ex10-2.htm


     

    Exhibit
10.2

     

    
      EMPLOYMENT
AGREEMENT

       

      EMPLOYMENT
AGREEMENT (the “Agreement”) by and between The
Stanley Works, a Connecticut corporation (the “Company”), and James M. Loree
(the “Executive”), dated
November 2, 2009 (the “Execution Date”) and effective
as of the Effective Date (as defined in Section 1 below).

       

      WITNESSETH:

       

      WHEREAS,
the Company, Blue Jay Acquisition Corp. (“Merger Sub”) and The Black
& Decker Corporation, a Maryland corporation (“Black & Decker”), propose
to enter into a merger agreement, dated as of the date hereof (the “Merger Agreement”), whereby,
subject to the satisfaction of the terms and conditions of the Merger Agreement,
Black & Decker will become a wholly-owned subsidiary of the Company upon
consummation of the Merger (as defined in the Merger Agreement);

       

      WHEREAS,
the Executive has provided services to the Company in exchange for certain
compensation and benefits prior to entry into this Agreement;

       

      WHEREAS,
the Company and the Executive entered into an Amended and Restated Change in
Control Agreement dated December 10, 2008, which remains in full force and
effect; and

       

      WHEREAS,
the Company and Executive mutually desire to enter into this Agreement,
effective as of the Closing (as defined in the Merger Agreement), pursuant to
which the Executive will continue to provide services to the Company from and
after the Closing in exchange for certain compensation and benefits as provided
in this Agreement.

       

      NOW,
THEREFORE, it is hereby agreed as follows:

       

      1.             EFFECTIVENESS;
TERM.

       

      (a)           This
Agreement shall become effective upon the Closing (the date of the Closing, the
“Effective
Date”).  If the Merger Agreement is terminated in accordance
with its terms prior to the consummation of the Merger or if the Executive is
not continuously employed by the Company from the Execution Date to the Closing,
this Agreement shall be null and void ab initio and of no further force or
effect.

       

      (b)           Subject
to Section 1(a), the term of this Agreement, and the term of the Executive’s
service hereunder, shall commence on the Effective Date and shall continue until
the occurrence of a Date of Termination (as defined in Section 4 below) (such
period of service, the “Term”).

       

      2.            
POSITION AND DUTIES;
LOCATION.

       

      (a)           During
the Term, the Executive shall serve as the Executive Vice President and Chief
Operating Officer of the Company with such duties and responsibilities as are
customarily assigned to such positions, and such other duties and
responsibilities commensurate therewith as may from time to time be assigned to
him by the Chief Executive Officer of the Company (the “Company CEO”).  The
Executive shall report solely to the Company CEO.  At the Company’s
request, upon termination of the Executive’s employment with the Company for any
reason, the Executive shall (1) promptly resign from all positions the
Executive then holds as an officer or member of the board of directors of any of
the Company’s subsidiaries or affiliates and (2) execute any and all
documentation of such resignations.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      (b)           During
the Term, the Executive shall devote his full business time and effort to the
performance of his duties hereunder.  It shall not be considered a
violation of the foregoing for the Executive to manage his personal investments
or, subject to the approval of the Board, to serve on corporate, industry, civic
or charitable boards or committees, so long as such activities do not
significantly interfere with the performance of the Executive’s duties
hereunder.

       

      (c)           During
the Term, the Executive shall be based at the Company’s principal headquarters
in New Britain, Connecticut, except for travel reasonably required for the
performance of the Executive’s duties hereunder.

       

      3.            
COMPENSATION AND
BENEFITS.

       

      (a)           BASE
SALARY.  As of the Effective Date, the Executive’s annual base
salary will be $750,000.  The Annual Base Salary (as defined below)
shall be payable in accordance with the Company’s regular payroll practice for
its senior executives, as in effect from time to time.  During the
Term, the Annual Base Salary shall be reviewed at least annually by the
Compensation and Organization Committee (the “C&O Committee”) of the
Board of Directors of the Company (the “Board”) for possible
increase.  Any increase in the Annual Base Salary shall not limit or
reduce any other obligation of the Company under this Agreement.  Once
increased, the Annual Base Salary shall not thereafter be decreased, except
pursuant to across-the-board salary reductions similarly affecting all senior
Company executives.  The term “Annual Base Salary” shall
refer to the Annual Base Salary as in effect from time to time.

       

      (b)           ANNUAL CASH
BONUS.  For each fiscal year of the Company during the Term,
the Executive shall participate in the Company’s Management Incentive
Compensation Plan, as amended, or any successor plan thereto (the “MICP”).  As of the
Effective Date, the Executive’s annual target bonus opportunity pursuant to the
MICP shall equal 100% (the “Target Annual Bonus
Percentage”) of the Annual Base Salary in effect for the Executive at the
beginning of such fiscal year (or, in the case of the 2010 fiscal year, as in
effect immediately following the Effective Date), with a threshold potential
award equal to 50% of such Annual Base Salary and a maximum potential award
equal to 200% of such Annual Base Salary.  Any cash bonuses payable to
the Executive will be paid at the time the Company normally pays such bonuses to
its senior executives in accordance with the terms of the MICP, but in no event
later than March 15 of the calendar year following the calendar year in which
such cash bonuses are earned and vested.

       

       

      
        
          
          

        

        
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      (c)           EQUITY
AWARDS

       

      (i)           MERGER EQUITY
GRANT.  Promptly after the Effective Date, the Company shall
grant to the Executive restricted stock units (the “Merger RSUs”), which number of
Merger RSUs shall be determined by the Board such that the aggregate value of
the shares of Company common stock underlying such Merger RSUs shall be equal to
the value, as of the Closing, of an option to purchase 675,000 shares of Company
common stock (based on the full grant date value as determined for purposes of
the Company’s financial reporting and assuming such options have a 10-year term
and other terms and conditions consistent with the most recent option awards
made to the Executive).  The Merger RSUs shall be granted under, and
subject to the terms and conditions of, the Company’s 2009 Long-Term Incentive
Plan or a successor thereto (the “Company Stock
Plan”).  The Merger RSUs shall vest and be settled, subject to
the Executive’s continued employment with the Company, 50% on the fourth
anniversary of the Closing and 50% on the fifth anniversary of the
Closing.  In addition, the Merger RSUs shall become immediately and
fully vested and settled in the event (i) the Company terminates the Executive’s
employment other than for Cause (as defined below) or (ii) the Executive’s
employment is terminated by the Executive for Good Reason (as defined below);
provided that,
in any such case, such settlement shall occur on the date of the Executive’s
“separation from service” (within the meaning of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), and the regulations
promulgated thereunder (collectively, “Section
409A”)).  The Merger RSUs shall accrue dividends and
distributions paid on shares of Company common stock in accordance with the
Company’s customary practices.  Except as described above, the Merger
RSUs shall be subject to the terms and conditions set forth in the Company’s
customary award agreement.

       

      (ii)          LONG-TERM INCENTIVE
COMPENSATION.  For each fiscal year of the Company during the
Term, the Executive shall be eligible to receive (a) annual performance awards
with a target annual value (based on the full grant date value as determined for
purposes of the Company’s financial reporting) equal to 250% of the Annual Base
Salary in effect for the Executive at the beginning of such fiscal year (the
“Annual Performance
Awards”), with a threshold potential annual performance award equal to
125% of such Annual Base Salary and a maximum potential annual performance award
equal to 400% of such Annual Base Salary, and (b) annual awards of options to
purchase 100,000 shares of Company common stock (the “Annual Options” and,
collectively with the Annual Performance Awards, the “Annual LTIP
Awards”).  The Annual LTIP Awards shall be granted under, and
subject to the terms and conditions of, the Company Stock Plan, and shall be
subject to the terms and conditions set forth in the Company’s customary award
agreements, including with respect to vesting and exercisability of stock
options (if any) after termination of employment; provided that none of
such Annual LTIP Awards shall constitute “deferred compensation” within the
meaning of Section 409A.

       

      (d)           OTHER
BENEFITS.  While the Executive is employed during the
Term:  (i) the Executive shall be entitled to participate in all
tax-qualified and non-qualified savings, employee stock ownership, employee
stock purchase, deferred compensation and retirement and supplemental retirement
plans that are generally made available to the Company’s senior officers,
including, without limitation, the Company’s Supplemental Executive Retirement
Program (the “SERP”),
and shall be entitled to participate in all fringe benefit and perquisite
practices, policies and programs of the Company made available to the senior
officers of the Company or to the Company CEO, including but not limited to the
Company’s executive car program, financial planning services, executive life
insurance program, executive long-term disability program and executive physical
program (provided that in each case, such participation shall be no less
favorable than that available to senior officers of the Company); and
(ii) the Executive and/or the Executive’s eligible dependents, as the case
may be, shall be eligible for participation in, and shall receive all benefits
under, all welfare benefit plans, practices, policies and programs provided by
the Company, including, any medical (with COBRA equivalent premiums paid on a
gross-up basis during any waiting period that is not waived), flexible spending,
prescription, dental, short- and long-term disability, employee life insurance,
group life insurance, accidental death and travel accident insurance plans and
programs to the same extent, and subject to the same terms and conditions, as
are made available to the senior officers of the Company.

       

       

      
        
          
          

        

        
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      (c)           VACATION.  The
Executive shall be entitled to four (4) weeks paid vacation per
year.

       

      (e)           EXPENSES.  The
Company shall pay or reimburse the Executive for reasonable out-of-pocket
expenses incurred by the Executive during the Term in the performance of the
Executive’s services under this Agreement, in accordance with Company policy for
its senior executives and subject to the Reimbursement Rules (as defined in
Section 4(e) below).

       

      (f)           CHANGE IN CONTROL SEVERANCE
AGREEMENT.  On December 10, 2008, the Executive and the Company
entered into an Amended and Restated Change in Control Severance Agreement,
which shall remain in full force and effect.

       

      (g)           INDEMNIFICATION.  To
the fullest extent permitted by the Company’s certificate of incorporation and
by-laws, or, if greater, by the laws of the State of Connecticut, the Company
shall promptly indemnify and hold harmless the Executive for all amounts
(including, without limitation, judgments, fines, settlement payments, losses,
damages, costs, expenses (including reasonable attorneys’ fees), ERISA excise
taxes, or other liabilities or penalties and amounts paid or to be paid in
settlement) incurred or paid by the Executive in connection with any action,
proceeding, suit or investigation (the “Proceeding”) to which the
Executive is made a party, or is threatened to be made a party, by reason of the
fact that he is or was a director, officer or employee of the Company or is or
was serving at the request of the Company as a director, officer, member,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans,
programs or arrangements, whether or not the basis of such Proceeding is the
Executive’s alleged action in an official capacity.  Such
indemnification shall continue even if the Executive has ceased to be a
director, employee or agent of the Company or other affiliated entity and shall
inure to the benefit of the Executive’s heirs, executors and
administrators.  The Company shall advance to the Executive all
reasonable costs and expenses incurred by him in connection with a Proceeding
within fifteen (15) calendar 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 senior
executive officers.  Following the Term, the Company shall continue to
maintain a directors’ and officers’ liability insurance policy for the benefit
of the Executive which is no less favorable than the policy covering other
senior officers of the Company.

       

       

      
        
          
          

        

        
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      4.            
TERMINATION OF
EMPLOYMENT.

       

      (a)           DEATH OR
DISABILITY.  The Executive’s employment shall terminate
automatically upon the Executive’s death during the Term.  The Company
shall be entitled to terminate the Executive’s employment because of the
Executive’s Disability during the Term.  “Disability” means that the
Executive is disabled within the meaning of the Company’s long-term disability
policy for salaried employees (or any successor thereto) or, if there is no such
policy in effect, that (i) the Executive has been substantially unable, for 120
business days within a period of 180 consecutive business days, to perform the
Executive’s duties under this Agreement, as a result of physical or mental
illness or injury, and (ii) a physician selected by the Company and the
Executive or the Executive’s legal representative has determined that the
Executive is totally and permanently disabled.  In the event that the
Executive and the Company cannot agree as to a physician to make such a
determination, each shall appoint a physician and those two (2) physicians
shall select a third who shall make such determination in writing.  A
termination of the Executive’s employment by the Company for Disability shall be
communicated to the Executive by written notice, and shall be effective on the
30th day after receipt of such notice by the Executive (the “Disability Effective Time”),
unless the Executive returns to full-time performance of the Executive’s duties
before the Disability Effective Time.  Notwithstanding the foregoing,
in the event that as a result of absence because of mental or physical
incapacity the Executive incurs a “separation from service” within the meaning
of such term under Section 409A, the Executive shall on such date
automatically be terminated from employment because of Disability.

       

      (b)           TERMINATION BY THE
COMPANY.  The Company may terminate the Executive’s employment
during the Term for Cause or without Cause.

       

      (i)          “Cause” is defined as
(A) the Executive’s willful and continued failure to substantially perform
his duties with the Company (other than any such failure resulting from his
incapacity due to physical or mental illness) that has not been cured within
thirty (30) calendar days after a written demand for substantial
performance is delivered to the Executive by the Board, which demand
specifically identifies the manner in which the Board believes that the
Executive has not substantially performed his duties, (B) the willful
engaging by the Executive in conduct which is demonstrably and materially
injurious to the Company or its affiliates, (C) the Executive’s conviction of
(or plea of nolo contendere to) any felony or any other crime involving
dishonesty, fraud or moral turpitude, (D) any violation of the Company’s
policies relating to compliance with applicable laws that has a material adverse
effect on the Company or its affiliates or (E) the Executive’s breach of
any restrictive covenant set forth in Section 8 hereof.  For
purposes of clauses (A) and (B) of this definition, no act, or failure
to act, on the Executive’s part shall be deemed “willful” unless done, or
omitted to be done, by the Executive not in good faith and without reasonable
belief that his act, or failure to act, was in the best interest of the
Company.

       

       

      
        
          
          

        

        
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      (ii)        
A termination of the Executive’s employment for Cause shall not be effective
unless it is accomplished in accordance with the following
procedures.  The Board shall give the Executive written notice (“Notice of Termination for
Cause”) of its intention to terminate the Executive’s employment for
Cause, setting forth in detail the specific conduct (including any failure to
act) of the Executive that it considers to constitute Cause, and proposing the
date, time and place (which, in each case, shall be subject to the Executive’s
approval; provided that such approval shall not be unreasonably withheld) of the
Special Board Meeting for Cause.  The “Special Board Meeting for
Cause” means a meeting of the Board called and held specifically and
exclusively for the purpose of considering the Executive’s termination for
Cause, that takes place not less than forty-five (45) business days after
the Executive receives the Notice of Termination for Cause.  The Board
shall provide the Executive an opportunity, together with counsel, to be heard
at the Special Board Meeting for Cause.  The Executive’s termination
for Cause shall be effective when and if a resolution is duly adopted at the
Special Board Meeting for Cause stating that, in the good faith opinion of a
majority of the Board (other than the Executive), the Executive’s conduct
constitutes Cause under this Agreement.

       

      (c)           GOOD
REASON.  The Executive may terminate employment for Good Reason
or without Good Reason.

       

      (i)         
“Good Reason” is defined
as, without the Executive’s consent, (A) the assignment to the Executive of
any duties inconsistent with his status as the Company’s Chief Operating Officer
or a material adverse alteration in the nature or status of the Executive’s
responsibilities, unless the Company has cured such events within ten (10)
business days after the receipt of written notice thereof from the Executive,
(B) a reduction in the Executive’s Annual Base Salary or Target Annual
Bonus Percentage, except for across-the-board salary reductions similarly
affecting all senior Company executives, (C) the relocation of the
Company’s headquarters to a location more than thirty-five (35) miles from the
location of such headquarters on the Effective Date, or (D) the Company’s
election not to renew the Change in Control Severance Agreement.

       

      (ii)        
A termination of employment by the Executive for Good Reason shall be
effectuated by giving the Company written notice (“Notice of Termination for Good
Reason”) of the termination, setting forth in reasonable detail the
specific conduct of the Company that constitutes Good Reason; provided, however,
that no termination by the Executive shall be treated as a termination for Good
Reason unless the Notice of Termination for Good Reason is given within
forty-five (45) business days following the date the Executive first has
knowledge of the event or circumstance alleged to constitute Good
Reason.  A termination of employment by the Executive for Good Reason
shall be effective fifteen (15) business days following the date when the
Notice of Termination for Good Reason is given, unless the event or circumstance
constituting Good Reason is remedied by the Company in accordance with the
foregoing.

       

      (iii)        A
termination of the Executive’s employment by the Executive without Good Reason
shall be effected by giving the Company thirty (30) calendar days advance
written notice of the termination.

       

       

      
        
          
          

        

        
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      (d)           DATE OF
TERMINATION.  The “Date of Termination” means the
date of the Executive’s death, the Disability Effective Time or the date on
which the termination of the Executive’s employment by the Company for Cause or
without Cause or by the Executive for Good Reason or without Good Reason is
effective.  A termination of employment shall not be deemed to have
occurred for purposes of any provision of this Agreement providing for the
payment of any amounts or benefits subject to Section 409A upon or
following a termination of employment unless such termination is also a “separation from service”
(within the meaning of Section 409A).

       

      (e)           REIMBURSEMENT
RULES.  The “Reimbursement Rules” means the
requirement that any amount of expenses eligible for reimbursement under this
Agreement be made (i) in accordance with the reimbursement payment date set
forth in the applicable provision of this Agreement providing for the
reimbursement or (ii) where the applicable provision does not provide for a
reimbursement date, thirty (30) calendar days following the date on which
the Executive incurs the expenses, but, in each case, no later than
December 31 of the year following the year in which the Executive incurs
the related expenses; provided, that in no event shall the reimbursements or
in-kind benefits to be provided by the Company in one taxable year affect the
amount of reimbursements or in-kind benefits to be provided in any other taxable
year, nor shall the Executive’s right to reimbursement or in-kind benefits be
subject to liquidation or exchange for another benefit.

       

      5.            
OBLIGATIONS OF THE
COMPANY UPON TERMINATION.

       

      (a)           OBLIGATIONS ON ANY
TERMINATION.  If the Executive’s employment hereunder
terminates for any reason, then (1) the Company shall pay to the Executive,
or his estate, beneficiary or legal representative, as applicable, in a lump sum
in cash within ten (10) business days after the Date of Termination,
(i) any portion of the Executive’s Annual Base Salary through the Date of
Termination that has not yet been paid, (ii) any earned annual bonus that
has not been paid (or previously deferred) for any previous fiscal year, and
(iii) any amount needed to reimburse the Executive for any unreimbursed
business expenses properly incurred by the Executive in accordance with Company
policy prior to the Date of Termination and subject to the Reimbursement Rules,
(2) the Company shall also pay or provide to the Executive (or the
Executive’s estate, beneficiary, or legal representative, as the case may be)
all compensation and benefits payable to the Executive under the terms of the
Company’s compensation and benefit plans, programs or arrangements as in effect
immediately prior to the Date of Termination, in accordance with the terms of
such plans, programs or arrangements, and (3) except as otherwise set forth
below in Section 5(c), all of the Executive’s then outstanding equity and
incentive compensation awards shall be treated in accordance with the terms of
the plans and agreements evidencing such awards.

       

      (b)           OBLIGATIONS ON A TERMINATION
DUE TO DEATH OR DISABILITY.  If the Executive’s employment
hereunder terminates by reason of death or Disability, then the Company, in
addition to making the payments and benefits in Section 5(a), shall pay to
the Executive, or his estate, beneficiary or legal representative, as
applicable, in a lump sum in cash within thirty (30) business days following the
Date of Termination, a pro-rata portion of the Executive’s Target Annual Bonus
Percentage of Annual Base Salary for the Company’s fiscal year in which the Date
of Termination occurs (the “Pro-Rata
Bonus”).  The Pro-Rata Bonus shall be calculated by multiplying
the Target Annual Bonus Percentage of Annual Base Salary by a fraction, the
numerator of which is the number of days in the Company’s fiscal year that have
elapsed to the Date of Termination and the denominator of which is the number of
days in such fiscal year.

       

       

      
        
          
          

        

        
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      (c)           OTHER THAN FOR CAUSE,
DISABILITY, OR DEATH, OR FOR GOOD REASON.

       

      (i)          If,
during the Term, the Company terminates the Executive’s employment for any
reason other than for Cause, death or Disability, or the Executive terminates
his employment for Good Reason, then, in addition to making the payments and
providing the benefits pursuant to Section 5(a), subject to
Section 5(c)(ii) and Section 5(e), (1) on the sixtieth (60th) day
following the Date of Termination, the Company shall pay to the Executive a lump
sum in cash equal to two times the sum of (i) the Executive’s Annual Base
Salary immediately prior to the Date of Termination plus (ii) the
Executive’s Target Annual Bonus Percentage of Annual Base Salary for the fiscal
year in which the Date of Termination occurs (“Cash Severance”); (2) the
Executive shall be entitled to immediate vesting of any Merger RSUs outstanding
as of the Date of Termination in accordance with Section 3(c)(i); (3) the
Company shall provide or arrange to provide the Executive and his eligible
dependents, at no greater cost to the Executive than the cost to the Executive
immediately prior to the Date of Termination, life, disability, accident and
health insurance benefits (the “Health and Welfare Benefits”)
no less favorable than those provided to the Executive and his eligible
dependents immediately prior to the Date of Termination for twenty-four
(24) months following the Date of Termination (the “Continuation Period”), or, if
sooner, until he becomes eligible for such benefits from a new employer (and the
Executive shall promptly notify the Company of such eligibility from any new
employer), but only to the extent that the Executive makes a payment to the
Company in an amount equal to the monthly premium payments (both the employee
and employer portion) required to maintain such coverage on the first day of
each calendar month commencing with the first calendar month following the Date
of Termination and the Company shall reimburse the Executive on an after-tax
basis for the amount of such premiums, if any, in excess of any employee
contributions necessary to maintain such coverage for the Continuation Period
and such reimbursement shall comply with the Reimbursement Rules; (4) the
Company shall pay the Executive, on sixtieth (60th) day following the Date of
Termination, the Pro-Rata Bonus; and (5) the Executive shall be deemed to have
attained service through the greater of the Executive’s actual age as of the
Date of Termination and age 54 for all purposes (including vesting and benefit
accrual) under the SERP.

       

      (ii)        
In the event that, during the Continuation Period, the Executive shall, without
the written consent of the Board, directly or indirectly, as employee, agent,
consultant, stockholder, director, manager, co-partner or in any other
individual or representative capacity, own, operate, manage, control, engage in,
invest in or participate in any manner in, act as consultant or advisor to,
render services for (alone or in association with any person, firm, corporation
or entity), or otherwise assist any person or entity (other than the Company)
that engages in or owns, invests in, operates, manages or controls any venture
or enterprise that directly or indirectly engages or proposes to engage in any
Competitive Business (as defined below), then the Company’s obligations to make
any further payments or provide any further benefits under this Section 5(c)
shall immediately terminate.  “Competitive Business” shall
mean any line of business that is substantially the same as any line of any
operating business which on the Date of Termination the Company was engaged in
or conducting and which during the Company’s preceding fiscal constituted at
least 5% of the gross sales of the Company and its
subsidiaries.  Notwithstanding the foregoing, the Executive may become
a partner or employee of, or otherwise acquire an interest in, a stock or
business brokerage firm, consulting or advisory firm, investment banking firm or
similar organization which, as part of its business, trades or invests in
securities of Competitive Businesses or which represents or acts as agent or
advisor for Competitive Businesses, but only on condition that the Executive
shall not personally render any services in connection with such Competitive
Business either directly to such Competitive Business or other persons or to the
Executive’s firm in connection therewith.

       

       

      
        
          
          

        

        
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      (d)           SECTION
409A.

       

      (i)         
Notwithstanding any provisions of this Agreement to the contrary, if the
Executive is a “specified
employee” (within the meaning of Section 409A and determined
pursuant to procedures adopted by the Company) at the time of his separation
from service and if any portion of the payments or benefits to be received by
the Executive upon separation from service would be considered deferred
compensation under Section 409A, amounts that would otherwise be payable
pursuant to this Agreement during the six-month period immediately following the
Executive’s separation from service (the “Delayed Payments”) and
benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the
six-month period immediately following the Executive’s separation from service
(such period, the “Delay
Period”) shall instead be paid or made available on the earlier of
(i) the first business day of the seventh month following the date of the
Executive’s separation from service or (ii) Executive’s death (the
applicable date, the “Permissible Payment
Date”).  The Company shall also reimburse the Executive for the
after-tax cost incurred by the Executive in independently obtaining any Delayed
Benefits (the “Additional
Delayed Payments”).

       

      (ii)        
With respect to any amount of expenses eligible for reimbursement under Section
5(a)(1)(iii), such expenses shall be reimbursed by the Company within thirty
(30) calendar days following the date on which the Company receives the
applicable invoice from the Executive but in no event later than
December 31 of the year following the year in which the Executive incurs
the related expenses; provided, that with respect to reimbursement relating to
the Additional Delayed Payments, such reimbursement shall be made on the
Permissible Payment Date.  In no event shall the reimbursements or
in-kind benefits to be provided by the Company in one taxable year affect the
amount of reimbursements or in-kind benefits to be provided in any other taxable
year, nor shall the Executive’s right to reimbursement or in-kind benefits be
subject to liquidation or exchange for another benefit.

       

      (iii)        Each
payment under this Agreement shall be considered a “separate payment” and not of
a series of payments for purposes of Section 409A.

       

      (iv)        Any
Delayed Payments shall bear interest at the United States 5-year Treasury Rate
plus 2%, which accumulated interest shall be paid to the Executive on the
Permissible Payment Date.

       

       

      
        
          
          

        

        
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      (e)           EXECUTION OF
RELEASE.  As a condition of receiving any payments for which
the Executive otherwise qualifies under Section 5(c)(i), the Executive
shall be required to execute, deliver and not revoke, within sixty
(60) calendar days following the Executive’s separation from service, the
mutual release attached hereto as Exhibit A (the “Release”), such
Release to be delivered by the Executive no later than sixty (60) calendar
days following the Executive’s separation from service.  If the
Release has not been executed, delivered and become irrevocable by the Executive
within the statutory revocation period, all payments under Section 5(c)(i)
shall be forfeited.  Notwithstanding the foregoing, if the Company
does not execute and deliver the Release to the Executive within two
(2) business days following the Executive’s delivery of the Release to the
Company, then any requirement for the Executive to execute, deliver and not
revoke the Release as a condition of receiving any payments under
Section 5(c)(i) will have no effect, and the Executive shall be entitled to
receive any payments to which the Executive otherwise qualifies under
Section 5(c)(i).

       

      6.            
NON-EXCLUSIVITY OF
RIGHTS.  Nothing in this Agreement shall prevent or limit the
Executive’s continuing or future participation in any plan, program, policy or
practice provided by the Company or any of its affiliated companies for which
the Executive may qualify nor shall anything in this Agreement limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with the Company or any of its affiliated companies.  Vested
benefits and other amounts that the Executive is otherwise entitled to receive
under any plan, policy, practice or program of, or any contract of agreement
with, the Company or any of its affiliated companies on or after the Date of
Termination shall be payable in accordance with the terms of each such plan,
policy, practice, program, contract or agreement, as the case may be, except as
explicitly modified by this Agreement.

       

      7.            
FULL
SETTLEMENT.  Except as provided herein, the Company’s
obligation to make the payments provided for in, and otherwise to perform its
obligations under, this Agreement shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action that the
Company may have against the Executive or others.  In no event shall
the Executive be obligated to seek other employment or take any other action to
mitigate the amounts payable to the Executive under any of the provisions of
this Agreement and such amounts shall not be reduced, regardless of whether the
Executive obtains other employment.

       

      8.            
CONFIDENTIAL
INFORMATION; SOLICITATION.

       

      (a)           The
Executive shall hold in a fiduciary capacity for the benefit of the Company any
and all information of the Company and its subsidiaries that is not generally
known by others with whom they compete or do business, or with whom they plan to
compete or do business and any and all information not readily available to the
public, which, if disclosed by the Company or its subsidiaries could reasonably
be of benefit to such person or business in competing with or doing business
with the Company (“Confidential
Information”).  Confidential Information includes, without
limitation, such information relating to the (i) development, research,
testing, manufacturing, store operational processes, marketing and financial
activities, including costs, profits and sales, of the Company and its
subsidiaries, (ii) products and all formulas therefor, (iii) costs,
sources of supply, financial performance and strategic plans of the Company and
its subsidiaries, (iv) identity and special needs of the customers and
suppliers of the Company and its subsidiaries and (v) people and
organizations with whom the Company and its subsidiaries have business
relationships and those relationships.  “Confidential Information”
also includes comparable information that the Company or any of its subsidiaries
have received belonging to others or which was received by the Company or any of
its subsidiaries pursuant to an agreement by the Company that it would not be
disclosed.  “Confidential Information” does not include information
which (A) is or becomes available to the public generally (other than as a
result of the Executive’s unauthorized disclosure), (B) was within the
Executive’s possession prior to the date hereof or prior to its being furnished
to the Executive by or on behalf of the Company, provided that the source of
such information was not bound by a confidentiality agreement with or other
contractual, legal or fiduciary obligation of confidentiality to the Company or
any other party with respect to such information, (C) becomes available to
the Executive on a non-confidential basis from a source other than the Company
or its subsidiaries, provided that such source is not bound by a confidentiality
agreement with or other contractual, legal or fiduciary obligation of
confidentiality to the Company or any other party with respect to such
information, (D) was independently developed the Executive without
reference to the Confidential Information or (E) is required by law to be
disclosed.  The Executive shall promptly return to the Company upon
the Date of Termination or at any other time the Company may so request, all
notes, records, documents, files and memoranda (including in electronic format
and all copies of such materials) constituting Confidential Information he may
then possess or have under his control; provided, however, that he may retain
his personal correspondence, diaries and other items of a personal
nature.

       

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

       

      (b)           For
a period of two (2) years after the Date of Termination, the Executive
shall not, without the written consent of the Board, directly or indirectly,
(i) hire any person who was employed by the Company or any of its
subsidiaries or affiliates (other than persons employed in a clerical or other
non-professional position) within the six (6) month period preceding the
date of such hiring; or (ii) solicit, entice, persuade or induce (in each
case, other than pursuant to non-targeted, general advertisements) any person or
entity doing business with the Company and its subsidiaries or affiliates, to
terminate such relationship or to refrain from extending or renewing the
same.

       

      (c)           The
Executive agrees that, in addition to any other remedies available to the
Company, the Company shall be entitled to injunctive relief in the event of any
actual or threatened breach of this Section 8 without the necessity of
posting any bond, it being acknowledged and agreed that any breach or threatened
breach of this Section 8 hereof will cause irreparable injury to the
Company and that money damages alone will not provide an adequate remedy to the
Company.

       

      9.            
DISPUTE
RESOLUTION.  Except for the Company’s right to seek injunctive
relief as set forth in Section 8(c), all disputes arising under, related
to, or in connection with this Agreement shall be settled by expedited
arbitration conducted before a panel of three (3) arbitrators sitting in
Hartford, Connecticut, in accordance with the rules of the American Arbitration
Association then in effect.  The decision of the arbitrators in that
proceeding shall be binding on the Company and the
Executive.  Judgment may be entered on the award of the arbitrators in
any court having jurisdiction.  Each party shall bear its own costs
and expenses (including legal fees) in connection with any arbitration
proceeding instituted hereunder; provided, however, that if the Executive
prevails in the arbitration, his costs and expenses shall be promptly reimbursed
by the Company.  The reimbursement provided for in this Section 9
shall be made as soon as practicable following the resolution of such contest or
dispute (whether or not appealed) to the extent the Company received reasonable
written evidence of such fees and expenses, but in any event no later than
within thirty (30) calendar days following the date on which such consent
or dispute (whether or not appealed) is resolved.

       

      10.           ASSIGNMENT;
SUCCESSORS.  This Agreement is personal to the Executive and,
without the prior written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and
distribution.  This Agreement shall inure to the benefit of and be
enforceable by the Executive’s legal representatives.  This Agreement
shall inure to the benefit of and be binding upon the Company and its
successors.  In addition to any obligations imposed by law upon any
successor to the Company, 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 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
and benefits had taken place.  Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle the Executive to compensation
from the Company in the same amount and on the same terms as the Executive would
be entitled to hereunder if the Executive were to terminate the Executive’s
employment for Good Reason.

       

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

       

      11.           NO
VIOLATIONS.  As a material inducement to the Company’s
willingness to enter into this Agreement, the Executive represents to the
Company that neither the execution of this Agreement by the Executive, the
employment of the Executive by the Company nor the performance by the Executive
of his duties hereunder will constitute a violation by the Executive of any
employment, non-competition or other agreement to which the Executive is a
party.  The Company represents and warrants that it is fully
authorized and empowered to enter into this Agreement (and those contemplated
hereby) and that the performance of its obligations under this Agreement will
not violate any agreement between it and any other person, firm or
organization.

       

      12.           MISCELLANEOUS.

       

      (a)           GOVERNING
LAW.  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Connecticut, without reference to
principles of conflict of laws.  The captions of this Agreement are
not part of the provisions hereof and shall have no force or
effect.  This Agreement may not be amended or modified except by a
written agreement executed by the parties hereto or their respective successors
and legal representatives.

       

      (b)           NOTICES.  All
notices and other communications under this Agreement shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as
follows:

       

      If to the
Executive:

       

      At his
address on file with the Company

       

      If to the
Company:

       

      The
Stanley Works

      1000
Stanley Drive

      New
Britain, Connecticut 06053

      Facsimile:  860-827-3911

      Attention:  Bruce
H. Beatt, Vice President, General Counsel and Secretary

       

      With a
copy to:

       

      Cravath,
Swaine & Moore LLP

      Worldwide
Plaza

      825
Eighth Avenue

      New York,
New York 10019

      Attention:  Eric
W. Hilfers, Esq.

       

      or to
such other address as either party furnishes to the other in writing in
accordance with this paragraph (b) of Section 12.  Notices
and communications shall be effective when actually received by the
addressee.

       

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

       

      (c)           SEVERABILITY.  The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this
Agreement.  If any provision of this Agreement shall be held invalid
or unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with
law.

       

      (d)           LEGAL
FEES.  The Company shall pay directly or reimburse the
Executive for legal fees and expenses incurred in connection with the
negotiation and preparation of this Agreement; provided, however, that such
payment or reimbursement obligation shall not exceed $10,000 in the
aggregate.  Such payment or reimbursement by the Company shall be
subject to the Reimbursement Rules.

       

      (e)           WITHHOLDING.  Notwithstanding
any other provision of this Agreement, the Company may withhold from amounts
payable under this Agreement all federal, state, local and foreign taxes that
are required to be withheld by applicable laws or regulations.

       

      (f)           WAIVER.  The
Executive’s or the Company’s failure to insist upon strict compliance with any
provisions of, or to assert any right under, this Agreement shall not be deemed
to be a waiver of such provision or right or of any other provision of or right
under this Agreement.

       

      (g)           ENTIRE
AGREEMENT.  The Executive and the Company acknowledge that this
Agreement (together with Exhibit A hereto) constitutes the entire understanding
of the parties with respect to the subject matter hereof and supersede any other
prior agreement or other understanding, whether oral or written, express or
implied, between them concerning, related to or otherwise in connection with,
the subject matter hereof and that, following the date hereof, no such agreement
or understanding shall be of any further force or effect.

       

      (h)           SECTION
409A.  To the extent applicable, it is intended that the
compensation arrangements under this Agreement be in full compliance with
Section 409A.  This Agreement shall be construed in a manner to
give effect to such intention.  The subject matter of this Agreement
involves complex and substantial tax considerations.  The Executive
acknowledges that he has been afforded adequate opportunity to consult and that
he has consulted with his own tax adviser with respect to this
Agreement.  The Company makes no warranties or representations
whatsoever to the Executive regarding the tax consequences of any item of
compensation subject to this Agreement and which is paid in accordance with the
terms of this Agreement.

       

      (i)           SURVIVAL OF
TERMS.  To the extent necessary to effectuate the terms of this
Agreement, terms of this Agreement which must survive the termination of the
Executive’s employment or the termination of this Agreement shall so
survive.

       

      (j)           COUNTERPARTS.  This
Agreement may be executed in several counterparts, each of which shall be deemed
an original, and said counterparts shall constitute but one and the same
instrument.

       

      (k)           EACH PARTY THE
DRAFTER.  This Agreement and the provisions contained in it
shall not be construed or interpreted for or against any party to this Agreement
because that party drafted or caused that party’s legal representative to draft
any of its provisions.

       

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

       

      IN
WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and,
pursuant to the authorization of its Board, the Company has caused this
Agreement to be executed in its name on its behalf, all as of the day and year
first above written, to become effective as of the Execution Date.

       

      
        	
                THE
      STANLEY WORKS

              
	 
      
	
                By:

              	/s/
      John F. Lundgren
	 
      	
                Name: 
      John F. Lundgren

              
	 
      	
                Title:   
      Chairman and Chief Executive Officer

              
	 
      	 
      


      

      


      


      
        	
                JAMES
      M. LOREE

              
	 
      
	
                By:

              	/s/
      James M. Loree
	 
      	
                Name:  James
      M. Loree

              
	 
      	 
      


      

      


      


      


       

      


      


      


      


      


      


      


      


      


      


      


      


      [Signature Page to COO
Employment Agreement]

      


      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

    

     

     

    
      EXHIBIT
A

      TO
EMPLOYMENT AGREEMENT

       

      MUTUAL
RELEASE

       

      (a)  James
M. Loree (“Releasor”) for and in consideration of benefits provided pursuant to
an Employment Agreement with The Stanley Works entered into on
November 2, 2009 (the “Employment Agreement”), does for himself and
his heirs, executors, administrators, successors and assigns, hereby now and
forever, voluntarily, knowingly and willingly release and discharge The Stanley
Works and its parents, subsidiaries and affiliates (collectively, the “Company
Group”), together with their respective present and former partners, officers,
directors, employees and agents, and each of their predecessors, heirs,
executors, administrators, successors and assigns (but as to any partner,
officer, director, employee or agent, only in connection with, or in
relationship to, his to its capacity as a partner, officer, director, employee
or agent of the Company and its subsidiaries or affiliates and not in connection
with, or in relationship to, his or its personal capacity unrelated to the
Company or its subsidiaries or affiliates) (collectively, the “Company
Releasees”) from any and all charges, complaints, claims, promises, agreements,
controversies, causes of action and demands of any nature whatsoever, known or
unknown, suspected or unsuspected, which against the Company Releasees, jointly
or severally, Releasor or Releasor’s heirs, executors, administrators,
successors or assigns ever had or now have by reason of any matter, cause or
thing whatsoever arising from the beginning of time to the time Releasor
executes this release arising out of or relating in any way to Releasor’s
employment or director relationship with the Company, or the termination
thereof, including but not limited to, any rights or claims arising under any
statute or regulation, including the Age Discrimination in Employment Act of
1967, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991,
the Americans with Disabilities Act of 1990, or the Family and Medical Leave Act
of 1993, each as amended, or any other federal, state or local law, regulation,
ordinance or common law, or under any policy, agreement, understanding or
promise, written or oral, formal or informal, between any Company Releasee and
Releasor.  Releasor shall not seek or be entitled to any recovery, in
any action or proceeding that may be commenced on Releasor’s behalf in any way
arising out of or relating to the matters released under this
Release.  Notwithstanding the foregoing, nothing herein shall release
any Company Releasee from any claim or damages based on (i) the Releasor’s
rights under the Employment Agreement, (ii) any right or claim that arises
after the date the Releasor executes this release, (iii) the Releasor’s
eligibility for indemnification in accordance with applicable laws or the
certificate of incorporation or by-laws of the Company (or any affiliate or
subsidiary) or any applicable insurance policy, with respect to any liability
the Releasor incurs or incurred as a director, officer or employee of the
Company or any affiliate or subsidiary (including as a trustee, director or
officer of any employee benefit plan) or (iv) any right the Releasor may have to
obtain contribution as permitted by law in the event of entry of judgment
against the Releasor as a result of any act or failure to act for which the
Releasor and the Company or any affiliate or subsidiary are held jointly
liable.

       

      (b)  Releasor
has been advised to consult with an attorney of Releasor’s choice prior to
signing this release, has done so and enters into this release freely and
voluntarily.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      (c)  Releasor
has had in excess of twenty-one (21) calendar days to consider the terms of
this release.  Once Releasor has signed this release, Releasor has
seven (7) additional days to revoke Releasor’s consent and may do so by
writing to the Company as provided in Section 12(b) of the Employment
Agreement.  Releasor’s release shall not be effective, and no payments
or benefits shall be due under Section 5(c) of the Employment Agreement, until
the eighth day after Releasor shall have executed this release (the “Revocation
Date”) and returned it to the Company, assuming that Releasor has not revoked
Releasor’s consent to this release prior to the Revocation Date.

       

      (d)  The
Company, for and in consideration of the Releasor’s covenants under the
Employment Agreement, on behalf of itself and the other members of the Company
Group and any other Company Releasee, their respective successors and assigns,
and any and all other persons claiming through any member of the Company Group
or such other Company Releasee, and each of them, does hereby now and forever,
voluntarily, knowingly and willingly release and discharge, the Releasor and
dependents, administrators, agents, executors, successors, assigns, and heirs,
from any and all charges, complaints, claims, promises, agreements,
controversies, causes of action and demands of any nature whatsoever, known or
unknown, suspected or unsuspected, which against the Releasor, jointly or
severally, the Company and each other member of the Company Group or any other
Company Releasee, their respective successors and assigns, and any and all other
persons claiming through any member of the Company Group or such other Company
Releasee ever had or now have by reason of any matter, cause or thing whatsoever
arising from the beginning of time to the time the Company executes this release
arising out of or relating to the Releasor’s employment or director relationship
with the Company or the termination thereof, including, but not limited to, any
claim, demand, obligation, liability or cause of action arising under any
federal, state or local employment law or ordinance, tort, contract or breach of
public policy theory or alleged violation of any other legal
obligation.  Notwithstanding the foregoing, nothing herein shall
release the Releasor and his dependents, administrators, agents, executors,
successors, assigns, and heirs, (i) in respect of the Company’s rights under the
Employment Agreement, or (ii) from any claims or damages based on any right
or claim that arises after the date the Company executes this
release.

       

      (e)  The
Company’s release shall become effective on the Revocation Date, assuming that
Releasor shall have executed this release and returned it to the Company and has
not revoked Releasor’s consent to this release prior to the Revocation
Date.

       

      (f)  In
the event that any one or more of the provisions of this release shall be held
to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remainder of this release shall not in any way be affected
or impaired thereby.

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      


      This
release shall be governed by the law of the State of Connecticut without
reference to its choice of law rules.

       

      
        	
                THE
      STANLEY WORKS

              
	 
	
                By:

              	 
      
	 
      	
                Name:

              
	 
      	
                Title:

              


      

      


      


      Signed as
of this ____ day of _____________.

      


      


      
        	
                RELEASOR

              
	 
      
	
                James
      M. Loree

              


      

      


      


      Signed as
of this ____ day of _____________.

      
 

       

       

       

       

      3