ex10-3.htm


    
       

      Exhibit
10.3

       

      
 

       

      EXECUTIVE
CHAIRMAN AGREEMENT

       

      EXECUTIVE
CHAIRMAN AGREEMENT (this “Agreement”) by and between The
Stanley Works, a Connecticut corporation (the “Company”) and Nolan D.
Archibald (the “Executive
Chairman”), 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 (the “Prior Employer”), propose to
enter into a merger agreement, dated as of the Execution Date (the “Merger Agreement”), whereby,
subject to the satisfaction of the terms and conditions of the Merger Agreement,
the Prior Employer will become a wholly-owned subsidiary of the Company upon
consummation of the Merger (as defined in the Merger Agreement);

       

      WHEREAS,
the Prior Employer and the Executive Chairman entered into an Amended and
Restated Employment Agreement dated November 2, 2009 (the “Prior
Agreement”);

       

      WHEREAS,
as an inducement to the Company and Merger Sub to enter into the Merger
Agreement, the Company has requested that the Executive Chairman provide
services to, and enter into an agreement with, the Company effective as of the
Closing (as defined in the Merger Agreement); and

       

      WHEREAS,
the Company and the Executive Chairman mutually desire to enter into this
Agreement, which will replace and supersede the Prior Agreement as of the
Closing (except as specifically set forth in this Agreement) and pursuant to
which the Executive Chairman will 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, if the Closing does not
occur for any other reason prior to September 30, 2010 or if the Executive
Chairman is not continuously employed by the Prior Employer under the terms of
the Prior Agreement from the Execution Date to the Closing, this Agreement shall
be null and void ab initio and of no further force or effect and the Prior
Agreement shall remain in effect.

       

      (b) 
 Subject
to Section 1(a), the term of this Agreement, and the term of the Executive
Chairman’s service hereunder, shall commence on the Effective Date and shall
continue until the third anniversary of the Effective Date, unless terminated
earlier in accordance with Section 5 of this Agreement (such period of service,
the “Term”).

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      2.           
 POSITION AND DUTIES;
LOCATION.

       

      
        	
                (a)  

              	
                (i)     Effective
      as of the Effective Date, the Executive Chairman shall be appointed to the
      Board of Directors of the Company (the “Board”) and elected
      executive chairman of the Board and, thereafter during the Term, the
      Company shall nominate and recommend the Executive Chairman for
      re-election to such positions.  In his capacity as executive
      chairman of the Board, the Executive Chairman shall have the duties and
      responsibilities designated for such position in the by-laws of the
      Company (if any) and as specified by the Board from time to time, which
      shall initially include the responsibility to determine, jointly with the
      lead independent director of the Board and the Chief Executive Officer of
      the Company (the “Company
      CEO”), the times and agendas of meetings of the
      Board.  Effective as of the third anniversary of the Effective
      Date or, if earlier, upon termination of the Executive Chairman’s
      employment with the Company for any reason, the Executive Chairman shall
      (1) be deemed to have resigned immediately from the Board and from
      all other positions the Executive Chairman then holds (whether as a
      director, employee or otherwise) with the Company or any of the Company’s
      subsidiaries or affiliates and (2) execute any reasonably requested
      documentation in respect of such resignations; provided, however, that, notwithstanding the foregoing, in the event
      that the third anniversary of the Effective Date occurs prior to
      expiration of the Executive Chairman’s then-current scheduled term as a
      member of the Board, the Executive Chairman shall be permitted to remain a
      non-employee member of the Board (but not as executive chairman of the
      Board or as an executive, employee or any other position) through the end
      of such term and, at such time, shall be deemed to have resigned
      immediately from such Board membership; provided further, however, that, except as provided herein, the Executive
      Chairman shall not be entitled to any compensation or benefits pursuant to
      this Agreement after the end of the Term and the Executive Chairman’s
      compensation for any period following the Term during which the Executive
      Chairman serves only as a director of the Board shall be limited to the
      compensation normally paid by the Company to its non-employee
      directors.  Notwithstanding the foregoing, the Board reserves
      the right, in its sole discretion, to continue the Executive Chairman’s
      service as executive chairman of the Board or other capacity as may be
      mutually agreed upon by the Board and the Executive Chairman for periods
      following the third anniversary of the Effective
    Date.

              


      

       

          (ii)  
 During
the Term, the Executive Chairman shall also serve as an employee of the Company,
reporting directly to the Board, and shall be subject to the Company’s policies
on the same basis as other senior executives of the Company.  In such
capacity, the Executive Chairman shall assist and advise the Company CEO and the
Company’s other senior executives in connection with the integration of the
Company and the Prior Employer and shall have such other duties and
responsibilities as the Board may specify from time to time.  Such
duties and responsibilities shall initially include the Executive Chairman’s
service as the Co-Chair, along with the Company CEO, of the Integration Steering
Committee of the Company, which committee will be responsible for monitoring the
status of integration of the Company and the Prior Employer and providing
direction with respect thereto.  Unless otherwise determined by the
Board, no employees of the Company shall report to the Executive Chairman in his
capacity as an employee (other than his executive assistant).

       

      
        
          
          

        

        
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      (b) 
During
the Term, the Executive Chairman shall devote the time and effort reasonably
required to fulfill his duties and responsibilities
hereunder.  Notwithstanding any provision of this Agreement to the
contrary, (i) the parties hereto intend that, as of the Closing, the Executive
Chairman shall have a “separation from service” (within the meaning of Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations
thereunder) from the Prior Employer (and this Agreement shall be applied in such
manner in all material respects), and (ii) the Executive Chairman shall not be
required or expected to perform any services or devote the time necessary to
perform any services that would be inconsistent with the Executive Chairman
experiencing such a “separation from service” as of the Closing.  It
shall not be considered a violation of this Agreement for the Executive Chairman
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 Chairman’s duties hereunder.

       

      (c) 
For a
period beginning on the Effective Date and ending on the later of six months
following the Effective Date and December 31, 2010, the Executive Chairman’s
office location shall be at the Executive Chairman’s most recent office location
with the Prior Employer in Towson, Maryland, except that the Executive Chairman
shall travel as reasonably required in order to perform the Executive Chairman’s
duties under this Agreement.  Thereafter and for the remainder of the
Term, the Company shall provide the Executive Chairman with reasonable furnished
office space at a location and on other terms mutually acceptable to the Board
and the Executive Chairman.  In addition, during the Term, the
Executive Chairman shall be entitled to choose, and the Company will offer
employment on commercially reasonable terms (consistent with Company policies)
to, the Executive Chairman’s executive assistant.

       

      3.           
 COMPENSATION AND
BENEFITS.

       

      (a) 
 BASE
SALARY.  During the Term, the Executive Chairman’s annual base
salary (“Annual Base
Salary”) will be $1,500,000.  The Annual Base Salary shall be
payable in accordance with the Company’s regular payroll practice for its senior
executives, as in effect from time to time.

       

      (b)
 ANNUAL CASH
BONUS.  During the Term, the Executive Chairman shall
participate in the Company’s Management Incentive Compensation Plan, as amended,
or any successor plan thereto (the “MICP”).  The
Executive Chairman’s annual target bonus opportunity pursuant to the MICP for
each fiscal year of the Company during the Term shall equal $1,875,000 (the
“Annual Bonus Amount”),
which shall be subject to the attainment of such performance goals and other
conditions as shall be determined by the Compensation and Organization Committee
of the Board (the “C&O
Committee”); provided that such
performance goals shall be substantially similar to the performance goals
applicable to the annual cash bonus opportunity provided to the Company CEO for
the applicable fiscal year, except that no vesting or similar requirement shall
require the provision of services by the Executive Chairman after the third
anniversary of the Effective Date.  In the event that the Executive
Chairman participates in the MICP for less than a full fiscal year of the
Company for any reason, the Annual Bonus Amount (and the related performance
goals) for such partial year shall be pro rated to reflect the number of days
that the Executive Chairman participates in the MICP during such fiscal
year.  Any cash bonuses payable to the Executive Chairman will be paid
at the time the Company normally pays such bonuses to its senior executives in
accordance with the terms of the MICP.

       

      
        
          
          

        

        
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      (c)  
EQUITY
AWARDS.

       

                                  
(i)    SIGN-ON
OPTIONS.  Promptly after the Effective Date, the Company shall
grant to the Executive Chairman options to acquire 1,000,000 shares of Company
common  stock (the “Sign-on Options”), which 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 Sign-on Options shall have an exercise price equal
to the Fair Market Value (as defined in the Company Stock Plan) of a share of
Company common stock on the date of grant and shall expire on the tenth
anniversary of the date of grant.  The Sign-on Options shall vest in
full, subject to the Executive Chairman’s continued employment with the Company,
on the third anniversary of the Effective Date; provided that the
Sign-on Options shall become immediately and fully vested in the event the
Company terminates the Executive Chairman’s employment other than for Cause (as
defined below), the Executive Chairman’s employment is terminated by the
Executive Chairman for Good Reason (as defined below) or the Executive
Chairman’s employment is terminated due to his death or Disability (as defined
below), in each case, pursuant to Section 5.  Any Sign-on Options that
become vested shall remain exercisable until their expiration
date.  Except as described above, the Sign-on Options shall be subject
to the terms and conditions set forth in the Company’s customary award
agreement; provided that such
terms and conditions shall be substantially similar to the equivalent terms and
conditions of stock options most recently granted to the Company
CEO.

       

                (ii)  
ANNUAL EQUITY
AWARDS.  During the Term, the Executive Chairman shall receive,
at the time that annual equity awards are granted to senior executives of the
Company, annual equity or equity-based compensation awards with an aggregate
annual value (based on the full grant date value as determined for purposes of
the Company’s financial reporting) equal to $6,650,000 (the “Annual Equity Awards”), which
shall be comprised (based on value) of 50% stock options and 50% restricted
stock, restricted stock units or other full-share types of awards and which
shall be granted under, and subject to the terms and conditions of, the Company
Stock Plan.  For the avoidance of doubt, the Executive Chairman shall
receive three Annual Equity Awards (one Annual Equity Award during each year of
employment) and shall not be eligible to receive more than three Annual Equity
Awards.  The Annual Equity Awards 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 (i) no
vesting or similar requirement shall require the provision of services by the
Executive Chairman after the third anniversary of the Effective Date, (ii) in
the event the Company terminates the Executive Chairman’s employment other than
for Cause (as defined below), the Executive Chairman’s employment is terminated
by the Executive Chairman for Good Reason (as defined below) or the Executive
Chairman’s employment is terminated due to his death or Disability (as defined
below), in each case, pursuant to Section 5, the Annual Equity Awards shall
become immediately and fully vested, (iii) stock options or stock appreciation
rights (if any) that become vested will remain exercisable until their
respective expiration dates (without regard to such termination), (iv) none of
such Annual Equity Awards shall constitute “deferred compensation” within the
meaning of Section 409A of the Code and (v) except as provided herein, the other
terms and conditions of the Annual Equity Awards shall be substantially similar
to the other terms and conditions of equity-based compensation awards granted to
the Company CEO during the applicable year.

       

      
        
          
          

        

        
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      (d)  
COST SYNERGY
BONUS.  The Executive Chairman shall be eligible to receive,
subject to continued employment with the Company through the third anniversary
of the Effective Date (except as provided in Section 6), a cash bonus (the
“Cost Synergy Bonus”)
based on the Company’s attainment, as certified by the Audit Committee of the
Board (the “Audit
Committee”) and the Company’s Chief Financial Officer (“Company CFO”), of cost synergy
goals.  The applicable cost synergy targets and corresponding payout
amounts are set forth on Exhibit A
hereto.  During the Term, the Company shall provide the Executive
Chairman with quarterly estimates of the Cost Synergy Level
Attained.   No later than 60 days after the third anniversary of
the Effective Date, the Audit Committee and CFO shall certify the Cost Synergy
Level Attained (as defined in Exhibit A), which
shall be reflected in, and consistent with, the Company’s public disclosures
relating to cost synergies, and the corresponding Cost Synergy Bonus Amount (as
defined in Exhibit
A).  The Executive Chairman shall be entitled to consult with
the Audit Committee and Company CFO regarding the calculation of the Cost
Synergy Level Attained but shall not vote on or otherwise participate in the
certification thereof or participate in any way in the certification of the Cost
Synergy Bonus Amount.  The Cost Synergy Bonus Amount (if any) shall be
paid on the 90th day after the third anniversary of the Effective Date (such
payment date, the “Cost Synergy
Bonus Payment Date”).

       

      (e) 
OTHER
BENEFITS.  During the Term,  (i) the Executive
Chairman shall be entitled to participate in all fringe benefit and perquisite
practices, policies and programs of the Company generally made available 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, in each case, to
the extent permitted under applicable law, the terms of the applicable plan,
program or policy and Company policies; provided that (x)
such participation shall be on a basis no less favorable than that available to
the Company CEO, (y) the perquisites provided by the Company shall be no less
favorable than those provided to the Executive Chairman by the Prior Employer on
December 31, 2008, including perquisites related to the business and
personal use of the Prior Employer’s aircraft, and (z) the Executive Chairman
shall not be eligible to enter into a Change in Control Severance Agreement with
the Company, and (ii) the Executive Chairman and/or the Executive
Chairman’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 executives of the Company, in each case, to the extent permitted
under applicable law, the terms of the applicable plan, program or policy and
Company policies.

       

       

      
        
          
          

        

        
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      (f)  
EXPENSES; LEGAL
FEES.  The Company shall pay or reimburse the Executive
Chairman for reasonable out-of-pocket expenses incurred by the Executive
Chairman during the Term in the performance of the Executive Chairman’s services
under this Agreement, in accordance with Company policy for its senior
executives and subject to the Reimbursement Rules (as defined in Section 5(e)
below).  The Company shall pay to the Executive Chairman all
reasonable legal fees and expenses incurred by him as a result of a termination
of employment described in Section 6(b) or (c) (including all such reasonable
fees and expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit provided in
this Agreement), which payments shall be subject to the Reimbursement
Rules.

       

      (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 Chairman 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 Chairman in connection with any
action, proceeding, suit or investigation (the “Proceeding”) to which the
Executive Chairman 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, the Prior Employer (with respect to all periods prior to, occurring on,
and subsequent to, the Effective Date), or is or was serving at the request of
the Company or the Prior Employer 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
Chairman’s alleged action or inaction in an official capacity.  Such
indemnification shall continue even if the Executive Chairman 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 Chairman’s heirs, executors and
administrators.  The Company shall advance to the Executive Chairman
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 Chairman for such advance.  Such
request shall include an undertaking by the Executive Chairman 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 Chairman to the most favorable extent that the
Company provides such coverage for its other senior executives or members of the
Board.  For the avoidance of doubt, the provisions of this Section
3(g) shall be in addition to, and not affect, any rights the Executive Chairman
may have under the Merger Agreement to indemnification and liability insurance
coverage.

       

      (h)  Except as
provided herein, the Executive Chairman shall not receive any compensation in
respect of his service as a member or the executive chairman of the
Board.

       

       

      
         

        
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      4.           
EXISTING
ENTITLEMENTS.

       

      (a) 
Upon the
Effective Date, this Agreement shall replace and supersede in its entirety the
Prior Agreement, which shall have no further force or effect; provided, however, that the
Executive Chairman shall continue to be entitled to the payments and benefits
under the Prior Agreement that are described in Section 4(b)
hereof.  In addition, the Company shall, and shall cause its
subsidiaries (including the Prior Employer) to, honor, in accordance with their
terms, the Executive Chairman’s existing entitlements under each plan or
arrangement described in Section 4(c) hereof.

       

      (b) 
The
Executive Chairman shall remain entitled to, or otherwise agrees to modify, the
following payments and benefits under the Prior Agreement as set forth in this


      Section
4(b),
which such payments and benefits shall, for the avoidance of doubt, survive a
termination of the Executive Chairman’s employment and a termination of this
Agreement for any reason.

       

                (i)  Notwithstanding
the occurrence of a “separation from service” (within the meaning of Section
409A of the Code and the regulations thereunder) from the Prior Employer as of
the Effective Date, immediately following the Effective Date, the Executive
Chairman hereby waives his entitlement to the Severance Payment (as defined in
Section 4.2(b) of the Prior Agreement); provided, however, that, solely
for purposes of calculating the amount payable to the Executive Chairman under
the Prior Employer’s Supplemental Executive Retirement Plan (the “SERP”), the Executive Chairman
shall be considered to have been entitled to receive such Severance Payment as a
result of the separation from service.

       

             (ii) 
Immediately
following the Effective Date, the Executive Chairman hereby waives his
entitlement to the Gross-Up Payment (as defined in Section 4.2(e) of the Prior
Agreement) in respect of the Merger.

       

            (iii) To the
extent not previously paid by the Prior Employer, the Executive Chairman shall
be entitled to reimbursement for any legal fees and expenses incurred and
payable in accordance with Section 4.2(d) of the Prior Agreement, which,
notwithstanding the waiver under Section 4(b)(ii) hereof, shall include the
application of Section 4999 of the Code to all payments and benefits under this
Agreement in connection with the Merger.

       

            (iv)
In the
event the Executive Chairman’s employment is terminated by the Company other
than for Cause (including, solely for purposes of this Section 4(b)(iv), a
termination for any reason upon the third anniversary of the Effective Date), by
the Executive Chairman for Good Reason or due to death or Disability, the
provisions of Section 4.2(c) of the Prior Agreement shall apply with respect to
all the outstanding restricted stock (and restricted stock units) and stock
option awards granted to the Executive Chairman prior to the Closing (which,
upon Closing, shall be converted into awards in respect of the common stock of
the Company at Closing in accordance with the terms of the Merger Agreement and
shall otherwise continue in accordance with the terms and conditions of such
awards as were applicable immediately prior to the Closing, subject to the
provisions of Sections 4.2(c) (as provided above) and 5.1 of the Prior
Agreement); provided, however, that, for
the avoidance of doubt and notwithstanding any provisions of the Prior Agreement
or this Agreement to the contrary, the Executive Chairman agrees that his
separation of service from the Prior Employer at the time of the Closing shall
not constitute Good Reason under the Prior Agreement for purposes of applying
Section 4.2(c) of the Prior Agreement at Closing; provided further, however, that,
notwithstanding any provisions of the Merger Agreement to the contrary, the
Executive Chairman agrees that all outstanding restricted stock and restricted
stock units granted to the Executive Chairman prior to the Closing shall not
vest immediately prior to the Closing and, instead, shall be converted into, and
shall constitute, a restricted share or restricted stock unit, as applicable,
with respect to Company common stock, the number of shares of Company common
stock, rounded down to the nearest whole share, determined by multiplying the
number of shares of Prior Employer common stock subject to such restricted
shares and restricted stock units, as applicable, by the Exchange Ratio (as
defined in the Merger Agreement).

       

       

      
        
          
          

        

        
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      (c)
 In
addition, the Executive Chairman shall receive the following payments and
benefits pursuant to the Prior Agreement or other applicable Prior Employer plan
or policy:

       

              (i)  to the
extent not previously paid by the Prior Employer, a payment of $3,750,000 in
respect of the Prior Employer’s Executive Annual Incentive Plan for 2009, which
shall be payable promptly but no later than 15 days after the Effective
Date;

       

                                   
(ii)  to the
extent not previously paid by the Prior Employer, a payment of $4,725,000 in
respect of the Prior Employer’s 2008 Executive Long-Term Incentive Retention
Plan, which shall be payable promptly but no later than 15 days after the
Effective Date; and

       

                                   
(iii) all
amounts owed to the Executive Chairman under the Prior Employer’s SERP,
Supplemental Pension Plan and the Supplemental Retirement Savings Plan, which
(A) shall be payable in accordance with any election previously made by the
Executive Chairman (or the Prior Employer), and in the absence of such election
a lump sum on the Closing, but in no event earlier than the earliest date
permissible in accordance with Section 409A of the Code and (B) solely with
respect to the SERP, shall be determined without regard to the waiver of the
Severance Payment under Section 4(b)(i) hereof; and

       

                                   
(iv) retiree
medical benefit coverage for the Executive Chairman and his spouse, to the
extent the Executive Chairman is eligible to receive such benefit coverage upon
his retirement under the applicable plans of the Prior Employer as in effect on
the Effective Date, in accordance with the terms of such plans as in effect on
the Execution Date.

       

      5.   TERMINATION OF
EMPLOYMENT.

       

      (a)
 DEATH OR
DISABILITY.  The Term and the Executive Chairman’s employment
hereunder shall terminate automatically upon the Executive Chairman’s
death.  The Company shall be entitled to terminate the Term and the
Executive Chairman’s employment hereunder prior to the third anniversary of the
Effective Date because of the Executive Chairman’s Disability.  “Disability” means that the
Executive Chairman 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 Chairman has been
substantially unable, for 120 business days within a period of 180 consecutive
business days, to perform the Executive Chairman’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 Chairman or the Executive Chairman’s
legal representative has determined that the Executive Chairman is totally and
permanently disabled.  In the event that the Executive Chairman 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 Chairman’s employment by the Company for Disability shall be
communicated to the Executive Chairman by written notice, and shall be effective
on the 30th day after receipt of such notice by the Executive Chairman (the
“Disability Effective
Time”), unless the Executive Chairman returns to full-time performance of
the Executive Chairman’s duties before the Disability Effective
Time.

       

      
        
          
          

        

        
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      (b)
 TERMINATION BY THE
COMPANY.  The Company may terminate the Term and Executive
Chairman’s employment hereunder prior to the third anniversary of the Effective
Date for Cause or without Cause.

       

              (i) “Cause” is defined as
(A) the Executive Chairman’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 Chairman by the Board, which demand
specifically identifies the manner in which the Board believes that the
Executive Chairman has not substantially performed his duties, (B) the
willful engaging by the Executive Chairman in conduct which is demonstrably and
materially injurious to the Company or its affiliates, (C) the Executive
Chairman’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 Chairman’s breach of any restrictive covenant set forth in
Section 9 hereof.  For purposes of clauses (A) and
(B) of this definition, no act, or failure to act, on the Executive
Chairman’s part shall be deemed “willful” unless done, or omitted to be done, by
the Executive Chairman not in good faith and without reasonable belief that his
act, or failure to act, was in the best interest of the Company.

       

                                   
(ii) A
termination of the Executive Chairman’s employment for Cause or without Cause
shall not be effective unless it is accomplished in accordance with the
following procedures.  The Board shall give the Executive Chairman
written notice (“Notice of
Termination by the Board”) of its intention to terminate the Executive
Chairman’s employment, which shall (A) in the case of termination for Cause, set
forth in detail the specific conduct (including any failure to act) of the
Executive Chairman that it considers to constitute Cause and (B) propose the
date, time and place (which, in each case, shall be subject to the Executive
Chairman’s approval; provided that such approval shall not be unreasonably
withheld) of the Special Board Meeting for Termination.  The “Special Board Meeting for
Termination” means a meeting of the Board called and held specifically
and exclusively for the purpose of considering the Executive Chairman’s
termination of employment, that takes place not less than forty-five
(45) business days after the Executive Chairman receives the Notice of
Termination by the Board.  The Board shall provide the Executive
Chairman an opportunity, together with counsel, to be heard at the Special Board
Meeting for Termination.  The Executive Chairman’s termination of
employment shall be effective when and if a resolution is duly adopted at the
Special Board Meeting for Termination stating that, in the good faith opinion of
at least 80% of the members of the Board (other than the Executive Chairman),
the Executive Chairman’s employment should be terminated.

       

       

      
        
          
          

        

        
          9

          
            

          

        

         

      

       

       

      (c)
 GOOD
REASON.  The Executive Chairman may terminate the Term and the
Executive Chairman’s employment hereunder prior to the third anniversary of the
Effective Date for Good Reason or without Good Reason.

       

              (i) “Good Reason” is defined as,
without the Executive Chairman’s consent, (A) the assignment to the
Executive Chairman of any duties materially inconsistent with those specified in
Section 2 or a material adverse alteration in the nature or status of the
Executive Chairman’s responsibilities specified in Section 2, unless the Company
has cured such events within ten (10) business days after the receipt of written
notice thereof from the Executive Chairman, (B) a reduction in the
Executive Chairman’s Annual Base Salary or Annual Bonus Amount opportunity,
(C) the Company requiring the Executive Chairman to perform on a regular
basis services under this Agreement from an office location other than the
location designated in accordance with Section 2(c) hereof or (D) the
failure of the Executive Chairman both to be appointed or elected a member of
the Board and to be elected its executive chairman.  For the avoidance
of doubt, (1) any changes to the Executive Chairman’s duties or title, status,
base salary, compensation, benefits, perquisites or work location under the
Prior Agreement, in each case, as a result of the Executive Chairman’s
separation from service from the Prior Employer and entry into this Agreement
and (2) the Executive Chairman ceasing to be an employee, a member of the Board
or the executive chairman of the Board upon the third anniversary of the
Effective Date in accordance with Section 2 of this Agreement, in each case,
shall not constitute Good Reason for purposes of this Agreement.

       

                                   
(ii) A
termination of employment by the Executive Chairman 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 Chairman 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 Chairman
first has knowledge of the event or circumstance alleged to constitute Good
Reason.  A termination of employment by the Executive Chairman 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.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

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

       

      (d)
 DATE OF
TERMINATION.  The “Date of Termination” means the
date of the Executive Chairman’s death, the Disability Effective Time or the
date on which the termination of the Executive Chairman’s employment by the
Company for Cause or without Cause or by the Executive Chairman for Good Reason
or without Good Reason is effective.

       

      (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 Chairman incurs the expenses, but, in each case, no later than
December 31 of the year following the year in which the Executive Chairman
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 Chairman’s right to reimbursement or in-kind
benefits be subject to liquidation or exchange for another benefit.

       

      6.    OBLIGATIONS OF THE COMPANY
UPON TERMINATION.

       

      (a)
 OBLIGATIONS ON ANY
TERMINATION.  If the Executive Chairman’s employment hereunder
terminates for any reason, then (1) the Company shall pay to the Executive
Chairman, 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 Chairman’s Annual Base Salary
through the Date of Termination that has not yet been paid, (ii) any earned
Annual Bonus Amount, whether for a full or partial fiscal year, that has not yet
been paid as of the Date of Termination; provided, however, that, in the
case of any earned Annual Bonus Amount for a partial fiscal year that has not
been paid as of the Date of Termination, such earned Annual Bonus Amount shall
be paid at such time as such Annual Bonus Amount would have otherwise been paid
pursuant to this Agreement had the Executive Chairman remained employed by the
Company until the last day of such fiscal year, and (iii) any amount needed
to reimburse the Executive Chairman for any unreimbursed business expenses
properly incurred by the Executive Chairman 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 Chairman (or the
Executive Chairman’s estate, beneficiary, or legal representative, as the case
may be) all compensation and benefits payable to the Executive Chairman 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, (3) the
Company shall also pay or provide to the Executive Chairman all amounts and
benefits payable pursuant to and in accordance with Section 4 of this Agreement
and (4) except as otherwise set forth below in Section 6(b) and Section
6(c), all of the Executive Chairman’s then outstanding equity and incentive
compensation awards that are granted on or after the Effective Date shall be
treated in accordance with the terms of the plans and agreements evidencing such
awards.

       

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      (b)
 OBLIGATIONS ON A TERMINATION
DUE TO DEATH OR DISABILITY.  If the Executive Chairman’s
employment hereunder terminates by reason of death or Disability, then, in
addition to making the payments and benefits in Section 6(a), (1) the
Company shall pay to the Executive Chairman, or his estate, beneficiary or legal
representative, as applicable, in a lump sum in cash on the Cost Synergy Bonus
Payment Date, an amount equal to the higher of (i) the Cost Synergy Bonus Amount
to which the Executive Chairman would have been entitled if he had remained
continuously employed by the Company through the third anniversary of the
Effective Date based on the actual Cost Synergy Level Attained as of such third
anniversary, but pro rated based on the number of days in such three-year period
that the Executive Chairman was actually employed by the Company and (ii) the
Cost Synergy Bonus Amount calculated based on the Cost Synergy Level Attained as
of the Date of Termination (instead of the third anniversary of the Effective
Date) and without proration, (2) the Executive Chairman shall be entitled to
immediate vesting of any Sign-on Options and Annual Equity Awards outstanding as
of the Date of Termination (it being understood that the Executive Chairman
shall not be entitled to receive additional Annual Equity Awards following such
Date of Termination); provided that the
Sign-on Options and any Annual Equity Awards granted as stock options or stock
appreciation rights shall remain exercisable until their respective expiration
dates (without regard to such termination), and (3) the equity-based awards
described in Section 4(b)(iv) and outstanding as of the Date of Termination
shall be treated in accordance with the terms of Section 4(b)(iv).

       

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

       

                                  
(i)  If,
during the Term, the Company terminates the Executive Chairman’s employment for
any reason other than for Cause, death or Disability, or the Executive Chairman
terminates his employment for Good Reason, then, in addition to making the
payments and providing the benefits pursuant to Section 6(a), subject to
Section 6(c)(ii) and Section 6(e), (1) the Company shall pay to the
Executive Chairman a lump sum cash amount equal to the Cost Synergy Bonus Amount
to which the Executive Chairman would have been entitled if he had remained
continuously employed by the Company through the third anniversary of the
Effective Date based on the actual Cost Synergy Level Attained as of such third
anniversary and without proration, which amount shall be payable on the Cost
Synergy Bonus Payment Date; (2) the Executive Chairman shall be entitled to
immediate vesting of any Sign-on Options and Annual Equity Awards outstanding as
of the Date of Termination (it being understood that the Executive Chairman
shall not be entitled to receive additional Annual Equity Awards following such
Date of Termination); provided that the
Sign-On Options and any Annual Equity Awards granted as stock options or stock
appreciation rights shall remain exercisable until their respective expiration
dates (without regard to such termination); (3) the equity-based awards
described in Section 4(b)(iv) and outstanding as of the Date of Termination
shall be treated in accordance with the terms of Section 4(b)(iv); and (4) the
Company shall provide or arrange to provide the Executive Chairman and his
eligible dependents, at no greater cost to the Executive Chairman than the cost
to the Executive Chairman 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 Chairman and his eligible
dependents immediately prior to the Date of Termination, which coverage shall be
provided during the remainder of the period ending on the third anniversary of
the Effective Date (the “Continuation Period”), or, if
sooner, until he becomes eligible for such benefits from a new employer (and the
Executive Chairman shall promptly notify the Company of such eligibility from
any new employer), but such coverage shall only be provided to the extent that
the Executive Chairman 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 Chairman 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.

        

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

                                  
(ii)
 In the
event that, during the Continuation Period, the Executive Chairman 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 6(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 Chairman
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 Chairman 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 Chairman’s firm in connection
therewith.

       

      (d)
 SECTION
409A.

       

                                   
(i) Notwithstanding
any provisions of this Agreement to the contrary, if the Executive Chairman is a
“specified employee”
(within the meaning of Section 409A of the Code and the regulations
thereunder and determined pursuant to procedures adopted by the Company) and he
experiences a “separation from service” (including in respect of his position as
a member of the Board) after the Effective Date and if any portion of the
payments or benefits to be received by the Executive Chairman upon such a
“separation from service” would be considered deferred compensation under
Section 409A of the Code, amounts that would otherwise be payable pursuant
to this Agreement during the six-month period immediately following the
Executive Chairman’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 Chairman’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 Chairman’s separation from
service or (ii) Executive Chairman’s death (the applicable date, the “Permissible Payment
Date”).  The Company shall also reimburse the Executive
Chairman for the after-tax cost incurred by the Executive Chairman in
independently obtaining any Delayed Benefits (the “Additional Delayed
Payments”).  For the avoidance of doubt, this Section 6(d) is
not intended to limit or modify the provisions of Section 2(b) and is instead
intended to ensure compliance with Section 409A of the Code.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

                                   
(ii) 
With
respect to any amount of expenses eligible for reimbursement under Section
6(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 Chairman but in no event later than
December 31 of the year following the year in which the Executive Chairman
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 Chairman’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 of the Code and the
regulations thereunder.

       

                                   
(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 Chairman on
the Permissible Payment Date.

       

      (e)
 EXECUTION OF
RELEASE.  As a condition of receiving any payments for which
the Executive Chairman otherwise qualifies under Section 6(c)(i), the
Executive Chairman shall be required to execute and deliver following the
Executive Chairman’s Date of Termination the mutual release attached hereto as
Exhibit B
(the “Release”), such
Release to be delivered by the Executive Chairman and become irrevocable no
later than sixty (60) calendar days following the Executive Chairman’s Date
of Termination.  If the Release has not been executed, delivered and
become irrevocable by the Executive Chairman within the 60-day period following
the Date of Termination, all payments under Section 6(c)(i) shall be
forfeited.  Notwithstanding the foregoing, if the Company does not
execute and deliver the Release to the Executive Chairman within two
(2) business days following the Executive Chairman’s delivery of the
Release to the Company, then any requirement for the Executive Chairman to
execute, deliver and not revoke the Release as a condition of receiving any
payments under Section 6(c)(i) will have no effect, and the Executive
Chairman shall be entitled to receive all payments to which the Executive
Chairman otherwise is entitled under Section 6(c)(i).

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      7.           
 NON-EXCLUSIVITY OF
RIGHTS.  Nothing in this Agreement shall prevent or limit the
Executive Chairman’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 Chairman may qualify nor, except as otherwise expressly
provided under this Agreement, shall anything in this Agreement limit or
otherwise affect such rights as the Executive Chairman may have under any
contract or agreement with the Company or any of its affiliated
companies.  Vested benefits and other amounts that the Executive
Chairman 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.

       

      8.           
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 Chairman or others.  In no
event shall the Executive Chairman be obligated to seek other employment or take
any other action to mitigate the amounts payable to the Executive Chairman under
any of the provisions of this Agreement and such amounts shall not be reduced,
regardless of whether the Executive Chairman obtains other
employment.

       

      9.           
CONFIDENTIAL INFORMATION;
SOLICITATION.

       

      (a) 
The
Executive Chairman 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 Chairman’s unauthorized disclosure), (B) was within
the Executive Chairman’s possession prior to the date hereof or prior to its
being furnished to the Executive Chairman 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 Chairman 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 Chairman without reference to the
Confidential Information or (E) is required by law to be
disclosed.  The Executive Chairman 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.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      (b) 
For a
period of two (2) years after the Date of Termination, the Executive
Chairman 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, including the Executive Chairman’s executive
assistant) 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 Chairman 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 9 without the necessity of
posting any bond, it being acknowledged and agreed that any breach or threatened
breach of this Section 9 hereof will cause irreparable injury to the
Company and that money damages alone will not provide an adequate remedy to the
Company.

       

      10.   DISPUTE
RESOLUTION.  Except for the Company’s right to seek injunctive
relief as set forth in Section 9(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
Chairman.  Judgment may be entered on the award of the arbitrators in
any court having jurisdiction.  Except for the Executive Chairman’s
rights under Section 4.2(d) of the Prior Agreement for all amounts and benefits
payable to him thereunder and as provided in Section 3(f) hereof, 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 Chairman prevails in the arbitration, his costs and expenses shall be
promptly reimbursed by the Company.  The reimbursement provided for in
this Section 10 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.

       

      11.   ASSIGNMENT;
SUCCESSORS.  This Agreement is personal to the Executive
Chairman and, without the prior written consent of the Company, shall not be
assignable by the Executive Chairman 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 Chairman’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 Chairman to compensation from the
Company in the same amount and on the same terms as the Executive Chairman would
be entitled to hereunder if the Executive Chairman were to terminate the
Executive Chairman’s employment for Good Reason.

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      12.         
 NO
VIOLATIONS.  As a material inducement to the Company’s
willingness to enter into this Agreement, the Executive Chairman represents to
the Company that neither the execution of this Agreement by the Executive
Chairman, the employment of the Executive Chairman by the Company nor the
performance by the Executive Chairman of his duties hereunder will constitute a
violation by the Executive Chairman of any employment, non-competition or other
agreement to which the Executive Chairman 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.

       

      13.   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 Chairman:

       

                                   
At
his address on file with the Company

       

                                   
With a
copy to:

       

                                   
Vedder
Price P.C.

                                    222 North
LaSalle Street

                                   
Suite 2600

                                   
Chicago, Illinois 60601

                                    Attention:  Robert
F. Simon, Esq.

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

                                   
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 13.  Notices
and communications shall be effective when actually received by the
addressee.

       

      (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) 
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.

       

      (e) 
WAIVER.  The
Executive Chairman’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.

       

      (f) 
ENTIRE
AGREEMENT.  The Executive Chairman and the Company acknowledge
that this Agreement (together with the Exhibits hereto) constitutes the entire
understanding of the parties with respect to the subject matter hereof and
supersede any other prior agreement or other under-standing, 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 Effective
Date, no such agreement or understanding shall be of any further force or
effect.  To the extent the terms of this Agreement are inconsistent
with any plan, program, practice or other agreement of the Company and
applicable to the Executive Chairman as in effect from time to time, the terms
of this Agreement shall control unless specifically provided otherwise in
writing by reference to this Agreement and signed by the Executive Chairman and
the Company.

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      (g) 
SECTION
409A.  To the extent applicable, it is intended that the
compensation arrangements under this Agreement be in full compliance with
Section 409A of the Code.  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 Chairman 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 Chairman 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.

       

      (h) 
SURVIVAL OF
TERMS.  To the extent necessary to effectuate the terms of this
Agreement, the terms of this Agreement which must survive the termination of the
Executive Chairman’s employment or the termination of this Agreement, including
Sections 3(g), 4, 6 and 9, shall so survive.

       

      (i) 
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.

       

      (j)
 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.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      IN
WITNESS WHEREOF, the Executive Chairman has hereunto set the Executive
Chairman’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

                
	 
      	 
      


        

        


        


        
          	
                  NOLAN
      D. ARCHIBALD

                
	
                   
      

                   

                
	
                  By:

                	/s/
      Nolan D. Archibald
	 
      	
                  Name:  Nolan
      D. Archibald

                
	 
      	 
      


        

        
 

         

         

         

         

         

         

         

        
           

        

      

      


      


      


      


      


      


      


      


      


      


      [Signature Page to Executive
Chairman Agreement]

      


       

      
        
          20

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
 

      EXHIBIT
A

      TO
EXECUTIVE CHAIRMAN AGREEMENT

       

       

      Cost
Synergy Bonus

       

       

       

      
        	
                 

                Cost
      Synergy

                 Level
      Attained

                 

              	 	
                Cost
      Synergy
Bonus Amount

                 

              	 
	
                 

                Less
      than $150 mm

                 

              	 	
                $0

                 

              	
                 

              	 
	
                $150
      mm

                 

              	 	
                $0

                 

              	
                 

                 

              	 
	
                $225
      mm

                 

              	 	
                $15
      mm

                 

              	 
	
                $300
      mm

                 

              	 	
                $30
      mm

                 

              	 
	
                $350
      mm

                 

              	 	
                $45
      mm

                 

              	 
	
                More
      than $350 mm

                 

              	 	
                $45
      mm

                 

              	 


      

      


       

      “Cost
Synergy Level Attained” shall mean the annual run-rate of cost savings achieved
by the Company as of the third anniversary of the Effective Date that are
attributable to the Merger, which cost savings shall be calculated on a pre-tax
basis, applying generally accepted accounting principles and otherwise
consistent with the methods of cost synergy measurement used in reports provided
to the Board and included in the Company’s public filings.  For the
avoidance of doubt, such calculation shall not include any revenue
synergies.

      


      “Cost
Synergy Bonus Amount” shall be calculated by reference to the Cost Synergy Level
Attained and the payout matrix set forth in the table above; provided that each
amount set forth in the payout matrix above shall be increased at an interest
rate of 4.5% compounded annually over the period commencing on the Effective
Date and ending on the third anniversary thereof.  To the extent that
the Cost Synergy Level Attained is between two values set forth in the table
above, the Cost Synergy Bonus Amount shall be determined by linear interpolation
between the two corresponding Cost Synergy Bonus Amount values.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      EXHIBIT
B

       

      TO
EXECUTIVE CHAIRMAN AGREEMENT

       

      MUTUAL
RELEASE

       

      (a)   Nolan D.
Archibald (“Releasor”) for and in consideration of benefits provided pursuant to
an Executive Chairman Agreement with The Stanley Works entered into on November
2, 2009 (the “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 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 13(b) of the
Agreement.  Releasor’s release shall not be effective, and no payments
or benefits shall be due under Section 6(c) of the 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.

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      (d)  The
Company, for and in consideration of the Executive Chairman’s covenants under
the 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 Executive Chairman’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
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.

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      
 

      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

                   

                   

                
	 
      
	
                  Nolan
      D. Archibald

                


        

        


        


        Signed as
of this ____ day of _____________.

      

       

       

       4