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Adopted by the Board of Directors September 17, 1997
Amended by the Board of Directors February 25, 1998
Adopted by the shareholders April 15, 1998
Amended by the Board of Directors May 26, 2000
THE STANLEY WORKS
1997 LONG-TERM INCENTIVE PLAN
Section 1. Purpose
The purposes of this Long-Term Incentive Plan (the "Plan") are to encourage
selected salaried employees of The Stanley Works (together with any successor
thereto, the "Company") and selected salaried employees and non-employee
directors of its Affiliates (as defined below) to acquire a proprietary interest
in the growth and performance of the Company, to generate an increased incentive
to contribute to the Company's future success and prosperity, thus enhancing the
value of the Company for the benefit of its shareholders, and to enhance the
ability of the Company and its Affiliates to attract and retain exceptionally
qualified individuals upon whom, in large measure, the sustained progress,
growth and profitability of the Company depend.
Section 2. Definitions
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Affiliate" shall mean (i) any entity that, directly or through one or
more intermediaries, is controlled by the Company and (ii) any entity
in which the Company has a significant equity interest, as determined
by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent,
or Other Stock- Based Award granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Award granted under the Plan.
(d) "Board of Directors" or "Board" shall mean the Board of Directors of
the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
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(f) "Committee" shall mean the Compensation and Organization Committee of
the Board.
(g) "Dividend Equivalent" shall mean any right granted under Section 6(e)
of the Plan.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(i) "Fair Market Value" shall mean, with respect to any property other
than Shares, the fair market value of such property determined by such
methods or procedures as shall be established from time to time by the
Committee, and with respect to Shares, shall mean the mean average of
the high and the low price of a Share as quoted on the New York Stock
Exchange Composite Tape on the date as of which fair market value is
to be determined or, if there is no trading of Shares on such date,
such mean average of the high and the low price on the next preceding
date on which there was such trading.
(j) "Immediate family members" of a Participant shall mean the
Participant's children, grandchildren and spouse.
(k) "Incentive Stock Option" shall mean an option granted under Section
6(a) of the Plan that is intended to meet the requirements of Section
422 of the Code, or any successor provision thereto.
(l) "1990 Plan" shall mean the Company's 1990 Stock Option Plan.
(m) "Non-Employee Director" shall mean any non-employee director of an
Affiliate.
(n) "Non-Qualified Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock
Option.
(o) "Option" shall mean an Incentive Stock Option or a Non- Qualified
Stock Option.
(p) "Other Stock-Based Award" shall mean any right granted under Section
6(f) of the Plan.
(q) "Participant" shall mean a Salaried Employee designated to be granted
an Award under the Plan.
(r) "Performance Award" shall mean any Award granted under Section 6(d) of
the Plan.
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(s) "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization,
or government or political subdivision thereof.
(t) "Released Securities" shall mean securities that were Restricted
Securities with respect to which all applicable restrictions have
expired, lapsed, or been waived.
(u) "Restricted Securities" shall mean securities covered by Awards of
Restricted Stock or other Awards under which issued and outstanding
Shares are held subject to certain restrictions.
(v) "Restricted Stock" shall mean any Share granted under Section 6(c) of
the Plan.
(w) "Restricted Stock Unit" shall mean any right granted under Section
6(c) of the Plan that is denominated in Shares.
(x) "Salaried Employee" shall mean any salaried Employee of the Company or
of any Affiliate.
(y) "Shares" shall mean shares of the common stock of the Company, par
value $2.50 per share, and such other securities or property as may
become the subject of Awards, or become subject to Awards, pursuant to
an adjustment made under Section 4(b) of the Plan.
(z) "Stock Appreciation Right" shall mean any right granted under Section
6(b) of the Plan.
Section 3. Administration
Except as otherwise provided herein, the Plan shall be administered by the
Committee. Subject to the terms of the Plan and applicable law, the Committee
shall have full power and authority to: (i) designate Participants; (ii)
determine the type or types of Awards to be granted to each Participant under
the Plan; (iii) determine the number of Shares to be covered by (or with respect
to which payments, rights, or other matters are to be calculated in connection
with) Awards; (iv) determine the terms and conditions of any Award; (v)
determine whether, to what extent, and under what circumstances Awards may be
settled or exercised in cash, Shares, other securities, other Awards, or other
property, or canceled, forfeited, or suspended, and the method or methods by
which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi)
determine whether, to what extent, and under what circumstances cash, Shares,
other securities, other Awards, other property and other amounts
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payable with respect to an Award under the Plan shall be deferred either
automatically or at the election of the holder thereof or of the Committee;
(vii) interpret and administer the Plan and any instrument or agreement relating
to, or Award made under, the Plan; (viii) establish, amend, suspend, or waive
such rules and regulations and appoint such agents as it shall deem appropriate
for the proper administration of the Plan; and (ix) make any other determination
and take any other action that the Committee deems necessary or desirable for
the administration of the Plan. Unless otherwise expressly provided in the Plan,
all designations, determinations, interpretations, and other decisions under or
with respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time, and shall be final, conclusive, and binding
upon all Persons, including the Company, any Affiliate, any Participant, any
holder or beneficiary of any Award, any shareholder, and any employee of the
Company or of any Affiliate.
Section 4. Shares Available for Awards
(a) Shares Available. Subject to adjustment as provided in Section 4(b):
(i) Calculation of Number of Shares Available. The number of Shares
authorized to be issued in connection with the granting of Awards
under the Plan is four million (4,000,000), and the number of
Shares available for granting Awards under the Plan in each
fiscal year or, in the case of the years 1997 and 2007, part
thereof shall be two percent (2%) of the issued Shares
(including, without limitation, treasury Shares) as of the first
day of such year; provided, however, that the number of Shares
available for granting Awards in any year shall be increased in
any such year by the number of Shares available under the Plan in
previous years but not covered by Awards granted under the Plan
in such years. Further, if any Shares covered by an Award granted
under the Plan or by an award granted under the 1990 Plan, or to
which such an Award or award relates, are forfeited, or if an
Award or award otherwise terminates without the delivery of
Shares or of other consideration, or if upon the termination of
the 1990 Plan there are Shares remaining that were authorized for
issuance under that Plan but with respect to which no awards have
been granted, then the Shares covered by such Awards or award, or
to which such Award or award relates, or the number of Shares
otherwise counted against the aggregate number
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of Shares available under the Plan with respect to such Award or
award, to the extent of any such forfeiture or termination, or
which were authorized for issuance under the 1990 Plan but with
respect to which no awards were granted as of the termination of
the 1990 Plan shall again be, or shall become available for
granting Awards under the Plan. Notwithstanding the foregoing but
subject to adjustment as provided in Section 4(b), no more than
one million (1,000,000) Shares shall be cumulatively available
for delivery pursuant to the exercise of Incentive Stock Options.
(ii) Accounting for Awards. For purposes of this Section 4,
(A) if an Award (other than a Dividend Equivalent) is
denominated in Shares, the number of Shares covered by such
Award, or to which such Award relates, shall be counted on
the date of grant of such Award against the aggregate number
of Shares available for granting Awards under the Plan; and
(B) Dividend Equivalents and Awards not denominated in Shares
shall be counted against the aggregate number of Shares
available for granting Awards under the Plan, if at all,
only in such amount and at such time as the Committee shall
determine under procedures adopted by the Committee
consistent with the purposes of the Plan;
provided, however, that Awards that operate in tandem with
(whether granted simultaneously with or at a different time
from), or that are substituted for, other Awards or awards
granted under the 1990 Plan may be counted or not counted under
procedures adopted by the Committee in order to avoid double
counting. Any Shares that are delivered by the Company, and any
Awards that are granted by, or become obligations of, the Company
through the assumption by the Company or an Affiliate of, or in
substitution for, outstanding awards previously granted by an
acquired company, shall not be counted against the Shares
available for granting Awards under the Plan.
(iii) Sources of Shares Deliverable Under Awards. Any Shares delivered
pursuant to an Award may
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consist, in whole or in part, of authorized and unissued Shares
or of treasury Shares.
(b) Adjustments. In the event that the Committee shall determine that
any dividend or other distribution (whether in the form of cash,
Shares, other securities, or other property), recapitalization,
stock split, reverse stock split, reorganization, merger,
consolidation split-up, spin-off, combination repurchase, or
exchange of Shares or other securities of the Company, issuance
of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction
or event affects the Shares such that an adjustment is determined
by the Committee to be appropriate in order to prevent dilution
or enlargement of the benefits or potential benefits intended to
be made available under the Plan, then the Committee shall, in
such manner as it may deem equitable, adjust any or all of (i)
the number and type of Shares (or other securities or property)
which thereafter may be made the subject of Awards, (ii) the
number and type of Shares (or other securities or property)
subject to outstanding Awards, (iii) the number and type of
Shares (or other securities or property) specified as the annual
per-participant limitation under Section 6(g)(vi), and (iv) the
grant, purchase, or exercise price with respect to any Award, or,
if deemed appropriate, make provision for a cash payment to the
holder of an outstanding Award; provided, however, in each case,
that with respect to Awards of Incentive Stock Options no such
adjustment shall be authorized to the extent that such authority
would cause the Plan to violate Section 422(b)(1) of the Code or
any successor provision thereto; and provided further, however,
that the number of Shares subject to any Award denominated in
Shares shall always be a whole number.
Section 5. Eligibility
Any Salaried Employee, including any officer or employee- director of the
Company or of any Affiliate, and any Non-Employee Director, who is not a member
of the Committee shall be eligible to be designated a Participant.
Section 6. Awards
(a) Options. The Committee is hereby authorized to grant Options to
Participants with the following terms and conditions and with
such additional terms and conditions, in either case not
inconsistent with the
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provisions of the Plan, as the Committee shall determine:
(i) Exercise Price. The purchase price per Share purchasable
under an Option shall be determined by the Committee;
provided, however, that such purchase price shall not be
less than the Fair Market Value of a Share on the date of
grant of such Option (or, if the Committee so determines, in
the case of any Option retroactively granted in tandem with
or in substitution for another Award or any outstanding
award granted under any other plan of the Company, on the
date of grant of such other Award or award).
(ii) Option Term. The term of each Option shall be fixed by the
Committee.
(iii) Time and Method of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in
whole or in part, and the method or methods by which, and
the form or forms, including, without limitation, cash,
Shares, other Awards, or other property, or any combination
thereof, having a Fair Market Value on the exercise date
equal to the relevant exercise price, in which, payment of
the exercise price with respect thereto may be made or
deemed to have been made.
(iv) Incentive Stock Options. The terms of any Incentive Stock
Option granted under the plan shall comply in all respects
with the provisions of Section 422 of the Code, or any
successor provision thereto, and any regulations promulgated
thereunder. No Incentive Stock Option shall be granted to
any Non-Employee Director who is not otherwise an employee
of the Company or any of its Affiliates.
(v) Transferability. An Option shall not be transferable other
than by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order, as defined
in the Code, and, during the Participant's lifetime, shall
be exercisable only by the Participant, except that the
Committee may:
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(A) permit exercise, during the Participant's lifetime, by
the Participant's guardian or legal representative; and
(B) permit transfer, upon the Participant's death, to
beneficiaries designated by the Participant in a manner
authorized by the Committee, provided that the
Committee determines that such exercise and such
transfer are consonant with requirements for exemption
from Section 16(b) of the Exchange Act and, with
respect to an Incentive Stock Option, the requirements
of Section 422(b)(5) of the Code; and
(C) grant Non-Qualified Stock Options that are
transferable, or amend outstanding NonQualified Stock
Options to make them so transferable, without payment
of consideration, to immediate family members of the
Participant or to trusts or partnerships for such
family members.
(b) Stock Appreciation Rights. The Committee is hereby
authorized to grant Stock Appreciation Rights to
Participants. Subject to the terms of the Plan and any
applicable Award Agreement, a Stock Appreciation Right
granted under the Plan shall confer on the holder thereof a
right to receive, upon exercise thereof, the excess of (i)
the Fair Market Value of one Share on the date of exercise
or, if the Committee shall so determine in the case of any
such right other than one related to any Incentive Stock
Option, at any time during a specified period before or
after the date of exercise over (ii) the grant price of the
right as specified by the Committee, which shall not be less
than the Fair Market Value of one Share on the date of grant
of the Stock Appreciation Right (or, if the Committee so
determines, in the case of any Stock Appreciation Right
retroactively granted in tandem with or in substitution for
another Award or any outstanding award granted under any
other plan of the Company, on the date of grant of such
other Award or award). Subject to the terms of the Plan and
any applicable Award Agreement, the grant price, term,
methods of exercise, methods of settlement, and any other
terms and conditions of any Stock Appreciation Right shall
be as determined by the Committee. The Committee may impose
such conditions or restrictions on the exercise of any Stock
Appreciation Right as it may deem appropriate.
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(c) Restricted Stock and Restricted Stock Units.
(i) Issuance. The Committee is hereby authorized to grant
Awards of Restricted Stock and Restricted Stock Units
to Participants.
(ii) Restrictions. Shares of Restricted Stock and Restricted
Stock Units shall be subject to such restrictions as
the Committee may impose (including, without
limitation, any limitation on the right to vote a Share
of Restricted Stock or the right to receive any
dividend or other right or property), which
restrictions may lapse separately or in combination at
such time or times, in such installments or otherwise,
as the Committee may deem appropriate.
(iii) Registration. Any Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee
may deem appropriate, including, without limitation,
book-entry registration or issuance of a stock
certificate or certificates. In the event any stock
certificate is issued in respect of Shares of
Restricted Stock granted under the Plan, such
certificate shall be registered in the name of the
Participant and shall bear an appropriate legend
referring to the terms, conditions, and restrictions
applicable to such Restricted Stock.
(iv) Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment (as
determined under criteria established by the Committee)
for any reason during the applicable restriction
period, all Shares of Restricted Stock and all
Restricted Stock Units still, in either case, subject
to restriction shall be forfeited and reacquired by the
Company; provided, however, that the Committee may,
when it finds that a waiver would be in the best
interests of the Company, waive in whole or in part any
or all remaining restrictions with respect to Shares of
Restricted Stock or Restricted Stock Units.
Unrestricted Shares, evidenced in such manner as the
Committee shall deem appropriate, shall be delivered to
the holder of Restricted Stock promptly after such
Restricted Stock shall become Released Securities.
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(d) Performance Awards. The Committee is hereby authorized to
grant Performance Awards to Participants. Subject to the
terms of the Plan and any applicable Award Agreement, a
Performance Award granted under the Plan (i) may be
denominated or payable in cash, Shares (including without
limitation, Restricted Stock), other securities, other
Awards, or other property and (ii) shall confer on the
holder thereof rights valued as determined by the Committee
and payable to, or exercisable by, the holder of the
Performance Award, in whole or in part, upon the achievement
of such performance goals during such performance periods as
the Committee shall establish. Subject to the terms of the
Plan and any applicable Awards Agreement, the performance
goals to be achieved during any performance period, the
length of any performance period, the amount of any
Performance Award granted, and the amount of any payment or
transfer to be made pursuant to any Performance Award shall
be determined by the Committee.
(e) Dividend Equivalents. The Committee is hereby authorized to
grant to Participants Awards under which the holders thereof
shall be entitled to receive payments equivalent to
dividends or interest with respect to a number of Shares
determined by the Committee, and the Committee may provide
that such amounts (if any) shall be deemed to have been
reinvested in additional Shares or otherwise reinvested.
Subject to the terms of the Plan and any applicable Awards
Agreement, such Awards may have such terms and conditions as
the Committee shall determine.
(f) Other Stock-Based Awards. The Committee is hereby authorized
to grant to Participants such other Awards that are
denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares
(including, without limitation, securities convertible into
Shares), as are deemed by the Committee to be consistent
with the purposes of the Plan, provided, however, that such
grants must comply with applicable law. Subject to the terms
of the Plan and any applicable Award Agreement, the
Committee shall determine the terms and conditions of such
Awards. Shares or other securities delivered pursuant to a
purchase right granted under this Section 6(f) shall be
purchased for such consideration, which may be paid by such
method or methods and in such form or forms, including,
without limitation, cash, Shares, other securities, other
Awards, or other property, or any combination thereof, as
the Committee shall determine, the value of which
consideration, as established by the Committee, shall not be
less than the Fair Market Value
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of such Shares or other securities as of the date such
purchase right is granted (or, if the Committee so
determines, in the case of any such purchase right
retroactively granted in tandem with or in substitution for
another Award or any outstanding award granted under any
other plan of the Company, on the date of grant of such
other Award or award).
(g) General.
(i) No Cash Consideration for Awards. Awards shall be
granted for no cash consideration or for such minimal
cash consideration as may be required by applicable
law.
(ii) Awards May Be Granted Separately or Together. Awards
may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in
substitution for any other Award or any awards granted
under any other plan of the Company or any Affiliate.
Awards granted in addition to or in tandem with other
Awards, or in addition to or in tandem with awards
granted under any other plan of the Company or any
Affiliate, may be granted either at the same time as or
at a different time from the grant of such other Awards
or awards.
(iii) Forms of Payment Under Awards. Subject to the terms of
the Plan and of any applicable Award Agreement,
payments or transfers to be made by the Company or an
Affiliate upon the grant, exercise, or payment of an
Award may be made in such form or forms as the
Committee shall determine, including, without
limitation, cash, Shares, other securities, other
Awards, or other property, or any combination thereof,
and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case in
accordance with rules and procedures established by the
Committee. Such rules and procedures may include,
without limitation, provisions for the payment or
crediting of reasonable interest on installment or
deferred payments or the grant or crediting of Dividend
Equivalents in respect of installment or deferred
payments.
(iv) Limits on Transfer of Awards. Except as provided in
Section 6(a) above regarding Options, no Award (other
than Released Securities), and no right under any such
Award,
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shall be assignable, alienable, saleable, or
transferable by a Participant otherwise than by will
or by the laws of descent and distribution or pursuant
to a qualified domestic relations order, as defined in
the Code (or, in the case of an Award of Restricted
Securities, to the Company); provided, however, that,
if so determined by the Committee, a Participant may,
in the manner established by the Committee, designate
a beneficiary or beneficiaries to exercise the rights
of the Participant, and to receive any property
distributable, with respect to any Award upon the
demand of the Participant. Each Award, and each right
under any Award, shall be exercisable, during the
Participant's lifetime, only by the Participant or, if
permissible under applicable law, by the Participant's
guardian or legal representative. No Award (other than
Released Securities), and no right under any such
Award, may be pledged, alienated, attached, or
otherwise encumbered, and any purported pledge,
alienation, attachment, or encumbrance thereof shall
be void and unenforceable against the Company or any
Affiliate.
(v) Terms of Awards. The Term of each Award shall be for
such period as may be determined by the Committee;
provided, however, that in no event shall the term of
any Incentive Stock Option exceed a period of ten years
from the date of its grant.
(vi) Per-Person Limitation on Options and SARs. The number
of Shares with respect to which Options and SARs may be
granted under the Plan to an individual Participant in
any three-year period from September 17, 1997 through
the end of the term shall not exceed 3,000,000 Shares,
subject to adjustment as provided in Section 4(b).
(vii) Share Certificates. All certificates for Shares or
other securities delivered under the Plan pursuant to
any Award or the exercise thereof shall be subject to
such stop transfer orders and other restrictions as the
Committee may deem advisable under the Plan or the
rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange
upon which such Shares or other securities are then
listed, and any applicable Federal or state securities
laws, and the
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Committee may cause a legend or legends to be put on
any such certificates to make appropriate reference to
such restrictions.
(viii) Maximum Payment Amount. The maximum fair market value
of payments to any executive officer made in connection
with any long-term performance awards (except for
payments made in connection with Options or Stock
Appreciation Rights) granted under the 1997 Plan shall
not, during any three-year period, exceed two percent
of Stanley's shareholders' equity as of the end of the
year immediately preceding the commencement of such
three-year period.
Section 7. Amendment and Termination
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board of Directors of the Company may
amend, alter, suspend, discontinue, or terminate the Plan, including,
without limitation, any amendment, alteration, suspension,
discontinuation, or termination that would impair the rights of any
Participant, or any other holder or beneficiary of any Award
theretofore granted, without the consent of any shareholder,
Participant, other holder or beneficiary of an Award, or other Person;
provided, however, that, notwithstanding any other provision of the
Plan or any Award Agreement, without the approval of the shareholders
of the Company no such amendment, alteration, suspension,
discontinuation, or termination shall be made that would:
(i) increase the total number of Shares available for Awards under
the Plan, except as provided in Section 4 hereof; or
(ii) permit Options, Stock Appreciation Rights, or other Stock-Based
Awards encompassing rights to purchase Shares to be granted with
per Share grant, purchase, or exercise prices of less than the
Fair Market Value of a Share on the date of grant thereof, except
to the extent permitted under Sections 6(a), 6(b), or 6(f)
hereof.
(b) Adjustments of Awards Upon Certain Acquisitions. In the event the
Company or any Affiliate shall assume outstanding employee awards or
the right or obligation
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to make future such awards in connection with the acquisition of
another business or another corporation or business entity, the
Committee may make such adjustments, not inconsistent with the terms
of the Plan, in the terms of Awards as it shall deem appropriate in
order to achieve reasonable comparability or other equitable
relationship between the assumed awards and the Awards granted under
the Plan as so adjusted.
(c) Adjustments of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee shall be authorized to make
adjustments in the terms and conditions of, and the criteria included
in, Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in Section 4(b)
hereof) affecting the Company, any Affiliate, or the financial
statements of the Company or any Affiliate, or of changes in
applicable laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits
to be made available under the Plan.
(d) Correction of Defects, Omissions and Inconsistencies. The Committee
may correct any defect, supply any omission, or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent
it shall deem desirable to carry the Plan into effect.
Section 8. General Provisions
(a) No Rights to Awards. No Salaried Employee, Participant or other Person
shall have any claim to be granted any Award under the Plan, and there
is no obligation for uniformity of treatment of Salaried Employees,
Participants, or holders or beneficiaries of Awards under the Plan.
The terms and conditions of Awards need not be the same with respect
to each recipient.
(b) Delegation. The Committee may delegate to one or more officers or
managers of the Company or any Affiliate, or a committee of such
officers or managers, the authority, subject to such terms and
limitations as the Committee shall determine, to grant Awards to, or
to cancel, modify, waive rights with respect to, alter, discontinue,
suspend or terminate Awards held by, Salaried Employees who are not
officers of the Company for purposes of Section 16 of the Exchange
Act.
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(c) Withholding. The Company or any Affiliate shall be authorized to
withhold from any Award granted or any payment due or transfer made
under any Award or under the Plan the amount (in cash, Shares, other
securities, other Awards, or other property) of withholding taxes due
in respect of an Award, its exercise, or any payment or transfer under
such Awards or under the Plan and to take such other action as may be
necessary in the opinion of the Company or Affiliate to satisfy all
obligations for the payment of such taxes.
(d) No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation arrangements,
and such arrangements may be either generally applicable or applicable
only in specific cases.
(e) No Right to Employment. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of the
Company or any Affiliate. Further, the Company or an Affiliate may at
any time dismiss a Participant from employment, free from any
liability, or any claim under the Plan, unless otherwise expressly
provided in the Plan or in any Award Agreement.
(f) Governing Law. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Connecticut and applicable
Federal law.
(g) Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction, or as to any Person or Award, or would disqualify the
Plan or any Award under any law deemed applicable by the Committee,
such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended
without, in the determination of the Committee, materially altering
the intent of the Plan or the Award, such provision shall be stricken
as to such jurisdiction, Person, or Award, and the remainder of the
Plan and any such Award shall remain in full force and effect.
(h) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a
Participant or any other Person. To the extent that any Person
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acquires a right to receive payments from the Company or any Affiliate
pursuant to an Award, such right shall be no greater than the right of
any unsecured general creditor of the Company or any Affiliate.
(i) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash, other securities, or other property shall be
paid or transferred in lieu of any fractional Shares, or whether such
fractional Shares or any rights thereto shall be canceled, terminated,
or otherwise eliminated.
(j) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the
construction or interpretation of the Plan or any provision thereof.
Section 9. Change in Control
(a) Upon the occurrence of a Change in Control (as hereinafter defined);
(i) all Options and Stock Appreciation Rights, whether granted as
performance awards or otherwise, shall become immediately
exercisable in full for the remainder of their terms, and
Grantees shall have the right to have the Company purchase all or
any number of such Options or Stock Appreciation Rights for cash
for a period of thirty (30) days following a Change in Control at
the Option Acceleration Price (as hereinafter defined); and
(ii) all restrictions applicable to all Restricted stock and
Restricted Stock Units, whether such Restricted Stock and
Restricted Stock Units were granted as performance awards or
otherwise, shall immediately lapse and have no effect, and
Grantees shall have the right to have the Company purchase all or
any number of such Restricted Stock Units and shares of
Restricted Stock for cash for a period of thirty (30) days
following a Change in Control at the Restricted Stock
Acceleration Price (as hereinafter defined).
(b)(i) The "Restricted Stock Acceleration Price" is the highest of the
following on the date of a Change in Control:
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(A) the highest reported sales price of a share of the
Common Stock within the sixty (60) days preceding the
date of a Change in Control, as reported on any
securities exchange upon which the Common Stock is
listed,
(B) the highest price of a share of the Common Stock
reported in a Schedule 13D or an amendment thereto as
paid within the sixty (60) days preceding the date of
the Change in Control,
(C) the highest tender offer price paid for a share of the
Common Stock, and
(D) any cash merger or similar price paid for a share of
the Common Stock.
(ii) The "Option Acceleration Price" is the excess of the
Restricted Stock Acceleration Price over the exercise price
of the award, except that for Incentive Stock Options, the
Option Acceleration Price is limited to the spread between
the Fair Market Value on the date of exercise and the option
price.
(C) A "Change in Control" is the occurrence of any one of the
following events:
(i) any "person," as such term is defined in Section 3(a)(9) and
modified and used in Sections 13(d) and 14(d) of the
Exchange Act (other than a Grantee, the Company, any trustee
or other fiduciary holding securities under an employee
benefit plan of the Company (or of any subsidiary of the
Company), or any corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), is
or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding
securities;
(ii) during any period of two consecutive years individuals who
at the beginning of such period constitute the Board, and
any new director (other than a director designated by a
person
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who has entered into an agreement with the Company to effect
a transaction described in clause (i), (iii), (iv) or (v) of
this definition) whose election by the Board or nomination
for election by the Company's shareholders was approved by a
vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at the beginning
of the period or whose election or nomination for election
was previously so approved, cease for any reason to
constitute at least a majority thereof;
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation,
other than (A) a merger or consolidation which would result
in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) more than 75% of the
combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately
after such merger or consolidation or (B) a merger or
consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no "person"
(with the exceptions specified in clause (i) of this
definition) acquires 25% or more of the combined voting
power of the Company's then outstanding securities;
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of
the Company's assets; or
(v) the Company consummates a merger, consolidation, stock
dividend, stock split or combination, extraordinary cash
dividend, exchange offer, issuer tender offer or other
transaction effecting a recapitalization of the Company (or
similar transaction) (the "Transaction") and, in connection
with the Transaction, a Designated Downgrading occurs with
respect to the unsecured general obligations of the Company
(the "Securities"), as described below:
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(A) If the rating of the Securities by both Rating Agencies (defined
hereinafter) on the date 60 days prior to the public announcement
of the Transaction (a "Base Date") is equal to or higher than BBB
Minus (as hereinafter defined), then a "Designated Downgrading"
means that the rating of the Securities by either Rating Agency
on the effective date of the Transaction (or, if later, the
earliest date on which the rating shall reflect the effect of the
Transaction) (as applicable, the "Transaction Date") is equal to
or lower than BB Plus (as hereinafter defined); if the rating of
the Securities by either Rating Agency on a Base Date is lower
than BBB Minus, then a "Designated Downgrading" means that the
rating of the Securities by either Rating Agency on the
Transaction Date has decreased from the rating by such Rating
Agency on the Base Date. In determining whether the rating of the
Securities has decreased, a decrease of one gradation (+ and -
for S&P and 1, 2 and 3 for Moody's, or the equivalent thereof by
any substitute rating agency referred to below) shall be taken
into account;
(B) "Rating Agency" means either Standard & Poor's Corporation or its
successor ("S&P") or Moody's Investor Service, Inc. or its
successor ("Moody's");
(C) "BBB Minus" means, with respect to ratings by S&P, a rating of
BBB- and, with respect to ratings by Moody's, a rating of Baa3,
or the equivalent thereof by any substitute agency referred to
below;
(D) "BB Plus" means, with respect to ratings by S&P, a rating of BB+
and, with respect to ratings by Moody's, a rating of BBB3, or the
equivalent thereof by any substitute agency referred to below;
(E) The Company shall take all reasonable action necessary to enable
each of the Rating Agencies to provide a rating for the
Securities, but, if either or both of the Rating Agencies shall
not make such a rating available, a nationally-recognized
investment banking firm shall select a nationally-recognized
securities rating agency or two nationally-recognized securities
rating agencies to act as substitute
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rating agency or substitute rating agencies, as the case may be.
Section 10. Effective Date of the Plan
The Plan shall be effective as of September 17, 1997.
Section 11. Term of the Plan
No Award shall be granted under the Plan after September 16, 2007. However,
unless otherwise expressly provided in the plan or in an applicable Award
Agreement, any Award theretofore granted may extend beyond such date, and the
authority of the Committee to amend, alter, or adjust any such Award, or to
waive any conditions or rights under any such Award, and the authority of the
Board of Directors of the Company to amend the Plan, shall extend beyond such
date.
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