Exhibit 10(ii)

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.

[spacer.gif] [spacer.gif] [spacer.gif] 1.  Time and Manner of Settlement.    As
soon as practicable following completion of the applicable Measurement Period,
but in no event later than March 15 of the year following the end of such
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 applicable
Minimum Ownership Guidelines set forth in the Award Document provided to that
Participant, 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.

[spacer.gif] [spacer.gif] [spacer.gif] 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.

[spacer.gif] [spacer.gif] [spacer.gif] 3.  Transferability.    Transferability
shall be as set forth in the Plan.

[spacer.gif] [spacer.gif] [spacer.gif] 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.

[spacer.gif] [spacer.gif] [spacer.gif] 5.  Miscellaneous.    The Committee shall
have full 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

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[spacer.gif] [spacer.gif] [spacer.gif]   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.

[spacer.gif] [spacer.gif] [spacer.gif] 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.

[spacer.gif] [spacer.gif] [spacer.gif] 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 accordance with the terms of the Plan not later than 15 days following
such Change in Control. In addition, if any Performance Award which a
Participant earned under 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 settled in accordance with the Plan 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, provided, however, that in no event shall
such settlement occur later than March 15 of the year following the year in
respect of which the Performance Award was earned. 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.

[spacer.gif] [spacer.gif] [spacer.gif] 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.

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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 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 any 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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