EX-10.XVI





Exhibit 10(xvi)


Form B



CHANGE IN CONTROL SEVERANCE AGREEMENT



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CHANGE IN CONTROL SEVERANCE AGREEMENT




     THIS AGREEMENT (the “Agreement”), dated ________, 200_ is made by and between The
Stanley Works, a Connecticut corporation (the “Company”),
and _____________ (the “Executive”).



     WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the
possibility of a Change in Control exists and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its shareowners; and



     WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the Company’s management, including
the Executive, to their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in Control;



     NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained,
the Company and the Executive hereby agree as follows:



     1. Defined Terms. The definitions of capitalized terms used in this Agreement are
provided in the last Section hereof.



     2. Term of Agreement. The Term of this Agreement shall commence on the date hereof
and shall continue in effect through the second anniversary hereof; provided, however, that
commencing on
_____________ and
each _____________ thereafter, the Term shall
automatically be extended for one additional year unless, not later than ninety (90) calendar days
prior to such _____________, the Company or the Executive shall have given notice not to extend
the Term; and further provided, however, that if a Change in Control shall have occurred during the
Term, the Term shall expire no earlier than twenty-four (24) months beyond the month in which such
Change in Control occurred.



     3. Company’s Covenants Summarized. In order to induce the Executive to remain in the
employ of the Company and in consideration of the Executive’s covenants set forth in Section 4
hereof, the Company agrees, under the conditions described herein, to pay the Executive the
Severance Payments and the other payments and benefits described herein. Except as provided in
Section 10.1 hereof, no Severance Payments shall be payable under this Agreement unless there shall
have been (or, under the terms of the second sentence of Section 6.1 hereof, there shall be deemed
to have been) a termination of the Executive’s employment with the Company following a Change in
Control and during the Term. This Agreement shall not be construed as creating an express or
implied contract of employment and, except as otherwise agreed in writing between the Executive and
the Company, the Executive shall not have any right to be retained in the employ of the Company.



 









 





     4. The Executive’s Covenants. The Executive agrees that, subject to the terms and
conditions of this Agreement, in the event of a Potential Change in Control during the Term, the
Executive will remain in the employ of the Company until the earliest of (i) a date which is six
(6) months from the date of such Potential Change in Control, (ii) the date of a Change in Control,
(iii) the date of termination by the Executive of the Executive’s employment for Good Reason or by
reason of death, Disability or Retirement, or (iv) the termination by the Company of the
Executive’s employment for any reason.



     5. Compensation Other Than Severance Payments.



     5.1 Following a Change in Control and during the Term, during any period that the Executive
fails to perform the Executive’s full-time duties with the Company as a result of incapacity due to
physical or mental illness, the Company shall pay the Executive’s full salary to the Executive at
the rate in effect at the commencement of any such period, together with all compensation and
benefits payable to the Executive under the terms of any compensation or benefit plan, program or
arrangement maintained by the Company during such period (other than any disability plan), until
the Executive’s employment is terminated by the Company for Disability.



     5.2 If the Executive’s employment shall be terminated for any reason following a Change in
Control and during the Term, the Company shall pay the Executive’s full salary to the Executive
through the Date of Termination at the rate in effect immediately prior to the Date of Termination
or, if higher, the rate in effect immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, together with all compensation and benefits payable to the
Executive through the Date of Termination under the terms of the Company’s compensation and benefit
plans, programs or arrangements as in effect immediately prior to the Date of Termination [or, if
more favorable to the Executive, as in effect immediately prior to the first occurrence of an event
or circumstance constituting Good Reason].



     5.3 If the Executive’s employment shall be terminated for any reason following a Change in
Control and during the Term, the Company shall pay to the Executive the Executive’s normal
post-termination compensation and benefits as such payments become due. Such post-termination
compensation and benefits shall be determined under, and paid in accordance with, the Company’s
retirement, insurance and other compensation or benefit plans, programs and arrangements as in
effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in
effect immediately prior to the occurrence of the first event or circumstance constituting Good
Reason.



     6. Severance Payments.



     6.1 If the Executive incurs a “separation from service” (within the meaning of section 409A)
following a Change in Control and during the Term, other than (A) by the Company for Cause, (B) by
reason of death or Disability, or (C) by the Executive without Good Reason, then the Company shall
pay the Executive the amounts, and provide the Executive the benefits, described in this Section
6.1 (“Severance Payments”) and Section 6.2, in addition to any payments and benefits to which the
Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive shall
be deemed to have incurred a separation from service



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following a Change in Control by the Company without Cause or by the Executive with Good
Reason, if (i) the Executive’s employment is terminated by the Company without Cause prior to a
Change in Control (whether or not a Change in Control occurs) and such termination was at the
request or direction of a Person who has entered into an agreement with the Company the
consummation of which would constitute a Change in Control, (ii) the Executive terminates his
employment for Good Reason prior to a Change in Control (whether or not a Change in Control occurs)
and the circumstance or event which constitutes Good Reason occurs at the request or direction of
such Person, or (iii) the Executive’s employment is terminated by the Company without Cause or by
the Executive for Good Reason and such termination or the circumstance or event which constitutes
Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or
not a Change in Control occurs). For purposes of Section 5 and 6 of this Agreement (other than the
last sentence of Section 6.2(A)), no payment that would otherwise be made and no benefit that would
otherwise be provided upon a termination of employment will be made or provided unless and until
such termination of employment is also a “separation from service,” as determined in accordance
with section 409A.





     (A) In lieu of any further salary payments to the Executive for periods subsequent to
the Date of Termination and in lieu of any severance benefit otherwise payable to the
Executive, the Company shall pay to the Executive a lump sum severance payment, in cash,
equal to two and one-half times the sum of (i) the Executive’s base salary as in effect
immediately prior to the Date of Termination or, if higher, in effect immediately prior to
the first occurrence of an event or circumstance constituting Good Reason, and (ii) the
average annual bonus earned by the Executive pursuant to any annual bonus or incentive plan
maintained by the Company in respect of the three fiscal years ending immediately prior to
the fiscal year in which occurs the Date of Termination or, if higher, immediately prior to
the fiscal year in which occurs the first event or circumstance constituting Good Reason.




     (B) For the thirty (30) month period immediately following the Date of Termination, the
Company shall arrange to provide the Executive and his dependents life, disability, accident
and health insurance benefits substantially similar to those provided to the Executive and
his dependents immediately prior to the Date of Termination or, if more favorable to the
Executive, those provided to the Executive and his dependents immediately prior to the first
occurrence of an event or circumstance constituting Good Reason, at no greater after tax
cost to the Executive than the after tax cost to the Executive immediately prior to such
date or occurrence; provided, however, that, unless the Executive consents to a different
method, such health insurance benefits shall be provided through a third-party insurer.
Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be
reduced to the extent benefits of the same type are received by or made available to the
Executive during the thirty (30) month period following the Executive’s termination of
employment (and any such benefits received by or made available to the Executive shall be
reported to the Company by the Executive); provided, however, that the Company shall
promptly reimburse the Executive for the excess, if any, of the after tax cost of such
benefits to the Executive over such cost immediately prior to the Date of Termination or, if
more favorable to the Executive, the first occurrence of an event or circumstance
constituting Good Reason.



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     (C) In addition to the retirement benefits, if any, to which the Executive is entitled
under each DB Pension Plan or any successor plan thereto, the Company shall pay the
Executive a lump sum amount, in cash, equal to the excess of (i) the actuarial equivalent of
the aggregate retirement pension (taking into account any early retirement subsidies
associated therewith and determined as a straight life annuity commencing at the date (but
in no event earlier than two and one-half (2.5) years following the Date of Termination) as
of which the actuarial equivalent of such annuity is greatest) which the Executive would
have accrued under the terms of all DB Pension Plans (without regard to any amendment to any
DB Pension Plan made subsequent to a Change in Control and on or prior to the Date of
Termination, which amendment adversely affects in any manner the computation of retirement
benefits thereunder), determined as if the Executive were fully vested thereunder and had
accumulated (after the Date of Termination) thirty (30) additional months of age and service
credit thereunder and had been credited under each DB Pension Plan during such period with
compensation equal to the Executive’s compensation (as defined in such DB Pension Plan)
during the twelve (12) months immediately preceding Date of Termination or, if higher,
during the twelve months immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, over (ii) the actuarial equivalent of the aggregate
retirement pension (taking into account any early retirement subsidies associated therewith
and determined as a straight life annuity commencing at the date (but in no event earlier
than the Date of Termination) as of which the actuarial equivalent of such annuity is
greatest) which the Executive had accrued pursuant to the provisions of the DB Pension Plans
as of the Date of Termination. For purposes of this Section 6.1(C), “actuarial equivalent”
shall be determined using the same assumptions utilized under The Stanley Works Retirement
Plan immediately prior to the Date of Termination or, if more favorable to the Executive,
immediately prior to the first occurrence of an event or circumstance constituting Good
Reason. The payments provided in this Section 6.1(C) are in addition to any payment the
Executive would otherwise receive under the applicable DB Plan and are not intended to
offset or reduce any payment under such DB Plan.




     (D) In addition to the benefits to which the Executive is entitled under the DC Pension
Plan, the Company shall pay the Executive a lump sum amount, in cash, equal to the sum of
(i) the amount that would have been contributed thereto by the Company on the Executive’s
behalf during the thirty (30) months immediately following the Date of Termination,
determined (x) as if the Executive made the maximum permissible contributions thereto during
such period, (y) as if the Executive earned compensation during such period at a rate equal
to the Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12)
months immediately preceding the Date of Termination or, if higher, during the twelve months
immediately prior to the first occurrence of an event or circumstance constituting Good
Reason, and (z) without regard to any amendment to the DC Pension Plan made subsequent to a
Change in Control and on or prior to the Date of Termination, which amendment adversely
affects in any manner the computation of benefits thereunder, and (ii) the excess, if any,
of (x) the Executive’s account balance under the DC Pension Plan as of the Date of
Termination over (y) the portion of such account balance that is nonforfeitable under the
terms of the DC Pension Plan. The payments provided in this Section 6.1(D) are in addition
to any



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payment the Executive would otherwise receive under the applicable DC Plan and are not
intended to offset or reduce any payment under such DC Plan.




     (E) If the Executive would have become entitled to benefits under the Company’s
post-retirement health care or life insurance plans, as in effect immediately prior to the
Date of Termination or, if more favorable to the Executive, as in effect immediately prior
to the first occurrence of an event or circumstance constituting Good Reason, had the
Executive’s employment terminated at any time during the period of thirty (30) months after
the Date of Termination, the Company shall provide such post-retirement health care and/or
life insurance benefits to the Executive and the Executive’s dependents commencing on the
later of (i) the date on which such coverage would have first become available and (ii) the
date on which benefits described in subsection (B) of this Section 6.1 terminate.




     (F) The Company shall provide the Executive with third-party outplacement services
suitable to the Executive’s position for the period following the Executive’s Date of
Termination and ending on December 31 of the second calendar year following such Date of
Termination or, if earlier, until the first acceptance by the Executive of an offer of
employment, provided, however, that in no case shall the Company be required
to pay in excess of $50,000 over such period in providing outplacement services and that all
reimbursements hereunder shall be paid to the Executive within thirty (30) calendar days
following the date on which the Executive submits the invoice but no later than December 31
of the third year following the year of the Executive’s Date of Termination.




     (G) For the thirty (30) month period immediately following the Date of Termination or
until the Executive becomes eligible for substantially similar benefits from a new employer,
whichever occurs earlier, the Company shall continue to provide the Executive with all
perquisites provided by the Company immediately prior to the Date of Termination or, if more
favorable to the Executive, immediately prior to the first occurrence of an event or
circumstance constituting Good Reason (including, without limitation, automobile, financial
planning, annual physical and executive whole life insurance).



     6.2 (A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the
payments or benefits received or to be received by the Executive (including any payment or benefits
received in connection with a Change in Control or the Executive’s termination of employment,
whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement) (all
such payments and benefits, excluding the Gross-Up Payment, being hereinafter referred to as the
“Total Payments”) will be subject to the Excise Tax, the Company shall pay to the Executive an
additional amount (the “Gross-Up Payment”) such that the net amount retained by the Executive,
after deduction of any Excise Tax on the Total Payments and any federal, state and local income and
employment taxes and Excise Tax upon the Gross-Up Payment, and after taking into account the phase
out, if any, of itemized deductions and personal exemptions attributable to the Gross-Up Payment,
shall be equal to the Total Payments. The Company’s obligation to make the Gross-Up Payment under
this Section 6.2(A) shall not be conditioned upon Executive’s termination of employment.



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     (B) For purposes of determining whether any of the Total Payments will be subject to
the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be
treated as “parachute payments” (within the meaning of section 280G(b)(2) of the Code)
unless, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive
and selected by the accounting firm which was, immediately prior to the Change in Control,
the Company’s independent auditor (the “Auditor”), such payments or benefits (in whole or in
part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of
the Code, (ii) all “excess parachute payments” within the meaning of section 280G(b)(l) of
the Code shall be treated as subject to the Excise Tax unless, in the opinion of Tax
Counsel, such excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of
the Code) in excess of the Base Amount allocable to such reasonable compensation, or are
otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any
deferred payment or benefit shall be determined by the Auditor in accordance with the
principles of sections 280G(d)(3) and (4) of the Code. For purposes of determining the
amount of the Gross-Up Payment, the Executive’s estimated actual blended marginal rate of
federal, state and local income taxation in the calendar year in which the Date of
Termination occurs shall be utilized (or if there is no Date of Termination, then the date
on which the Gross-Up Payment is calculated for purposes of this Section 6.2). Such
marginal rate shall be determined by taking into account (i) the estimated actual net effect
on the marginal rate attributable to the deduction of state and local income taxes, (ii) the
phase out, if any, of itemized deductions, (iii) the estimated actual net tax rate
attributable to any employment taxes, and (iv) any other tax provision that in the judgment
of the Auditor will actually affect Executive’s estimated actual blended marginal tax rate.




     (C) In the event that the Excise Tax is finally determined to be less than the amount
taken into account hereunder in calculating the Gross-Up Payment, the Executive shall repay
to the Company, within five (5) business days following the time that the amount of such
reduction in the Excise Tax is finally determined, the portion of the Gross-Up Payment
attributable to such reduction (plus that portion of the Gross-Up Payment attributable to
the Excise Tax and federal, state and local income and employment taxes imposed on the
Gross-Up Payment being repaid by the Executive), to the extent that such repayment results
in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive’s
taxable income and wages for purposes of federal, state and local income and employment
taxes, plus interest on the amount of such repayment at 120% of the rate provided in section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the
amount taken into account hereunder in calculating the Gross-Up Payment (including by reason
of any payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such
excess (plus any interest, penalties or additions payable by the Executive with respect to
such excess) within five (5) business days following the time that the amount of such excess
is finally determined, but in no event later than December 31 of the year following the year
in which the applicable taxes are remitted. The Executive and the Company shall each
reasonably cooperate with the other in connection with any administrative or



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judicial proceedings concerning the existence or amount of liability for Excise Tax
with respect to the Total Payments.



     6.3 Subject to Section 6.4, the payments provided in subsections (A), (C) and (D) of Section
6.1 hereof and in Section 6.2 hereof shall be made not later than the fifth (5th)
business day following the Date of Termination (or, with respect to the payment to be made pursuant
to Section 6.2, if there is no Date of Termination, then the date on which the Gross-Up Payment is
calculated for purposes of Section 6.2 hereof but in no event later than December 31 of the year
following the year in which the applicable taxes are remitted); provided, however, that if the
amounts of such payments cannot be finally determined on or before such day, the Company shall pay
to the Executive on such day an estimate, as determined in good faith by the Company or, in the
case of payments under Section 6.2 hereof, in accordance with Section 6.2 hereof, of the minimum
amount of such payments to which the Executive is clearly entitled and shall pay the remainder of
such payments (together with interest on the unpaid remainder (or on all such payments to the
extent the Company fails to make such payments when due) at 120% of the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later
than the thirtieth (30th) calendar day after the Date of Termination. In the event that the amount
of the estimated payments exceeds the amount subsequently determined to have been due, such excess
shall be payable by the Executive to the Company on the fifth (5th) business day after demand by
the Company (together with interest at 120% of the rate provided in section 1274(b)(2)(B) of the
Code). At the time that payments are made under this Agreement, the Company shall provide the
Executive with a written statement setting forth the manner in which such payments were calculated
and the basis for such calculations including, without limitation, any opinions or other advice the
Company has received from Tax Counsel, the Auditor or other advisors or consultants (and any such
opinions or advice which are in writing shall be attached to the statement). Notwithstanding any
other provision of this Section 6, the Company may, in its sole discretion, withhold and pay over
to the Internal Revenue Service or any other applicable taxing authority, for the benefit of
Executive, all or any portion of any Gross-Up Payment, and Executive hereby consents to such
withholding.



     6.4 (A) 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 (1st) 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”).



     (B) With respect to any amount of expenses eligible for reimbursement under Sections 6.1 (B),
(E) and (G), such expenses shall be reimbursed by the Company within thirty



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(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.




     (C) For purposes of section 409A, the Executive’s right to receive any “installment” payments
pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct
payments.



     6.5 The Company shall deposit the estimated Delayed Payments and estimated Additional Delayed
Payments into an irrevocable grantor trust (for purposes of this Section 6, the “Grantor Trust”)
not later than the fifth (5th) business day following the occurrence of a Potential
Change in Control. The Company shall deposit additional amounts into the Grantor Trust on a
monthly basis equal to the interest accrued on the Delayed Payments (and any earlier interest
payments) at the United States 5-year Treasury Rate plus 2%, and the amount held in the Grantor
Trust shall be paid to the Executive (in accordance with the terms of the Grantor Trust) on the
Permissible Payment Date.



     6.6 The Company also shall pay to the Executive all legal fees and expenses incurred by the
Executive in disputing in good faith any issue hereunder relating to the termination of the
Executive’s employment or in seeking in good faith to obtain or enforce any benefit or right
provided by this Agreement. Such payments shall be made within five (5) business days (but in any
event no later than December 31 of the year following the year in which the Executive incurs the
expenses) after delivery of the Executive’s written requests for payment accompanied with such
evidence of fees and expenses incurred as the Company reasonably may require, provided that (i) the
amount of such legal fees and expenses that the Company is obligated to pay in any given calendar
year shall not affect the legal fees and expenses that the Company is obligated to pay in any other
calendar year, (ii) the Executive’s right to have the Company pay such legal fees and expenses may
not be liquidated or exchanged for any other benefit, and (iii) the Executive shall not be
entitled to reimbursement unless he has submitted an invoice for such fees and expenses at least
ten (10) business days before the end of the calendar year next following the calendar year in
which such fees and expenses were incurred. The Company shall also pay all legal fees and expenses
incurred by the Executive in connection with any tax audit or proceeding to the extent attributable
to the application of section 4999 of the Code to any payment or benefit hereunder. Payment
pursuant to the preceding sentence will be made within fifteen (15) business days after delivery of
the Executive’s written request for payment but in no event later than the end of the calendar year
following the calendar year in which the taxes that are the subject of the audit or proceeding are
remitted to the taxing authority, or where as a result of the audit or proceeding no taxes are
remitted, the end of the calendar year in which the audit is completed or there is a final and
nonappealable settlement or other resolution of the matter.



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     7. Termination Procedures and Compensation During Dispute.



     7.1 Notice of Termination. After a Change in Control and during the Term, any
purported termination of the Executive’s employment (other than by reason of death) shall be
communicated by written Notice of Termination from one party hereto to the other party hereto in
accordance with Section 11 hereof. For purposes of this Agreement, a “Notice of Termination” shall
mean a notice which shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated. Further, a Notice of
Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of
the Board which was called and held for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for the Executive, together with the
Executive’s counsel, to be heard before the Board) finding that, in the good faith opinion of the
Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of
Cause herein, and specifying the particulars thereof in detail.



     7.2 Date of Termination. “Date of Termination,” with respect to any purported
termination of the Executive’s employment after a Change in Control and during the Term, shall mean
(i) if the Executive incurs a separation from service due to Disability, thirty (30) calendar days
after Notice of Termination is given (provided that the Executive shall not have returned to the
full-time performance of the Executive’s duties during such thirty (30) calendar day period), and
(ii) if the Executive incurs a separation from service for any other reason, the date specified in
the Notice of Termination (which, in the case of a termination by the Company, shall be the
thirtieth (30th) calendar day after Notice of Termination is given (except in the case
of a termination for Cause) and, in the case of a termination by the Executive, shall not be less
than fifteen (15) calendar days nor more than sixty (60) calendar days, respectively, from the date
such Notice of Termination is given).



     8. No Mitigation. The Company agrees that, if the Executive’s employment with the
Company terminates during the Term, the Executive is not required to seek other employment or to
attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to
Section 6 hereof. Further, except as specifically provided in Sections 6.1(B) and 6.1(G) hereof,
no payment or benefit provided for in this Agreement shall be reduced by any compensation earned by
the Executive as the result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Executive to the Company, or otherwise.



     9. Restrictive Covenants.



     9.1 The Executive agrees that restrictions on his activities during and after his employment
are necessary to protect the goodwill, Confidential Information and other legitimate interests of
the Company and its Subsidiaries, and that the agreed restrictions set forth below will not deprive
the Executive of the ability to earn a livelihood:




     (A) While the Executive is in the employment of the Company and, if the Executive is
entitled to benefits under Section 6.1 hereof upon termination of



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employment, for a period of twenty-four (24) months after such termination of
employment (the “Non-Competition Period”), the Executive shall not, without the express
written consent of the Company, in the United States of America, directly or indirectly (i)
enter into the employ of or render any services to any person, firm or corporation engaged
in any Competitive Business; (ii) engage in any Competitive Business for his own account or
(iii) become interested in any Competitive Business as an individual, partner, shareholder,
creditor, director, officer, principal, agent, employee, consultant, advisor or in any other
relationship or capacity; provided, however, that nothing contained in this Section shall be
deemed to prohibit the Executive from acquiring, solely as an investment through market
purchases, securities of any corporation which are registered under Section 12 of the
Exchange Act and which are publicly traded so long as he is not part of any group in control
of such corporation.




     (B) The Executive agrees that during the Non-Competition Period or in connection with
any termination of employment pursuant to which the Executive is entitled to benefits under
Section 6.1, the Executive will not, either directly or through any agent or employee,
Solicit any employee of the Company or any of its Subsidiaries to terminate his or her
relationship with the Company or any of its Subsidiaries or to apply for or accept
employment with any enterprise competitive with the business of the Company, or Solicit any
customer, supplier, licensee or vendor of the Company or any of its Subsidiaries to
terminate or materially modify its relationship with them, or, in the case of a customer, to
conduct with any person any business or activity which such customer conducts or could
conduct with the Company or any of its Subsidiaries.




     (C) The Executive acknowledges that the Company and its Subsidiaries continually
develop Confidential Information, that the Executive may develop Confidential Information
for the Company or its Subsidiaries and that the Executive may learn of Confidential
Information during the course of his employment under this Agreement. The Executive will
comply with the policies and procedures of the Company and its Subsidiaries for protecting
Confidential Information and shall never disclose to any person (except as required by
applicable law or legal process or for the proper performance of his duties and
responsibilities to the Company and its Subsidiaries, or in connection with any litigation
between the Company and the Executive (provided that the Company shall be afforded a
reasonable opportunity in each case to obtain a protective order)), or use for his own
benefit or gain, any Confidential Information obtained by the Executive incident to his
employment or other association with the Company or any of its Subsidiaries. The Executive
understands that this restriction shall continue to apply after his employment terminates,
regardless of the reason for such termination. All documents, records, tapes and other
media of every kind and description relating to the business, present or otherwise, of the
Company or its Subsidiaries and any copies, in whole or in part, thereof (the “Documents”),
whether or not prepared by the Executive, shall be the sole and exclusive property of the
Company and its Subsidiaries. The Executive shall safeguard all Documents and shall
surrender to the Company at the time his employment terminates, or at such earlier time or
times as the Board or its designee may specify, all Documents then in the Executive’s
possession or control.



10









 






     (D) Without limiting the foregoing, it is understood that the Company shall not be
obligated to make any of the payments or to provide for any of the benefits specified in
Sections 6.1 and 6.2 hereof, and shall be entitled to recoup the pro rata portion of any
such payments and of the value of any such benefits previously provided to the Executive in
the event of a material breach by the Executive of the provisions of this Section 9 (such
pro ration to be determined as a fraction, the numerator of which is the number of days from
such breach to the second anniversary of the date on which the Executive terminates
employment and the denominator of which is 730), which breach continues without having been
cured within fifteen (15) calendar days after written notice to the Executive specifying the
breach in reasonable detail.



     10. Successors; Binding Agreement.



     10.1 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 had taken place.



     10.2 This Agreement shall inure to the benefit of and be enforceable by the Executive’s
personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive shall die while any amount would still be payable to the
Executive hereunder (other than amounts which, by their terms, terminate upon the death of the
Executive) if the Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the executors, personal
representatives or administrators of the Executive’s estate.



     11. Notices. For the purpose of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt requested, postage prepaid,
addressed, if to the Executive, to the address inserted below the Executive’s signature on the
final page hereof and, if to the Company, to the address set forth below, or to such other address
as either party may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:



	 	 	 	 	 
	 

	 	To the Company:
	 	The Stanley Works
	 

	 	 	 	1000 Stanley Drive
	 

	 	 	 	New Britain, Connecticut 06053
	 

	 	 	 	Attention: Corporate Secretary






     12. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and signed by the
Executive and such officer as may be specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or of any lack of compliance
with, any condition or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same or at



11









 




any prior or subsequent time. This Agreement supersedes the agreement by and between the
Company and the Executive dated
_____________ and any other agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof which have been
made by either party; provided, however, that (1) this Agreement shall supersede any agreement
setting forth the terms and conditions of the Executive’s employment with the Company only in the
event that the Executive’s employment with the Company is terminated on or following a Change in
Control (or deemed to have been so terminated), by the Company other than for Cause or by the
Executive for Good Reason and (2) to extent this Agreement does not supersede any agreement
referred to in clause (1), it shall not result in any duplication of benefits to the Executive.
The validity, interpretation, construction and performance of this Agreement shall be governed by
the laws of the State of Connecticut, without regard to its conflicts of law principles. All
references to sections of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law and any additional
withholding to which the Executive has agreed. The obligations of the Company and the Executive
under this Agreement which by their nature may require either partial or total performance after
the expiration of the Term (including, without limitation, those under Sections 6 and 7 hereof)
shall survive such expiration. 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.




     13. Validity. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect.



     14. Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will constitute one and the same
instrument.



     15. Settlement of Disputes. All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Board and shall be in writing. Any denial by
the Board of a claim for benefits under this Agreement shall be delivered to the Executive in
writing and shall set forth the specific reasons for the denial and the specific provisions of this
Agreement relied upon. The Board shall afford a reasonable opportunity to the Executive for a
review of the decision denying a claim and shall further allow the Executive to appeal to the Board
a decision of the Board within sixty (60) calendar days after notification by the Board that the
Executive’s claim has been denied. Notwithstanding the above, in the event of any dispute, any
decision by the Board hereunder shall be subject to a de novo review by a court of competent
jurisdiction.



     Notwithstanding any provision of this Agreement to the contrary, the Executive shall be
entitled to seek specific performance of the Executive’s right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or in connection with
this Agreement.



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     16. Definitions. For purposes of this Agreement, the following terms shall have the
meanings indicated below:




     (A) “Additional Delayed Payments” shall have the meaning set forth in Section 6.4
hereof.




     (B) “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under
Section 12 of the Exchange Act.




     (C) “Auditor” shall have the meaning set forth in Section 6.2 hereof.




     (D) “Base Amount” shall have the meaning set forth in section 280G(b)(3) of the Code.




     (E) “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the
Exchange Act.




     (F) “Board” shall mean the Board of Directors of the Company.




     (G) “Cause” for termination by the Company of the Executive’s employment shall mean (i)
the willful and continued failure by the Executive to substantially perform the Executive’s
duties with the Company (other than any such failure resulting from the Executive’s
incapacity due to physical or mental illness or any such actual or anticipated failure after
the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section
7.1 hereof) 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 the Executive’s duties, or (ii) the willful engaging by the
Executive in conduct which is demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this
definition, (x) 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 the Executive’s act, or failure to act, was in the best interest of
the Company and (y) in the event of a dispute concerning the application of this provision,
no claim by the Company that Cause exists shall be given effect unless the Company
establishes to the Board by clear and convincing evidence that Cause exists.




     (H) A “Change in Control” shall be deemed to have occurred if the event set forth in
any one of the following paragraphs shall have occurred:




     (I) any Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company or its Affiliates)
representing 25% or more of the combined voting power of the Company’s then
outstanding securities, excluding any Person who becomes such a Beneficial Owner in
connection with a transaction described in clause (i) of paragraph (III) below; or



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     (II) the following individuals cease for any reason to constitute a majority of
the number of directors then serving: individuals who, on the date hereof,
constitute the Board and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the Board or nomination
for election by the Company’s shareowners was approved or recommended by a vote of
at least two-thirds (2/3) of the directors then still in office who either were
directors on the date hereof or whose appointment, election or nomination for
election was previously so approved or recommended; or;




     (III) there is consummated a merger or consolidation of the Company or any
direct or indirect subsidiary of the Company with any other corporation or other
entity, other than (i) a merger or consolidation which results in the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or any parent thereof) at
least 50% of the combined voting power of the securities of the Company or such
surviving entity or any parent thereof outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person is or
becomes the Beneficial Owner, directly or indirectly, of securities of the Company
(not including in the securities Beneficially Owned by such Person any securities
acquired directly from the Company or its Affiliates) representing 25% or more of
the combined voting power of the Company’s then outstanding securities; or




     (IV) the shareowners of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets,
other than a sale or disposition by the Company of all or substantially all of the
Company’s assets to an entity, at least 50% of the combined voting power of the
voting securities of which are owned by shareowners of the Company in substantially
the same proportions as their ownership of the Company immediately prior to such
sale.




     (I) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.




     (J) “Company” shall mean The Stanley Works and, except in determining under Section
15(G) hereof whether or not any Change in Control of the Company has occurred, shall include
any successor to its business and/or assets which assumes and agrees to perform this
Agreement by operation of law, or otherwise.




     (K) “Competitive Business” shall mean any line of business that is substantially the
same as any line of any operating business engaged in by the Company



14









 






during the term of this Agreement and which at the termination of the Executive’s
employment the Company was engaged in or conducting and which during the fiscal year of the
Company next preceding the date as of which the determination of competitive status is to be
made constituted at least 5% of the gross sales of the Company and its Subsidiaries. The
Executive may, without being deemed in violation of this section, 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 his
firm in connection therewith.




     (L) “Confidential Information” means 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 includes without limitation such information relating
to (1) the development, research, testing, manufacturing, store operational processes,
marketing and financial activities, including costs, profits and sales, of the Company and
its Subsidiaries, (2) the products and all formulas therefor, (3) the costs, sources of
supply, financial performance and strategic plans of the Company and its Subsidiaries, (4)
the identity and special needs of the customers and suppliers of the Company and its
Subsidiaries and (5) the 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 with an agreement
by the Company that it would not be disclosed. Confidential Information does not include
information which (i) is or becomes available to the public generally (other than as a
result of a disclosure by the Executive), (ii) 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, (iii) becomes available to the
Executive on a non-confidential basis from a source other than the Company, 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, or (iv) was independently developed the Executive without reference to the
Confidential Information.




     (M) “DB Pension Plan” shall mean any tax-qualified, supplemental or excess defined
benefit pension plan maintained by the Company and any other defined benefit plan or
agreement entered into between the Executive and the Company which is designed to provide
the Executive with supplemental retirement benefits. For purposes of Section 6.1(C) hereof,
if the Executive would have satisfied the condition for



15









 






participation in a DB Plan (or any successor thereto) within thirty (30) months
following the Date of Termination (i.e., assuming the Executive accrued additional age and
service credit over such period), the Executive shall be deemed to have been a participant
in such plan immediately prior to the Date of Termination and shall be entitled to the
benefits provided under Section 6.1(C) relating thereto.




     (N) “DC Pension Plan” shall mean any tax-qualified, supplemental or excess defined
contribution plan maintained by the Company and any other defined contribution plan or
agreement entered into between the Executive and the Company which is designed to provide
the executive with supplemental retirement benefits.




     (O) “Date of Termination” shall have the meaning set forth in Section 7.2 hereof.




     (P) “Delayed Benefits” shall have the meaning set forth in Section 6.4 hereof.




     (Q) “Delayed Payments” shall have the meaning set forth in Section 6.4 hereof.




     (R) “Delay Period” shall have the meaning set forth in Section 6.4 hereof.




     (S) “Disability” shall be deemed the reason for the termination by the Company of the
Executive’s employment, if, as a result of the Executive’s incapacity due to physical or
mental illness, the Executive shall have been absent from the full-time performance of the
Executive’s duties with the Company for a period of six (6) consecutive months, the Company
shall have given the Executive a Notice of Termination for Disability, and, within thirty
(30) calendar days after such Notice of Termination is given, the Executive shall not have
returned to the full-time performance of the Executive’s duties.




     (T) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time
to time.




     (U) “Excise Tax” shall mean any excise tax imposed under section 4999 of the Code.




     (V) “Executive” shall mean the individual named in the first paragraph of this
Agreement.




     (W) “Good Reason” for termination by the Executive of the Executive’s employment shall
mean the occurrence (without the Executive’s express written consent which specifically
references this Agreement) after any Change in Control, or prior to a Change in Control
under the circumstances described in clauses (ii) and (iii) of the second sentence of
Section 6.1 hereof (treating all references in paragraphs (I) through (VII) below to a
“Change in Control” as references to a “Potential Change in Control”), of any one of the
following acts by the Company, or failures by the Company to act, unless, in the case of any
act or failure to act described in paragraph (I), (V), (VI) or (VII)



16









 






below, such act or failure to act is corrected prior to the Date of Termination
specified in the Notice of Termination given in respect thereof:




     (I) the assignment to the Executive of any duties inconsistent with the
Executive’s status as a senior executive officer of the Company or a substantial
adverse alteration in the nature or status of the Executive’s responsibilities from
those in effect immediately prior to the Change in Control including, without
limitation, if the Executive was, immediately prior to the Change in Control, an
executive officer of a public company, the Executive ceasing to be an executive
officer of a public company;




     (II) a reduction by the Company in the Executive’s annual base salary as in
effect on the date hereof or as the same may be increased from time to time except
for across-the-board salary reductions similarly affecting all senior executives of
the Company and all senior executives of any Person in control of the Company;




     (III) the relocation of the Executive’s principal place of employment to a
location more than thirty-five (35) miles from the Executive’s principal place of
employment immediately prior to the Change in Control or the Company’s requiring the
Executive to be based anywhere other than such principal place of employment (or
permitted relocation thereof) except for required travel on the Company’s business
to an extent substantially consistent with the Executive’s present business travel
obligations;




     (IV) the failure by the Company to pay to the Executive any portion of the
Executive’s current compensation or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation program of the
Company, within seven (7) calendar days of the date such compensation is due;




     (V) the failure by the Company to continue in effect any compensation plan in
which the Executive participates immediately prior to the Change in Control which is
material to the Executive’s total compensation, including but not limited to the
Company’s 2001 Long-Term Incentive Plan and Management Incentive Compensation Plan
or any substitute plans adopted prior to the Change in Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has been made
with respect to such plan, or the failure by the Company to continue the Executive’s
participation therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount or timing of payment of
benefits provided and the level of the Executive’s participation relative to other
participants, as existed immediately prior to the Change in Control;




     (VI) the failure by the Company to continue to provide the Executive with
benefits substantially similar to those enjoyed by the Executive under any of the
Company’s pension, savings, life insurance, medical, health and accident, or



17









 






disability plans in which the Executive was participating immediately prior to
the Change in Control (except for across the board changes similarly affecting all
senior executives of the Company and all senior executives of any Person in control
of the Company), the taking of any other action by the Company which would directly
or indirectly materially reduce any of such benefits or deprive the Executive of any
material fringe benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive with the number of
paid vacation days to which the Executive is entitled on the basis of years of
service with the Company in accordance with the Company’s normal vacation policy in
effect at the time of the Change in Control;




     (VII) any purported termination of the Executive’s employment which is not
effected pursuant to a Notice of Termination satisfying the requirements of Section
7.1 hereof; for purposes of this Agreement, no such purported termination shall be
effective. The Executive’s right to terminate the Executive’s employment for Good
Reason shall not be affected by the Executive’s incapacity due to physical or mental
illness; or




     (VIII) breach by the Company of Section 10.1 hereof.



     The Executive’s continued employment shall not constitute consent to, or a waiver of rights
with respect to, any act or failure to act constituting Good Reason hereunder.



     For purposes of any determination regarding the existence of Good Reason in connection with a
termination of employment other than as described in the second sentence of Section 6.1 hereof, any
claim by the Executive that Good Reason exists shall be presumed to be correct unless the Company
establishes to the Board by clear and convincing evidence that Good Reason does not exist.




     (X) “Gross-Up Payment” shall have the meaning set forth in Section 6.2 hereof.




     (Y) “Grantor Trust” shall have the meaning set forth in Section 6.5 hereof.




     (Z) “Notice of Termination” shall have the meaning set forth in Section 7.1 hereof.




     (AA) “Permissible Payment Date” shall have the meaning set forth in Section 6.4 hereof.




     (BB) “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not
include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of its Affiliates,
(iii) an underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the shareowners of the
Company in substantially the same proportions as their ownership of stock of the Company.



18









 






     (CC) “Potential Change in Control” shall be deemed to have occurred if the event set
forth in any one of the following paragraphs shall have occurred:




     (I) the Company enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control;




     (II) the Company or any Person publicly announces an intention to take or to
consider taking actions which, if consummated, would constitute a Change in Control;




     (III) any Person becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 15% or more of either the then outstanding
 shares of common stock of the Company or the combined voting power of the Company’s
then outstanding securities (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company or its affiliates); or




     (IV) the Board adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change in Control has occurred.




     (DD) “Prior Agreement” shall have the meaning set forth in the second paragraph of this
Agreement.




     (EE) “Retirement” shall be deemed the reason for the termination by the Executive of
the Executive’s employment if such employment is terminated in accordance with the Company’s
retirement policy, including early retirement, generally applicable to its salaried
employees.




     (FF) “section 409A” shall mean section 409A of the Code and any proposed, temporary or
final regulation, or any other guidance, promulgated with respect to section 409A by the
U.S. Department of Treasury or the Internal Revenue Service.




     (GG) “Severance Payments” shall have the meaning set forth in Section 6.1 hereof.




     (HH) “Solicit” means any direct or indirect communication of any kind whatsoever (other
than non-targeted general advertisements), regardless of by whom initiated, inviting,
advising, encouraging or requesting any person or entity, in any manner, with respect to any
action.




     (II) “Subsidiary” means any corporation or other business organization of which the
securities having a majority of the normal voting power in electing the board of directors
or similar governing body of such entity are, at the time of determination, owned by the
Company directly or indirectly through one or more Subsidiaries.




     (JJ) “Tax Counsel” shall have the meaning set forth in Section 6.2 hereof.



19









 






     (KK) “Term” shall mean the period of time described in Section 2 hereof (including any
extension, continuation or termination described therein).




     (LL) “Total Payments” shall mean those payments so described in Section 6.2 hereof.



     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.



	 	 	 	 	 
	 	THE STANLEY WORKS

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 





	 	 	 	 	 
	 	EXECUTIVE
 	 
	 
	 	Address: 	
 	 
	 	 	
 	 
	 	 	
 	 
	 	 	 	 
	 




20