Document:

EX-10.2

Exhibit 10.2

THE STANLEY WORKS

2001 LONG-TERM INCENTIVE PLAN

Section 1. Purpose

The purposes of this Long-Term Incentive Plan (the “Plan”) are to encourage selected salaried
employees of The Stanley Works (together with any successor thereto, the “Company”) and selected
salaried employees and non-employee directors of its Affiliates (as defined below) to acquire a
proprietary interest in the growth and performance of the Company, to generate an increased
incentive to contribute to the Company’s future success and prosperity, thus enhancing the value of
the Company for the benefit of its shareowners, and to enhance the ability of the Company and its
Affiliates to attract and retain exceptionally qualified individuals upon whom, in large measure,
the sustained progress, growth and profitability of the Company depend.

Section 2. Definitions

As used in the Plan, the following terms shall have the meanings set forth below:

	 	(a)	 	“Affiliate” shall mean (i) any entity that, directly or through one or more
intermediaries, is controlled by the Company and (ii) any entity in which the Company has
a significant equity interest, as determined by the Committee.

	 	(b)	 	“Award” shall mean any Option, Stock Appreciation Right, Restricted Stock,
Restricted Stock Unit, Performance Award, Dividend Equivalent, or Other Stock-Based Award
granted under the Plan.

	 	(c)	 	“Award Agreement” shall mean any written agreement, contract, or other instrument
or document evidencing any Award granted under the Plan.

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

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

	 	(f)	 	“Committee” shall mean the Compensation and Organization Committee of the Board.

	 	(g)	 	“Dividend Equivalent” shall mean any right granted under Section 6(e) of the Plan.

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

	 	(i)	 	“Fair Market Value” shall mean, with respect to any property other than Shares, the
fair market value of such property determined by such methods or procedures as shall be
established from time to time by the Committee, and with respect to Shares, shall mean
the mean average of the high and the low price of a Share as quoted on the New York Stock
Exchange Composite Tape on the date as of which fair market value is to be determined or,
if there is no trading of Shares on such date, such mean average of the high and the low
price on the next preceding date on which there was such trading.

	 	(j)	 	“Immediate family members” of a Participant shall mean the Participant’s children,
grandchildren and spouse.

	 	(k)	 	“Incentive Stock Option” shall mean an option granted under Section 6(a) of the
Plan that is intended to meet the requirements of Section 422 of the Code, or any
successor provision thereto.

	 	(l)	 	“1997 Plan” shall mean the Company’s 1997 Long-Term Incentive Plan.

	 	(m)	 	“Non-Employee Director” shall mean any non-employee director of an Affiliate.

	 	(n)	 	“Non-Qualified Stock Option” shall mean an option granted under Section 6(a) of the
Plan that is not intended to be an Incentive Stock Option.

	 	(o)	 	“Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option.

	 	(p)	 	“Other Stock-Based Award” shall mean any right granted under Section 6(f) of the
Plan.

	 	(q)	 	“Participant” shall mean a Salaried Employee or non-employee director designated to
be granted an Award under the Plan.

	 	(r)	 	“Performance Award” shall mean any Award granted under Section 6(d) of the Plan.

	 	(s)	 	“Person” shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, or government or political
subdivision thereof.

	 	(t)	 	“Released Securities” shall mean securities that were Restricted Securities with
respect to which all applicable restrictions have expired, lapsed, or been waived.

	 	(u)	 	“Restricted Securities” shall mean securities covered by Awards of Restricted Stock
or other Awards under which issued and outstanding Shares are held subject to certain
restrictions.

	 	(v)	 	“Restricted Stock” shall mean any Share granted under Section 6(c) of the Plan.

	 	(w)	 	“Restricted Stock Unit” shall mean any right granted under Section 6(c) of the Plan
that is denominated in Shares.

	 	(x)	 	“Salaried Employee” shall mean any salaried employee of the Company or of any
Affiliate.

	 	(y)	 	“Shares” shall mean shares of the common stock of the Company, par value $2.50 per
share, and such other securities or property as may become the subject of Awards, or
become subject to Awards, pursuant to an adjustment made under Section 4(b) of the Plan.

	 	(z)	 	“Stock Appreciation Right” shall mean any right granted under Section 6(b) of the
Plan.

Section 3. Administration

Except as otherwise provided herein, the Plan shall be administered by the Committee. Subject
to the terms of the Plan and applicable law, the Committee shall have full power and authority to:
(i) designate Participants; (ii) determine the type or types of Awards to be granted to each
Participant under the Plan; (iii) determine the number of Shares to be covered by or with respect
to which payments, rights, or other matters are to be calculated in connection with Awards; (iv)
determine the terms and conditions of any Award; (v) determine whether, to what extent, and under
what circumstances Awards may be settled or exercised in cash, Shares, other securities, other
Awards, or other property, or canceled, forfeited, or suspended, and the method or methods by which
Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to
what extent, and under what circumstances cash, Shares, other securities, other Awards, other
property and other amounts payable with respect to an Award under the Plan shall be deferred either
automatically or at the election of the holder thereof or of the Committee; (vii) interpret and
administer the Plan and any instrument or agreement relating to, or Award made under, the Plan;
(viii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it
shall deem appropriate for the proper administration of the Plan; and (ix) make any other
determination and take any other action that the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect to the Plan or any Award
shall be within the sole discretion of the Committee, may be made at any time, and shall be final,
conclusive, and binding upon all Persons, including the Company, any Affiliate, any Participant,
any holder or beneficiary of any Award, any shareowner, and any employee of the Company or of any
Affiliate.

Section 4. Shares Available for Awards

(a) Shares Available. Subject to adjustment as provided in Section 4(b):

	 	(i)	 	Calculation of Number of Shares Available. The number of Shares
authorized to be issued in connection with the granting of Awards under the Plan is
ten million (10,000,000). If any Shares covered by an Award granted under the Plan
or by an award granted under the 1997 Plan, or to which such an Award or award
relates, are forfeited, or if an Award or award otherwise terminates without the
delivery of Shares or of other consideration, or if upon the termination of the
1997 Plan there are Shares remaining that were authorized for issuance under that
Plan but with respect to which no awards have been granted, then the Shares covered
by such Awards or award, or to which such Award or award relates, or the number of
Shares otherwise counted against the aggregate number of Shares available under the
Plan with respect to such Award or award, to the extent of any such forfeiture or
termination, or which were authorized for issuance under the 1997 Plan but with
respect to which no awards were granted as of the termination of the 1997 Plan
shall again be, or shall become available for granting Awards under the Plan.
Notwithstanding the foregoing but subject to adjustment as provided in Section
4(b), (A) no more than one million (1,000,000) Shares shall be cumulatively
available for delivery pursuant to the exercise of Incentive Stock Options and (B)
no more than one million (1,000,000) Shares shall be cumulatively available for
granting as Restricted Stock or Restricted Stock Units.

(ii) Accounting for Awards. For purposes of this Section 4,

	 	(A)	 	if an Award (other than a Dividend Equivalent) is
denominated in Shares, the number of Shares covered by such Award, or to
which such Award relates, shall be counted on the date of grant of such Award
against the aggregate number of Shares available for granting Awards under
the Plan; and

	 	(B)	 	Dividend Equivalents and Awards not denominated in Shares
shall be counted against the aggregate number of Shares available for
granting Awards under the Plan, if at all, only in such amount and at such
time as the Committee shall determine under procedures adopted by the
Committee consistent with the purposes of the Plan; provided, however, that
Awards that operate in tandem with (whether granted simultaneously with or at
a different time from), or that are substituted for, other Awards or awards
granted under the 1997 Plan may be counted or not counted under procedures
adopted by the Committee in order to avoid double counting. Any Shares that
are delivered by the Company, and any Awards that are granted by, or become
obligations of, the Company through the assumption by the Company or an
Affiliate of, or in substitution for, outstanding awards previously granted
by an acquired company, shall not be counted against the Shares available for
granting Awards under the Plan.

	 	(iii)	 	Sources of Shares Deliverable Under Awards. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and unissued
Shares or of treasury Shares.

	 	(b)	 	Adjustments. In the event that the Committee shall determine that any dividend or
other distribution (whether in the form of cash, Shares, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation split-up, spin-off, combination repurchase, or exchange of Shares or other
securities of the Company, issuance of warrants or other rights to purchase Shares or
other securities of the Company, or other similar corporate transaction or event affects
the Shares such that an adjustment is determined by the Committee to be appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, then the Committee shall, in such manner as it may
deem equitable, adjust any or all of (i) the number and type of Shares (or other
securities or property) which thereafter may be made the subject of Awards, (ii) the
number and type of Shares (or other securities or property) subject to outstanding
Awards, (iii) the number and type of Shares (or other securities or property) specified
as the annual per-participant limitation under Section 6(g)(vi), and (iv) the grant,
purchase, or exercise price with respect to any Award, or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Award; provided, however, in
each case, that with respect to Awards of Incentive Stock Options no such adjustment
shall be authorized to the extent that such authority would cause the Plan to violate
Section 422(b)(1) of the Code or any successor provision thereto; and provided further,
however, that the number of Shares subject to any Award denominated in Shares shall
always be a whole number.

Section 5. Eligibility

Any Salaried Employee, including any officer or employee-director of the Company or of any
Affiliate, and any Non-Employee Director, who is not a member of the Committee shall be eligible to
be designated a Participant.

Section 6. Awards

	 	(a)	 	Options. The Committee is hereby authorized to grant Options to Participants with
the following terms and conditions and with such additional terms and conditions, in
either case not inconsistent with the provisions of the Plan, as the Committee shall
determine:

	 	(i)	 	Exercise Price. The purchase price per Share purchasable under an
Option shall be determined by the Committee; provided, however, that such purchase
price shall not be less than the Fair Market Value of a Share on the date of grant
of such Option (or, if the Committee so determines, in the case of any Option
retroactively granted in tandem with or in substitution for another Award or any
outstanding award granted under any other plan of the Company, on the date of grant
of such other Award or award).

(ii) Option Term. The term of each Option shall be fixed by the Committee.

	 	(iii)	 	Time and Method of Exercise. The Committee shall determine the time
or times at which an Option may be exercised in whole or in part, and the method or
methods by which, and the form or forms, including, without limitation, cash,
Shares, other Awards, or other property, or any combination thereof, having a Fair
Market Value on the exercise date equal to the relevant exercise price, in which,
payment of the exercise price with respect thereto may be made or deemed to have
been made.

	 	(iv)	 	Incentive Stock Options. The terms of any Incentive Stock Option
granted under the plan shall comply in all respects with the provisions of Section
422 of the Code, or any successor provision thereto, and any regulations
promulgated thereunder. No Incentive Stock Option shall be granted to any
Non-Employee Director who is not otherwise an employee of the Company or any of its
Affiliates.

	 	(v)	 	Transferability. An Option shall not be transferable other than by
will or the laws of descent and distribution or pursuant to a qualified domestic
relations order, as defined in the Code, and, during the Participant’s lifetime,
shall be exercisable only by the Participant, except that the Committee may:

	 	(A)	 	permit exercise, during the Participant’s lifetime, by the
Participant’s guardian or legal representative; and

	 	(B)	 	permit transfer, upon the Participant’s death, to
beneficiaries designated by the Participant in a manner authorized by the
Committee, provided that the Committee determines that such exercise and such
transfer are consonant with requirements for exemption from Section 16(b) of
the Exchange Act and, with respect to an Incentive Stock Option, the
requirements of Section 422(b)(5) of the Code; and

	 	(C)	 	grant Non-Qualified Stock Options that are transferable, or
amend outstanding Non-Qualified Stock Options to make them so transferable,
without payment of consideration, to immediate family members of the
Participant or to trusts or partnerships for such family members.

	 	(b)	 	Stock Appreciation Rights. The Committee is hereby authorized to grant Stock
Appreciation Rights to Participants. Subject to the terms of the Plan and any applicable
Award Agreement, a Stock Appreciation Right granted under the Plan shall confer on the
holder thereof a right to receive, upon exercise thereof, the excess of (i) the Fair
Market Value of one Share on the date of exercise or, if the Committee shall so determine
in the case of any such right other than one related to any Incentive Stock Option, at
any time during a specified period before or after the date of exercise over (ii) the
grant price of the right as specified by the Committee, which shall not be less than the
Fair Market Value of one Share on the date of grant of the Stock Appreciation Right (or,
if the Committee so determines, in the case of any Stock Appreciation Right retroactively
granted in tandem with or in substitution for another Award or any outstanding award
granted under any other plan of the Company, on the date of grant of such other Award or
award). Subject to the terms of the Plan and any applicable Award Agreement, the grant
price, term, methods of exercise, methods of settlement, and any other terms and
conditions of any Stock Appreciation Right shall be as determined by the Committee. The
Committee may impose such conditions or restrictions on the exercise of any Stock
Appreciation Right as it may deem appropriate.

(c) Restricted Stock and Restricted Stock Units.

	 	(i)	 	Issuance. The Committee is hereby authorized to grant Awards of
Restricted Stock and Restricted Stock Units to Participants.

	 	(ii)	 	Restrictions. Shares of Restricted Stock and Restricted Stock Units
shall be subject to such restrictions as the Committee may impose (including,
without limitation, any limitation on the right to vote a Share of Restricted Stock
or the right to receive any dividend or other right or property), which
restrictions may lapse separately or in combination at such time or times, in such
installments or otherwise, as the Committee may deem appropriate.

	 	(iii)	 	Registration. Any Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee may deem appropriate, including, without
limitation, book-entry registration or issuance of a stock certificate or
certificates. In the event any stock certificate is issued in respect of Shares of
Restricted Stock granted under the Plan, such certificate shall be registered in
the name of the Participant and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Restricted Stock.

	 	(iv)	 	Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment (as determined under criteria established by the
Committee) for any reason during the applicable restriction period, all Shares of
Restricted Stock and all Restricted Stock Units still, in either case, subject to
restriction shall be forfeited and reacquired by the Company; provided, however,
that the Committee may, when it finds that a waiver would be in the best interests
of the Company, waive in whole or in part any or all remaining restrictions with
respect to Shares of Restricted Stock or Restricted Stock Units. Unrestricted
Shares, evidenced in such manner as the Committee shall deem appropriate, shall be
delivered to the holder of Restricted Stock promptly after such Restricted Stock
shall become Released Securities.

	 	(d)	 	Performance Awards. The Committee is hereby authorized to grant Performance Awards
to Participants. Subject to the terms of the Plan and any applicable Award Agreement, a
Performance Award granted under the Plan (i) may be denominated or payable in cash,
Shares (including without limitation, Restricted Stock), other securities, other Awards,
or other property and (ii) shall confer on the holder thereof rights valued as determined
by the Committee and payable to, or exercisable by, the holder of the Performance Award,
in whole or in part, upon the achievement of such performance goals during such
performance periods as the Committee shall establish.

Performance goals shall be based on one or more of the following criteria, determined in
accordance with generally accepted accounting principles, where applicable: (i) pre-tax
income or after-tax income; (ii) earnings including operating income, earnings before or
after taxes, earnings before or after interest, depreciation, amortization, or
extraordinary or special items; (iii) net income excluding amortization of intangible
assets, depreciation and impairment of goodwill and intangible assets; (iv) operating
income; (v) earnings or book value per share (basic or diluted); (vi) return on assets
(gross or net), return on investment, return on capital, or return on equity; (vii)
return on revenues; (viii) net tangible assets (working capital plus property, plants
and equipment) or return on net tangible assets (operating income divided by average net
tangible assets) or working capital; (ix) operating cash flow (operating income plus or
minus changes in working capital less capital expenditures); (x) cash flow, free cash
flow, cash flow return on investment (discounted or otherwise), net cash provided by
operations, or cash flow in excess of cost of capital; (xi) sales or sales growth; (xii)
operating margin or profit margin; (xiii) share price or total shareholder return; (xiv)
earnings from continuing operations; (xv) cost targets, reductions or savings,
productivity or efficiencies; (xvi) economic value added; and (xvii) strategic business
criteria, consisting of one or more objectives based on meeting specified market
penetration or market share, geographic business expansion, customer satisfaction,
employee satisfaction, human resources management, financial management, project
management, supervision of litigation, information technology, or goals relating to
divestitures, joint ventures or similar transactions.

Where applicable, the performance goals may be expressed in terms of attaining a
specified level of the particular criterion or the attainment of a percentage increase
or decrease in the particular criterion, and may be applied to one or more of Stanley or
a parent or subsidiary of Stanley, or a division or strategic business unit of Stanley,
all as determined by the Compensation and Organization Committee (the “Committee”). The
performance goals may include a threshold level of performance below which no payment
will be made (or no vesting will occur), levels of performance at which specified
payments will be paid (or specified vesting will occur) and a maximum level of
performance above which no additional payment will be made (or at which full vesting
will occur).

Subject to the terms of the Plan and any applicable Awards Agreement, the performance
goals to be achieved during any performance period, the length of any performance
period, the amount of any Performance Award granted, and the amount of any payment or
transfer to be made pursuant to any Performance Award shall be determined by the
Committee.

	 	(e)	 	Dividend Equivalents. The Committee is hereby authorized to grant to Participants
Awards under which the holders thereof shall be entitled to receive payments equivalent
to dividends or interest with respect to a number of Shares determined by the Committee,
and the Committee may provide that such amounts (if any) shall be deemed to have been
reinvested in additional Shares or otherwise reinvested. Subject to the terms of the
Plan and any applicable Awards Agreement, such Awards may have such terms and conditions
as the Committee shall determine.

	 	(f)	 	Other Stock-Based Awards. The Committee is hereby authorized to grant to
Participants such other Awards that are denominated or payable in, valued in whole or in
part by reference to, or otherwise based on or related to, Shares (including, without
limitation, securities convertible into Shares), as are deemed by the Committee to be
consistent with the purposes of the Plan, provided, however, that such grants must comply
with applicable law. Subject to the terms of the Plan and any applicable Award
Agreement, the Committee shall determine the terms and conditions of such Awards. Shares
or other securities delivered pursuant to a purchase right granted under this Section
6(f) shall be purchased for such consideration, which may be paid by such method or
methods and in such form or forms, including, without limitation, cash, Shares, other
securities, other Awards, or other property, or any combination thereof, as the Committee
shall determine, the value of which consideration, as established by the Committee, shall
not be less than the Fair Market Value of such Shares or other securities as of the date
such purchase right is granted (or, if the Committee so determines, in the case of any
such purchase right retroactively granted in tandem with or in substitution for another
Award or any outstanding award granted under any other plan of the Company, on the date
of grant of such other Award or award).

(g) General.

	 	(i)	 	No Cash Consideration for Awards. Awards shall be granted for no cash
consideration or for such minimal cash consideration as may be required by
applicable law.

	 	(ii)	 	Awards May Be Granted Separately or Together. Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in tandem
with, or in substitution for any other Award or any awards granted under any other
plan of the Company or any Affiliate. Awards granted in addition to or in tandem
with other Awards, or in addition to or in tandem with awards granted under any
other plan of the Company or any Affiliate, may be granted either at the same time
as or at a different time from the grant of such other Awards or awards.

	 	(iii)	 	Forms of Payment Under Awards. Subject to the terms of the Plan and
of any applicable Award Agreement, payments or transfers to be made by the Company
or an Affiliate upon the grant, exercise, or payment of an Award may be made in
such form or forms as the Committee shall determine, including, without limitation,
cash, Shares, other securities, other Awards, or other property, or any combination
thereof, and may be made in a single payment or transfer, in installments, or on a
deferred basis, in each case in accordance with rules and procedures established by
the Committee. Such rules and procedures may include, without limitation,
provisions for the payment or crediting of reasonable interest on installment or
deferred payments or the grant or crediting of Dividend Equivalents in respect of
installment or deferred payments.

	 	(iv)	 	Limits on Transfer of Awards. Except as provided in Section 6(a) above
regarding Options, no Award (other than Released Securities), and no right under
any such Award, shall be assignable, alienable, saleable, or transferable by a
Participant otherwise than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order, as defined in the Code (or, in
the case of an Award of Restricted Securities, to the Company); provided, however,
that, if so determined by the Committee, a Participant may, in the manner
established by the Committee, designate a beneficiary or beneficiaries to exercise
the rights of the Participant, and to receive any property distributable, with
respect to any Award upon the death of the Participant. Each Award, and each right
under any Award, shall be exercisable, during the Participant’s lifetime, only by
the Participant or, if permissible under applicable law, by the Participant’s
guardian or legal representative. No Award (other than Released Securities), and no
right under any such Award, may be pledged, alienated, attached, or otherwise
encumbered, and any purported pledge, alienation, attachment, or encumbrance
thereof shall be void and unenforceable against the Company or any Affiliate.

	 	(v)	 	Terms of Awards. The Term of each Award shall be for such period as
may be determined by the Committee; provided, however, that in no event shall the
term of any Incentive Stock Option exceed a period of ten years from the date of
its grant.

	 	(vi)	 	Per-Person Limitation on Options and SARs. The number of Shares with
respect to which Options and SARs may be granted under the Plan to an individual
Participant in any three-year period from January 24, 2001 through the end of the
term shall not exceed 4,000,000 Shares, subject to adjustment as provided in
Section 4(b).

	 	(vii)	 	Share Certificates. All certificates for Shares or other securities
delivered under the Plan pursuant to any Award or the exercise thereof shall be
subject to such stop transfer orders and other restrictions as the Committee may
deem advisable under the Plan or the rules, regulations, and other requirements of
the Securities and Exchange Commission, any stock exchange upon which such Shares
or other securities are then listed, and any applicable Federal or state securities
laws, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.

	 	(viii)	 	Maximum Payment Amount. The maximum fair market value of payments to any
executive officer made in connection with any long-term performance awards (except
for payments made in connection with Options or Stock Appreciation Rights) granted
under the Plan shall not, during any three-year period, exceed two percent of
Stanley’s shareowners’ equity as of the end of the year immediately preceding the
commencement of such three-year period.

Section 7. Amendment and Termination

Except to the extent prohibited by applicable law and unless otherwise expressly provided in
an Award Agreement or in the Plan:

	 	(a)	 	Amendments to the Plan. The Board of Directors of the Company may amend, alter,
suspend, discontinue, or terminate the Plan, including, without limitation, any
amendment, alteration, suspension, discontinuation, or termination that would impair the
rights of any Participant, or any other holder or beneficiary of any Award theretofore
granted, without the consent of any shareowner, Participant, other holder or beneficiary
of an Award, or other Person; provided, however, that, notwithstanding any other
provision of the Plan or any Award Agreement, without the approval of the shareowners of
the Company no such amendment, alteration, suspension, discontinuation, or termination
shall be made that would:

	 	(i)	 	increase the total number of Shares available for Awards under the
Plan, except as provided in Section 4 hereof; or

	 	(ii)	 	permit Options, Stock Appreciation Rights, or other Stock-Based Awards
encompassing rights to purchase Shares to be granted with per Share grant,
purchase, or exercise prices of less than the Fair Market Value of a Share on the
date of grant thereof, except to the extent permitted under Sections 6(a), 6(b), or
6(f) hereof.

	 	(b)	 	Adjustments of Awards Upon Certain Acquisitions. In the event the Company or any
Affiliate shall assume outstanding employee awards or the right or obligation to make
future such awards in connection with the acquisition of another business or another
corporation or business entity, the Committee may make such adjustments, not inconsistent
with the terms of the Plan, in the terms of Awards as it shall deem appropriate in order
to achieve reasonable comparability or other equitable relationship between the assumed
awards and the Awards granted under the Plan as so adjusted.

	 	(c)	 	Adjustments of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events. The Committee shall be authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in Section 4(b)
hereof) affecting the Company, any Affiliate, or the financial statements of the Company
or any Affiliate, or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits to be made
available under the Plan.

	 	(d)	 	Correction of Defects, Omissions and Inconsistencies. The Committee may correct
any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award
in the manner and to the extent it shall deem desirable to carry the Plan into effect.

Section 8. General Provisions

	 	(a)	 	No Rights to Awards. No Salaried Employee, Participant or other Person shall have
any claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Salaried Employees, Participants, or holders or beneficiaries
of Awards under the Plan. The terms and conditions of Awards need not be the same with
respect to each recipient.

	 	(b)	 	Delegation. The Committee may delegate to one or more officers or managers of the
Company or any Affiliate, or a committee of such officers or managers, the authority,
subject to such terms and limitations as the Committee shall determine, to grant Awards
to, or to cancel, modify, waive rights with respect to, alter, discontinue, suspend or
terminate Awards held by, Salaried Employees who are not officers of the Company for
purposes of Section 16 of the Exchange Act.

	 	(c)	 	Withholding. The Company or any Affiliate shall be authorized to withhold from any
Award granted or any payment due or transfer made under any Award or under the Plan the
amount (in cash, Shares, other securities, other Awards, or other property) of
withholding taxes due in respect of an Award, its exercise, or any payment or transfer
under such Awards or under the Plan and to take such other action as may be necessary in
the opinion of the Company or Affiliate to satisfy all obligations for the payment of
such taxes.

	 	(d)	 	No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall
prevent the Company or any Affiliate from adopting or continuing in effect other or
additional compensation arrangements, and such arrangements may be either generally
applicable or applicable only in specific cases.

	 	(e)	 	No Right to Employment. The grant of an Award shall not be construed as giving a
Participant the right to be retained in the employ of the Company or any Affiliate.
Further, the Company or an Affiliate may at any time dismiss a Participant from
employment, free from any liability, or any claim under the Plan, unless otherwise
expressly provided in the Plan or in any Award Agreement.

	 	(f)	 	Governing Law. The validity, construction, and effect of the Plan and any rules
and regulations relating to the Plan shall be determined in accordance with the laws of
the State of Connecticut and applicable Federal law.

	 	(g)	 	Severability. If any provision of the Plan or any Award is or becomes or is deemed
to be invalid, illegal, or unenforceable in any jurisdiction, or as to any Person or
Award, or would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to applicable
laws, or if it cannot be so construed or deemed amended without, in the determination of
the Committee, materially altering the intent of the Plan or the Award, such provision
shall be stricken as to such jurisdiction, Person, or Award, and the remainder of the
Plan and any such Award shall remain in full force and effect.

	 	(h)	 	No Trust or Fund Created. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary relationship
between the Company or any Affiliate and a Participant or any other Person. To the
extent that any Person acquires a right to receive payments from the Company or any
Affiliate pursuant to an Award, such right shall be no greater than the right of any
unsecured general creditor of the Company or any Affiliate.

	 	(i)	 	No Fractional Shares. No fractional Shares shall be issued or delivered pursuant
to the Plan or any Award, and the Committee shall determine whether cash, other
securities, or other property shall be paid or transferred in lieu of any fractional
Shares, or whether such fractional Shares or any rights thereto shall be canceled,
terminated, or otherwise eliminated.

	 	(j)	 	Headings. Headings are given to the Sections and subsections of the Plan solely as
a convenience to facilitate reference. Such headings shall not be deemed in any way
material or relevant to the construction or interpretation of the Plan or any provision
thereof.

Section 9. Change in Control

(a) Upon the occurrence of a Change in Control (as hereinafter defined), unless otherwise
determined by the Committee and set forth in an Award Agreement:

	 	(i)	 	all Options and Stock Appreciation Rights, whether granted as
performance awards or otherwise, shall become immediately exercisable in full for
the remainder of their terms, and Grantees shall have the right to have the Company
purchase all or any number of such Options or Stock Appreciation Rights for cash
for a period of thirty (30) days following a Change in Control at the Option
Acceleration Price (as hereinafter defined); and

	 	(ii)	 	all restrictions applicable to all Restricted Stock and Restricted
Stock Units, whether such Restricted Stock and Restricted Stock Units were granted
as performance awards or otherwise, shall immediately lapse and have no effect, and
Grantees shall have the right to have the Company purchase all or any number of
such Restricted Stock Units and shares of Restricted Stock for cash for a period of
thirty (30) days following a Change in Control at the Restricted Stock Acceleration
Price (as hereinafter defined).

	 	(b)	 	(i) The “Restricted Stock Acceleration Price” is the highest of the following on
the date of a Change in Control:

	 	(A)	 	the highest reported sales price of a share of the Common
Stock within the sixty (60) days preceding the date of a Change in Control,
as reported on any securities exchange upon which the Common Stock is listed,

	 	(B)	 	the highest price of a share of the Common Stock reported
in a Schedule 13D or an amendment thereto as paid within the sixty (60) days
preceding the date of the Change in Control,

	 	(C)	 	the highest tender offer price paid for a share of the
Common Stock, and

	 	(D)	 	any cash merger or similar price paid for a share of the
Common Stock.

	 	(ii)	 	The “Option Acceleration Price” is the excess of the Restricted Stock
Acceleration Price over the exercise price of the award, except that for Incentive
Stock Options, the Option Acceleration Price is limited to the spread between the
Fair Market Value on the date of exercise and the option price.

	 	(c)	 	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, as hereinafter defined, is or becomes the Beneficial Owner,
as hereinafter defined, directly or indirectly, of securities of the Company, as
hereinafter defined, (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

	 	(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 December 17, 2003 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.

	 	(d)	 	Solely for purposes of Section 9(c) and (d), and notwithstanding anything to
the contrary in any other provision of this Plan, the following terms shall have the
meanings indicated below:

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

	 	2.	 	“Company” shall mean The Stanley Works.

	 	3.	 	“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.

Section 10. Effective Date of the Plan

The Plan shall be effective as of January 25, 2001.

Section 11. Term of the Plan

No Award shall be granted under the Plan after January 24, 2011. However, unless otherwise
expressly provided in the plan or in an applicable Award Agreement, any Award theretofore granted
may extend beyond such date, and the authority of the Committee to amend, alter, or adjust any such
Award, or to waive any conditions or rights under any such Award, and the authority of the Board of
Directors of the Company to amend the Plan, shall extend beyond such date.EX-10.3

Exhibit 10.3

The Stanley Works 2006 Management Incentive Compensation Plan

	 	1.	 	Purpose. The purpose of The Stanley Works 2006 Management Incentive Plan is to
reinforce corporate, organizational and business-development goals, to promote the
achievement of year-to-year financial and other business objectives and to reward the
performance of eligible employees in fulfilling their personal responsibilities.

	 	2.	 	Definitions. The following terms, as used herein, shall have the following
meanings:

	 	(a)	 	“Affiliate” shall mean, with respect to the Company or any of its
subsidiaries, any other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company.

	 	(b)	 	“Award” shall mean an incentive compensation award, granted pursuant to
the Plan, that is contingent upon the attainment of Performance Goals with respect
to a Performance Period.

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

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

	 	(e)	 	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:

	 	(1)	 	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 (3) below; or

	 	(2)	 	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;

	 	(3)	 	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

	 	(4)	 	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.

	 	(f)	 	“Code” shall mean the Internal Revenue Code of 1986, as amended.

	 	(g)	 	“Committee” shall mean the Compensation and Organization Committee of the
Board of Directors, the composition of which shall at all times consist solely of
two or more “outside directors” within the meaning of section 162(m) of the Code.

	 	(h)	 	“Company” shall mean The Stanley Works and its and successors.

	 	(i)	 	“Covered Employee” shall have the meaning set forth in Section 162(m)(3)
of the Code.

	 	(j)	 	“Disability” shall have the meaning set forth in Section 22(e)(3) of the
Code, or any successor provision.

	 	(k)	 	“Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.

	 	(l)	 	“Participant” shall mean any employee of the Company or an Affiliate who
is, pursuant to Section 4 of the Plan, selected to participate in the Plan.

	 	(m)	 	“Performance Goals” shall mean performance goals based on one or more of
the following criteria, determined in accordance with generally accepted accounting
principles, where applicable: (i) pre-tax income or after-tax income; (ii) earnings
including operating income, earnings before or after taxes, earnings before or after
interest, depreciation, amortization, or extraordinary or special items; (iii) net
income excluding amortization of intangible assets, depreciation and impairment of
goodwill and intangible assets; (iv) operating income; (v) earnings or book value
per share (basic or diluted); (vi) return on assets (gross or net), return on
investment, return on capital, or return on equity; (vii) return on revenues; (viii)
net tangible assets (working capital plus property, plants and equipment) or return
on net tangible assets (operating income divided by average net tangible assets) or
working capital; (ix) operating cash flow (operating income plus or minus changes in
working capital less capital expenditures); (x) cash flow, free cash flow, cash flow
return on investment (discounted or otherwise), net cash provided by operations, or
cash flow in excess of cost of capital; (xi) sales or sales growth; (xii) operating
margin or profit margin; (xiii) share price or total shareholder return; (xiv)
earnings from continuing operations; (xv) cost targets, reductions or savings,
productivity or efficiencies; (xvi) economic value added; and (xvii) strategic
business criteria, consisting of one or more objectives based on meeting specified
market penetration or market share, geographic business expansion, customer
satisfaction, employee satisfaction, human resources management, financial
management, project management, supervision of litigation, information technology,
or goals relating to divestitures, joint ventures or similar transactions. Where
applicable, the Performance Goals may be expressed in terms of attaining a specified
level of the particular criterion or the attainment of a percentage increase or
decrease in the particular criterion, and may be applied to one or more of the
Company or a parent or subsidiary of the Company, or a division or strategic
business unit of the Company, all as determined by the Committee. The Performance
Goals may include a threshold level of performance below which no payment will be
made (or no vesting will occur), levels of performance at which specified payments
will be paid (or specified vesting will occur) and a maximum level of performance
above which no additional payment will be made (or at which full vesting will
occur).

Each of the foregoing Performance Goals shall be evaluated in accordance with
generally accepted accounting principles, where applicable, and shall be subject
to certification by the Committee.

	 	(n)	 	“Performance Period” shall mean, unless the Committee determines
otherwise, a period of no longer than 12 months.

	 	(o)	 	“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 shares of the Company.

	 	(p)	 	“Plan” shall mean The Stanley Works 2006 Management Incentive Plan, as
amended from time to time.

	 	(q)	 	“Retirement” shall mean a Participant’s termination of employment with
the Company or an Affiliate thereof at or after attaining age 55 and completing ten
years of service.

	 	3.	 	Administration. The Plan shall be administered by the Compensation and
Organization Committee of the Board. The Committee shall have the authority in its sole
discretion, subject to and not inconsistent with the express provisions of the Plan, to
administer the Plan and to exercise all the powers and authorities either specifically
granted to it under the Plan or necessary or advisable in the administration of the Plan,
including, without limitation, the authority to grant Awards; to determine the persons to
whom and the time or times at which Awards shall be granted; to determine the terms,
conditions, restrictions and performance criteria, including Performance Goals, relating to
any Award; to determine whether, to what extent, and under what circumstances an Award may
be settled, cancelled, forfeited, or surrendered; to construe and interpret the Plan and any
Award; to prescribe, amend and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of Awards; and to make all other determinations deemed
necessary or advisable for the administration of the Plan. The Committee shall have the
authority to make equitable adjustments to the Performance Goals in recognition of unusual
or non-recurring events affecting the Company or any parent or subsidiary of the Company or
the financial statements of the Company or any parent or subsidiary of the Company, in
response to changes in applicable laws or regulations or to account for items of gain, loss
or expense determined to be extraordinary or unusual in nature or infrequent in occurrence
or related to the disposal of a segment of a business or related to a change in accounting
principles.

All decisions, determinations and interpretations of the Committee shall be final and
binding on all persons, including the Company and the Participant (or any person claiming
any rights under the Plan from or through any Participant).

Subject to Section 162(m) of the Code or as otherwise required for compliance with other
applicable law, the Committee may delegate all or any part of its authority under the
Plan to any officer or officers of the Company.

	 	4.	 	Eligibility. Awards may be granted to Participants in the sole discretion of the
Committee. In determining the persons to whom Awards shall be granted and the Performance
Goals relating to each Award, the Committee shall take into account such factors as the
Committee shall deem relevant in connection with accomplishing the purposes of the Plan.

	 	5.	 	Terms of Awards. Awards granted pursuant to the Plan shall be communicated to
Participants in such form as the Committee shall from time to time approve and the terms and
conditions of such Awards shall be set forth therein.

	 	(a)	 	In General. On or prior to the earlier of the 90th
day after the commencement of a Performance Period or the date on which 25% of a
Performance Period has elapsed, the Committee shall specify in writing, by
resolution of the Committee or other appropriate action, the Participants for such
Performance Period and the Performance Goals applicable to each Award for each
Participant with respect to such Performance Period. Unless otherwise provided by
the Committee in connection with specified terminations of employment, payment in
respect of Awards shall be made only if and to the extent the Performance Goals with
respect to such Performance Period are attained.

	 	(b)	 	Special Provisions Regarding Awards. Notwithstanding anything to
the contrary contained in this Section 5, in no event shall payment in respect of an
Award granted for a Performance Period be made to a Participant who is or is
reasonably expected to be a Covered Employee exceed the lesser of 300% of the
Participant’s annual base salary on the date the Performance Period commences for
any twelve month period or $5,000,000. The Committee may, in its sole discretion,
increase (subject to the maximum amount set forth in this Section 5(b)) or decrease
the amounts otherwise payable to Participants upon the achievement of Performance
Goals under an Award; provided, however, that in no event may the Committee so
increase the amount otherwise payable to a Covered Employee pursuant to an Award.

	 	(c)	 	Time and Form of Payment. Unless otherwise determined by the
Committee, all payments in respect of Awards granted under this Plan shall be made
in cash within 2 1/2 months after the end of the Performance Period.

	 	6.	 	Term. Subject to the approval of the Plan by the holders of a majority of the
Common Stock represented and voting on the proposal at the annual meeting of Company’s
shareholders to be held in 2006 (or any adjournment thereof), the Plan shall be effective as
of January [1], 2006 and shall continue in effect until the tenth anniversary of the date of
such shareholder approval, unless earlier terminated as provided below.

	 	7.	 	General Provisions.

	 	(a)	 	Compliance with Legal Requirements. The Plan and the granting
and payment of Awards, and the other obligations of the Company under the Plan shall
be subject to all applicable federal and state laws, rules and regulations, and to
such approvals by any regulatory or governmental agency as may be required.

	 	(b)	 	Nontransferability. Awards shall not be transferable by a
Participant except upon the Participant’s death following the end of the Performance
Period but prior to the date payment is made, in which case the Award shall be
transferable in accordance with any beneficiary designation made by the Participant
in accordance with Section 7(l) below or, in the absence thereof, by will or the
laws of descent and distribution.

	 	(c)	 	No Right To Continued Employment. Nothing in the Plan or in any
Award granted pursuant hereto shall confer upon any Participant the right to
continue in the employ of the Company or to be entitled to any remuneration or
benefits not set forth in the Plan or to interfere with or limit in any way whatever
rights otherwise exist of the Company to terminate such Participant’s employment or
change such Participant’s remuneration.

	 	(d)	 	Withholding Taxes. Where a Participant or other person is
entitled to receive a payment pursuant to an Award hereunder, the Company shall have
the right either to deduct from the payment, or to require the Participant or such
other person to pay to the Company prior to delivery of such payment, an amount
sufficient to satisfy any federal, state, local or other withholding tax
requirements related thereto.

	 	(e)	 	Amendment, Termination and Duration of the Plan. The Board or
the Committee may at any time and from time to time alter, amend, suspend, or
terminate the Plan in whole or in part; provided that, no amendment
that requires shareholder approval in order for the Plan to continue to comply with
Section 162(m) of the Code shall be effective unless the same shall be approved by
the requisite vote of the shareholders of the Company. Notwithstanding the
foregoing, no amendment shall affect adversely any of the rights of any Participant
under any Award following the end of the Performance Period to which such Award
relates, provided that the exercise of the Committee’s discretion pursuant to
Section 5(b) to reduce the amount of an Award shall not be deemed an amendment of
the Plan.

	 	(f)	 	Participant Rights. No Participant shall have any claim to be
granted any Award under the Plan, and there is no obligation for uniformity of
treatment for Participants.

	 	(g)	 	Termination of Employment.

	 	(i)	 	Unless otherwise provided by the Committee, and except as
set forth in subparagraph (ii) of this Section 7(g), a Participant must be
actively employed by the Company or one of its Affiliates at the end of the
Performance Period in order to be eligible to receive payment in respect of
such Award.

	 	(ii)	 	Unless otherwise provided by the Committee, if a
Participant’s employment is terminated as result of death, Disability or
Retirement prior to the end of the Performance Period, the Participant’s
Award shall be cancelled and in respect of his or her cancelled Award the
Participant shall receive a pro rata portion of the Award as determined by
the Committee.

	 	(h)	 	Change in Control. Notwithstanding any provision in the Plan to
the contrary, upon a Change in Control, unless otherwise determined by the Committee
with respect to an Award at the time of its grant, each outstanding Award shall be
cancelled and in respect of his or her cancelled Award a Participant shall receive a
pro rata portion of the Award. Such portion shall be calculated by extrapolating
the achievement of the applicable Performance Goal or Performance Goals during the
Performance Period prior to the Change in Control to the end of the Performance
Period and then multiplying this amount by a fraction, the numerator of which is the
number of days completed in the Performance Period prior to the Change in Control
and the denominator of which is the total number of days in the Performance Period.
The pro rata portion of the Award shall be paid in cash as soon as practicable
following the Change in Control. In addition, if any Award which a Participant
earned under the Plan during any Performance Period which ended prior to the Change
in Control has neither been paid to the Participant nor credited to such Participant
under a deferred compensation plan maintained or sponsored by the Company or an
Affiliate prior to the Change in Control, such Award shall be paid to the
Participant as soon as practicable and in no event later than the later of (i) March
1st following the year in respect of which the Award was earned or (ii)
the fifteenth day following the Change in Control. After a Change in Control, the
Committee may not exercise the discretion referred to in Section 5(b) to decrease
the amount payable in respect of any Award which is outstanding immediately prior to
the occurrence of the Change in Control.

	 	(i)	 	Unfunded Status of Awards. The Plan is intended to constitute an
“unfunded” plan for incentive and deferred compensation. With respect to any
payments not yet made to a Participant pursuant to an Award, nothing contained in
the Plan or any Award shall give any such Participant any rights that are greater
than those of a general creditor of the Company.

	 	(j)	 	Governing Law. The Plan and all determinations made and actions
taken pursuant hereto shall be governed by the laws of the State of Connecticut
without giving effect to the conflict of laws principles thereof.

	 	(k)	 	Effective Date. The Plan shall take effect upon its adoption by
the Board; provided, however, that the Plan shall be subject to the
requisite approval of the shareholders of the Company in order to comply with
Section 162(m) of the Code. In the absence of such approval, the Plan (and any
Awards made pursuant to the Plan prior to the date of such approval) shall be null
and void.

	 	(l)	 	Beneficiary. A Participant may file with the Committee a written
designation of a beneficiary on such form as may be prescribed by the Committee and
may, from time to time, amend or revoke such designation. If no designated
beneficiary survives the Participant and an Award is payable to the Participant’s
beneficiary pursuant to Section 7(b), the Participant’s estate shall be deemed to be
the grantee’s beneficiary.

	 	(m)	 	Interpretation. The Plan is designed and intended to comply, to
the extent applicable, with Section 162(m) of the Code, and all provisions hereof
shall be construed in a manner to so comply.

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