EXHIBIT 10(xi)(d)
 
Terms and Conditions Applicable to
Long Term Performance Awards
issued pursuant to The Stanley Works 1997 and 2001 Long Term Incentive Plans
 
This document sets forth the Terms and Conditions applicable to long term
performance awards (“Performance Awards”) issued to eligible Employees pursuant
to either The Stanley Works 1997 Long-Term Incentive Plan or The Stanley Works
2001 Long-Term Incentive Plan (the “Plan”) as described in the Award Document.
 
Each Performance Award represents the right of the Participant to receive a
number of Shares to be issued if the Company achieves Performance Goals for the
Measurement Period as set forth in the Award Document.
 

1.
Time and Manner of Settlement. As soon as practicable following completion of
the applicable Measurement Period and assuming that the Threshold Performance
Goals are achieved and employment requirements are satisfied, the Company shall
issue a number of Shares to the Participant, in settlement of the Participant’s
Performance Award, equal to (i) the number of Shares specified in the Award
Document to be issued based upon the Performance Goals achieved plus (ii) in the
event performance falls between the Threshold and Target or Target and Maximum
Goals as specified in the Award Document, a pro rata number of Shares calculated
as follows (rounded to the closest whole number):

 
S = (A-L/N-L)x(SN-SL)
 
where:
S =the additional number of Shares to be issued
A =the actual EPS or ROCE achieved
L =the EPS or ROCE Goal reached
N =the next highest EPS or ROCE Goal
SN =the number of Shares designated for issuance at the next highest EPS or ROCE
Goal; and
SL = the number of Shares designated for issuance at the EPS or ROCE Goal
reached.
 
If, at the time of settlement, the Participant meets or exceeds the Minimum
Ownership Guidelines, Shares shall be issued in the form of Unrestricted Stock.
If the Participant does not meet the applicable Minimum Ownership Guidelines at
the time of settlement, the Shares shall be issued in the form of Restricted
Stock to the extent necessary for such Participant to meet such Minimum
Ownership Guidelines at the time of settlement. Any additional Shares shall be
issued in the form of Unrestricted Stock.

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2.
Rights of a Shareholder. The Participant shall not have any rights of a
shareholder with respect to the Performance Awards or any Shares issued in
settlement thereof prior to the date of settlement.

 

 
3.
Transferability. Transferability shall be as set forth in the Plan.

 

 
4.
Adjustments. Notwithstanding any other provision hereof, the Committee shall
have authority to make adjustments in the terms and conditions of, and the
criteria included in, Performance Awards granted hereunder, as set forth in the
Plan.

 

 
5. 
Miscellaneous. The Committee shall have full discretionary authority to
administer the Performance Awards and to interpret the terms of the Award
Document and this document, which authority includes the authority to waive
certain conditions in appropriate circumstances. All decisions or
interpretations of the Committee with respect to any question arising in respect
of the Performance Awards shall be binding, conclusive and final. The waiver by
Stanley of any provision of this document or an Award Document shall not operate
as or be construed to be a subsequent waiver of the same provision or a waiver
of any other provision of this document or any Award Document. The validity and
construction of the terms of this document and any Award Document shall be
governed by the laws of the State of Connecticut. The terms and conditions set
forth in this document and any Award Document are subject in all respects to the
terms and conditions of the Plan, which shall be controlling. The Participant
agrees to execute such other agreements, documents or assignments as may be
necessary or desirable to effect the purposes hereof.

 

 
6.
Unfunded Arrangement. The Performance Awards represented in any Award Document
constitute an unfunded unsecured promise of Stanley and the rights of the
Participant in respect of the Performance Awards are no greater than the rights
of an unsecured creditor of Stanley.

 

 
7.
Change in Control. Notwithstanding any provision in the Award documents to the
contrary, upon a Change in Control, unless otherwise determined by the Committee
with respect to a Performance Award at the time of its grant, each outstanding
Performance Award shall be cancelled and in respect of his or her cancelled
Performance Award a Participant shall receive a pro rata portion of the
Performance Award, calculated by assuming the achievement of the applicable
Performance Goal or Performance Goals at target levels and then multiplying this
amount by a fraction, the numerator of which is the number of days completed in
the Performance Period prior to the Change in Control and the denominator of
which is the total number of days in the Performance Period. The pro rata
portion of the Performance Award shall be issued in the form of Unrestricted
Stock as soon as practicable following the Change in Control. In addition, if
any Performance Award which a Participant earned under

 

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the Plan during any Performance Period which ended prior to the Change in
Control has neither been issued to the Participant nor credited to such
Participant under a deferred compensation plan maintained or sponsored by the
Company or an Affiliate prior to the Change in Control, such Performance Award
shall be issued to the Participant in the form of Unrestricted Stock as soon as
practicable and in no event later than the later of (i) March 1st following the
year in respect of which the Performance Award was earned or (ii) the fifteenth
day following the Change in Control. Pursuant to Section 9(a)(ii) of the Plan,
each Participant shall have the right, within thirty days following a Change in
Control, to have the Company purchase all or any number of any Unrestricted
Stock issued hereunder at the Restricted Stock Acceleration Price. After a
Change in Control, the Committee may not exercise its discretion pursuant to
Section 5 hereof to decrease the amount of stock issuable in respect of any
Performance Award which is outstanding immediately prior to the occurrence of
the Change in Control.
 

 
8.
Capitalized Terms. The following capitalized terms shall have the meaning set
forth below for purposes of any Award Document. All other capitalized terms used
in this document shall have the meanings set forth in the Plan.

 
Award Document. A letter or combination of letters to a Participant that advises
the Participant that he or she has been selected to Participate in the program
and sets forth the EPS Performance Goals, ROCE Performance Goals and Shares at
the Threshold, Target and Maximum Levels, signed by the Chairman of the
Committee, in the case of an Award Document to the Chief Executive Officer, and
by the Chief Executive Officer, in the case of an Award Document to any other
Participant.
 
EPS Performance Goals. Threshold, Target and Maximum earnings per share (“EPS”)
performance to be achieved over the Measurement Period as set forth in the Award
Document.
 
Measurement Period. The period during which financial performance is measured
against the applicable Performance Goals as set forth in the Award Document.
 
Minimum Ownership Guidelines. Minimum levels of stock ownership Participants are
expected to reach over time, as set forth in the Award Document.
 
Performance Goals. EPS Performance Goals and ROCE Performance Goals as defined
herein.
 
Restricted Stock. Common Stock of the Company that confers on holders the right
to vote and receive dividends, but that is subject to

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certain restrictions on sale and transfer. All restrictions on sale and transfer
of such stock shall lapse on the date the Participant’s employment with the
Company or any Affiliate terminates, regardless of the reason for termination,
provided, however, that a transfer of employment from the Company to any
Affiliate or from any Affiliate to another Affiliate or to the Company shall not
be deemed a termination of employment hereunder. In addition, if through the
acquisition of additional Shares or otherwise, the total market value of shares
owned by a Participant (restricted and unrestricted) exceeds the applicable
Minimum Ownership Guidelines, the restrictions on the sale and transfer of that
number of Shares of Restricted Stock in excess of the number required to meet
the applicable Minimum Ownership Guidelines shall lapse.
 
ROCE Performance Goals. Threshold, Target and Maximum return on capital employed
(“ROCE”) performance to be achieved over the Measurement Period as set forth in
the Award Document.
 
Shares. Shares of Restricted Stock or Unrestricted Stock to be issued if
Performance Goals are achieved, as specified in an Award Document, with 50% of
Shares allocated to EPS Performance Goals and 50% of Shares allocated to ROCE
Performance Goals.
 
Unrestricted Stock. Common Stock of the Company that may be sold at any time.

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