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): June 23, 2000
The Stanley Works
(Exact name of registrant as specified in charter)
Connecticut 1-5224 06-0548860
(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
Page 1 of 29 Pages
<PAGE>
Item 5. Other Events.
1. On June 23, 2000, the Registrant and John M. Trani, the
Registrant's chairman and chief executive officer and director, executed a new
Employment Agreement (the "JMT Employment Agreement") dated as of January 1,
2000. Attached as Exhibit 10(i) is a copy of the JMT Employment Agreement.
Item 7. Financial Statements and Exhibits.
(c) 10(i) Employment Agreement with John M. Trani, dated as of
January 1, 2000.
Page 2 of 29 Pages
<PAGE>
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: June 23, 2000 By: Stephen S. Weddle
Name: Stephen S. Weddle
Title: Vice President, General
Counsel and Secretary
Page 3 of 29 Pages
<PAGE>
EXHIBIT INDEX
Current Report on Form 8-K
Dated June 23, 2000
Exhibit No. Page
10 (i) 5
Page 4 of 29 Pages
<PAGE>
Exhibit 10 (i)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement"), entered into as of
January 1, 2000 (the "Effective Date"), between The Stanley Works, a Connecticut
corporation (the "Company"), and John M. Trani (the "Executive").
WHEREAS, the Executive and the Company are parties to an
Employment Agreement dated December 31, 1996 (the "Prior Agreement"); and
WHEREAS, the Company desires to provide for the continued
service and employment of the Executive with the Company and the Executive
wishes to continue to perform services for the Company, all in accordance with
the terms and conditions provided herein; and
WHEREAS, the Executive and the Company desire to amend and
restate the Prior Agreement in its entirety;
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 Effective Date and will
end on December 31, 2002, unless further extended or sooner terminated as
hereinafter provided. Commencing on January 1, 2003, 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).
Page 5 of 29 Pages
<PAGE>
3. Nature of Performance.
(a) Position and Duties. During the Term, the Executive shall
continue to 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 charitable 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. The Company shall use its best efforts to have the Executive
elected to the Board for the duration of the Term. Notwithstanding the
foregoing, upon the termination of the Executive's employment 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, settlement 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.
Page 6 of 29 Pages
<PAGE>
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. For services rendered by the
Executive to the Company during the year 2000, the Company shall pay to
the Executive an annual base salary at the rate of one million dollars
($1,000,000), such salary to be paid in conformity with the Company's
policies relating to salaried employees. For subsequent periods during
the Term, the Company shall pay to the Executive an annual base salary
at a rate to be determined by the Board. The annual base salary as in
effect from time to time hereunder is hereinafter referred to as the
"Base Salary".
(ii) Annual Bonus. Commencing with respect to the
Company's 2000 fiscal year and continuing during the Term, the
Executive shall be eligible to participate 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. For the
Company's 2000 fiscal year, the Bonus payable to the Executive at
target performance ranges between 90% and 270% of Base Salary.
(b) Stock Options. The Executive shall be granted an
option (the "Option") to acquire 1,000,000 shares of common stock of the Company
("Shares") pursuant to the Company's 1990 Stock Option Plan (the "1990 Plan").
The Option shall be evidenced by a stock option agreement in the form attached
hereto as Exhibit A.
In addition, during the Term, the Executive shall be eligible
for additional stock option, share unit and/or other equity-based awards, in the
sole discretion of the Board or the Compensation and Organization Committee
thereof, pursuant to the terms and conditions of the 1990 Plan or any successor
thereto, as from time to time in effect, as appropriate for his position and
Company performance.
(c) 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,
Page 7 of 29 Pages
<PAGE>
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, conditions and
overall administration of such plans, programs and arrangements; provided,
however, that consistent with the terms of the Prior Agreement, effective as of
December 27, 1996, the Executive has been credited with ten (10) years of
service for purposes of eligibility for participation, vesting and benefit
accrual under such plans. Benefits payable under such defined benefit plans
shall not commence prior to the last day of the Severance Period (as herein-
after defined).
(d) Split Dollar Life Insurance. The Company shall
continue to assume the obligations of the Executive's prior employer (the "Prior
Employer") 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 immediately prior to the Execution Date (as defined in the
Prior Agreement), including, without limitation, 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(d).
(e) Life Insurance and Long Term Disability Benefits.
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
Page 8 of 29 Pages
<PAGE>
insurance plans, programs or policies from time to time in effect for its
senior executives. The Company 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.
(f) Other Benefits. During the Term, the
Executive shall be entitled to participate in all other employee benefit 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, conditions and
overall administration of such plans, programs and arrangements, and subject to
Section 5(c) hereof. 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 executive officers, as the case may be, subject to
and on a basis consistent with the terms, conditions and overall administration
of such benefits and perquisites.
(g) 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 generally 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.
(h) Expenses. During the Term, the Executive
shall be entitled to receive prompt reimbursement for all reasonable and
customary expenses incurred by the Executive in performing 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.
(i) Services Furnished. The Company shall furnish
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.
Page 9 of 29 Pages
<PAGE>
(j) Legal Fees. The Company shall pay directly
or reimburse the Executive for reasonable legal fees and expenses incurred by
the Executive in connection with the negotiation and preparation of this
Agreement.
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 terminate 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
Executive, 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
Page 10 of 29 Pages
<PAGE>
the initial benefits payable thereunder, and within thirty (30) days
after written 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, or termination or
material reduction in a material 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 function 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 location more than 35 miles from New Britain,
Connecticut;
(E) any material failure by the Company to comply with
a material provision of this Agreement;
Page 11 of 29 Pages
<PAGE>
(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
(G) 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 transaction.
(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
termination of the Executive's employment under the provision so indicated.
(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 Sections 5(a), 5(h) and 5(j) hereof and shall pay to the
Executive, in accordance with the terms of the applicable plan or program, all
other unpaid amounts to which Executive is then entitled under any compensation
or benefit plan or program of the Company, including, without limitation,
benefits provided in accordance with the provisions of Sections 5(d) and 5(e)
hereof, 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 the respective agreements
setting forth the terms and conditions of each award, it being specifically
understood that any unvested awards shall be forfeited as of the Date of
Page 12 of 29 Pages
<PAGE>
Termination (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 Termination, pay the Executive (or the Executive's
beneficiary, as the case may be) an amount (the "Pro Rata Bonus Amount")
equal to (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
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), 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 Obligations;
(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 for the year of
termination, divided by (2) the number twelve (12);
Page 13 of 29 Pages
<PAGE>
(iii) the Company shall pay to the Executive, as soon as
practicable following the Date of Termination, 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(c) 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;
(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 coverage as existed immediately prior to the
Notice of Termination; 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 Executive 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; and
(vi) the Executive shall also be entitled to immediate
pro rata vesting and/or payment, as soon as practicable following the
Date of Termination, of restricted stock and long-term awards under the
Company's 3-year management incentive plan, based on the assumption
that actual performance through the Date of Termination had continued
to the end of the applicable performance period at the rate achieved
through the Date of Termination.
Upon payment or other satisfaction of the obligations referred to in clauses (i)
through (vi) above, the Company shall have no
Page 14 of 29 Pages
<PAGE>
further 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 in the 1990 Plan), 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.
(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.
Page 15 of 29 Pages
<PAGE>
(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,
directly or indirectly, alone, in association with or as a shareholder,
principal, agent, partner, officer, director, employee or consultant of any
other organization, in any business (a "Competitive 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 encourage 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.
Page 16 of 29 Pages
<PAGE>
(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 Severance 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(c) and 6(e)(iv)
hereof, and (ii) the right to seek injunctive relief in accordance 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.
Page 17 of 29 Pages
<PAGE>
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 Executive 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 (unless
otherwise specified) mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Company:
The Stanley Works
1000 Stanley Drive
New Britain, Connecticut 06053
Attn: General Counsel
Page 18 of 29 Pages
<PAGE>
With a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
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, modification 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 implied,
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 applicable federal, State and local tax
withholding requirements.
12. Company's and Executive's Representations and Warranties.
(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
Page 19 of 29 Pages
<PAGE>
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 hereunder.
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 Company 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.
Page 20 of 29 Pages
<PAGE>
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 duplication.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
THE STANLEY WORKS
By: Stillman B. Brown
Name: Stillman B. Brown
Title: Director
John M. Trani
John M. Trani
Page 21 of 29 Pages
<PAGE>
EXHIBIT A
THE STANLEY WORKS
1990 STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION
Granted To
John M. Trani
Grantee
1,000,000 $30.125
Number of Option Shares Purchase Price per Share
GRANT DATE: April 26, 2000
EXPIRATION DATE: December 31, 2009
Note:
i. Cliff vesting at the earlier of (a) 12/31/02, or (b) the date,
subsequent to the date of grant, as of which the closing price per
share of Common Stock on the New York Stock Exchange on each of the ten
consecutive trading days immediately preceding such date shall have
equalled or exceeded $40 (equitably adjusted to reflect stock
dividends, stock splits, etc.).
ii. Upon exercise you must pay not only the Purchase Price but
also applicable tax withholding on the "spread" (see
paragraph 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
Page 22 of 29 Pages
<PAGE>
EXHIBIT A
NON-QUALIFIED STOCK OPTION AGREEMENT
The Stanley Works ("Stanley") hereby grants to the Grantee
under Stanley's 1990 Stock Option Plan (the "Plan") an 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 following additional
terms and conditions and the terms and conditions of the Plan:
1. Subject to the provisions of Section 5, this Option shall
become fully vested and exercisable on the earlier of (a) December 31, 2002 or
(b) the date, subsequent to the date of grant, as of which the closing price per
share of Common Stock on the New York Stock Exchange on each of the ten
consecutive trading days immediately preceding such date shall have equalled or
exceeded $40 (such earlier date, the "Vesting Date"). 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 Vesting 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 Expiration Date, and shall be in such form as the
Compensation and Organization Committee (the "Committee") may prescribe,
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
Page 23 of 29 Pages
<PAGE>
EXHIBIT A
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 Committee, and accomplished in accordance therewith,
by delivery 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 completion 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 clearance from any governmental agency which
Stanley shall, in its sole discretion, determine to be necessary or advisable,
and (iv) the payment to Stanley, upon its demand, of any amount requested by
Stanley for withholding federal, 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 payment) incurred by reason of the exercise of
the Option or the transfer of such shares. The Option shall be exercised 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
Page 24 of 29 Pages
<PAGE>
EXHIBIT A
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
exercise 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 distribution 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 interfere in any way with the right of Stanley
or any of its subsidiaries to terminate the Grantee's employment.
5. Notwithstanding any other provisions hereof:
(a) Upon the termination of the Grantee's employment for any
reason (other than death or Disability, as defined in the Employment
Agreement dated as of January 1, 2000, between the Grantee and Stanley
(the "Employment Agreement")) prior to December 31, 2002, the Option,
to the extent not previously vested and exercisable pursuant to
paragraph (b) below, shall be immediately forfeited.
(b) In the event a Change in Control (as defined in the Plan)
occurs prior to December 31, 2002 and prior to Grantee's termination of
employment, or in the event Grantee's employment terminates prior to
December 31, 2002 by reason of death or Disability, the Option shall
immediately become vested and exercisable in full.
(c) If the Grantee should die (whether before or after his
employment with Stanley terminates), the Option, to the extent vested
and exercisable at the date of death, may be exercised by the person
designated in the Grantee's last will and testament or, in the absence
of such designation,
Page 25 of 29 Pages
<PAGE>
EXHIBIT A
by the Grantee's estate, at any time prior to the Expiration Date, and
the Option shall thereupon expire and cease to be exercisable.
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 representatives of the Optionee's estate or the proper
legatees or distributees thereof.
(d) 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 employment 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.
(e) If the Grantee's employment is terminated as a result of
Disability (as defined in the Employment Agreement), the Option shall
remain exercisable until the Expiration Date and the Option shall
thereupon expire and cease to be exercisable.
(f) If the Grantee's employment is terminated by the Company
without Cause or if the Grantee terminates his employment with the
Company for Good Reason (as defined in the Employment Agreement), the
Option, to the extent vested and exercisable at the date of
termination, shall remain exercisable until the Expiration Date and the
Option shall thereupon expire and shall cease to be exercisable.
(g) If the Grantee voluntarily terminates his employment with
the Company other than for Good Reason, the Option, to the extent
vested and exercisable at the date of termination, shall remain
exercisable until the Expiration Date and the Option shall thereupon
expire and shall cease to be exercisable.
(h) 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, the
Page 26 of 29 Pages
<PAGE>
EXHIBIT A
Purchase Price and the price referred to in Section 1(b) hereof 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 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
acknowledges receipt thereof.
THE STANLEY WORKS
Craig A. Douglas
Treasurer
Page 27 of 29 Pages
<PAGE>
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)
Page 28 of 29 Pages
<PAGE>
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.
Page 29 of 29 Pages
<PAGE>
