Document:

Exhibit 10.36

    EXHIBIT
      10.36

    
 

    SECOND
      AMENDMENT

    TO
      AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

     

    This
      Second Amendment to Amended and Restated Loan and Security Agreement (the
      "Amendment")
      is
      executed as of March 28, 2006, by and among HURON CONSULTING GROUP INC., a
      Delaware corporation (referred to herein as "Parent"
      or
      "Parent
      Borrower"),
      and
      HURON CONSULTING SERVICES LLC, a Delaware limited liability company f/k/a Huron
      Consulting Group LLC (referred to herein as "Original
      Borrower"),
      and
      SPELTZ & WEIS LLC, a Delaware limited liability company ("Subsidiary")
      (each
      of the foregoing three entities shall collectively be referred to herein as
      the
      "Borrower")
      and
      LASALLE BANK NATIONAL ASSOCIATION, a national banking association whose address
      is 135 South LaSalle Street, Chicago, Illinois 60603 (the “Bank”),
      with
      reference to the following facts:

     

    RECITALS:

     

    
      	A.  	
              Original
                Borrower and Bank entered into that certain Loan and Security Agreement
                (the “Original
                Loan Agreement”)
                dated January 31, 2003, whereby Bank agreed to provide Original Borrower
                a
                secured, revolving loan in the principal amount not to exceed
                $5,000,000.00 (the "Revolving
                Loan"),
                with a maturity date of January 31,
                2004.

            

    

     

    
      	B.  	
              Pursuant
                to a First Amendment to Loan and Security Agreement dated January
                28, 2004
                (the "First
                Amendment"),
                Original Borrower and Bank agreed to amend the Loan Agreement to,
                among
                other things, (i) increase the principal amount of the Revolving
                Loan to
                be $6,500,000.00, and (ii) extend the maturity date of the Revolving
                Loan
                to February 29, 2004.

            

    

     

    
      	C.  	
              Pursuant
                to a Second Amendment to Loan and Security Agreement dated February
                11,
                2004, Original Borrower and Bank agreed to further amend the Loan
                Agreement to (i) increase the principal amount of the Revolving Loan
                to be
                $15,000,000.00, (ii) extend the maturity date of the Revolving Loan
                to
                February 10, 2005, and (iii) permit certain advances under the Revolving
                Loan to be made on Eligible Work in Process (as defined
                below).

            

    

     

    
      	D.  	
              Pursuant
                to a Third Amendment to Loan and Security Agreement dated May 7,
                2004,
                Original Borrower and Bank agreed to further amend the Loan Agreement
                to
                clarify the definition of the defined term used in the Subsidiary's
                minimum equity covenant and to modify such
                covenant.

            

    

     

    
      	E.  	
              Pursuant
                to a Fourth Amendment to Loan and Security Agreement dated May 7,
                2004,
                Original Borrower and Bank agreed to further amend the Loan Agreement
                in
                connection with a potential initial public offering of the Original
                Borrower's parent company. 

            

    

     

    
      	F.  	
              Pursuant
                to a Fifth Amendment to Loan and Security Agreement dated December
                3,
                2004, Original Borrower and Bank agreed to further amend the Loan
                Agreement to waive the covenant requiring audited annual financial
                statements for Original Borrower's 2004 fiscal
                year.

            

    

     

    
      	G.  	
              Pursuant
                to an Amended and Restated Loan and Security Agreement (the "Loan
                Agreement")
                dated February 10, 2005, Parent, Original Borrower and Bank agreed
                to
                amend and restate the Original Loan Agreement to: (i) incorporate
                the
                amendments to the Loan Agreement referred to in the above Recitals;
                (ii)
                add the Parent as a co-borrower, (iii) increase the principal amount
                of
                the Revolving Loan to be $25,000,000.00 (iv) extend the maturity
                date of
                the Revolving Loan to be February 10, 2006, and (v) modify certain
                financial covenants.

            

    

     

    
      	H.  	
              Pursuant
                to a Joinder Agreement dated as of May 17, 2005, the Subsidiary,
                which was
                acquired by the Parent, became a party to the Loan
                Agreement.

            

    

     

    
      	I.  	
              Pursuant
                to a First Amendment to Amended and Restated Loan and Security Agreement
                dated January 17, 2006, Borrower and Bank agreed to amend the Loan
                Agreement to extend the maturity date of the Revolving Loan to be
                May 10,
                2006.

            

    

     

    
      	J.  	
              Borrower
                has requested, and Bank has agreed, to further amend the Loan Agreement
                to: (i) increase the principal amount of the Revolving Loan to be
                $35,000,000.00; (ii) extend the maturity date of the Revolving Loan
                to be
                July 10, 2006; (iii) eliminate the Borrowing Base, aged schedule,
                and
                field exam requirements; and (iv) reduce certain pricing, on the
                terms and
                conditions in this Amendment.

            

    

     

    NOW,
      THEREFORE,
      for
      valid consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties hereto hereby agree as follows:

     

    
      	1.  	
              Recitals
                and Certain Definitions.
                The Recitals set forth above are true and correct and are incorporated
                into this Amendment by this reference as if they were fully set forth
                herein. Unless the context requires otherwise, terms defined in the
                Loan
                Agreement shall have the same meaning in this Amendment. The term
“Loan
                Agreement” as defined therein and in the other Loan Documents shall mean
                the Loan Agreement as amended, including by this
                Amendment.

            

    

     

    
      	2.  	
              Increase
                in Revolving Loan.
                Bank
                and Borrower hereby agree to increase the principal amount of the
                Revolving Loan to be $35,000,000.00. Accordingly, the following definition
                in Section 1.1 of the Loan Agreement is hereby amended to read as
                follows:
                

            

    

     

    "Revolving
      Loan Amount"
      shall
      mean Thirty-Five Million and 00/100 Dollars ($35,000,000.00).

     

    
      	3.  	
              Extension
                of Maturity Date.
                Bank and Borrower hereby agree to extend the Maturity Date of the
                Revolving Loan from May 10, 2006 to July 10, 2006. Accordingly, the
                following definition in Section 1.1 of the Loan Agreement is hereby
                amended to read as follows:

            

    

     

    "Revolving
      Loan Maturity Date"
      shall
      mean July 10, 2006, unless extended by the Bank pursuant to any modification,
      extension or renewal note executed by the Borrower and accepted by the Bank
      in
      its sole and absolute discretion in substitution of the Revolving
      Note.

     

    
      	4.  	
              Elimination
                of Borrowing Base, Aging and Field Exam
                Requirements.
                Bank and Borrower hereby agree to eliminate the Borrowing Base, aged
                schedule, and field exam requirements with respect to the Revolving
                Loan.
                Accordingly, the following definition in Section 1.1 of the hereby
                amended
                to read as follows;

            

    

     

    "Revolving
      Loan Availability"
      shall
      mean at any time, the Revolving Loan Amount less the Letter of Credit
      Obligations.

     

    The
      following defined terms are hereby deleted from Section 1.1: "Borrowing
      Base Amount,"
      "Borrowing
      Base Certificate",
      "Eligible
      Accounts,"
      and
      "Eligible
      Work in Process."
      The
      following sections of the Loan Agreement are hereby deleted: Section 9.9
      (entitled "Borrowing
      Base Certificate";
      Section 9.11 (entitled "Aged Accounts Schedule"); and Section 9.12 (entitled
      "Field
      Audits").

     

    
      	5.  	
              Reduction
                in Certain Pricing.
                The Bank and Borrower hereby agree to reduce the applicable Libor
                Rate by
                .50%. Accordingly, the following definition in Section 1.1 of the
                Loan
                Agreement is hereby amended to read as
                follows:

            

    

     

    "LIBOR
      Rate"
      shall
      mean a per annum rate of interest equal to LIBOR for the relevant Interest
      Period (rounded upward if necessary, to the nearest 1/100 of 1.00%) plus one
      and
      one-quarter percent (1.25%), which LIBOR Rate shall remain fixed during such
      Interest Period.

     

    Bank
      and
      Borrower hereby agree to reduce the Letter of Credit fee by 1.25%. Accordingly,
      Section 5 of the Loan Agreement is hereby amended to reduce the annual fee
      for
      all standby Letters of Credit set forth in such Section 5 from two and one-half
      percent (2.50%) to one and one-quarter percent (1.25%) of the undrawn amount
      of
      each such standby Letter of Credit.

     

    
      	6.  	
              Note.
                Borrower shall, contemporaneous with the execution of this Amendment,
                execute and deliver to Bank a Sixth Amended and Restated Secured
                Revolving
                Line of Credit Note, in form and substance satisfactory to Bank,
                which
                reflects the above amendments to the Loan
                Agreement.

            

    

     

    
      	7.  	
              Scope
                of Amendment.
                This Amendment does not limit the rights of Bank with respect to
                any other
                loan documents or any other loan or other relationship to which the
                Borrower or Bank may be parties determined, in each case, after giving
                effect to any amendments in connection with this
                Amendment.

            

    

     

    
      	8.  	
              Commitment
                Fee.
                As a condition to Bank entering into this Amendment, the Borrower
                shall
                contemporaneously herewith pay to the Bank a non-refundable commitment
                fee
                in the amount of Ten-Thousand Dollars
                ($10,000.00).

            

    

     

    
      	9.  	
              Reaffirmation
                of Obligations.
                Borrower (i) reaffirms all of its obligations under the Loan Documents
                to
                which it is a party, (ii) acknowledges that it has no claims, offsets,
                or
                defenses with respect to the payment of sums due under the Loan Agreement
                or any other Loan Document, (iii) acknowledges and consents to the
                modifications required pursuant to this Amendment, and (iv) acknowledges
                that, except as otherwise provided herein, each of the other Loan
                Documents is hereby ratified and confirmed and remains in full force
                and
                effect.

            

    

     

    
      	10.  	
              Reaffirmation
                of Warranties and Representations.
                Borrower hereby represents and warrants to Bank that after giving
                effect
                to this Amendment (a) all representations and warranties contained
                in the
                Loan Documents are true and correct as of the date hereof as if made
                on
                the date hereof except to the extent such representation or warranty
                expressly relates to an earlier date, (b) as of the date hereof Borrower
                is in full compliance with the covenants contained in each of the
                Loan
                Documents, except for the covenant violation which was waived by
                Bank
                under the First Amendment, and any other covenant violation heretofore
                expressly waived by the Bank in writing or waived above, and (c)
                as of the
                date hereof there exists no Event of Default or any condition that,
                with
                the giving of notice or lapse of time or both, would constitute an
                Event
                of Default under any of the Loan Documents, except for the default
                waived
                in the First Amendment or any other defaults heretofore expressly
                waived
                by the Bank in writing or waived
                above.

            

    

     

    
      	11.  	
              Borrower
                Authorization.
                Borrower hereby authorizes Bank to file such financing statements
                and
                extensions as Bank from time to time deems necessary or desirable
                to
                continue the perfection of its security interest in the
                Collateral.

            

    

     

    
      	12.  	
              Conditions
                to Effectiveness of Amendment.
                The effectiveness of this Amendment is subject to Borrower's satisfaction
                of the following conditions:

            

    

     

    
      	(a)  	
              Amendment
                and Note.
                Borrower shall have delivered to Bank a duly executed counterpart
                of this
                Amendment and a duly executed Note.

            

    

     

    
      	(b)  	
              Other
                Documents; Fees.
                Borrower shall have delivered to Bank all other documents, certificates
                and agreements as Bank may request to accomplish the purposes of
                this
                Amendment, including without limitation certified corporate resolutions
                and certificates and good standing certificates, and shall have paid
                the
                fee set forth in Section 7 above.

            

    

     

    
      	(c)  	
              No
                Defaults.
                As of the date of this Amendment, no Event of Default under the Loan
                Agreement or any of the Loan Documents shall have occurred or be
                continuing, except for the default waived under the First Amendment
                or any
                other defaults heretofore expressly waived by the Bank in writing
                or
                waived above.

            

    

     

    
      	13.  	
              Counterparts.
                This document may be executed in counterparts, which taken together
                shall
                be considered one and the same
                instrument.

            

    

     

    

    [SIGNATURE
      PAGE FOLLOWS]

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF,
      the
      undersigned have executed this Amendment as of the date first above
      written.

     

    
      	
              BORROWER:

            
	 
	
              HURON
                CONSULTING GROUP INC.,
                a
                Delaware corporation

            
	 
	
              By:

            	
              /s/
                Gary E. Holdren

            
	
              Name:

            	
              Gary
                E. Holdren

            
	
              Title:

            	
              Chairman
                and Chief Executive Officer

            

    

    

    

    
      	
              HURON
                CONSULTING SERVICES LLC,
                a
                Delaware limited liability company f/k/a

            
	
              Huron
                Consulting Group LLC

            
	 
	
              By:

            	
              /s/
                Gary E. Holdren

            
	
              Name:

            	
              Gary
                E. Holdren

            
	
              Title:

            	
              Chairman
                and Chief Executive Officer

            

    

    

    

    
      	
              SPELTZ
                & WEIS LLC

            
	
              By:

            	
              Huron
                Consulting Group Inc., its manager

            
	 	 
	
              By:

            	
              /s/
                Gary E. Holdren

            
	
              Name:

            	
              Gary
                E. Holdren

            
	
              Title:

            	
              Chairman
                and Chief Executive Officer

            

    

    

    

    
      	
              BANK:

            
	
              LASALLE
                BANK NATIONAL ASSOCIATION, a national banking
                association

            
	 	 
	
              By:

            	
              /s/
                David Bacon

            
	
              Name:

            	
              David
                Bacon

            
	
              Title:

            	
              VPEX-10.1

Exhibit 10.1

THE STANLEY WORKS

1997 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 shareholders, 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)	 	“1990 Plan” shall mean the Company’s 1990 Stock Option 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 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 shareholder, 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 four million
(4,000,000), and the number of Shares available for granting Awards under the Plan in
each fiscal year or, in the case of the years 1997 and 2007, part thereof shall be two
percent (2%) of the issued Shares (including, without limitation, treasury Shares) as
of the first day of such year; provided, however, that the number of Shares available
for granting Awards in any year shall be increased in any such year by the number of
Shares available under the Plan in previous years but not covered by Awards granted
under the Plan in such years. Further, if any Shares covered by an Award granted under
the Plan or by an award granted under the 1990 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 1990
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 1990 Plan but with respect to which no
awards were granted as of the termination of the 1990 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), no more than one million (1,000,000)
Shares shall be cumulatively available for delivery pursuant to the exercise of
Incentive Stock Options.

	 	(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 1990 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 demand 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 September 17, 1997 through the end of the term shall not
exceed 3,000,000 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 1997
Plan shall not, during any three-year period, exceed two percent of Stanley’s
shareholders’ 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
shareholder, 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 shareholders 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 shareholders 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;

	 	 	 	(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 shareholders 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 shareholders 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 shareholders 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 September 17, 1997.

Section 11. Term of the Plan

No Award shall be granted under the Plan after September 16, 2007. 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.

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