
or Disability), or by the Executive for Good Reason, for the
duration of the Severance Period and (2) in the event that
the Executive's employment is terminated for Disability,
until the Executive attains age 65. In the event the
Executive's employment is terminated by the Company for Cause
or the Executive terminates employment for other than Good
Reason, the Company's obligations to pay such premiums shall
terminate on the Date of Termination.
Whenever the obligations of the Company to pay such
premiums cease, the Company shall have the right to receive,
for each policy, (1) the lesser of (X) the sum of all
premiums paid by the Company for which the Company has not
received reimbursement, and (Y) the cash surrender value of
the policy, plus (2) the amount paid to the Prior Employer
pursuant to the first sentence of this Section 5(e). If,
notwithstanding the expectations of the parties, the Company
is for any reason unable to assume the obligations with
respect to such policies, the Company shall instead, as
promptly as practicable, obtain substitute coverage for the
Executive on as comparable a basis as possible, and on terms
that are reasonably satisfactory to the Executive; provided,
however, that the Company shall be under no obligation to
make any payment that results in an increase in the coverage
or benefits to the Executive as compared to the coverage and
benefits under the split-dollar program of the Prior
Employer, the intent being that the Executive shall not be
provided with duplicate coverage or benefits hereunder.
(f) Life Insurance and Long Term Disability Bene-
fits. Effective as of the Execution Date, the Company shall
provide life insurance coverage for the benefit of the Executive
in the forms and amounts set forth in Exhibit C hereto, which
coverage shall otherwise be governed by the terms and conditions
of the Company's life insurance plans, programs or policies from
time to time in effect for its senior executives. To the extent
it is practicable for the life insurance policies set forth in
Exhibit C to be continued, the Company shall seek to assume the
policies and to be substituted for the Prior Employer. The Com-
pany shall also provide the Executive with an annual long-term
disability benefit commencing upon termination of employment for
Disability (as defined in Section 6(a)(iii) hereof) equal to 70%
of Base Salary, which benefit shall otherwise be governed by the
terms and conditions set forth in the Company's long-term
disability plans, programs or policies in effect for its senior
executives at the time of such termination.
(g) Other Benefits. During the Term, the Execu-
tive shall be entitled to participate in all other employee bene-
fit plans, programs and arrangements of the Company, as now or
hereinafter in effect, that are applicable to the Company's
employees generally or to its executive officers (including, but
not limited to, all Company relocation policies), as the case may
be, subject to and on a basis consistent with the terms, condi-
tions and overall administration of such plans, programs and ar-
rangements, and subject to Section 5(d) hereof. To the extent
that there is a period of employment required for purposes of
eligibility or participation with respect to full benefit cover-
age under any employee benefit plan, program or arrangement, the
Executive shall be deemed to have met such requirement as of the
Execution Date. During the Term, the Company shall provide to
the Executive all of the fringe benefits and perquisites that are
available to the Company's employees generally or to its execu-
tive officers, as the case may be, subject to and on a basis con-
sistent with the terms, conditions and overall administration of
such benefits and perquisites. In addition, in the event that
the Executive does not sell his residence at 20910 Bradford Lane,
Brookfield, Wisconsin to a third party purchaser or pursuant to
the Company's Home Sale Assistance Program for at least the
original cost, as of March, 1996, of building such residence,
then the Company shall reimburse him for the difference between
such original cost and the contract sale price for such re-
sidence.
(h) Vacations and Other Leaves. During the Term,
the Executive shall be entitled to paid vacation and other paid
absences, whether for holidays, illness, personal time or any
similar purposes, in accordance with policies applicable gener-
ally to executive officers of the Company; provided, however,
that in no event shall the Executive be entitled to fewer than
four (4) weeks of paid vacation per calendar year.
(i) Expenses. During the Term, the Executive
shall be entitled to receive prompt reimbursement for all reason-
able and customary expenses incurred by the Executive in perform-
ing services hereunder, including all expenses of travel and
accommodations while away from home on business or at the request
of and in the service of the Company; provided however, that such
expenses are incurred and accounted for in accordance with the
policies and procedures established by the Company.
(j) Services Furnished. The Company shall fur-
nish the Executive with office space, stenographic assistance and
such other facilities and services as shall be suitable to the
Executive's position and adequate for the performance of his
duties hereunder.
(k) Legal Fees. The Company shall pay directly
or reimburse the Executive for reasonable legal fees and expenses
incurred by the Executive on or prior to December 31, 1996, in
connection with the negotiation and preparation of this Agree-
ment.
6. Termination. (a) The Executive's employment
hereunder may be terminated without breach of this Agreement only
under the following circumstances:
(i) Death. The Executive's employment
hereunder shall terminate upon his death.
(ii) Cause. The Company may terminate the
Executive's employment hereunder for "Cause." For purposes
of this Agreement, the Company shall have "Cause" to
terminate the Executive's employment hereunder if (1) the
Executive is convicted of a felony, including the entry of a
guilty or nolo contendere plea, or (2) the Executive engages
in conduct that constitutes willful gross neglect or willful
gross misconduct in carrying out his duties, resulting, in
either case, in material harm to the Company, monetarily or
otherwise, unless the Executive reasonably believed in good
faith that such act or non-act was in (or not opposed to)
the best interests of the Company. A termination for Cause
shall not take effect unless the provisions of this
paragraph (ii) are complied with. The Executive shall be
given written notice by the Board of the intention to termi-
nate him for Cause, such notice (A) to state in detail the
particular act or acts or failure or failures to act that
constitute the grounds on which the proposed termination for
Cause is based and (B) to be given within six months of the
Board learning of such act or acts or failure or failures to
act. The Executive shall have 10 days after the date that
such written notice has been given to the Executive in which
to cure such conduct, to the extent such cure is possible.
If he fails to cure such conduct, the Executive shall then
be entitled to a hearing before the Board. Such hearing
shall be held within 15 days of such notice to the Execu-
tive, provided he requests such hearing within 10 days of
the written notice from the Board of the intention to
terminate him for Cause. If, within five days following
such hearing, the Executive is furnished written notice by
the Board confirming that, in its judgment, grounds for
Cause on the basis of the original notice exist, he shall
thereupon be terminated for Cause.
(iii) Disability. If, as a result of an
accident or illness, the Executive is considered disabled
under the terms of the Company's Long Term Disability Plan
for Salaried Employees (or any successor thereto) for
purposes of determining eligibility for the initial benefits
payable thereunder, and within thirty (30) days after writ-
ten Notice of Termination (as defined in Section 6(b) below)
is given shall not have returned to the performance of his
duties hereunder on a full-time basis, the Company may
terminate the Executive's employment hereunder for
"Disability."
(iv) Termination by the Executive. The
Executive may terminate his employment hereunder by
providing the Company with a Notice of Termination (as
described in Section 6(b) below). If the Executive notifies
the Company that he has "Good Reason" to terminate his
employment hereunder, the Company shall have ten (10)
business days to cure after the Executive gives the Company
notice of his intention to terminate for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean the
occurrence of any of the following without the Executive's
prior written consent:
(A) a reduction in the Executive's then
current Base Salary or target bonus opportunity under
the Company's Management Incentive Compensation
Corporate Plan, as amended December 19, 1995, or any
similar plan below the minimum opportunity set forth
herein or termination or material reduction in a ma-
terial benefit or material perquisite (other than as
part of an across-the-board reduction of such benefit
or perquisite applicable to all executive officers of
the Company);
(B) the failure to elect or reelect the
Executive to any of the positions described in Section
3 hereof, or removal of the Executive from any such
position;
(C) a material diminution in the Executive's
duties or the assignment to the Executive of duties
that are materially inconsistent with his position or
that materially impair the Executive's ability to func-
tion as the Chairman and Chief Executive Officer;
(D) the relocation of the Company's
principal office, or the Executive's own office
location as assigned to him by the Company, to a loca-
tion more than 35 miles from New Britain, Connecticut;
(E) any material failure by the Company to
comply with a material provision of this Agreement;
(F) the issuance of notice by the Company to
the Executive that the Company does not wish to extend
the Term, as provided in Section 2 hereof; or
(E) the failure of the Company to obtain the
assumption in writing of its obligation to perform this
Agreement by any successor to all or substantially all
of the assets of the Company within 15 days after a
merger, consolidation or sale of all or substantially
all of the assets of the Company, or any similar trans-
action.
(b) Notice of Termination. Any termination of
the Executive's employment by the Company or by the Executive
(other than termination under Section 6(a)(i) hereof) shall be
communicated by written Notice of Termination to the other party
hereto in accordance with Section 10 hereof. For purposes of
this Agreement, a "Notice of Termination" shall mean a notice
that shall indicate the specific termination provision in this
Agreement relied upon and, in the case of a termination for Cause
or for Good Reason, shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termina-
tion of the Executive's employment under the provision so indi-
cated.
(c) Date of Termination. "Date of Termination"
shall mean (i) if the Executive's employment is terminated by his
death, the date of his death, and (ii) if the Executive's
employment is terminated for any other reason, the date specified
in the Notice of Termination.
(d) Termination Upon Death; Disability; for
Cause; Voluntary Termination Other than for Good Reason. If the
Executive's employment is terminated by reason of the Executive's
death or Disability, by the Company for Cause or voluntarily by
the Executive other than for Good Reason, (1) the Company shall,
as soon as practicable after the Date of Termination, pay the
Executive (or the Executive's beneficiary, as the case may be)
all unpaid amounts, if any, to which the Executive is entitled as
of the Date of Termination under Section 5(a) hereof and shall
pay to the Executive, in accordance with the terms of the ap-
plicable plan or program, all other unpaid amounts to which Exec-
utive is then entitled under any compensation or benefit plan or
program of the Company and (2) the Executive's
entitlements in respect of stock options, Share Units and any other long-term
incentive awards which are outstanding as of the Date of
Termination shall be as provided for in Section 5(b) or 5(c)
hereof and the respective agreements setting forth the terms and
conditions of each award (the matters referred to in clauses (1)
and (2) above being referred to herein collectively as "Accrued
Obligations"). In addition, if the Executive's employment is
terminated by reason of the Executive's death or Disability, then
the Company shall, as soon as practicable after the Date of Ter-
mination, pay the Executive (or the Executive's beneficiary, as
the case may be) an amount (the "Pro Rata Bonus Amount") equal to
(i) if such termination occurs prior to January 1, 2000, (X) 90%
of the Executive's Base Salary for such fiscal year multiplied by
a fraction, the numerator of which equals the number of days in
such fiscal year through and including the Date of Termination,
and the denominator of which equals 365, minus (Y) any bonus
amounts paid or payable with respect to the Executive for such
fiscal year under any annual bonus or incentive compensation plan
or program maintained by the Company, and (ii) if such
termination occurs on or after January 1, 2000, (X) the target
bonus for the Executive for such fiscal year multiplied by a
fraction, the numerator of which equals the number of days in
such fiscal year through and including the Date of Termination,
and the denominator of which equals 365, minus (Y) any bonus
amounts paid or payable with respect to the Executive for such
fiscal year under any annual bonus or incentive compensation plan
or program maintained by the Company. Upon satisfaction of the
Accrued Obligations, the Company shall have no further obliga-
tions to the Executive under this Agreement, other than those
obligations that by their nature are intended to extend beyond
the termination of the Executive's employment hereunder,
including, but not limited to those provided pursuant to Sections
3(b), 6(e), 9 and 15 hereof.
(e) Termination Other than for Cause or
Disability; Termination for Good Reason. If the Company shall
terminate the Executive's employment (other than for Cause or
Disability), or the Executive shall terminate his employment for
Good Reason, then, subject to compliance with the provisions of
Sections 7 and 8 hereof and except as otherwise provided in
Section 6(f) hereof:
(i) as soon as practicable after the Date of
Termination or otherwise in accordance with the terms of the
applicable plan or program, the Company shall pay to the
Executive or otherwise cause to be satisfied the Accrued Ob-
ligations;
(ii) following the Date of Termination and
for the balance of the Term (determined immediately prior to
the Date of Termination), but in no event for less than two
years (the "Severance Period"), the Company shall pay to the
Executive monthly an amount ("Severance Payments") equal to
the quotient of (1) the sum of (A) the Executive's Base
Salary at the annualized rate in effect as of the date on
which the Notice of Termination is given (or, in the event
that the Executive terminates for Good Reason because of a
diminution in his Base Salary, the Base Salary in effect
before such diminution), plus (B) a bonus equal to the
greater of (X) the annual Bonus earned by the Executive in
the fiscal year of the Company ended immediately prior to
the Date of Termination and (Y) the target bonus (or, if
termination occurs during the first, second or third year of
employment, the minimum annual Bonus) for the year of
termination, divided by (2) the number twelve (12);
(iii) the Company shall pay to the Execu-
tive, as soon as practicable following the Date of Termina-
tion, an amount, with respect to the fiscal year in which
occurs the Date of Termination, equal to the Pro Rata Bonus
Amount;
(iv) the defined benefit plan benefits that
the Executive shall be entitled to receive pursuant to
Section 5(d) hereof shall be calculated as if the Executive
had been continuously employed with the Company through the
Severance Period at an annualized rate of compensation equal
to the sum of the amounts set forth in Section
6(e)(ii)(1)(A) and (B) above, and based on his actual age as
of the last day of the Severance Period; and
(v) the Executive shall continue to be
provided for the duration of the Severance Period with the
same medical, life insurance and other welfare benefit cov-
erage as existed immediately prior to the Notice of Termi-
nation; provided, however, that benefits otherwise
receivable by the Executive pursuant to this Section 6(e)(v)
shall be reduced to the extent that benefits of the same
type are received by or made available to the Executive
during the Severance Period (and any such benefits received
by or made available to the Executive shall be reported to
the Company by the Executive) and; provided, further that
(A) if the Executive is precluded from continuing his
participation in any employee benefit plan or program as
provided in this Section 6(e)(v), he shall be provided with
the after-tax economic equivalent of the benefits provided
under the plan or program in which he is unable to
participate for the period specified in this Section 6(e)(v)
during which he is unable to so participate, (B) the
economic equivalent of any benefit foregone shall be deemed
to be the lowest cost that would be incurred by the Exec-
utive in obtaining such benefit himself on an individual
basis, and (C) payment of such economic equivalent shall be
made prior to such date as the Executive is required to
remit such amount to the applicable taxing authority.
Upon payment or other satisfaction of the obligations referred to
in clauses (i) through (v) above, the Company shall have no fur-
ther obligations to the Executive under this Agreement, other
than those obligations that by their nature are intended to
extend beyond the termination of the Executive's employment
hereunder, including, but not limited to those provided pursuant
to Sections 3(b), 9 and 15 hereof.
(f) Termination of Employment Following a Change
in Control.
(i) If, within two years following a Change in
Control (as defined below), the Executive's employment is
terminated by the Company (other than for Cause or
Disability) or the Executive terminates his employment for
Good Reason, the Executive shall be entitled to the payments
and benefits provided in Section 6(e), with the salary and
bonus continuation payments referred to in Section 6(e)(ii)
hereof being paid in a lump sum without discount. Also,
immediately upon a Change in Control, all then outstanding
options, restricted stock and other equity-based awards in
which he is not yet vested, shall become fully vested and
all options not yet exercisable shall become exercisable.
"Change in Control" shall have the meaning set forth in the
1990 Plan.
(ii) If the aggregate of all payments or benefits
made or provided to the Executive under paragraph (i) above
and under all other plans and programs of the Company (the
"Aggregate Payment") is determined to constitute a Parachute
Payment, as such term is defined in Section 280G (b)(2) of
the Code, the Company shall pay to the Executive, prior to
the time any excise tax imposed by Section 4999 of the Code
("Excise Tax") is payable with respect to such Aggregate
Payment, an additional amount which, after the imposition of
all income and excise taxes thereon, is equal to the Excise
Tax on the Aggregate Payment. The determination of whether
the Aggregate Payment constitutes a Parachute Payment and,
if so, the amount to be paid to the Executive and the time
of payment pursuant to this paragraph (ii) shall be made by
the accounting firm which was, immediately prior to the
Change in Control, the Company's independent auditor.
(g) No Mitigation; No Offset. In the event of
any termination of employment under this Section 6, the Executive
shall be under no obligation to seek other employment and there
shall be no offset against amounts due the Executive under this
Agreement on account of (i) any remuneration attributable to any
subsequent employment that he may obtain except as specifically
provided in this Section 6 or (ii) any claims the Company may
have against he Executive.
(h) Nature of Payment. Any amounts due under
this Section 6 are in the nature of severance payments considered
to be reasonable by the Company and are not in the nature of a
penalty.
7. Nonsolicitation; Noncompete.
(a) During the period of Executive's employment,
during the Severance Period (if applicable) and, in the event the
Executive's employment is terminated for Cause or the Executive
voluntarily terminates his employment without Good Reason, for a
period of twelve (12) months following such termination, the
Executive (i) shall not engage, anywhere within the geographical
areas in which the Company conducts its business operations, di-
rectly or indirectly, alone, in association with or as a share-
holder, principal, agent, partner, officer, director, employee or
consultant of any other organization, in any business (a "Com-
petitive Business") that directly and substantially competes with
any material business being conducted by the Company at the time
of the alleged competitive activity (and, if such alleged
activity commences after the Date of Termination, at the Date of
Termination); (ii) shall not, directly or indirectly, except in
the course of carrying out his duties hereunder, solicit or en-
courage any officer, employee or consultant of the Company to
leave the employ of the Company for employment by or with any
other business, whether or not a Competitive Business; and (iii)
shall not, directly or indirectly, except in the course of
carrying out his duties hereunder, solicit, divert or take away,
or attempt to divert or to take away, the business or patronage
of any of the customers or accounts, or prospective customers or
accounts, of the Company, which were contacted, solicited or
served by the Executive while employed by the Company; provided,
however, that nothing herein shall prohibit the Executive from
owning a maximum of two percent (2%) of the outstanding stock of
any publicly traded corporation; and provided further that
nothing herein shall preclude the Executive's participation in
the management of a subsidiary, division or other affiliate of a
Competitive Business, the subsidiary, division or affiliate is
not itself in the Competitive Business. If, at any time, the
provisions of this Section 7(a) shall be determined to be invalid
or unenforceable, by reason of being vague or unreasonable as to
area, duration or scope of activity, this Section 7(a) shall be
considered divisible and shall become and be immediately amended
to cover only such area, duration and scope of activity as shall
be determined to be reasonable and enforceable by the court or
other body having jurisdiction over the matter; and the Executive
agrees that this Section 7(a) as so amended shall be valid and
binding as though any invalid or unenforceable provision had not
been included herein.
(b) In the event of a violation of Section 7(a)
hereof, the remedies of the Company shall include, but shall not
be limited to (1) if such violation occurs during the period of
Executive's employment hereunder, the right to seek injunctive
relief in accordance with Section 15 hereof, and (2) if such
violation occurs following the period of Executive's employment
hereunder, (i) forfeiture by the Executive of any future Sever-
ance Payments under Section 6(e)(ii) hereof and any continuation
of welfare or other benefit coverage provided pursuant to Section
6(e)(v) hereof, and treating the Severance Period as having
immediately terminated for purposes of Sections 5(d) and 6(e)(iv)
hereof, and (ii) the right to seek injunctive relief in accor-
dance with Section 15 hereof.
8. Protection of Confidential Information.
(a) Executive acknowledges that his employment by
the Company will, throughout the Term of this Agreement, involve
his obtaining knowledge of confidential information regarding the
business and affairs of the Company. In recognition of the
foregoing, the Executive covenants and agrees:
(i) that, except in compliance with legal
process, he will keep secret all confidential matters of the
Company that are not otherwise in the public domain and will
not intentionally disclose them to anyone outside of the
Company, wherever located (other than to a person to whom
disclosure is reasonably necessary or appropriate in
connection with the performance by Executive of his duties
as an executive officer of the Company), either during or
after the Term, except with the prior written consent of the
Board or a person authorized thereby; and
(ii) that he will deliver promptly to the
Company on termination of his employment, or at any other
time the Company may so request, all memoranda, notes,
records, customer lists, reports and other documents (and
all copies thereof) relating to the business of the Company
which he obtained while employed by, or otherwise serving or
acting on behalf of, the Company and which he may then
possess or have under his control; provided, however, he may
retain his personal correspondence, diaries and other items
of a personal nature.
(b) If the Executive commits a breach of the
provisions of Section 8(a)(i) or 8(a)(ii), the Company shall have
the right to seek injunctive relief in accordance with Section
15.
9. Successors; Binding Agreement.
(a) Neither this Agreement nor any rights
hereunder shall be assignable or otherwise subject to
hypothecation by the Executive (except by will or by operation of
the laws of intestate succession or except as expressly provided
in this Agreement or in any plan or agreement that is the subject
matter hereof) or by the Company, except that the Company will
require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company, by agreement in
form and substance reasonably satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required
to perform it if no such succession had taken place. As used in
this Agreement, "Company" shall mean the Company as herein before
defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for
in this Section 9 or which otherwise becomes bound by the terms
and provisions of this Agreement by operation of law.
(b) This Agreement and all rights of the Execu-
tive hereunder shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts would
still be payable to him hereunder if he had continued to live,
all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the Executive's
devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. Notice. For the purposes of this Agreement,
notices, demands and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have
been duly given when delivered personally, dispatched by private
courier such as Federal Express or United Parcel Service, or (un-
less otherwise specified) mailed by United States certified or
registered mail, return receipt requested, postage prepaid, ad-
dressed as follows:
If to the Company:
The Stanley Works
1000 Stanley Drive
New Britain, Connecticut 06053
Attn
: General Counsel
With a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attn
: Stuart N. Alperin, Esq.
If to the Executive:
John M. Trani
c/o The Stanley Works
1000 Stanley Drive
New Britain, Connecticut 06053
or to such other address as any party may have furnished to the
other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
11. Miscellaneous. No provisions of this Agreement
may be modified, waived or discharged unless such waiver, modi-
fication or discharge is agreed to in writing signed by the
Executive and a duly authorized officer of the Company. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or im-
plied, with respect to the subject matter hereof have been made
by either party which are not set forth expressly in this
Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of
the state of Connecticut without regard to its conflicts of law
principles. All payments hereunder shall be subject to appli-
cable federal, State and local tax withholding requirements.
12. Company's and Executive's Representations and War-
ranties.
(a) The Company represents and warrants that it
is fully authorized and empowered to enter into this Agreement
and that the performance of its obligations under this Agreement
will not violate any agreement between it and any other person,
firm or organization.
(b) The Executive represents and warrants that he
has the legal right to enter into this Agreement and perform all
of the material obligations on his part to be performed hereunder
in accordance with its terms and that he is not a party to any
agreement or understanding, written or oral, that prevents him
from entering into this Agreement or performing his material
obligations hereunder. Notwithstanding any other provision of
this Agreement, in the event of a breach of such representation
or warranty on the Executive's part, the Company shall have the
right to terminate this Agreement forthwith in accordance with
the notice provisions set forth in Section 10 hereof, and the
Company shall have no further obligations to the Executive here-
under.
13. Validity. The invalidity or unenforceability
of any provision or provisions of this Agreement shall not affect
the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
14. Counterparts. This Agreement may be executed in
one or more counterparts, including by facsimile, each of which
shall be deemed to be an original but all of which together will
constitute one and the same instrument.
15. Arbitration. Any dispute or controversy arising
under or in connection with this Agreement shall be settled
exclusively by arbitration, conducted before one arbitrator to be
mutually agreed upon by the parties hereto. In the event the
parties are unable to agree upon an arbitrator, the Company and
the Executive shall each appoint an arbitrator, and these two
arbitrators shall select a third, who shall be the arbitrator.
Arbitration shall be held in Hartford, Connecticut in accordance
with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any
court having jurisdiction; provided however, that the Company
shall be entitled to seek a restraining order or injunction in
any court of competent jurisdiction to prevent any continuation
of any violation of the provisions of Section 7 or 8 of the
Agreement and the Executive hereby consents that such restraining
order or injunction may be granted without the necessity of the
Company's posting any bond, it being acknowledged and agreed that
any breach or threatened breach of the provisions of Section 7(a)
or 8(a)(i) or 8(a)(ii) will cause irreparable injury to the Com-
pany and that money damages will not provide an adequate remedy
to the Company. Each party shall bear its own costs and expenses
(including, without limitation, legal fees) in connection with
any arbitration proceeding instituted hereunder; provided,
however, that to the extent the Executive prevails, his costs and
expenses shall be promptly reimbursed by the Company.
16. Survivorship. The respective rights and
obligations of the parties hereunder shall survive any
termination of the Executive's employment to the extent necessary
to the intended preservation of such rights and obligations.
These shall include, without limitation, the provisions of
Sections 3(b), 6, 7, 8 and 15 hereof.
17. Entire Agreement. This Agreement sets forth the
entire agreement of the parties hereto in respect of the subject
matter contained herein and all other prior agreements, promises,
covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or
representative of any party hereto, and any prior agreement of
the parties hereto in respect of the subject matter contained
herein is hereby terminated and cancelled. To the extent that
this Agreement and any other agreement between the parties
provides duplicative payments or benefits, this Agreement and any
such other agreement shall be construed so as to prevent such du-
plication.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement on the Execution Date to take effect as of the Effec-
tive Date.
THE STANLEY WORKS
By:
Name:
Title:
John M. Trani
EXHIBIT A
THE STANLEY WORKS
1990 STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION
Granted To
John M. Trani
Grantee
1,000,000 $27.562
Number of Option Shares Purchase Price per Share
GRANT DATE: December 31, 1996
EXPIRATION DATE: December 30, 2006
Note:
i. Fully vested on Grant Date, subject to approval by Share-
holders of Amendments to the Plan at the 1997 Annual Meeting
(see paragraph 1).
ii. Not exercisable until June 30, 1997 (see paragraph 1).
iii. Upon exercise, the Purchase Price may be paid by delivery of
Stanley shares (see paragraph 2).
iv. Upon exercise you must pay not only the Purchase Price but
also applicable tax withholding on the "spread" (see para-
graph 3).
(Please sign and return to, Craig A. Douglas,
1000 Stanley Drive, New Britain, CT 06053,
keeping a copy for yourself)
I accept the Option, subject to its terms set
forth above and in the attachment.
Signature
Date NON-QUALIFIED STOCK OPTION AGREEMENT
The Stanley Works ("Stanley") hereby grants to
the Grantee under Stanley's 1990 Stock Option Plan (the
"Plan") the option (the "Option") to purchase on or
before the Expiration Date, at the Purchase Price per
Share, the Option Shares, which shall be fully paid and
non-assessable shares of the Common Stock of Stanley, par
value $2.50 per share (the "Common Stock").
The Option is granted subject to the approval
by the shareholders of Stanley (the "Shareholders"), at
Stanley's next Annual Meeting of Shareholders (the "1997
Annual Meeting"), of amendments to the Plan necessary or
appropriate in connection with this grant (the "Amend-
ments"). If such approval is not obtained, this Option
shall be null and void.
The Option is granted subject to the following
additional terms and conditions and the terms and condi-
tions of the Plan:
1. The Option shall be fully vested on the
Grant Date, subject to approval by Shareholders of the
Amendments at the 1997 Annual Meeting. Subject to the
provisions of Section 5 hereof, the Option may from time
to time be exercised as to all Option Shares or a portion
thereof on or after the six month anniversary of the
Grant Date and on or prior to the Expiration Date.
2. The Option may be exercised, in whole or
in part, by written notification delivered in person or
by mail to Stanley's Director, Corporate Finance at
Stanley's executive offices in New Britain, Connecticut.
Such notification shall be effective upon its receipt by
the Director, Corporate Finance on or before the Expira-
tion Date, and shall be in such form as the Compensation
and Organization Committee (the "Committee") may pre-
scribe, specifying the number of shares with respect to
which the Option is then being exercised and accompanied
by or followed promptly by payment for such shares. The
Option may not be exercised with respect to a fractional
share or with respect to the lesser of 100 shares or the
balance of the shares then covered by the Option. In the
event the Expiration Date falls on a day which is not a
regular business day at Stanley's executive offices in
New Britain, Connecticut, then such written notification
must be received at such office on or before the last
regular business day prior to the Expiration Date.
Payment is to be made (a) by check payable to the order
of The Stanley Works, or (b) by delivery of a certificate
or certificates for shares of Common Stock having a Fair
Market Value (as such term is defined in the Plan) on the
last business day prior to delivery of such notice of
exercise equal to the Purchase Price for the portion of
the Option being exercised, or in a combination of (a)
and (b) above (provided, however, that payment in shares
will not be permitted unless at least 100 shares are
required and delivered for such purpose), and such shares
have been held by the Grantee for at least six months or
(c) if authorized by regulations adopted by the Commit-
tee, and accomplished in accordance therewith, by deliv-
ery of a properly executed exercise notice, together with
irrevocable instructions to a broker to deliver promptly
to the Director, Corporate Finance the portion of sale or
loan proceeds sufficient to pay the Purchase Price. Any
stock certificate or certificates delivered pursuant to
this paragraph must be accompanied by an appropriate
stock power, to the order of Stanley, with the signature
guaranteed by a bank or trust company or by a member firm
of the New York Stock Exchange. No shares shall be
issued on exercise of the Option until full payment for
such shares has been made and all checks delivered in
payment therefor have been collected. The Grantee shall
not have any rights of a shareholder upon exercise of the
Option, including but not limited to, the right to vote
or to receive dividends, until stock certificates have
been issued to the Grantee.
3. Stanley shall not be required to issue any
certificate or certificates for shares purchased upon the
exercise of any part of the Option prior to (i) the
admission of such shares to listing on any stock exchange
on which the stock may then be listed, (ii) the comple-
tion of any registration or other qualification of such
shares under any state or federal law or rulings or
regulations of any governmental regulatory body, (iii)
the obtaining of any consent or approval or other clear-
ance from any governmental agency which Stanley shall, in
its sole discretion, determine to be necessary or advis-
able, and (iv) the payment to Stanley, upon its demand,
of any amount requested by Stanley for withholding feder-
al, state or local income or earnings taxes or any other
applicable tax or assessment (plus interest or penalties
thereon, if any, caused by a delay in making such pay-
ment) incurred by reason of the exercise of the Option or
the transfer of such shares. The Option shall be exer-
cised and shares issued only upon compliance with the
Securities Act of 1933, as amended (the "Act"), and any
other applicable securities laws, and the Grantee shall
comply with any requirements imposed by the Committee
under such laws.
If the Grantee qualifies as an "affiliate" (as
that term is defined in Rule 144 ("Rule 144") promulgated
under the Act), upon demand by Stanley, the Grantee (or
any person acting on his or her behalf) shall deliver to
the Director, Corporate Finance at the time of any exer-
cise of the Option a written representation that upon
exercising the Option he or she will acquire shares
pursuant to the Plan for his or her own account, that he
or she is not taking the shares with a view to distribu-
tion and that he or she will dispose of the shares only
in compliance with Rule 144.
4. Except as otherwise provided in the Plan,
the Option is not transferrable by the Grantee otherwise
than by will or by the laws of descent and distribution,
and is exercisable, during the life of the Grantee, only
by him or by his guardian or legal representative. More
particularly (but without limiting the generality of the
foregoing), the option may not be assigned, transferred
(except as provided above), pledged or hypothecated in
any way, shall not be assignable by operation of law and
shall not be subject to execution, attachment or similar
process. The Option does not confer upon the Grantee any
right with respect to continuation of employment with
Stanley or any of its subsidiaries, and will not inter-
fere in any way with the right of Stanley or any of its
subsidiaries to terminate the Grantee's employment.
5. Notwithstanding any other provisions
(other than the requirement for Shareholder approval of
the Amendments):
(a) Upon the termination of the Grantee's
employment (i) by Stanley for any reason (including
disability) other than for "Cause" (as defined
below) or (ii) by the Grantee for "Good Reason" (as
defined below), the Grantee may exercise the Option
at any time on or prior to the Expiration Date.
(b) If the Grantee should die (whether before
or after his employment with Stanley terminates),
the Option may be exercised by the person designated
in the Grantee's last will and testament or, in the
absence of such designation, by the Grantee's es-
tate, to the full extent that the Option could have
been exercised by the Grantee immediately prior to
the Grantee's death at any time on or prior to the
Expiration Date.
In the event the Option is exercised by the
executors, administrators, legatees or
distributees
of the estate of the Optionee, Stanley shall be
under no obligation to issue shares unless Stanley
is satisfied that the person or persons exercising
the Option are the duly appointed legal representa-
tives of the Optionee's estate or the proper lega-
tees or distributee thereof.
(c) If the Grantee is terminated by Stanley
for Cause, the Option, whether or not vested and
exercisable at such time, shall immediately expire
and shall cease to be exercisable as of the date of
the act that gave rise to such termination of em-
ployment by Stanley for Cause. For purposes of this
Agreement, Cause shall have the meaning set forth in
Section 6(a)(ii) of the employment agreement, en-
tered into December __, 1996, by and between Stanley
and the Grantee (the "Employment Agreement").
(d) If the Grantee terminates his employment
with Stanley other than for Good Reason, the Option
shall expire on the earlier to occur of the sixtieth
day following such termination of employment and the
Expiration Date. For purposes of this Agreement,
Good Reason shall have the meaning set forth in
Section 6(a)(iv) of the Employment Agreement.
(e) In the event of a merger, consolidation,
reorganization, recapitalization, stock dividend,
stock split or other change in corporate structure
or capitalization affecting the Common Stock, the
number of shares remaining to be exercised under the
Option and the Purchase Price shall be appropriately
adjusted by the Committee. If, as a result of any
adjustment under this paragraph, the Grantee becomes
entitled to a fractional share, he or she shall have
the right to purchase only the adjusted number of
full shares and no payment or other adjustment will
be made with respect to the fractional share so
disregarded.
6. All decisions or interpretations of the
Committee with respect to any question arising under the
Plan or under the Option shall be binding, conclusive and
final.
7. The waiver by Stanley of any provision of
the Option shall not operate as or be construed to be a
subsequent waiver of the same provision or a waiver of
any other provision of the Option.
8. The 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 set forth in the Option are subject
in all respects to the terms and conditions of the Plan,
which shall be controlling. A copy of the Plan has been
furnished to the Grantee, and the Grantee hereby acknowl-
edges receipt thereof.
THE STANLEY WORKS
Craig A. Douglas
Director, Corporate Finance
Exhibit B
PRIOR EMPLOYER SPLIT-DOLLAR POLICIES
Metropolitan Life Insurance Company Flexible Premium
Adjustable Life Insurance Policies
#917590670U
(Initial Face Value: $1,416,000)
#883215027U
(Initial Face Value: $656,250)
Northwestern Mutual Life Insurance Policies
#9473739 (Initial Face Value: $130,000)
#10097130 (Initial Face Value: $45,000)
Exhibit C
COMPANY PROVIDED LIFE INSURANCE
Non-Contributory Universal Life Insurance
Coverage Formula:
Two times the sum of current Base Salary plus the
most recent annual Bonus earned.
Contributory Term Life Insurance
Coverage Formula:
Three times the sum of current Base Salary plus the
lesser of (i) 50% of the most recent annual Bonus
earned and (ii) the non-deferred portion of the most
recent annual Bonus earned.
Exhibit 10(ii)
EMPLOYMENT AGREEMENT
Employment Agreement (the Agreement )
effective December 31, 1996 (the Effective Date ),
between The Stanley Works ( Stanley ), and Richard H.
Ayers (the Executive ).
Background of Agreement
A. The Executive wishes to retire as an
employee from the company as of November 1, 1997,
and in connection therewith wishes to resign as an
officer and director of Stanley as of the Effective
Date.
B. Stanley wishes the Executive to provide
certain services for Stanley between the Effective
Date and November 1, 1997.
In consideration of the foregoing and the
respective agreements of the parties herein contained,
and intending to be legally bound hereby, Stanley and the
Executive agrees as follows:
. Resignation as an officer and a director. The
executive, as of the Effective Date, resigns as an
officer and a director of Stanley. The Executive
will deliver a resignation in the form of Exhibit A
in order to formalize such resignation.
. Term of employment; services to be performed;
compensation and benefits. The Executive s
employment will continue until November 1, 1997.
During the period between the Effective Date and
November 1, 1997, the Executive will perform the
services set forth on Exhibit B. During the period
from the Effective Date to November 1, 1997, the
Executive will receive the compensation and benefits
set forth on Exhibit B, such other benefits as are
normally provided to Stanley employees, and such
other compensation as may be determined by Stanley s
Board of Directors.
THE STANLEY WORKS
By:________________________________
Stephen S. Weddle
Vice President
____________________________
Richard H. Ayers
Exhibit A
December 31, 1996
Secretary
The Stanley Works
New Britain, Connecticut
Dear Sir:
I hereby resign as an officer and a director of
The Stanley Works.
Very truly yours,
Richard H. Ayers
Exhibit B
Employment Agreement
Richard H. Ayers
Effective December 31, 1996
Period of the Agreement:
December 31, 1996 through October 31, 1997
Richard H. Ayers will retire on November 1, 1997
Role:
Richard H. Ayers will be special advisor to the
Chairman and CEO providing support in the transition
and assistance with community affairs, government
issues and acquisitions.
Richard H. Ayers will resign as a director and as
CEO and an officers of the company effective
December 31, 1996.
Specific activities will include completion of 1996
Performance Evaluations, recommendations for the
1996 MICP, involvement in the March of Dimes,
Christmas in April, Habitat for Humanity, New
Britain General Hospital, Chairman of the Stanley
Public Policy Council, represent the company at the
Hand Tool Institute.
Monthly activity reports will be sent to the CEO.
Pay and Benefits:
Pay will continue at the current rate of $45,000
/month through October 31, 1997.
Pension - Participant through October 31, 1997.
Eligible for distribution November 1, 1997.
401(k) - Participant through October 31, 1997.
Eligible for distribution November 1, 1997.
Life/AD&D - Covered through October 31, 1997. Then
eligible for retiree Life Benefits November 1, 1997.
Executive Council Life Program - Covered through
October 31, 1997 at the face amount in force during
January 1997. Then eligible for retiree benefits
November 1, 1997.
Medical/Dental - Covered through October 31, 1997.
Then eligible for retiree Medical/Dental benefits
November 1, 1997.
Short and Long Term Disability - Coverage through
October 31, 1997.
Management Disability Plan - Covered through October
31, 1997. Then can continue plan by individually
paying the premium, subject to the terms of the
plan.
Management Incentive Compensation (MICP) - Full
share participant in 1996. No coverage in 1997.
Long-Term Stock Incentive Plan (LTSIP) - As a
retiree on November 1, 1997, eligible for pro-rated
payment of any uncompleted cycles, subject to the
terms of the plan. Full share participant in 1992-
1996 cycle.
Deferred
MICP and Deferred LTSIP
- Considered a retiree on November 1, 1997.
Stock Option Plans - Considered a retiree November
1, 1997 with exercise rights as provided by the
plan. Not eligible for Stock Option Grant in 1997.
Automobile - Continued use and coverage through
October 31, 1997. On November 1, 1997, ownership
will be transferred to Richard H. Ayers at no cost.
From November 1, 1997, Richard H. Ayers will be
responsible for registration, taxes and maintenance
costs.
Travel Expenses - Normal coverage when involved in
company business. Trips will be pre-approved by the
CEO.
Unemployment Compensation - Unemployment benefits
will not be sought.
Tax Preparation Service - E&Y coverage for 1996 tax
year on the same basis as the executive officers.
Insider trading restrictions - end on June 30, 1997.
Exhibit (20)(i)
FOR IMMEDIATE RELEASE
January 2, 1997
THE STANLEY WORKS NAMES JOHN M. TRANI CHAIRMAN AND CHIEF
EXECUTIVE OFFICER
New Britain, Connecticut (NYSE: SWK) ... The Stanley
Works today announced the election of John M. Trani to
the posts of chairman and chief executive officer,
concluding the search by the board of directors to fill
this position. He replaces Richard H. Ayers, who served
Stanley in various roles since joining the company in
1972 and as chief executive officer since 1987. Mr.
Ayers, who previously announced his retirement, will
assist in the transition of leadership which will begin
today.
Mr. Trani, age 51, has been employed by General
Electric Company since 1978. Since 1986, he has been
president and chief executive officer of GE Medical
Systems. His career includes prior positions that dealt
with consumer and industrial markets. I am excited to
be joining The Stanley Works at this time, Mr. Trani
said. This company clearly has many assets, including a
strong brand franchise, a broad product line, an
impressive dividend record and, most importantly,
dedicated employees. I look forward to overseeing the
challenge that lies ahead: leveraging the company s
strengths into the generation of sustained, profitable
growth.
Stillman B. Brown, Chairman of the search committee,
commenting on the selection of Mr. Trani, stated: John
Trani was instrumental in transforming GE Medical Systems
from a domestic business to a $4 billion global
enterprise through acquisitions, joint ventures, industry
leadership and outstanding financial performance. These
are qualities sought by our search committee since it
began its work last spring. Mr. Ayers added: John is
an ideal choice to lead The Stanley Works into the
21st century.
The Stanley Works is a worldwide producer of tools,
hardware and specialty hardware for consumer, home
improvement, industrial and professional use.
Contact: Gerard J. Gould
Director, Investor Relations and Communications
Tel.: (860) 827-3833
The Stanley Works corporate press releases are available through PR
Newswire's "Company News On-Call" service. By FAX: dial
1-800-758-5804, ext. 874363 or on the internet at: http://
www.prnewswire.com
or
http
://
www.StanleyWorks.com.
