UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 30, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from to
Commission File Number: 1-1553
THE BLACK & DECKER CORPORATION
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(Exact name of registrant as specified in its charter)
Maryland 52-0248090
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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701 East Joppa Road Towson, Maryland 21286
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(Address of principal executive offices) (Zip Code)
(410) 716-3900
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address, and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. X YES NO
The number of shares of Common Stock outstanding as of March 30, 1997:
94,416,964
The exhibit index as required by item 601(a) of Regulation S-K is included in
this report.
<PAGE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
INDEX - FORM 10-Q
March 30, 1997
Page
PART I - FINANCIAL INFORMATION
Consolidated Statement of Earnings (Unaudited)
For the Three Months Ended March 30, 1997 and March 31, 1996................3
Consolidated Balance Sheet
March 30, 1997 (Unaudited) and December 31, 1996............................4
Consolidated Statement of Cash Flows (Unaudited)
For the Three Months Ended March 30, 1997 and March 31, 1996................5
Notes to Consolidated Financial Statements (Unaudited).........................6
Management's Discussion and Analysis of Financial Condition and
Results of Operations.......................................................9
PART II - OTHER INFORMATION...................................................15
SIGNATURES....................................................................18
<PAGE>
CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
The Black & Decker Corporation and Subsidiaries
(Dollars in Millions Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended
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March 30, 1997 March 31, 1996
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<S> <C> <C>
Sales $ 1,015.0 $ 1,065.0
Cost of goods sold 650.5 670.1
Selling, general, and administrative expenses 291.2 306.2
Restructuring costs - 81.6
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Operating Income 73.3 7.1
Interest expense (net of interest income) 30.6 37.9
Other expense 2.3 3.4
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Earnings (Loss) From Continuing Operations Before
Income Taxes 40.4 (34.2)
Income taxes (benefit) 14.1 (1.8)
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Earnings (Loss) From Continuing Operations 26.3 (32.4)
Earnings from discontinued operations (net of income taxes
of $55.6 for 1996) - 70.4
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Net Earnings $ 26.3 $ 38.0
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Net Earnings Applicable to Common Shares $ 26.3 $ 35.1
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Net Earnings Per Common and Common Equivalent Share:
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Primary:
Earnings (loss) from continuing operations $ .27 $ (.40)
Earnings from discontinued operations - .79
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Primary Earnings Per Share $ .27 $ .39
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Shares Used in Computing Primary Earnings Per Share
(in Millions) 96.2 89.1
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Assuming Full Dilution:
Earnings (loss) from continuing operations $ .27 $ (.40)
Earnings from discontinued operations - .79
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Fully Diluted Earnings Per Share $ .27 $ .39
===================================================================================================================
Shares Used in Computing Fully Diluted Earnings Per
Share (in Millions) 96.2 89.5
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Dividends Per Common Share $ .12 $ .12
===================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited)
<PAGE>
CONSOLIDATED BALANCE SHEET
The Black & Decker Corporation and Subsidiaries
(Millions of Dollars Except Per Share Amount)
<TABLE>
<CAPTION>
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March 30, 1997
(Unaudited) December 31, 1996
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<S> <C> <C>
Assets
Cash and cash equivalents $ 119.6 $ 141.8
Trade receivables 655.7 672.4
Inventories 842.4 747.8
Other current assets 186.4 242.2
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Total Current Assets 1,804.1 1,804.2
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Property, Plant, and Equipment 875.5 905.8
Goodwill 1,940.8 2,012.2
Other Assets 506.4 431.3
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$ 5,126.8 $ 5,153.5
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Liabilities and Stockholders' Equity
Short-term borrowings $ 147.4 $ 235.9
Current maturities of long-term debt 52.1 54.1
Trade accounts payable 333.5 380.7
Other accrued liabilities 800.4 835.9
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Total Current Liabilities 1,333.4 1,506.6
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Long-Term Debt 1,652.0 1,415.8
Deferred Income Taxes 77.1 67.5
Postretirement Benefits 304.4 310.3
Other Long-Term Liabilities 151.5 220.9
Stockholders' Equity
Common stock, par value $.50 per share
(outstanding: March 30, 1997--94,416,964 shares;
December 31, 1996--94,248,807 shares) 47.2 47.1
Capital in excess of par value 1,266.5 1,261.7
Retained earnings 395.2 380.2
Equity adjustment from translation (100.5) (56.6)
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Total Stockholders' Equity 1,608.4 1,632.4
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$ 5,126.8 $ 5,153.5
===================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited)
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
The Black & Decker Corporation and Subsidiaries
(Millions of Dollars)
<TABLE>
<CAPTION>
Three Months Ended
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March 30, 1997 March 31, 1996
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<S> <C> <C>
Operating Activities
Net earnings $ 26.3 $ 38.0
Adjustments to reconcile net earnings to cash flow from
operating activities of continuing operations:
Non-cash charges and credits:
Restructuring charges - 81.6
Depreciation and amortization 54.7 52.9
Other (2.7) 2.1
Earnings of discontinued operations - (70.4)
Changes in selected working capital items:
Trade receivables 49.2 87.5
Inventories (120.3) (69.2)
Trade accounts payable (36.4) (8.8)
Other assets and liabilities (42.5) (115.6)
Net decrease in receivables sold (59.0) (56.0)
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Cash flow from operating activities of continuing operations (130.7) (57.9)
Cash flow from operating activities of discontinued operations - (10.1)
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Cash Flow From Operating Activities (130.7) (68.0)
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Investing Activities
Proceeds from partial sale of discontinued operations - 415.0
Proceeds from disposal of assets 2.6 18.0
Capital expenditures (40.2) (40.5)
Cash inflow from hedging activities 15.0 155.6
Cash outflow from hedging activities (14.4) (156.5)
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Cash Flow From Investing Activities (37.0) 391.6
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Cash Flow Before Financing Activities (167.7) 323.6
Financing Activities
Net decrease in short-term borrowings (56.6) (362.0)
Proceeds from long-term debt (including revolving credit facility) 400.0 24.7
Payments on long-term debt (including revolving credit facility) (183.6) (5.6)
Issuance of common stock 1.1 13.8
Cash dividends (11.3) (13.4)
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Cash Flow From Financing Activities 149.6 (342.5)
Effect of exchange rate changes on cash (4.1) (.2)
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Decrease In Cash And Cash Equivalents (22.2) (19.1)
Cash and cash equivalents at beginning of period 141.8 131.6
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Cash And Cash Equivalents At End Of Period $ 119.6 $ 112.5
===================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited)
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
The Black & Decker Corporation and Subsidiaries
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include all the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, the unaudited
consolidated financial statements include all adjustments consisting only of
normal recurring accruals considered necessary for a fair presentation of the
financial position and the results of operations. Certain prior year amounts in
the consolidated financial statements have been reclassified to conform to the
presentation used for 1997.
Operating results for the three-month period ended March 30, 1997, are not
necessarily indicative of the results that may be expected for a full fiscal
year. For further information, refer to the consolidated financial statements
and notes included in the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1996.
NOTE 2: SALE OF RECEIVABLES
At March 30, 1997, under its sale of receivables program, the Corporation had
sold $153.0 million of receivables compared to $212.0 million at December 31,
1996. The discount on sale of receivables is included in "Other expense."
NOTE 3: INVENTORIES
The components of inventory at the end of each period, in millions of dollars,
consisted of the following:
<TABLE>
<CAPTION>
March 30, 1997 December 31, 1996
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<S> <C> <C>
FIFO Cost
Raw materials and work-in-process $ 227.9 $ 211.1
Finished products 645.6 567.7
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873.5 778.8
Excess of FIFO cost over LIFO inventory value (31.1) (31.0)
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$ 842.4 $ 747.8
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</TABLE>
Inventories are stated at the lower of cost or market. The cost of United States
inventories is based primarily on the last-in, first-out (LIFO) method; all
other inventories are based on the first-in, first-out (FIFO) method.
NOTE 4: GOODWILL
Goodwill at the end of each period, in millions of dollars, was as follows:
<TABLE>
<CAPTION>
March 30, 1997 December 31, 1996
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<S> <C> <C>
Goodwill $ 2,516.1 $ 2,571.5
Less accumulated amortization 575.3 559.3
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$ 1,940.8 $ 2,012.2
===================================================================================================================
</TABLE>
<PAGE>
NOTE 5: LONG-TERM DEBT
Indebtedness of subsidiaries of the Corporation in the aggregate principal
amounts of $710.1 million and $586.5 million were included in the Consolidated
Balance Sheet at March 30, 1997 and December 31, 1996, respectively, under the
captions short-term borrowings, current maturities of long-term debt, and
long-term debt.
NOTE 6: INTEREST EXPENSE (NET OF INTEREST INCOME)
Interest expense (net of interest income) for each period, in millions of
dollars, consisted of the following:
<TABLE>
<CAPTION>
Three Months Ended
March 30, 1997 March 31, 1996
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<S> <C> <C>
Interest expense $ 33.3 $ 39.9
Interest (income) (2.7) (2.0)
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$ 30.6 $ 37.9
===================================================================================================================
</TABLE>
NOTE 7: DISCONTINUED OPERATIONS
As more fully described in Note 2 of Notes to Consolidated Financial Statements
included in the Corporation's Annual Report on Form 10-K for the year ended
December 31, 1996, on February 16, 1996, the Corporation completed the
previously announced sale of PRC Inc., the remaining business in the
discontinued information technology and services (PRC) segment, for $425.0
million to Litton Industries, Inc. Earnings from discontinued operations of
$70.4 million for the three months ended March 31, 1996, consist primarily of
the gain on the sale of PRC Inc., net of applicable income taxes of $55.6
million. Revenues and operating income of PRC Inc. for the period from January
1, 1996 through February 15, 1996, were not significant. The terms of the sale
of PRC Inc. provide for an adjustment to the sales price, expected to be
finalized later in 1997, based upon the changes in the net assets of PRC Inc.
through February 15, 1996.
NOTE 8: RESTRUCTURING
During the three months ended March 31, 1996, the Corporation commenced a
restructuring of certain of its operations and recorded a restructuring charge
of $81.6 million. As more fully described in Note 3 of Notes to Consolidated
Financial Statements and in Management's Discussion and Analysis of Financial
Condition and Results of Operations under the caption Restructuring included in
the Corporation's Annual Report on Form 10-K for the year ended December 31,
1996, the Corporation modified portions of the initial restructuring plan later
in 1996 as a result of changed business conditions and the insight of new
management in certain businesses. The net effect of these modifications was to
increase the total restructuring charge recognized in 1996 to $91.3 million.
NOTE 9: NET EARNINGS PER COMMON SHARE
Primary earnings per common and common equivalent share are computed by dividing
net earnings, after deducting, for the quarter ended March 31, 1996, preferred
stock dividends, by the weighted average number of common shares outstanding
during each period plus the incremental shares that would have been outstanding
under certain employee benefit plans and upon the assumed exercise of dilutive
stock options. As more fully described in Note 15 of Notes to
<PAGE>
Consolidated Financial Statements included in the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1996, the Corporation exercised its
conversion option in respect of all of the issued and outstanding shares of
Series B Cumulative Convertible Preferred Stock in October 1996, and in
connection therewith issued 6,350,000 shares of common stock in exchange for the
existing Series B Cumulative Convertible Preferred Stock.
Fully diluted earnings per share are computed by dividing net earnings,
after deducting, for the quarter ended March 31, 1996, preferred stock
dividends, by the weighted average number of common shares outstanding during
the period plus the incremental shares that would have been outstanding under
certain employee benefit plans and upon the assumed exercise of dilutive stock
options. For the three months ended March 31, 1996, conversion of the preferred
shares would have been anti-dilutive and, therefore, was not considered in the
computation of fully diluted earnings per share.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share," which is
required to be adopted on December 31, 1997. At that time, the Corporation will
be required to change the method currently used to compute earnings per share
and to restate all prior periods. Under SFAS No. 128, the dilutive effect of
stock options will be excluded from the calculation of primary earnings per
share (known as "basic earnings per share" in the new standard). Under SFAS No.
128, the calculation of fully diluted earnings per share (known as "diluted
earnings per share" in the new standard) uses income from continuing
operations--before the effect of discontinued operations, extraordinary items,
and the cumulative effect of accounting changes--as the benchmark to determine
whether securities are dilutive. Under the existing standard, net earnings is
used as the benchmark to determine whether securities are dilutive.
The following table sets forth the Corporation's pro forma earnings per
share, calculated in accordance with SFAS No. 128.
<TABLE>
<CAPTION>
Three Months Ended
March 30, 1997 March 31, 1996
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<S> <C> <C>
Basic earnings per share:
Earnings (loss) from continuing operations $ .28 $ (.41)
Earnings from discontinued operations - .81
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Basic earnings per share $ .28 $ .40
===================================================================================================================
Diluted earnings per share:
Earnings (loss) from continuing operations $ .27 $ (.41)
Earnings from discontinued operations - .81
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Diluted earnings per share $ .27 $ .40
===================================================================================================================
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Corporation reported net earnings of $26.3 million or $.27 per share on a
fully diluted basis for the three-month period ended March 30, 1997, compared to
net earnings of $38.0 million or $.39 per share on a fully diluted basis for the
three-month period ended March 31, 1996. Net earnings for the quarter ended
March 31, 1996, included a gain of $70.4 million or $.79 per share on a fully
diluted basis from the sale of PRC Inc., part of the Corporation's discontinued
information technology and services segment, partially offset by a restructuring
charge of $81.6 million ($67.0 million after tax) or $.75 per share on a fully
diluted basis. Excluding both the gain on sale and the restructuring charge, net
earnings for the quarter ended March 31, 1996, would have been $34.6 million or
$.35 per share on a fully diluted basis.
The decline in net earnings, excluding the gain on sale of PRC Inc. and the
restructuring charge, from the first quarter of 1996 to the first quarter of
1997 was due to a number of factors. The primary factors were the sharply lower
sales of the Corporation's SnakeLight(R) flexible flashlight and a higher
effective tax rate, partially offset by reduced interest expense as a result of
lower borrowing levels.
CONTINUING OPERATIONS
SALES
The following chart sets forth an analysis of the consolidated changes in sales
for the three-month periods ended March 30, 1997 and March 31, 1996.
ANALYSIS OF CHANGES IN SALES OF CONTINUING OPERATIONS
<TABLE>
<CAPTION>
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For the Three Months Ended
(Dollars in Millions) March 30, 1997 March 31, 1996
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<S> <C> <C>
Total sales $ 1,015.0 $ 1,065.0
Unit volume (2)% 4%
Price - % -%
Currency (3)% -%
- -------------------------------------------------------------------------------------------------------------------
Change in total sales (5)% 4%
===================================================================================================================
</TABLE>
The Corporation operates in two business segments: Consumer and Home
Improvement Products (Consumer), including consumer and professional power tools
and accessories, household products, security hardware, outdoor products
(composed of electric lawn and garden tools and recreational products), plumbing
products, and product service; and Commercial and Industrial Products
(Commercial), including fastening and assembly systems and glass
container-forming and inspection equipment.
<PAGE>
The following chart sets forth an analysis of the change in sales of
continuing operations for the three months ended March 30, 1997, compared to the
three months ended March 31, 1996, by geographic area for each business segment.
ANALYSIS OF CHANGES IN SALES OF CONTINUING OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 30, 1997
<TABLE>
<CAPTION>
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United
(Dollars in Millions) States Europe Other Total
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<S> <C> <C> <C> <C>
Consumer
Total Sales $ 462.1 $ 269.6 $ 111.6 $ 843.3
Unit volume (6)% (1)% 1 % (3)%
Price - % - % - % - %
Currency - % (6)% - % (2)%
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(6)% (7)% 1 % (5)%
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Commercial
Total Sales $ 80.4 $ 63.6 $ 27.7 $ 171.7
Unit volume 23 % (4)% (17)% 3 %
Price (1)% 1 % - % - %
Currency - % (7)% (8)% (4)%
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22 % (10)% (25)% (1)%
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Consolidated
Total Sales $ 542.5 $ 333.2 $ 139.3 $ 1,015.0
Unit volume (2)% (1)% (3)% (2)%
Price (1)% - % - % - %
Currency - % (6)% (2)% (3)%
- -------------------------------------------------------------------------------------------------------------------
Change in Total Sales (3)% (7)% (5)% (5)%
===================================================================================================================
</TABLE>
Unit volume decreased 2% for the three-month period ended March 30, 1997,
from the prior year's level. The negative effects of a stronger United States
dollar compared to most major foreign currencies caused a 3% decrease in the
Corporation's consolidated sales from the prior year's level for the quarter
ended March 30, 1997. Pricing actions had minimal effect on sales for the
three-month period ended March 30, 1997, compared to the corresponding period in
1996.
Unit volume in the Consumer segment for the three months ended March 30,
1997, declined by 3% compared to last year.
<PAGE>
Sales in the Corporation's Consumer businesses in the United States
decreased by 6% for the three-month period ended March 30, 1997, from the 1996
level. Excluding the significant sales decline experienced by the Corporation's
household products business in the first quarter of 1997, sales in the
Corporation's other domestic Consumer businesses for the three months ended
March 30, 1997, met or exceeded the prior year's level. Sales in the domestic
power tools and accessories business for the quarter ended March 30, 1997,
increased at a mid-single digit rate over the corresponding quarter in 1996. The
domestic power tools and accessories business benefited from the continued
strength of the DEWALT(R) professional power tools and accessories line, spurred
by the recent introduction of the 18 Volt Extreme CordlessTM system, but that
benefit was partially offset by weakness in sales of outdoor products and
consumer power tools and accessories in the first quarter of 1997. Sales in the
domestic security hardware business during the quarter ended March 30, 1997,
slightly exceeded the prior year's level while sales in the domestic plumbing
products business were essentially flat.
While the significant sales decline experienced in the domestic household
products business during the first quarter of 1997 compared to the corresponding
quarter in 1996 resulted primarily from sharply lower sales of the SnakeLight
flexible flashlight, sales decreases also were experienced in most other product
categories with the exception of cleaning products, where sales increased on the
strength of the ScumBusterTM cordless submersible tub and tile scrubber, which
was introduced in the latter part of 1996.
Excluding the significant negative effect of changes in foreign exchange
rates, sales in the Corporation's Consumer businesses in Europe declined by 1%
for the three months ended March 30, 1997, from the corresponding period in
1996. Increased sales of consumer and professional power tools and accessories
and outdoor lawn and garden tools in Europe during the first quarter of 1997 as
compared to the prior year's level were not sufficient to offset declines in
sales of security hardware, household products, and product service during the
quarter.
Sales of the Corporation's Consumer businesses in Other geographic areas
for the first quarter of 1997 increased by 1% over the first quarter of 1996.
The net effect of changes in foreign exchange rates did not have a significant
impact on the sales of those businesses during the three months ended March 30,
1997. Increased sales by Consumer businesses in certain countries, in particular
Canada and Brazil, were substantially offset by sales declines by Consumer
businesses in other countries, in particular Australia.
Excluding the negative effect of changes in foreign exchange rates, sales in
the Corporation's Commercial businesses increased by 3% during the three months
ended March 30, 1997, over the corresponding period in 1996. This improvement
was driven by good sales growth in the Corporation's fastening and assembly
systems business while sales in the glass container-forming and inspection
equipment business modestly exceeded the prior year's level.
<PAGE>
EARNINGS
Operating income for the three months ended March 30, 1997, was $73.3 million
compared to $7.1 million for the corresponding period in 1996. Excluding the
effects of the $81.6 million restructuring charge recognized in the first
quarter of 1996, operating income for the first quarter of 1997 decreased 17%
from $88.7 million for the first quarter of 1996 to $73.3 million for the first
quarter of 1997. Operating income as a percentage of sales, excluding the
restructuring charge recognized in the first quarter of 1996, was 7.2% for the
three-month period ended March 30, 1997, compared to 8.3% for the corresponding
period in 1996. This decline in operating income as a percentage of sales was
experienced in the Corporation's power tools and accessories, plumbing products,
security hardware, and glass container-forming and inspection businesses and,
most significantly, in the Corporation's household products business.
Gross margin as a percentage of sales was 35.9% and 37.1% for the
three-month periods ended March 30, 1997 and March 31, 1996, respectively. The
decline in gross margin during the first quarter of 1997 was a result of the
sales decline during the quarter, particularly with respect to the Corporation's
higher margin SnakeLight product, and competitive pressures which continued to
constrain pricing.
Selling, general, and administrative expenses as a percentage of total sales
for the three-month period ended March 30, 1997, were 28.7% compared to 28.8%
for the comparable period in 1996 as the benefits of the Corporation's cost
reduction initiatives offset the unfavorable effects of lower sales volumes on
fixed and semi-fixed costs.
Net interest expense (interest expense less interest income) for the
three-month period ended March 30, 1997, was $30.6 million as compared to $37.9
million for the three-month period ended March 31, 1996. The lower level of net
interest expense was primarily the result of reduced debt levels in the first
quarter of 1997 as compared to the first quarter of 1996.
The Corporation maintains a portfolio of interest rate hedge instruments for
the purpose of managing interest rate exposure. During the quarter ended March
30, 1997, the Corporation decreased its portfolio through the scheduled
maturities of interest rate caps with an aggregate notional principal amount of
$100.0 million and variable to fixed rate interest rate swaps with an aggregate
notional principal amount of $100.0 million. Deferred gains and losses on the
early termination of interest rate swaps as of March 30, 1997, were not
significant. An increase in variable-rate borrowings during the quarter ended
March 30, 1997, coupled with the changes in the Corporation's interest rate
hedge portfolio described above, had the effect of increasing the Corporation's
variable rate debt to total debt ratio from 35% at December 31, 1996, to 52% at
March 30, 1997.
Other expense for the three-month periods ended March 30, 1997 and March
31, 1996, primarily includes the discount on the sale of receivables.
An income tax benefit of $1.8 million was recognized on the Corporation's
pre-tax loss from continuing operations of $34.2 million for the three months
ended March 31, 1996. Excluding the income tax benefit of $14.6 million
recognized on the restructuring charge of $81.6 million recognized in the
quarter ended March 31, 1996, the Corporation's reported tax rate on its
continuing operations for the first quarter of 1996 would have been 27% compared
to a tax rate of 35% in the first quarter of 1997. This increase in the
effective tax rate in 1997 resulted from the fact that, by the end of 1996, the
Corporation had fully recognized the benefit of domestic deferred
<PAGE>
tax assets, exclusive of foreign tax credits, for financial reporting purposes.
The benefit of the previously unrecognized deferred tax assets had lowered the
domestic portion of tax expense for 1996 as well as for a number of prior years.
DISCONTINUED OPERATIONS
On February 16, 1996, the Corporation completed the sale of PRC Inc., the
remaining business in the discontinued PRC segment. Proceeds of $425.0 million,
less cash selling expenses of $10.0 million paid in the first quarter of 1996,
were used to reduce indebtedness during the quarter ended March 31, 1996.
Earnings from discontinued operation of $70.4 million ($.73 per share on a fully
diluted basis) for the quarter ended March 31, 1996, primarily consist of the
gain on sale of PRC Inc., net of applicable income taxes of $55.6 million.
Revenues and operating income of PRC Inc. for the period from January 1, 1996,
through the date of sale were not significant. Operating results, net assets,
and cash flows of the discontinued PRC segment have been segregated in the
accompanying Consolidated Financial Statements.
FINANCIAL CONDITION
Operating activities of continuing operations before the sale of receivables
used cash of $71.7 million for the three months ended March 30, 1997, compared
to $1.9 million of cash used for the corresponding period in 1996. This
increased cash usage was principally the result of changes in working capital.
Increased cash generation during 1996 resulted in the Corporation reducing its
working capital at December 31, 1996, to a lower level than at the 1995 year
end. The increase in working capital at March 30, 1997, from the lower base at
December 31, 1996, was, as a result, higher than the increase in working capital
at March 31, 1996, from the higher base at December 31, 1995.
In addition, cash spending during the first quarter of 1997 in the amount
of $5.7 million reduced the restructuring reserve from $37.7 million at December
31, 1996, to $32.0 million at March 30, 1997. The Corporation anticipates that
the remaining restructuring reserve at March 30, 1997, will be substantially
spent in 1997.
Investing activities for the three months ended March 30, 1997, used cash
of $37.0 million compared to $23.4 million of cash used in the corresponding
period in 1996, exclusive of the $415.0 million of net proceeds from the sale of
PRC Inc. received in the first quarter of 1996. Higher cash usage in the first
quarter of 1997 compared to the prior year's level primarily resulted from a
reduced level of asset disposals in the first quarter of 1997.
Financing activities generated cash of $149.6 million for the three months
ended March 30, 1997, compared to cash generated of $72.5 million in the first
three months of 1996, exclusive of the $415.0 million in debt repayments which
occurred in the first quarter of 1996 upon receipt of the net proceeds from the
sale of PRC Inc. The increased cash generated from financing activities in the
first quarter of 1997 over the corresponding quarter in 1996 was principally the
result of a larger increase in borrowings to fund working capital requirements
at March 30, 1997, over the 1996 year-end level versus the increase at March 31,
1996, over the 1995 year-end level, exclusive of the impact of debt repayments
related to the receipt of the PRC Inc. sales proceeds. Average debt maturity was
4.5 years at both March 30, 1997 and December 31, 1996.
<PAGE>
In addition to measuring its cash flow generation and usage based upon the
operating, investing, and financing classifications included in the Consolidated
Statement of Cash Flows, the Corporation also measures its free cash flow. Free
cash flow, a measure commonly employed by bond rating agencies and banks, is
defined by the Corporation as cash available for debt reduction (including
short-term borrowings), prior to the effects of cash received from divested
businesses, issuances of equity, and sales of receivables. Free cash flow, a
more inclusive measure of the Corporation's cash flow generation than cash flow
from operating activities included in the Consolidated Statement of Cash Flows,
considers items such as cash used for capital expenditures and dividends, as
well as net cash inflows or outflows from hedging activities. During the three
months ended March 30, 1997, the Corporation experienced negative free cash flow
of $110.0 million compared to negative free cash flow of $46.2 million for the
corresponding period in 1996. This $63.8 million decrease in free cash flow
during the first three months of 1997 from the 1996 level was primarily the
result of reduced cash flows from operating activities.
FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes statements that constitute "forward
looking statements" within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934 and that are
intended to come within the safe harbor protection provided by those sections.
By their nature, all forward looking statements involve risk and uncertainties.
Actual results may differ materially from those contemplated by the forward
looking statements for a number of reasons, including but not limited to: market
acceptance of the significant new products scheduled for introduction over the
balance of the year; the level of sales generated from these new products
relative to expectation, based on the existing investments in productive
capacity and commitments of the Corporation to fund advertising and product
promotions in connection with the introduction of these new products; the
ability of the Corporation and its suppliers to achieve scheduled new product
introduction timetables; unforeseen competitive pressures or other difficulty in
penetrating new channels of distribution; adverse changes in currency exchange
rates or raw material commodity prices, both in absolute terms and relative to
competitors' risk profiles; delays in or unanticipated inefficiencies resulting
from manufacturing reorganization actions in progress or contemplated; and the
continuation of modest economic growth in the United States and gradual
improvement of the economic environment in Europe. The Corporation's ability to
realize the anticipated benefits during 1997 of the existing restructuring
program also could be affected by those factors identified in Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in the Corporation's Annual Report on Form 10-K for the year ended
December 31, 1996.
<PAGE>
THE BLACK & DECKER CORPORATION
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
The Corporation is involved in various lawsuits in the ordinary course of
business. The lawsuits primarily involve claims for damages arising out of the
use of the Corporation's products and allegations of patent and trademark
infringement. The Corporation is also involved in litigation and administrative
proceedings involving employment matters and commercial disputes. Some of these
lawsuits include claims for punitive as well as compensatory damages. The
Corporation, using current product sales data and historical trends, actuarially
calculates the estimate of its current exposure for product liability claims for
amounts in excess of established deductibles and accrues for the estimated
liability as described above up to the limits of the deductibles. All other
claims and lawsuits are handled on a case-by-case basis.
The Corporation also is involved in lawsuits and administrative proceedings
with respect to claims involving the discharge of hazardous substances into the
environment. Certain of these claims assert damages and liability for remedial
investigations and cleanup costs with respect to sites at which the Corporation
has been identified as a potentially responsible party under federal and state
environmental laws and regulations (off-site). Other matters involve sites that
the Corporation currently owns or has previously sold (on-site). For off-site
claims, the Corporation makes an assessment of the cost involved based on
environmental studies, prior experience at similar sites, and the experience of
other named parties. The Corporation also considers the ability of other parties
to share costs, the percentage of the Corporation's exposure relative to all
other parties, and the effects of inflation on these estimated costs. For
on-site matters associated with properties currently owned, an assessment is
made as to whether an investigation and remediation would be required under
applicable federal and state law. For on-site matters associated with properties
previously sold, the Corporation considers the terms of sale as well as
applicable federal and state laws to determine if the Corporation has any
remaining liability. If the Corporation is determined to have potential
liability for properties currently owned or previously sold, an estimate is made
of the total cost of investigation and remediation and other potential costs
associated with the site.
The Corporation's estimate of the costs associated with legal, product
liability, and environmental exposures is accrued if, in management's judgment,
the likelihood of a loss is probable. These accrued liabilities are not
discounted. Insurance recoveries for environmental and certain general liability
claims are not recognized until realized.
As of March 30, 1997, the Corporation had no known probable but inestimable
exposures for awards and assessments in connection with environmental matters
and other litigation and administrative proceedings that could have a material
effect on the Corporation.
<PAGE>
Management is of the opinion that the amounts accrued for awards or
assessments in connection with the environmental matters and other litigation
and administrative proceedings to which the Corporation is a party are adequate
and, accordingly, ultimate resolution of these matters will not have a material
adverse effect on the Corporation.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 1997 Annual Meeting of Stockholders was held on April 22, 1997, for the
election of directors and to ratify the selection of Ernst & Young LLP as
independent public accountants for the Corporation for fiscal year 1997. A total
of 81,663,684 of the 94,390,399 votes entitled to be cast at the meeting were
present in person or by proxy. At the meeting, the stockholders:
(1) Elected the following directors:
Number of Shares
Number of Shares AUTHORITY
Directors VOTED FOR WITHHELD
- --------------------------------------------------------------------------------
Nolan D. Archibald 81,195,805 467,879
Alonzo G. Decker, Jr. 81,195,761 467,923
Norman R. Augustine 81,211,579 452,105
Barbara L. Bowles 81,175,174 488,510
Malcolm Candlish 81,192,354 471,330
Anthony Luiso 81,186,690 476,994
Lawrence R. Pugh 81,201,680 462,004
Mark H. Willes 81,208,499 455,185
M. Cabell Woodward, Jr. 81,205,602 458,082
(2) Ratified the selection of Ernst & Young LLP as independent public
accountants for the Corporation for fiscal year 1997 by an affirmative
vote of 81,250,897; votes against ratification were 148,862; and
abstentions were 263,925.
No other matters were submitted to a vote of the stockholders at the meeting.
<PAGE>
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
Exhibit No. Description
10(a) The Black & Decker 1986 Stock Option Plan, as
amended.
10(b) The Black & Decker 1989 Stock Option Plan, as
amended.
10(c) The Black & Decker 1992 Stock Option Plan, as
amended.
10(d) The Black & Decker Corporation 1995 Stock Option Plan
for Non-Employee Directors, as amended.
10(e) The Black & Decker 1996 Stock Option Plan, as
amended.
11 Computation of Earnings Per Share.
12 Computation of Ratios.
27 Financial Data Schedule.
The Corporation did not file any reports on Form 8-K during the three-month
period ended March 30, 1997.
All other items were not applicable.
<PAGE>
THE BLACK & DECKER CORPORATION
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE BLACK & DECKER CORPORATION
By /s/ THOMAS M. SCHOEWE
Thomas M. Schoewe
Senior Vice President and Chief Financial Officer
Principal Accounting Officer
By /s/ STEPHEN F. REEVES
Stephen F. Reeves
Vice President and Controller
Date: May 14, 1997
Exhibit 10(a)
THE BLACK & DECKER 1986 STOCK OPTION PLAN
The proper execution of the duties and responsibilities of the executive
and other key employees of The Black & Decker Corporation and its subsidiaries
is a vital factor in the continued growth and success of the Corporation. Toward
this end, it is necessary to attract and retain effective and capable employees
to assume positions which contribute materially to the successful operation of
the business of the Corporation. It will benefit the Corporation, therefore, to
bind the interests of these persons more closely to its own interests by
offering them an attractive opportunity to acquire a proprietary interest in the
business enterprise and thereby provide them with added incentive to remain in
its employ and to increase the prosperity, growth and earnings of the
Corporation. This stock option plan will serve these purposes.
ARTICLE 1:00
Definitions
The following terms wherever used herein shall have the following meanings
respectively:
1:01 The term "Corporation" shall mean The Black & Decker
Corporation.
1:02 The term "Code" shall mean the Internal Revenue Code of 1986,
as amended, and any regulation thereto.
1:03 The term "Incentive Stock Option" shall mean any Option
granted pursuant to the Plan clearly designated as an
Incentive Stock Option and which satisfies the requirements of
Code Section 422(b).
1:04 The term "Plan" shall mean The Black & Decker 1986 Stock
Option Plan as approved and recommended by the Board of
Directors on October 17, 1985 and as adopted by the
shareholders of the Corporation on January 27, 1986, as the
same may be further amended from time to time.
1:05 The term "Board of Directors" shall mean the Board of
Directors of the Corporation.
1:06 The term "Committee" shall mean a committee to be appointed by
the Board of Directors to consist of two or more of those
members of the Board of Directors who are Non-Employee
Directors within the meaning of Rule 16b-3 promulgated under
the Exchange Act and are outside directors within the meaning
of the Section 162(m) Regulations, as each may be amended from
time to time.
1:07 The term "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
1:08 The term "Nonqualified Stock Option" shall mean an Option
granted under the Plan that is not an Incentive Stock Option.
1:09 The term "Section 162(m) Regulations" shall mean the
regulations adopted pursuant to Section 162(m) of the Code.
1:10 The term "Immediate Family Member" shall mean each of (i) the
children, step children or grandchildren of the Initial
Holder, (ii) the spouse or any parent of the Initial Holder,
(iii) any trust solely for the benefit of any such family
members, and (iv) any partnership or other entity in which
such family members are the only partners or other equity
holders.
1:11 The term "Initial Holder," with respect to an Option granted
under the Plan, shall mean the executive or other key employee
of the Corporation granted the Option.
<PAGE>
1:12 The term "Option" or "Stock Option" shall mean a right granted
pursuant to the Plan to purchase shares of Common Stock, and
shall include the terms Incentive Stock Option and
Nonqualified Stock Option.
1:13 The term "Option Agreement" shall mean the written agreement
representing Options granted pursuant to the Plan as
contemplated by Article 6:00 of the Plan.
1:14 The term "Option Holder" shall mean the Initial Holder so long
as he or she holds an Option initially granted to the Initial
Holder, and thereafter shall mean the beneficiary or the
Immediate Family Member to whom the Option has been
transferred in accordance with Section 6:05.
ARTICLE 2:00
Effective Date of the Plan
2:01 The Plan shall become effective as of January 27, 1986.
ARTICLE 3:00
Administration
3:01 The Plan shall be administered by the Committee.
3:02 The Committee shall establish, from time to time and at any
time, subject to the limitations of the Plan as hereinafter
set forth, such rules and regulations and amendments and
supplements thereto, as it deems necessary to comply with
applicable law and regulation and for the proper
administration of the Plan. A majority of the members of the
Committee shall constitute a quorum. The vote of a majority of
a quorum shall constitute action by the Committee.
3:03 The Committee shall from time to time submit to the Board of
Directors for its approval the names of those executives and
key managerial personnel who, in its opinion, should receive
Options, and shall recommend the numbers of shares on which
Options should be granted to each such person and the nature
of the Options to be granted, including without limitation
whether the Options and stock appreciation rights shall be
transferable in accordance with the terms and conditions
provided in Section 6:12 or Section 8:05.
3:04 The Options shall be granted by the Corporation and shall
become effective only after prior approval of the Board of
Directors, and upon the execution of an Option Agreement
between the Corporation and the Initial Holder.
ARTICLE 4:00
Participation in the Plan
4:01 Participation in the Plan shall be limited to such executives
and other key managerial personnel of the Corporation and its
subsidiaries who are regular, full-time employees of the
Corporation, or of any of its subsidiaries, and who from time
to time shall be designated by the Committee and approved by
the Board of Directors together with any permitted transferees
in accordance with the terms and conditions of the Plan.
- 2 -
<PAGE>
4:02 No member of the Board of Directors who is not also an
employee shall be eligible to participate in the Plan. No
employee owning a beneficial interest in more than 5% of the
outstanding stock of the Corporation shall be eligible to
participate in the Plan.
ARTICLE 5:00
Stock Subject to the Plan
5:01 There shall be reserved for the granting of Options under the
Plan and for issuance and sale pursuant to such Options,
1,800,000 shares of the Common Stock of the Corporation. In
determining the shares available at any time for granting
Options, there shall be deducted from the total number of
reserved shares, the number of shares with respect to which
Options have been granted under the Plan which are still
outstanding or have been exercised. The shares subject to
Option shall be made available from the authorized and
unissued Common Stock or from treasury shares of the
Corporation. If for any reason shares as to which an Option
has been granted cease to be subject to purchase thereunder,
then such shares again shall be available for Option under the
Plan. However, except as provided in Section 5:03 to prevent
dilution, the aggregate number of shares subject to Options
under the Plan shall not exceed 1,800,000 shares.
5:02 Proceeds of the purchase of optioned shares by any Option
Holder shall be used for the general business purposes of the
Corporation.
5:03 In the event of reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation,
acquisition of property or stock, or any change in the capital
structure of the Corporation, the Committee shall make such
adjustment as may be appropriate in the number and kind of
shares reserved for purchase by executives or key managerial
employees, in the number, kind and price of shares covered by
Options granted but not then exercised, and in the number of
stock appreciation rights, if any, and in the number of cash
appreciation rights, if any, related to shares covered by
Options granted but not then exercised.
ARTICLE 6:00
Terms and Conditions of Options
6:01 Each Option granted pursuant to the Plan shall be evidenced by
an Option Agreement in such form and with such terms and
conditions (including, without limitation, noncompete,
confidentiality or other similar provisions or provisions
relating to transfer) as the Committee from time to time may
determine. The right of an Option Holder to exercise his, her
or its Option shall at all times be subject to the terms and
conditions set forth in the respective Option Agreement.
6:02 The option price per share shall be equal to one hundred
percent (100%) of the fair market value of a share of the
Common Stock of the Corporation on the date on which the
Option is granted. The fair market value shall be the closing
price per share of the Common Stock of the Corporation as
finally reported in the New York Stock Exchange Composite
Transactions for the New York Stock Exchange on the date on
which the Option is granted, or if shares of the Common Stock
of the Corporation are not sold on such date, the closing
price per share of the Common Stock of the Corporation as
finally reported in the New York Stock Exchange Composite
Transactions for the New York Stock Exchange for the most
recent prior date on which the Common Stock of the Corporation
was sold.
- 3 -
<PAGE>
6:03 Each Option, subject to the other limitations herein provided,
may extend for a period of up to ten years from the date on
which it is granted. The term of each Option shall be
determined by the Committee at the time of grant of the
Option.
6:04 Unless otherwise provided by the Board of Directors upon the
recommendation of the Committee, the number of shares subject
to each Option shall be divided into four installments of
twenty-five percent each. The first installment shall be
exercisable twelve months after the date the Option was
granted, and each succeeding installment shall be exercisable
twelve months after the date the immediately preceding
installment became exercisable. If the Option Holder does not
purchase the full number of shares which he or she at any time
has become entitled to purchase, the Option Holder may
purchase all or any part of those shares at any subsequent
time during the term of the Option.
6:05 Options shall be non-transferable and non-assignable except
that (i) Options may be transferred by testamentary instrument
or by the laws of descent and distribution, and (ii) subject
to the terms and conditions of the Option Agreement or any
other terms and conditions imposed by the Committee from time
to time, Options may be transferred in accordance with the
terms and conditions provided in Section 6:12 if the
applicable Option Agreement or other action of the Committee
expressly provides that the Options are transferable.
6:06 Upon voluntary or involuntary termination of an Initial
Holder's employment, his or her Option (including any Option
transferred in accordance with the terms and conditions
provided in Section 6:12) and all rights thereunder, shall be
terminated except to the extent previously exercised, and
except as provided in Sections 6:07, 6:08 and 6:09.
6:07 In the event an Initial Holder (i) ceases to be a key employee
of the Corporation due to involuntary termination, or (ii)
takes a leave of absence from the Corporation or any of its
subsidiaries for personal reasons or by entry into the armed
forces of the United States, or any of the departments or
agencies of the United States government, or (iii) terminates
employment by reason of illness, disability or other special
circumstance, the Committee shall consider his or her case and
shall, subject to the approval of the Board of Directors, take
such action with respect to the related Option Agreement as it
may deem appropriate under the circumstances, including
accelerating the time previously granted Options may be
exercised and extending the time following the Initial
Holder's termination of employment during which the Option
Holder is entitled to purchase shares subject to such Options,
provided that in no event may any Option be exercised after
the expiration of the term of the Option.
6:08 If an Initial Holder dies during the term of his or her Option
without the Option having been exercised in full, (i) the
executor or administrator of his or her estate or the person
who inherits the right to exercise the Option by bequest or
inheritance in the event the Initial Holder was the Option
Holder at the date of death or (ii) the Option Holder in the
event the Option had been transferred in accordance with the
terms and conditions provided in Section 6:12, shall have the
right within three years of the Initial Holder's death to
purchase the number of shares which the deceased Initial
Holder (or Option Holder, as the case may be) was entitled to
purchase at the date of death after which the Option shall
lapse, provided that in no event may any Option be exercised
after the expiration of the term of the Option.
6:09 If an Initial Holder's employment is terminated without having
fully exercised the Option, and (i) the Initial Holder is 62
years of age or older, or (ii) the Initial Holder has been
employed by the Corporation or any of its subsidiaries or
affiliates at least 10 years and the Initial Holder's age plus
years of such employment total not less than 55 years, then
such Initial Holder (or the Option Holder in the event the
Option had been transferred in accordance with the terms and
conditions provided in Section 6:12) shall have the right
within three years of the Initial Holder's termination of
employment to purchase the number of shares which the Initial
Holder (or Option Holder, as
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<PAGE>
the case may be) was entitled to purchase at the date of
termination, after which the Option shall lapse, provided that
in no event may any Option be exercised after the expiration
of the term of the Option.
6:10 The granting of an Option to purchase shares pursuant to the
Plan shall not constitute or be evidence of any agreement or
understanding, express or implied, on the part of the
Corporation or any of its subsidiaries, to employ the Initial
Holder for any specified period.
6:11 The aggregate fair market value (as of the date an Incentive
Stock Option is granted) of stock, with respect to which
Incentive Stock Options under this Plan and "incentive Stock
Options" (within the meaning of Code Section 422(b)) under all
other plans of the Corporation and its subsidiaries are
exercisable for the first time by an Option Holder during any
calendar year, shall not exceed $100,000. Incentive Stock
Options shall not be transferable in accordance with the terms
and conditions provided in Section 6:12.
6:12 The Committee may provide, in the original grant of a
Nonqualified Stock Option or in an amendment or supplement to
a previous grant, that some or all of the Nonqualified Stock
Options granted under the Plan are transferable by the Initial
Holder to an Immediate Family Member of the Initial Holder,
provided that (i) the Option Agreement, as it may be amended
from time to time, expressly so provides or the Committee
otherwise designates the Option as transferable, (ii) the
transfer by the Initial Holder is a bona fide gift without
consideration, (iii) the transfer is irrevocable, (iv) the
Initial Holder and any such transferee provides such
documentation or other information concerning the transfer or
the transferee as the Committee or any employee of the
Corporation acting on behalf of the Committee may from time to
time request, and (v) the Initial Holder or the Option Holder
complies with all of the terms and conditions (including,
without limitation, any further restrictions or limitations)
included in the Option Agreement. Any Nonqualified Stock
Option transferred in accordance with the terms and conditions
provided in this Section 6:12 shall continue to be subject to
the same terms and conditions that were applicable to such
Nonqualified Stock Option prior to the transfer.
Notwithstanding any other provisions of the Plan, the
Corporation shall not be required to honor any exercise of an
Option by an Immediate Family Member of an Option transferred
in accordance with the terms and conditions provided in this
Section 6:12 unless and until payment or provision for payment
of any applicable withholding taxes has been made.
ARTICLE 7:00
Methods of Exercise of Option
7:01 The Option Holder (or other person or persons, if any,
entitled to exercise an Option hereunder) desiring to exercise
an Option granted under the Plan as to all or part of the
shares covered by the Option shall notify the Corporation in
writing at its principal office at 701 East Joppa Road,
Towson, Maryland 21286, to that effect, specifying the number
of shares to be purchased and the method of payment therefor,
and make payment or provision for payment for the shares of
Common Stock so purchased in accordance with this Article
7:00. Such written notice may be given by means of a facsimile
transmission. If a facsimile transmission is used, the Option
Holder should mail the original executed copy of the written
notice to the Corporation promptly thereafter.
7:02 An Option Holder at any time may elect in writing to abandon
an Option with respect to the number of shares as to which the
Option shall not have been exercised.
7:03 Within 10 days after receipt by the Corporation of the notice
provided in Section 7:01, payment or provision for payment
shall be made as follows:
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<PAGE>
(a) the Option shall be exercised as to the
number of shares specified in the notice by payment
to the Corporation in United States currency of the
purchase price as provided in the Option; or
(b) at the election of the Option Holder,
the Option may be exercised as to the number of
shares specified in the notice by tendering to the
Corporation shares of Common Stock of the Corporation
already owned by the Option Holder which, together
with any cash tendered therewith, shall equal in
value the purchase price. The value of the tendered
shares for this purpose shall be the fair market
value (as defined in Section 6:02) of such shares on
the date the notice provided in Section 7:01 is
received by the Corporation, and the Option Holder
shall deliver only that number of shares which,
together with any cash delivered, has an aggregate
value of not less than the purchase price as provided
in the Option; or
(c) the Option Holder shall deliver to the
Corporation an exercise notice together with
irrevocable instructions to a broker to deliver
promptly to the Corporation the amount of sale or
loan proceeds necessary to pay the aggregate purchase
price of the shares of Common Stock as to which such
exercise relates and to sell the shares of Common
Stock to be issued upon exercise of the Option and
deliver the cash proceeds less commissions and
brokerage fees to the Option Holder or to deliver the
remaining shares of Common Stock to the Option
Holder.
Notwithstanding the foregoing provisions, the Committee, in
processing any purported exercise of an Option granted under
the Plan, may refuse to recognize the methods of exercise
selected by the Option Holder (other than the methods of
exercise set forth in Sections 7:03(a) and 7:03(b)) if, in the
opinion of counsel to the Corporation, (i) the Initial Holder
or the Option Holder is or within the six months preceding
such exercise was subject to reporting under Section 16(a) of
the Exchange Act and (ii) there is a substantial likelihood
that the method of exercise selected by the Option Holder
would subject the Initial Holder or the Option Holder to a
substantial risk of liability under Section 16 of the Exchange
Act. Notwithstanding the foregoing provisions, no Incentive
Stock Option may be exercised in accordance with the methods
of exercise set forth in Section 7:03(c).
7:04 In addition to the alternative methods of exercise set forth
in Section 7:03, holders of Nonqualified Stock Options shall
be entitled, at or prior to the time the written notice
provided for in Section 7:01 is delivered to the Corporation,
to elect to have the Corporation withhold from the shares of
Common Stock to be delivered upon exercise of the Nonqualified
Stock Option that number of shares of Common Stock (determined
based on the fair market value (as defined in Section 6:02) of
a share of Common Stock on the date the notice set forth in
Section 7:01 is received by the Corporation) necessary to
satisfy any withholding taxes attributable to the exercise of
the Nonqualified Stock Option. Alternatively, such holder of a
Nonqualified Stock Option may elect to deliver previously
owned shares of Common Stock upon exercise of the Nonqualified
Stock Option to satisfy any withholding taxes attributable to
the exercise of the Nonqualified Stock Option. The maximum
amount that an Option Holder may elect to have withheld from
the shares of Common Stock otherwise deliverable upon exercise
or the maximum number of previously owned shares an Option
Holder may deliver shall be based on the maximum federal,
state and local taxes payable by the Option Holder.
Notwithstanding the foregoing provisions, the Committee or the
Board of Directors may include in the Option Agreement
relating to any such Nonqualified Stock Option provisions
limiting or eliminating the Option Holder's ability to pay his
or her withholding tax obligation with shares of Common Stock
or, if no such provisions are included in the Option Agreement
but in the opinion of the Committee such withholding would
have an adverse tax or accounting effect to the Corporation,
at or prior to exercise of the Nonqualified Stock Option the
Committee may so limit or eliminate the Option Holder's
ability to pay his or her withholding tax obligation with
shares of Common Stock. Notwithstanding the foregoing
- 6 -
<PAGE>
provisions, a holder of a Nonqualified Stock Option may not
elect any of the methods of satisfying his or her withholding
tax obligation in respect of any exercise if, in the opinion
of counsel to the Corporation, (i) the Initial Holder or the
holder of the Nonqualified Stock Option is or within the six
months preceding such exercise was subject to reporting under
Section 16(a) of the Exchange Act and (ii) there is a
substantial likelihood that the election or timing of the
election would subject the Initial Holder or the holder of the
Nonqualified Stock Option to a substantial risk of liability
under Section 16 of the Exchange Act.
7:05 An Option Holder shall have none of the rights of a
stockholder until the shares covered by the Option are issued
upon exercise of the Option.
ARTICLE 8:00
Stock Appreciation Rights
8:01 Stock appreciation rights may be granted concurrently with the
grant of Stock Options at the sole discretion of the
Committee. If the Committee does grant stock appreciation
rights to an Option Holder, the number of stock appreciation
rights granted to the Option Holder shall equal the number of
shares granted pursuant to the related Stock Option.
8:02 A stock appreciation right shall entitle an Option Holder
subject to the terms and conditions of the Plan to surrender
to the Corporation for cancellation all or a portion of the
related Stock Option granted pursuant to the Plan, but only to
the extent that such Option is then exercisable, and to be
paid therefor an amount in cash or a number of shares of
Common Stock having a fair market value on the date the stock
appreciation right is exercised equal to the increase, if any,
of the fair market value of a share of Common Stock on the
date of exercise of the stock appreciation right over the
value of a share of Common Stock on the date of grant of the
related Stock Option.
8:03 The Committee in its sole discretion shall determine whether a
stock appreciation right will be paid in cash or in shares of
Common Stock.
8:04 Stock appreciation rights may only be exercised prior to the
exercise, termination or cancellation of the related Stock
Option.
8:05 The Committee may provide, in the original grant of a Stock
Appreciation Right or in an amendment or supplement to a
previous grant, that some or all of the stock appreciation
rights granted under the Plan are transferable by the Initial
Holder to an Immediate Family Member of the Initial Holder,
provided that (i) the stock appreciation right agreement, as
it may be amended from time to time, expressly so provides or
the Committee otherwise designates the stock appreciation
right as transferable, (ii) transfer by the Initial Holder is
a bona fide gift without consideration, (iii) the transfer is
irrevocable, (iv) the Initial Holder and any such transferee
provides such documentation or other information concerning
the transfer or the transferee as the Committee or any
employee of the Corporation acting on behalf of the Committee
may from time to time request, and (v) the Initial Holder or
the stock appreciation right holder complies with all of the
terms and conditions (including, without limitation, any
further restrictions or limitations) included in the stock
appreciation right agreement. Any stock appreciation right
transferred in accordance with the terms and conditions
provided in this Section 8:11 shall continue to be subject to
the same terms and conditions that were applicable to such
stock appreciation right prior to the transfer.
Notwithstanding any other provisions of the Plan, the
Corporation shall not be required to honor any exercise of a
stock appreciation right by an Immediate Family Member of a
stock appreciation right transferred in accordance with the
terms and conditions provided in this Section 8:11 unless and
until payment or provision for payment of any applicable
withholding taxes has been made.
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<PAGE>
ARTICLE 9:00
Cash Appreciation Rights
9:01 Cash appreciation rights may be granted concurrently with the
grant of Stock Options at the sole discretion of the
Committee. If the Committee does grant cash appreciation
rights to an Option Holder, the number of cash appreciation
rights granted to an Option Holder shall equal the number of
shares granted pursuant to the related Stock Option.
9:02 Cash appreciation rights shall entitle an Option Holder
subject to the terms and conditions of the Plan to receive
from the Corporation or the subsidiary employing the Option
Holder, upon exercise of all or a portion of the related Stock
Option granted pursuant to the Plan, or upon the surrender of
all or a portion of the related Stock Option granted in
exchange for the exercise of stock appreciation rights, if
any, granted to the Option Holder pursuant to the Plan, a
payment in cash equal to the sum of (i) the increase in income
taxes, if any, incurred by the Option Holder as a result of
the full or partial exercise of the related Stock Option or,
if appropriate, the related stock appreciation right, and (ii)
the increase in income taxes, if any, incurred by the Option
Holder as a result of receipt of this cash payment.
9:03 In no event shall the cash payment for a cash appreciation
right exceed the increase, if any, of the fair market value of
a share of Common Stock on the date of exercise of the related
Stock Option or, if appropriate, of the related stock
appreciation right over the value of a share of Common Stock
on the date of grant of the related Stock Option.
9:04 Except as otherwise contemplated in this Article 9:00, cash
appreciation rights shall be nontransferable and
nonassignable.
ARTICLE 10:00
Amendments and Discontinuance of the Plan
10:01 The Board of Directors shall have the right at any time and
from time to time to amend, modify or discontinue the Plan
provided that, except as provided in Section 5:03, no such
amendment, modification or discontinuance shall (i) revoke or
alter the terms of any valid Option, stock appreciation right
or cash appreciation right previously granted in accordance
with the Plan, (ii) increase the number of shares to be
reserved for issuance and sale pursuant to Options, (iii)
change the price determined pursuant to the provisions of
Section 6:02, (iv) change the class of employee to whom
Options may be granted under the Plan, or (v) provide for
Options exercisable more than ten years after the date
granted.
ARTICLE 11:00
Plan Subject to Governmental Laws and Regulations
11:01 The Plan, and the grant and the exercise of Options, stock
appreciation rights and cash appreciation rights shall be
subject to all applicable governmental laws and regulations.
Any other provision of the Plan to the contrary
notwithstanding, the Board of Directors may in its discretion
make such changes in the Plan as may be required, in their
opinion, to conform the Plan to such laws and regulations.
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<PAGE>
ARTICLE 12:00
Duration of the Plan
12:01 No Option shall be granted pursuant to the Plan after the
close of business on January 26, 1996.
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Exhibit 10(b)
THE BLACK & DECKER 1989 STOCK OPTION PLAN
The proper execution of the duties and responsibilities of the
executive and other key employees of The Black & Decker Corporation and its
subsidiaries is a vital factor in the continued growth and success of the
Corporation. Toward this end, it is necessary to attract and retain effective
and capable employees to assume positions that contribute materially to the
successful operation of the business of the Corporation. It will benefit the
Corporation, therefore, to bind the interests of these persons more closely to
its own interests by offering them an attractive opportunity to acquire a
proprietary interest in the Corporation and thereby provide them with added
incentive to remain in its employ and to increase the prosperity, growth, and
earnings of the Corporation. This stock option plan will serve these purposes.
ARTICLE 1:00
Definitions
The following terms wherever used herein shall have the meanings set
forth below.
1:01 The term "Board of Directors" shall mean the Board of
Directors of the Corporation.
1:02 The term "Cash Appreciation Right" shall mean a right to
receive cash pursuant to Article 10:00 of the Plan.
1:03 The term "Code" shall mean the Internal Revenue Code of 1986,
as amended, and any regulations promulgated thereunder.
1:04 The term "Committee" shall mean a committee to be appointed by
the Board of Directors to consist of two or more of those
members of the Board of Directors who are Non-Employee
Directors within the meaning of Rule 16b-3 promulgated under
the Exchange Act and are outside directors within the meaning
of the Section 162(m) Regulations, as each may be amended from
time to time.
1:05 The term "Common Stock" shall mean the shares of common stock,
par value $.50 per share, of the Corporation.
1:06 The term "Corporation" shall mean The Black & Decker
Corporation.
1:07 The term "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
1:08 The term "Fair Market Value of a share of Common Stock" shall
mean the closing price per share of Common Stock as finally
reported in the New York Stock Exchange Composite Transactions
for the New York Stock Exchange, or if shares of Common Stock
are not sold on such date, the closing price per share of
Common Stock as finally reported in the New York Stock
Exchange Composite Transactions for the New York Stock
Exchange for the most recent prior date on which shares of
Common Stock were sold.
1:09 The term "Immediate Family Member" shall mean each of (i) the
children, step children or grandchildren of the Initial
Holder, (ii) the spouse or any parent of the Initial Holder,
(iii) any trust solely for the benefit of any such family
members, and (iv) any partnership or other entity in which
such family members are the only partners or other equity
holders.
1:10 The term "Incentive Stock Option" shall mean any Option
granted pursuant to the Plan that is designated as an
Incentive Stock Option and which satisfies the requirements of
Section 422(b) of the Code.
<PAGE>
1:11 The term "Initial Holder," with respect to an Option or Right
granted under the Plan, shall mean the executive or other key
employee of the Corporation granted the Option or Right.
1:12 The term "Nonqualified Stock Option" shall mean any Option
granted pursuant to the Plan that is not an Incentive Stock
Option.
1:13 The term "Option" or "Stock Option" shall mean a right granted
pursuant to the Plan to purchase shares of Common Stock, and
shall include the terms Incentive Stock Option and
Nonqualified Stock Option.
1:14 The term "Option Agreement" shall mean the written agreement
representing Options granted pursuant to the Plan as
contemplated by Article 6:00 of the Plan.
1:15 The term "Option Holder" shall mean the Initial Holder so long
as he or she holds an Option initially granted to the Initial
Holder, and thereafter shall mean the beneficiary or the
Immediate Family Member to whom the Option has been
transferred in accordance with Section 6:05.
1:16 The term "Plan" shall mean The Black & Decker 1989 Stock
Option Plan as approved by the Board of Directors on November
17, 1988, and adopted by the stockholders of the Corporation
on January 30, 1989, as the same may be amended from time to
time.
1:17 The term "Rights" shall include Stock Appreciation Rights and
Cash Appreciation Rights.
1:18 The term "Section 162(m) Regulations" shall mean the
regulations adopted pursuant to Section 162(m) of the Code.
1:19 The term "Stock Appreciation Right" shall mean a right to
receive cash or shares of Common Stock pursuant to Article
8:00 of the Plan.
1:20 The term "Stock Appreciation Right Agreement" shall mean the
written agreement representing Stock Appreciation Rights
granted pursuant to the Plan as contemplated by Article 8:00
of the Plan.
1:21 The term "Stock Appreciation Right Holder" shall mean the
Initial Holder so long as he or she holds a Stock Appreciation
Right initially granted to the Initial Holder, and thereafter
shall mean the beneficiary or the Immediate Family Member to
whom the Stock Appreciation Right has been transferred in
accordance with Section 8:05.
1:22 The term "Stock Appreciation Right Base Price" shall mean the
base price for determining the value of a Stock Appreciation
Right under Section 8:02, which Stock Appreciation Right Base
Price shall be established by the Committee at the time of the
grant of Stock Appreciation Rights pursuant to the Plan and
shall not be less than 90% of the Fair Market Value of a share
of Common Stock on the date of grant. If the Committee does
not establish a specific Stock Appreciation Right Base Price
at the time of grant, the Stock Appreciation Right Base Price
shall be equal to the Fair Market Value of a share of Common
Stock on the date of grant of the Stock Appreciation Right.
1:23 The term "subsidiary" or "subsidiaries" shall mean a
corporation of which capital stock possessing 50% or more of
the total combined voting power of all classes of its capital
stock entitled to vote generally in the election of directors
is owned in the aggregate by the Corporation directly or
indirectly through one or more subsidiaries.
- 2 -
<PAGE>
ARTICLE 2:00
Effective Date of the Plan
2:01 The Plan shall become effective upon stockholder approval,
provided that such approval is received on or before November
16, 1989 and provided further that Options, Stock Appreciation
Rights, or Cash Appreciation Rights may be granted pursuant to
the Plan prior to stockholder approval if such Options, Stock
Appreciation Rights, or Cash Appreciation Rights by their
terms are contingent upon subsequent stockholder approval of
the Plan.
ARTICLE 3:00
Administration
3:01 The Plan shall be administered by the Committee.
3:02 The Committee may establish, from time to time and at any
time, subject to the limitations of the Plan as set forth
herein, such rules and regulations and amendments and
supplements thereto, as it deems necessary to comply with
applicable law and regulation and for the proper
administration of the Plan. A majority of the members of the
Committee shall constitute a quorum. The vote of a majority of
a quorum shall constitute action by the Committee.
3:03 The Committee shall from time to time determine the names of
those executives and other key employees who, in its opinion,
should receive Options and/or Stock Appreciation Rights, and
shall determine the numbers of shares on which Options should
be granted or upon which Stock Appreciation Rights should be
based to each such person and the nature of the Options and/or
Stock Appreciation Rights to be granted, including without
limitation whether the Options or Rights shall be transferable
in accordance with the terms and conditions provided in
Section 6:12 or Section 8:11.
3:04 Options and Stock Appreciation Rights shall be granted by the
Corporation only upon the prior approval of the Committee, and
upon the execution of an Option Agreement and/or Stock
Appreciation Right Agreement between the Corporation and the
Initial Holder.
3:05 The Committee's interpretation and construction of the
provisions of the Plan and the rules and regulations adopted
by the Committee shall be final. No member of the Committee or
the Board of Directors shall be liable for any action taken or
determination made, in respect of the Plan, in good faith.
ARTICLE 4:00
Participation in the Plan
4:01 Participation in the Plan shall be limited to such executives
and other key employees of the Corporation and its
subsidiaries who are regular, full-time employees of the
Corporation or any of its subsidiaries, and who from time to
time shall be designated by the Committee together with any
permitted transferees in accordance with the terms and
conditions of the Plan.
4:02 No member of the Board of Directors who is not also an
employee shall be eligible to participate in the Plan. No
employee who owns beneficially more than 10% of the
outstanding shares of Common Stock shall be eligible to
participate in the Plan.
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<PAGE>
ARTICLE 5:00
Stock Subject to the Plan
5:01 There shall be reserved for the granting of Options and/or
Stock Appreciation Rights pursuant to the Plan and for
issuance and sale pursuant to such Options and/or Stock
Appreciation Rights 3,400,000 shares of Common Stock. To
determine the number of shares of Common Stock available at
any time for the granting of Options and/or Stock Appreciation
Rights, there shall be deducted from the total number of
reserved shares of Common Stock, the number of shares of
Common Stock in respect of which Options have been granted
pursuant to the Plan that are still outstanding or have been
exercised. The shares of Common Stock to be issued upon the
exercise of Options or Stock Appreciation Rights granted
pursuant to the Plan shall be made available from the
authorized and unissued shares of Common Stock or from shares
of Common Stock held in treasury. If for any reason shares of
Common Stock as to which an Option has been granted cease to
be subject to purchase thereunder, then such shares of Common
Stock again shall be available for issuance pursuant to the
exercise of Options and/or Stock Appreciation Rights pursuant
to the Plan. Except as provided in Section 5:03, however, the
aggregate number of shares of Common Stock that may be issued
upon the exercise of Options and Stock Appreciation Rights
pursuant to the Plan shall not exceed 3,400,000 shares and no
more than 3,400,000 Stock Appreciation Rights shall be granted
pursuant to the Plan.
5:02 Proceeds from the purchase of shares of Common Stock upon the
exercise of Options granted pursuant to the Plan shall be used
for the general business purposes of the Corporation.
5:03 In the event of reorganization, recapitalization, stock split,
stock dividend, combination of shares of Common Stock, merger,
consolidation, share exchange, acquisition of property or
stock, or any change in the capital structure of the
Corporation, the Committee shall make such adjustments as may
be appropriate in the number and kind of shares reserved for
purchase by executives or other key employees, in the number,
kind and price of shares covered by Options and/or Stock
Appreciation Rights granted pursuant to the Plan but not then
exercised, in the number of Stock Appreciation Rights, if any,
granted pursuant to the Plan but not then exercised, and in
the number of Cash Appreciation Rights, if any, related to
Options and/or Stock Appreciation Rights granted pursuant to
the Plan but not then exercised.
ARTICLE 6:00
Terms and Conditions of Options
6:01 Each Option granted pursuant to the Plan shall be evidenced by
an Option Agreement in such form and with such terms and
conditions (including, without limitation, noncompete,
confidentiality or other similar provisions or provisions
relating to transfer) as the Committee from time to time may
determine. The right of an Option Holder to exercise his, her
or its Option shall at all times be subject to the terms and
conditions set forth in the respective Option Agreement.
6:02 The exercise price per share for Options shall be established
by the Committee at the time of the grant of Options pursuant
to the Plan and shall not be less than 90% of the Fair Market
Value of a share of Common Stock on the date on which the
Option is granted. If the Committee does not establish a
specific exercise price per share at the time of grant, the
exercise price per share shall be equal to the Fair Market
Value of a share of Common Stock on the date of grant of the
Options.
6:03 Each Option, subject to the other limitations set forth in the
Plan, may extend for a period of up to 10 years from the date
on which it is granted. The term of each Option shall be
determined by
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<PAGE>
the Committee at the time of grant of the Option, provided
that if no term is established by the Committee the term of
the Option shall be 10 years from the date on which it is
granted.
6:04 Unless otherwise provided by the Committee, the number of
shares of Common Stock subject to each Option shall be divided
into four installments of 25% each. The first installment
shall be exercisable 12 months after the date the Option was
granted, and each succeeding installment shall be exercisable
12 months after the date the immediately preceding installment
became exercisable. If an Option Holder does not purchase the
full number of shares of Common Stock that he, she or it at
any time has become entitled to purchase, the Option Holder
may purchase all or any part of those shares of Common Stock
at any subsequent time during the term of the Option.
6:05 Options shall be nontransferable and nonassignable, except
that (i) Options may be transferred by testamentary instrument
or by the laws of descent and distribution, and (ii) subject
to the terms and conditions of the Option Agreement or any
other terms and conditions imposed by the Committee from time
to time, Options may be transferred in accordance with the
terms and conditions provided in Section 6:12 if the
applicable Option Agreement or other action of the Committee
expressly provides that the Options are transferable.
6:06 Upon voluntary or involuntary termination of an Initial
Holder's employment, his or her Option (including any Option
transferred in accordance with the terms and conditions
provided in Section 6:12) and all rights thereunder shall be
terminated except to the extent previously exercised and
except as provided in Sections 6:07, 6:08, and 6:09.
6:07 In the event an Initial Holder (i) ceases to be an executive
or other key employee of the Corporation or any of its
subsidiaries due to involuntary termination, (ii) takes a
leave of absence from the Corporation or any of its
subsidiaries for personal reasons or as a result of entry into
the armed forces of the United States, or any of the
departments or agencies of the United States government, or
(iii) terminates employment by reason of illness, disability,
or other special circumstance, the Committee may consider
his or her case and may take such action in respect of the
related Option Agreement as it may deem appropriate under the
circumstances, including accelerating the time previously
granted Options may be exercised and extending the time
following the Initial Holder's termination of employment
during which the Option Holder is entitled to purchase the
shares of Common Stock subject to such Options, provided that
in no event may any Option be exercised after the expiration
of the term of the Option.
6:08 If an Initial Holder dies during the term of his or her Option
without the Option having been exercised in full, (i) the
executor or administrator of his or her estate or the person
who inherits the right to exercise the Option by bequest or
inheritance in the event the Initial Holder was the Option
Holder at the date of death or (ii) the Option Holder in the
event the Option had been transferred in accordance with the
terms and conditions provided in Section 6:12, shall have the
right within three years of the Initial Holder's death to
purchase the number of shares of Common Stock that the
deceased Initial Holder (or Option Holder, as the case may be)
was entitled to purchase at the date of death, after which the
Option shall lapse, provided that in no event may any Option
be exercised after the expiration of the term of the Option.
6:09 If an Initial Holder's employment is terminated without his or
her Option having been exercised in full and (i) the Initial
Holder is 62 years of age or older, or (ii) the Initial Holder
has been employed by the Corporation or any of its
subsidiaries for at least 10 years and the Initial Holder's
age plus years of such employment total not less than 55
years, then such Initial Holder (or the Option Holder in the
event the Option had been transferred in accordance with the
terms and conditions provided in Section 6:12) shall have the
right within three years of the Initial Holder's termination
of employment to purchase the number of shares of Common Stock
that the Initial Holder (or Option Holder, as the case may be)
was entitled to purchase at the date of termination, after
which the Option shall lapse, provided that in no event may
any Option be exercised after the
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<PAGE>
expiration of the term of the Option.
6:10 The granting of an Option pursuant to the Plan shall not
constitute or be evidence of any agreement or understanding,
express or implied, on the part of the Corporation or any of
its subsidiaries to employ the Initial Holder for any
specified period.
6:11 In addition to the general terms and conditions set forth in
this Article 6:00 in respect of Options granted pursuant to
the Plan, Incentive Stock Options granted pursuant to the Plan
shall be subject to the following additional terms and
conditions:
(a) The aggregate fair market value (determined at the
time the Incentive Stock Option is granted) of the
shares of Common Stock in respect of which "incentive
stock options" are exercisable for the first time by
the Option Holder during any calendar year (under all
such plans of the Corporation and its subsidiaries)
shall not exceed $100,000;
(b) The Option Agreement in respect of an Incentive Stock
Option may contain any other terms and conditions
specified by the Committee that are not inconsistent
with the Plan, except that such terms and conditions
must be consistent with the requirements for
"incentive stock options" under Section 422 of the
Code; and
(c) Incentive Stock Options shall not be transferable in
accordance with the terms and conditions provided in
Section 6:12.
6:12 The Committee may provide, in the original grant of a
Nonqualified Stock Option or in an amendment or supplement to
a previous grant, that some or all of the Nonqualified Stock
Options granted under the Plan are transferable by the Initial
Holder to an Immediate Family Member of the Initial Holder,
provided that (i) the Option Agreement, as it may be amended
from time to time, expressly so provides or the Committee
otherwise designates the Option as transferable, (ii) the
transfer by the Initial Holder is a bona fide gift without
consideration, (iii) the transfer is irrevocable, (iv) the
Initial Holder and any such transferee provides such
documentation or other information concerning the transfer or
the transferee as the Committee or any employee of the
Corporation acting on behalf of the Committee may from time to
time request, and (v) the Initial Holder or the Option Holder
complies with all of the terms and conditions (including,
without limitation, any further restrictions or limitations)
included in the Option Agreement. Any Nonqualified Stock
Option transferred in accordance with the terms and conditions
provided in this Section 6:12 shall continue to be subject to
the same terms and conditions that were applicable to such
Nonqualified Stock Option prior to the transfer.
Notwithstanding any other provisions of the Plan, the
Corporation shall not be required to honor any exercise of an
Option by an Immediate Family Member of an Option transferred
in accordance with the terms and conditions provided in this
Section 6:12 unless and until payment or provision for payment
of any applicable withholding taxes has been made.
ARTICLE 7:00
Methods of Exercise of Options
7:01 An Option Holder (or other person or persons, if any, entitled
to exercise an Option hereunder) desiring to exercise an
Option granted pursuant to the Plan as to all or part of the
shares of Common Stock covered by the Option shall (i) notify
the Corporation in writing at its principal office at 701 East
Joppa Road, Towson, Maryland 21286, to that effect, specifying
the number of shares of Common Stock to be purchased and the
method of payment therefor, and (ii) make payment or provision
for payment for the shares of Common Stock so purchased in
accordance with this Article 7:00. Such written notice may be
given by means of a facsimile transmission.
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<PAGE>
If a facsimile transmission is used, the Option Holder should
mail the original executed copy of the written notice to the
Corporation promptly thereafter.
7:02 Within 10 days after receipt by the Corporation of the written
notice provided for in Section 7:01, payment or provision for
payment shall be made as follows:
(a) The Option Holder shall deliver to the Corporation at
the address set forth in Section 7:01 United States
currency in an amount equal to the aggregate purchase
price of the shares of Common Stock as to which such
exercise relates; or
(b) The Option Holder shall tender to the Corporation
shares of Common Stock already owned by the Option
Holder that, together with any cash tendered
therewith, have an aggregate fair market value
(determined based on the Fair Market Value of a share
of Common Stock on the date the notice set forth in
Section 7:01 is received by the Corporation) equal to
the aggregate purchase price of the shares of Common
Stock as to which such exercise relates; or
(c) The Option Holder shall tender less than the number
of shares of Common Stock required by Section 7:02(b)
together with written instructions to the Corporation
to reapply continually the shares of Common Stock
received upon each partial exercise of the Option
until the Option shall have been exercised in full;
or
(d) The Option Holder shall deliver to the Corporation an
exercise notice requesting the Corporation to issue
to the Option Holder the full number of shares of
Common Stock as to which the Option is then
exercisable less the number of shares of Common Stock
that have an aggregate fair market value (determined
based on the Fair Market Value of a share of Common
Stock on the date the notice set forth in Section
7:01 is received by the Corporation) equal to the
aggregate purchase price of the shares of Common
Stock as to which such exercise relates; or
(e) The Option Holder shall deliver to the Corporation an
exercise notice together with irrevocable
instructions to a broker to deliver promptly to the
Corporation the amount of sale or loan proceeds
necessary to pay the aggregate purchase price of the
shares of Common Stock as to which such exercise
relates and to sell the shares of Common Stock to be
issued upon exercise of the Option and deliver the
cash proceeds less commissions and brokerage fees to
the Option Holder or to deliver the remaining shares
of Common Stock to the Option Holder.
Notwithstanding the foregoing provisions, the Committee, in
granting Options pursuant to the Plan, may limit the methods
in which an Option may be exercised by any person and, in
processing any purported exercise of an Option granted
pursuant to the Plan, may refuse to recognize the method of
exercise selected by the Option Holder (other than the method
of exercise set forth in Section 7:02(a)) if, in the opinion
of counsel to the Corporation, (i) the Initial Holder or the
Option Holder is or within the six months preceding such
exercise was subject to reporting under Section 16(a) of the
Exchange Act and (ii) there is a substantial likelihood that
the method of exercise selected by the Option Holder would
subject the Initial Holder or the Option Holder to a
substantial risk of liability under Section 16 of the Exchange
Act. Notwithstanding the foregoing provisions, no Incentive
Stock Option may be exercised in accordance with the methods
of exercise set forth in Section 7:02(d) or Section 7:02(e)
unless, in the opinion of counsel to the Corporation, such
exercise would not have a material adverse effect upon the
incentive stock option tax treatment of any outstanding
Incentive Stock Options or Incentive Stock Options that
thereafter may be granted pursuant to the Plan.
Notwithstanding the foregoing provisions, the methods of
exercise set forth in Section 7:02(c) and Section 7:02(d)
shall not be available for Options granted under the Plan on
or after October 17, 1991.
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<PAGE>
7:03 In addition to the alternative methods of exercise set forth
in Section 7:02, holders of Nonqualified Stock Options shall
be entitled, at or prior to the time the written notice
provided for in Section 7:01 is delivered to the Corporation,
to elect to have the Corporation withhold from the shares of
Common Stock to be delivered upon exercise of the Nonqualified
Stock Option that number of shares of Common Stock (determined
based on the Fair Market Value of a share of Common Stock on
the date the notice set forth in Section 7:01 is received by
the Corporation) necessary to satisfy any withholding taxes
attributable to the exercise of the Nonqualified Stock Option.
Alternatively, such holder of a Nonqualified Stock Option may
elect to deliver previously owned shares of Common Stock upon
exercise of the Nonqualified Stock Option to satisfy any
withholding taxes attributable to the exercise of the
Nonqualified Stock Option. The maximum amount that an Option
Holder may elect to have withheld from the shares of Common
Stock otherwise deliverable upon exercise or the maximum
number of previously owned shares an Option Holder may deliver
shall be based on the maximum federal, state and local taxes
payable by the Option Holder. Notwithstanding the foregoing
provisions, the Committee may include in the Option Agreement
relating to any such Nonqualified Stock Option provisions
limiting or eliminating the Option Holder's ability to pay his
or her withholding tax obligation with shares of Common Stock
or, if no such provisions are included in the Option Agreement
but in the opinion of the Committee such withholding would
have an adverse tax or accounting effect to the Corporation,
at or prior to exercise of the Nonqualified Stock Option the
Committee may so limit or eliminate the Option Holder's
ability to pay his or her withholding tax obligation with
shares of Common Stock. Notwithstanding the foregoing
provisions, a holder of a Nonqualified Stock Option may not
elect any of the methods of satisfying his or her withholding
tax obligation in respect of any exercise if, in the opinion
of counsel to the Corporation, (i) the Initial Holder or the
holder of the Nonqualified Stock Option is or within the six
months preceding such exercise was subject to reporting under
Section 16(a) of the Exchange Act and (ii) there is a
substantial likelihood that the election or timing of the
election would subject the Initial Holder or the holder of the
Nonqualified Stock Option to a substantial risk of liability
under Section 16 of the Exchange Act.
7:04 An Option Holder at any time may elect in writing to abandon
an Option in respect of all or part of the number of shares of
Common Stock as to which the Option shall not have been
exercised.
7:05 An Option Holder shall have none of the rights of a
stockholder of the Corporation until the shares of Common
Stock covered by the Option are issued upon exercise of the
Option.
ARTICLE 8:00
Terms and Conditions of Stock Appreciation Rights
8:01 Each Stock Appreciation Right granted pursuant to the Plan
shall be evidenced by a Stock Appreciation Right Agreement in
such form and with such terms and conditions (including,
without limitation, noncompete, confidentiality or other
similar provisions or provisions relating to transfer) as the
Committee from time to time may determine. Notwithstanding the
foregoing provision, Stock Appreciation Rights granted in
tandem with a related Option shall be evidenced by the Option
Agreement in respect of the related Option. The right of a
Stock Appreciation Right Holder to exercise his, her or its
Stock Appreciation Right shall at all times be subject to the
terms and conditions set forth in the respective Stock
Appreciation Right Agreement.
8:02 Each Stock Appreciation Right shall entitle the holder,
subject to the terms and conditions of the Plan, to receive
upon exercise of the Stock Appreciation Right an amount,
payable in cash or shares of Common Stock (determined based on
the Fair Market Value of a share of Common Stock on the date
the notice set forth in Section 9:01 is received by the
Corporation), equal to the Fair Market Value of a share of
Common Stock on the date of receipt by the Corporation of the
notice
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<PAGE>
required by Section 9:01 less the Stock Appreciation Right
Base Price. Notwithstanding the foregoing provision, each
Stock Appreciation Right that is granted in tandem with a
related Option shall entitle the holder, subject to the terms
and conditions of the Plan, to surrender to the Corporation
for cancellation all or a portion of the related Option, but
only to the extent such Stock Appreciation Right and related
Option then are exercisable, and to be paid therefor an
amount, payable in cash or shares of Common Stock (determined
based on the Fair Market Value of a share of Common Stock on
the date the notice set forth in Section 9:01 is received by
the Corporation), equal to the Fair Market Value of a share of
Common Stock on the date of receipt by the Corporation of the
notice required by Section 9:01 less the Stock Appreciation
Right Base Price.
8:03 Each Stock Appreciation Right, subject to the other
limitations set forth in the Plan, may extend for a period of
up to 10 years from the date on which it is granted. The term
of each Stock Appreciation Right shall be determined by the
Committee at the time of grant of the Stock Appreciation
Right, provided that if no term is established by the
Committee the term of the Stock Appreciation Right shall be 10
years from the date on which it is granted.
8:04 Unless otherwise provided by the Committee, the number of
Stock Appreciation Rights granted pursuant to each Stock
Appreciation Right Agreement shall be divided into four
installments of 25% each. The first installment shall be
exercisable 12 months after the date the Stock Appreciation
Right was granted, and each succeeding installment shall be
exercisable 12 months after the date the immediately preceding
installment became exercisable. If a Stock Appreciation Right
Holder does not exercise the Stock Appreciation Right to the
extent that he, she or it at any time has become entitled to
exercise, the Stock Appreciation Right Holder may exercise all
or any part of the Stock Appreciation Right at any subsequent
time during the term of the Stock Appreciation Right.
8:05 Stock Appreciation Rights shall be nontransferable and
nonassignable, except that (i) Stock Appreciation Rights may
be transferred by testamentary instrument or by the laws of
descent and distribution, and (ii) subject to the terms and
conditions of the Stock Appreciation Right Agreement or any
other terms and conditions imposed by the Committee from time
to time, Stock Appreciation Rights may be transferred in
accordance with the terms and conditions provided in Section
8:11 if the applicable Stock Appreciation Right Agreement or
other action of the Committee expressly provides that the
Stock Appreciation Rights are transferable.
8:06 Upon voluntary or involuntary termination of an Initial
Holder's employment, his or her Stock Appreciation Right
(including any Stock Appreciation Right transferred in
accordance with the terms and conditions provided in Section
8:11) and all rights thereunder shall be terminated except to
the extent previously exercised and except as provided in
Sections 8:07, 8:08, and 8:09.
8:07 In the event an Initial Holder (i) ceases to be an executive
or other key employee of the Corporation or any of its
subsidiaries due to involuntary termination, (ii) takes a
leave of absence from the Corporation or any of its
subsidiaries for personal reasons or as a result of entry into
the armed forces of the United States, or any of the
departments or agencies of the United States government, or
(iii) terminates employment by reason of illness, disability,
or other special circumstance, the Committee may consider his
or her case and may take such action in respect of the related
Stock Appreciation Right Agreement as it may deem appropriate
under the circumstances, including accelerating the time
previously granted Stock Appreciation Rights may be exercised
and extending the time following the Initial Holder's
termination of employment during which the Stock Appreciation
Right Holder is entitled to exercise the Stock Appreciation
Rights, provided that in no event may any Stock Appreciation
Right be exercised after the expiration of the term of the
Stock Appreciation Right.
8:08 If an Initial Holder dies during the term of his or her Stock
Appreciation Right without the Stock Appreciation Right having
been exercised in full, (i) the executor or administrator of
the Stock
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<PAGE>
Appreciation Right Holder's estate or the person who inherits
the right to exercise the Stock Appreciation Right by bequest
or inheritance in the event the Initial Holder was the Stock
Appreciation Right Holder at the date of death or (ii) the
Stock Appreciation Right Holder in the event the Stock
Appreciation Right had been transferred in accordance with the
terms and conditions provided in Section 8:11, shall have the
right within three years of the Initial Holder's death to
exercise the Stock Appreciation Rights that the deceased
Initial Holder (or Stock Appreciation Right Holder, as the
case may be) was entitled to purchase at the date of death,
after which the Stock Appreciation Right shall lapse, provided
that in no event may any Stock Appreciation Right be exercised
after the expiration of the term of the Stock Appreciation
Right.
8:09 If an Initial Holder's employment is terminated without his or
her Stock Appreciation Right having been exercised in full and
(i) the Initial Holder is 62 years of age or older, or (ii)
the Initial Holder has been employed by the Corporation or any
of its subsidiaries for at least 10 years and the Initial
Holder's age plus years of such employment total not less than
55 years, then such Initial Holder (or the Stock Appreciation
Right Holder in the event the Stock Appreciation Right had
been transferred in accordance with the terms and conditions
provided in Section 8:11) shall have the right within three
years of the Initial Holder's termination of employment to
exercise the Stock Appreciation Rights that the Initial Holder
(or Stock Appreciation Right Holder, as the case may be) was
entitled to exercise at the date of termination, after which
the Stock Appreciation Right shall lapse, provided that in no
event may any Stock Appreciation Right be exercised after the
expiration of the term of the Stock Appreciation Right.
8:10 The granting of a Stock Appreciation Right pursuant to the
Plan shall not constitute or be evidence of any agreement or
understanding, expressed or implied, on the part of the
Corporation or any of its subsidiaries to employ the Initial
Holder for any specified period.
8:11 The Committee may provide, in the original grant of a Stock
Appreciation Right or in an amendment or supplement to a
previous grant, that some or all of the Stock Appreciation
Rights granted under the Plan are transferable by the Initial
Holder to an Immediate Family Member of the Initial Holder,
provided that (i) the Stock Appreciation Right Agreement, as
it may be amended from time to time, expressly so provides or
the Committee otherwise designates the Stock Appreciation
Right as transferable, (ii) transfer by the Initial Holder is
a bona fide gift without consideration, (iii) the transfer is
irrevocable, (iv) the Initial Holder and any such transferee
provides such documentation or other information concerning
the transfer or the transferee as the Committee or any
employee of the Corporation acting on behalf of the Committee
may from time to time request, and (v) the Initial Holder or
the Stock Appreciation Right Holder complies with all of the
terms and conditions (including, without limitation, any
further restrictions or limitations) included in the Stock
Appreciation Right Agreement. Any Stock Appreciation Right
transferred in accordance with the terms and conditions
provided in this Section 8:11 shall continue to be subject to
the same terms and conditions that were applicable to such
Stock Appreciation Right prior to the transfer.
Notwithstanding any other provisions of the Plan, the
Corporation shall not be required to honor any exercise of a
Stock Appreciation Right by an Immediate Family Member of a
Stock Appreciation Right transferred in accordance with the
terms and conditions provided in this Section 8:11 unless and
until payment or provision for payment of any applicable
withholding taxes has been made.
ARTICLE 9:00
Methods of Exercise of Stock Appreciation Rights
9:01 A Stock Appreciation Right Holder (or other person or persons,
if any, entitled to exercise a Stock Appreciation Right
hereunder) desiring to exercise a Stock Appreciation Right
granted pursuant to the Plan shall notify the Corporation in
writing at its principal office at 701 East Joppa Road,
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<PAGE>
Towson, Maryland 21286, to that effect, specifying the number
of Stock Appreciation Rights to be exercised. Such written
notice may be given by means of a facsimile transmission. If a
facsimile transmission is used, the Stock Appreciation Right
Holder should mail the original executed copy of the written
notice to the Corporation promptly thereafter.
9:02 The Committee in its sole discretion shall determine whether a
Stock Appreciation Right shall be settled upon exercise in
cash or in shares of Common Stock. The Committee, in making
such a determination, may from time to time adopt general
guidelines or determinations as to whether Stock Appreciation
Rights shall be settled in cash or in shares of Common Stock.
ARTICLE 10:00
Terms and Conditions of Cash Appreciation Rights
10:01 Cash Appreciation Rights may be granted concurrently with
Options or Stock Appreciation Rights granted pursuant to the
Plan at the discretion of the Committee. If Cash Appreciation
Rights are granted to an Initial Holder, the number of Cash
Appreciation Rights granted to the Initial Holder shall equal
the number of shares of Common Stock that may be purchased
upon exercise of the related Option or the number of Stock
Appreciation Rights granted, as the case may be.
10:02 Cash Appreciation Rights shall entitle the Initial Holder or
Stock Appreciation Right Holder, as the case may be, subject
to the terms and conditions of the Plan including but not
limited to the limitations set forth in Section 10:03, to
receive from the Corporation or the subsidiary employing the
Initial Holder, upon exercise of all or part of the related
Option or Stock Appreciation Right, as the case may be, or in
the case of Options granted in tandem with Stock Appreciation
Rights upon the surrender of all or part of the related Option
granted in exchange for the exercise of Stock Appreciation
Rights granted to the Initial Holder pursuant to the Plan,
whether or not such exercise or surrender was by the Initial
Holder or a permitted transferee, a payment in cash equal to
the sum of (i) the increase in income taxes, if any, incurred
by the Initial Holder or Stock Appreciation Right Holder, as
the case may be, as a result of the full or partial exercise
of the related Option or Stock Appreciation Right, as the case
may be, and (ii) the increase in income taxes, if any,
incurred by the Initial Holder or Stock Appreciation Right
Holder, as the case may be, as a result of receipt of this
cash payment.
10:03 In no event shall the payment in respect of a Cash
Appreciation Right exceed the increase, if any, of the Fair
Market Value of a share of Common Stock on the date of
exercise of the related Option or Stock Appreciation Right, as
the case may be, over the exercise price per share of the
related Option or the Stock Appreciation Right Base Price of
the related Stock Appreciation Right, as the case may be.
10:04 Except as otherwise contemplated in this Article 10:00, Cash
Appreciation Rights shall be nontransferable and
nonassignable.
ARTICLE 11:00
Amendments and Discontinuance of the Plan
11:01 The Board of Directors shall have the right at any time and
from time to time to amend, modify, or discontinue the Plan
provided that, except as provided in Section 5:03, no such
amendment, modification, or discontinuance of the Plan shall
(i) revoke or alter the terms of any valid Option, Stock
Appreciation Right, or Cash Appreciation Right previously
granted pursuant to the Plan, (ii) increase the number of
shares of Common Stock to be reserved for issuance and sale
pursuant to Options or Stock Appreciation Rights granted
pursuant to the Plan, (iii) decrease the price determined
pursuant to the provisions of Section 6:02 or increase the
amount of cash or shares of Common Stock that a Stock
Appreciation Right Holder is
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<PAGE>
entitled to receive upon exercise of a Stock Appreciation
Right, (iv) change the class of employee to whom Options or
Stock Appreciation Rights may be granted pursuant to the Plan,
or (v) provide for Options or Stock Appreciation Rights
exercisable more than 10 years after the date granted.
ARTICLE 12:00
Plan Subject to Governmental Laws and Regulations
12:01 The Plan and the grant and exercise of Options, Stock
Appreciation Rights, and Cash Appreciation Rights pursuant to
the Plan shall be subject to all applicable governmental laws
and regulations. Notwithstanding any other provision of the
Plan to the contrary, the Board of Directors may in its
discretion make such changes in the Plan as may be required to
conform the Plan to such laws and regulations.
ARTICLE 13:00
Duration of the Plan
13:01 No Option or Stock Appreciation Right shall be granted
pursuant to the Plan after the close of business on November
16, 1999.
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Exhibit 10(c)
THE BLACK & DECKER 1992 STOCK OPTION PLAN
The proper execution of the duties and responsibilities of the
executive and other key employees of The Black & Decker Corporation and its
subsidiaries is a vital factor in the continued growth and success of the
Corporation. Toward this end, it is necessary to attract and retain effective
and capable employees to assume positions that contribute materially to the
successful operation of the business of the Corporation. It will benefit the
Corporation, therefore, to bind the interests of these persons more closely to
its own interests by offering them an attractive opportunity to acquire a
proprietary interest in the Corporation and thereby provide them with added
incentive to remain in its employ and to increase the prosperity, growth, and
earnings of the Corporation. This stock option plan will serve these purposes.
ARTICLE 1:00
Definitions
The following terms wherever used herein shall have the meanings set
forth below.
1:01 The term "Board of Directors" shall mean the Board of
Directors of the Corporation.
1:02 The term "Cash Appreciation Right" shall mean a right to
receive cash pursuant to Article 11:00 of the Plan.
1:03 The term "Change in Control" shall have the meaning provided
in Section 10:02 of the Plan.
1:04 The term "Code" shall mean the Internal Revenue Code of 1986,
as amended, and any regulations promulgated thereunder.
1:05 The term "Committee" shall mean a committee to be appointed by
the Board of Directors to consist of two or more of those
members of the Board of Directors who are Non-Employee
Directors within the meaning of Rule 16b-3 promulgated under
the Exchange Act and are outside directors within the meaning
of the Section 162(m) Regulations as each may be amended from
time to time.
1:06 The term "Common Stock" shall mean the shares of common stock,
par value $.50 per share, of the Corporation.
1:07 The term "Corporation" shall mean The Black & Decker
Corporation.
1:08 The term "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
1:09 The term "Fair Market Value of a share of Common Stock" shall
mean the average of the high and low sale price per share of
Common Stock as finally reported in the New York Stock
Exchange Composite Transactions for the New York Stock
Exchange, or if shares of Common Stock are not sold on such
date, the average of the high and low sale price per share of
Common Stock as finally reported in the New York Stock
Exchange Composite Transactions for the New York Stock
Exchange for the most recent prior date on which shares of
Common Stock were sold.
1:10 The term "Immediate Family Member" shall mean each of the (i)
children, step children or grandchildren of the Initial
Holder, (ii) the spouse or any parent of the Initial Holder,
(iii) any trust solely for the benefit of any such family
members, and (iv) any partnership or other entity in which
such family members are the only partners or other equity
holders.
1:11 The term "Incentive Stock Option" shall mean any Option
granted pursuant to the Plan that is
<PAGE>
designated as an Incentive Stock Option and which satisfies
the requirements of Section 422(b) of the Code.
1:12 The term "Initial Holder," with respect to an Option or Right
granted under the Plan, shall mean the executive or other key
employee of the Corporation granted the Option or Right.
1:13 The term "Limited Stock Appreciation Right" shall mean a
limited tandem stock appreciation right that entitles the
holder to receive cash upon a Change in Control pursuant to
Article 10:00 of the Plan.
1:14 The term "Nonqualified Stock Option" shall mean any Option
granted pursuant to the Plan that is not an Incentive Stock
Option.
1:15 The term "Option" or "Stock Option" shall mean a right granted
pursuant to the Plan to purchase shares of Common Stock, and
shall include the terms Incentive Stock Option and
Nonqualified Stock Option.
1:16 The term "Option Agreement" shall mean the written agreement
representing Options granted pursuant to the Plan as
contemplated by Article 6:00 of the Plan.
1:17 The term "Option Holder" shall mean the Initial Holder so long
as he or she holds an Option initially granted to the Initial
Holder, and thereafter shall mean the beneficiary or the
Immediate Family Member to whom the Option has been
transferred in accordance with the terms and conditions
provided in Section 6:05.
1:18 The term "Plan" shall mean The Black & Decker 1992 Stock
Option Plan as approved by the Board of Directors on February
20, 1992, and adopted by the stockholders of the Corporation
at the 1992 Annual Meeting of Stockholders, as the same may be
amended from time to time.
1:19 The term "Rights" shall include Stock Appreciation Rights,
Limited Stock Appreciation Rights and Cash Appreciation
Rights.
1:20 The term "Section 162(m) Regulations" shall mean the
regulations adopted pursuant to Section 162(m) of the Code.
1:21 The term "Stock Appreciation Right" shall mean a right to
receive cash or shares of Common Stock pursuant to Article
8:00 of the Plan.
1:22 The term "Stock Appreciation Right Agreement" shall mean the
written agreement representing Stock Appreciation Rights
granted pursuant to the Plan as contemplated by Article 8:00
of the Plan.
1:23 The term "Stock Appreciation Right Base Price" shall mean the
base price for determining the value of a Stock Appreciation
Right under Section 8:02, which Stock Appreciation Right Base
Price shall be established by the Committee at the time of the
grant of Stock Appreciation Rights pursuant to the Plan and
shall not be less than 90% of the Fair Market Value of a share
of Common Stock on the date of grant. If the Committee does
not establish a specific Stock Appreciation Right Base Price
at the time of grant, the Stock Appreciation Right Base Price
shall be equal to the Fair Market Value of a share of Common
Stock on the date of grant of the Stock Appreciation Right.
1:24 The term "Stock Appreciation Right Holder" shall mean the
Initial Holder so long as he or she holds a Stock Appreciation
Right initially granted to the Initial Holder, and thereafter
shall mean the beneficiary or the Immediate Family Member to
whom the Stock Appreciation Right has been
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<PAGE>
transferred in accordance with the terms and conditions
provided in Section 8:05.
1:25 The term "subsidiary" or "subsidiaries" shall mean a
corporation of which capital stock possessing 50% or more of
the total combined voting power of all classes of its capital
stock entitled to vote generally in the election of directors
is owned in the aggregate by the Corporation directly or
indirectly through one or more subsidiaries.
ARTICLE 2:00
Effective Date of the Plan
2:01 The Plan shall become effective upon stockholder approval,
provided that such approval is received on or before May 31,
1992, and provided further that the Committee may grant
Options or Rights pursuant to the Plan prior to stockholder
approval if such Options or Rights by their terms are
contingent upon subsequent stockholder approval of the Plan.
ARTICLE 3:00
Administration
3:01 The Plan shall be administered by the Committee.
3:02 The Committee may establish, from time to time and at any
time, subject to the limitations of the Plan as set forth
herein, such rules and regulations and amendments and
supplements thereto, as it deems necessary to comply with
applicable law and regulation and for the proper
administration of the Plan. A majority of the members of the
Committee shall constitute a quorum. The vote of a majority of
a quorum shall constitute action by the Committee.
3:03 The Committee shall from time to time determine the names of
those executives and other key employees who, in its opinion,
should receive Options or Rights, and shall determine the
numbers of shares on which Options should be granted or upon
which Rights should be based to each such person and the
nature of the Options or Rights to be granted, including
without limitation whether the Options or Rights shall be
transferable in accordance with the terms and conditions
provided in Section 6:12 or Section 8:11.
3:04 Options and Rights shall be granted by the Corporation only
upon prior approval of the Committee, and upon the execution
of an Option Agreement or Stock Appreciation Right Agreement
between the Corporation and the Initial Holder.
3:05 The Committee's interpretation and construction of the
provisions of the Plan and the rules and regulations adopted
by the Committee shall be final. No member of the Committee or
the Board of Directors shall be liable for any action taken or
determination made, in respect of the Plan, in good faith.
ARTICLE 4:00
Participation in the Plan
4:01 Participation in the Plan shall be limited to such executives
and other key employees of the Corporation and its
subsidiaries who at the date of grant of an Option or Right
are regular, full-time employees of the Corporation or any of
its subsidiaries and who shall be designated by the
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<PAGE>
Committee together with any permitted transferees in
accordance with the terms and conditions of the Plan.
4:02 No member of the Board of Directors who is not also an
employee shall be eligible to participate in the Plan. No
employee who owns beneficially more than 10% of the total
combined voting power of all classes of stock of the
Corporation shall be eligible to participate in the Plan.
ARTICLE 5:00
Stock Subject to the Plan
5:01 There shall be reserved for the granting of Options or Stock
Appreciation Rights pursuant to the Plan and for issuance and
sale pursuant to such Options or Stock Appreciation Rights
2,400,000 shares of Common Stock. To determine the number of
shares of Common Stock available at any time for the granting
of Options or Stock Appreciation Rights, there shall be
deducted from the total number of reserved shares of Common
Stock, the number of shares of Common Stock in respect of
which Options have been granted pursuant to the Plan that are
still outstanding or have been exercised. The shares of Common
Stock to be issued upon the exercise of Options or Stock
Appreciation Rights granted pursuant to the Plan shall be made
available from the authorized and unissued shares of Common
Stock. If for any reason shares of Common Stock as to which an
Option has been granted cease to be subject to purchase
thereunder, then such shares of Common Stock again shall be
available for issuance pursuant to the exercise of Options or
Stock Appreciation Rights pursuant to the Plan. Except as
provided in Section 5:03, however, the aggregate number of
shares of Common Stock that may be issued upon the exercise of
Options and Stock Appreciation Rights pursuant to the Plan
shall not exceed 2,400,000 shares and no more than 2,400,000
Stock Appreciation Rights shall be granted pursuant to the
Plan.
5:02 Proceeds from the purchase of shares of Common Stock upon the
exercise of Options granted pursuant to the Plan shall be used
for the general business purposes of the Corporation.
5:03 Subject to the provisions of Section 10:02, in the event of
reorganization, recapitalization, stock split, stock dividend,
combination of shares of Common Stock, merger, consolidation,
share exchange, acquisition of property or stock, or any
change in the capital structure of the Corporation, the
Committee shall make such adjustments as may be appropriate in
the number and kind of shares reserved for purchase by
executives or other key employees, in the number, kind and
price of shares covered by Options and Stock Appreciation
Rights granted pursuant to the Plan but not then exercised,
and in the number of Rights, if any, granted pursuant to the
Plan but not then exercised.
ARTICLE 6:00
Terms and Conditions of Options
6:01 Each Option granted pursuant to the Plan shall be evidenced by
an Option Agreement in such form and with such terms and
conditions (including, without limitation, noncompete,
confidentiality or other similar provisions or provisions
relating to transfer) as the Committee from time to time may
determine. The right of an Option Holder to exercise his, her
or its Option shall at all times be subject to the terms and
conditions set forth in the respective Option Agreement.
6:02 The exercise price per share for Options shall be established
by the Committee at the time of the grant of Options pursuant
to the Plan and shall not be less than 90% of the Fair Market
Value of a share of Common Stock on the date on which the
Option is granted. If the Committee does not
- 4 -
<PAGE>
establish a specific exercise price per share at the time of
grant, the exercise price per share shall be equal to the Fair
Market Value of a share of Common Stock on the date of grant
of the Options.
6:03 Each Option, subject to the other limitations set forth in the
Plan, may extend for a period of up to 10 years from the date
on which it is granted. The term of each Option shall be
determined by the Committee at the time of grant of the
Option, provided that if no term is established by the
Committee the term of the Option shall be 10 years from the
date on which it is granted.
6:04 Unless otherwise provided by the Committee, the number of
shares of Common Stock subject to each Option shall be divided
into four installments of 25% each. The first installment
shall be exercisable 12 months after the date the Option was
granted, and each succeeding installment shall be exercisable
12 months after the date the immediately preceding installment
became exercisable. If an Option Holder does not purchase the
full number of shares of Common Stock that he, she or it at
any time has become entitled to purchase, the Option Holder
may purchase all or any part of those shares of Common Stock
at any subsequent time during the term of the Option.
6:05 Options shall be nontransferable and nonassignable, except
that (i) Options may be transferred by testamentary instrument
or by the laws of descent and distribution, and (ii) subject
to the terms and conditions of the Option Agreement or any
other terms and conditions imposed by the Committee from time
to time, Options may be transferred in accordance with the
terms and conditions provided in Section 6:12 if the
applicable Option Agreement or other action of the Committee
expressly provides that the Options are transferable.
6:06 Upon voluntary or involuntary termination of an Initial
Holder's employment, his or her Option (including any Option
transferred in accordance with the terms and conditions
provided in Section 6.12) and all rights thereunder shall
terminate effective at the close of business on the date the
Initial Holder ceases to be a regular, full-time employee of
the Corporation or any of its subsidiaries, except (i) to the
extent previously exercised, (ii) as provided in Sections
6:07, 6:08, and 6:09, and (iii) in the case of involuntary
termination of employment, for a period of 30 days thereafter
the Option Holder shall be entitled to exercise that portion
of the Option which was exercisable at the close of business
on the date the Initial Holder ceased to be a regular,
full-time employee of the Corporation or any of its
subsidiaries.
6:07 In the event an Initial Holder (i) ceases to be an executive
or other key employee of the Corporation or any of its
subsidiaries due to involuntary termination, (ii) takes a
leave of absence from the Corporation or any of its
subsidiaries for personal reasons or as a result of entry into
the armed forces of the United States, or any of the
departments or agencies of the United States government, or
(iii) terminates employment by reason of illness, disability,
or other special circumstance, the Committee may consider
his or her case and may take such action in respect of the
related Option Agreement as it may deem appropriate under the
circumstances, including accelerating the time previously
granted Options may be exercised and extending the time
following the Initial Holder's termination of employment
during which the Option Holder is entitled to purchase the
shares of Common Stock subject to such Options, provided that
in no event may any Option be exercised after the expiration
of the term of the Option.
6:08 If an Initial Holder dies during the term of his or her Option
without the Option having been exercised in full, (i) the
executor or administrator of his or her estate or the person
who inherits the right to exercise the Option by bequest or
inheritance in the event the Initial Holder was the Option
Holder at the date of death or (ii) the Option Holder in the
event the Option had been transferred in accordance with the
terms and conditions provided in Section 6:12, shall have the
right within three years of the Initial Holder's death to
purchase the number of shares of Common Stock that the
deceased Initial Holder (or Option Holder, as the case may be)
was entitled to purchase at the date of death, after which the
Option shall lapse, provided that in no event may any Option
be exercised after the expiration of the term of the Option.
- 5 -
<PAGE>
6:09 If an Initial Holder's employment is terminated without the
Option having been exercised in full the Option and (i) the
Initial Holder is 62 years of age or older, or (ii) the
Initial Holder has been employed by the Corporation or any of
its subsidiaries for at least 10 years and the Initial
Holder's age plus years of such employment total not less than
55 years, then such Initial Holder (or the Option Holder in
the event the Option had been transferred in accordance with
the terms and conditions provided in Section 6:12) shall have
the right within three years of the Initial Holder's
termination of employment to purchase the number of shares of
Common Stock that the Initial Holder (or Option Holder, as the
case may be) was entitled to purchase at the date of
termination, after which the Option shall lapse, provided that
in no event may any Option be exercised after the expiration
of the term of the Option.
6:10 The granting of an Option pursuant to the Plan shall not
constitute or be evidence of any agreement or understanding,
express or implied, on the part of the Corporation or any of
its subsidiaries to employ the Initial Holder for any
specified period.
6:11 In addition to the general terms and conditions set forth in
this Article 6:00 in respect of Options granted pursuant to
the Plan, Incentive Stock Options granted pursuant to the Plan
shall be subject to the following additional terms and
conditions:
(a) The aggregate fair market value (determined at the
time the Incentive Stock Option is granted) of the
shares of Common Stock in respect of which "incentive
stock options" are exercisable for the first time by
the Option Holder during any calendar year (under all
such plans of the Corporation and its subsidiaries)
shall not exceed $100,000;
(b) The Option Agreement in respect of an Incentive Stock
Option may contain any other terms and conditions
specified by the Committee that are not inconsistent
with the Plan, except that such terms and conditions
must be consistent with the requirements for
"incentive stock options" under Section 422 of the
Code; and
(c) Incentive Stock Options shall not be transferable in
accordance with the terms and conditions provided in
Section 6:12.
6:12 The Committee may provide, in the original grant of a
Nonqualified Stock Option or in an amendment or supplement to
a previous grant, that some or all of the Nonqualified Stock
Options granted under the Plan are transferable by the Initial
Holder to an Immediate Family Member of the Initial Holder,
provided that (i) the Option Agreement, as it may be amended
from time to time, expressly so provides or the Committee
otherwise designates the Option as transferable, (ii) the
transfer by the Initial Holder is a bona fide gift without
consideration, (iii) the transfer is irrevocable, (iv) the
Initial Holder and any such transferee provides such
documentation or other information concerning the transfer or
the transferee as the Committee or any employee of the
Corporation acting on behalf of the Committee may from time to
time request, and (v) the Initial Holder or the Option Holder
complies with all of the terms and conditions (including,
without limitation, any further restrictions or limitations)
included in the Option Agreement. Any Nonqualified Stock
Option transferred in accordance with the terms and conditions
provided in this Section 6:12 shall continue to be subject to
the same terms and conditions that were applicable to such
Nonqualified Stock Option prior to the transfer.
Notwithstanding any other provisions of the Plan, the
Corporation shall not be required to honor any exercise of an
Option by an Immediate Family Member of an Option transferred
in accordance with the terms and conditions provided in this
Section 6:12 unless and until payment or provision for payment
of any applicable withholding taxes has been made.
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<PAGE>
ARTICLE 7:00
Methods of Exercise of Options
7:01 An Option Holder (or other person or persons, if any, entitled
to exercise an Option hereunder) desiring to exercise an
Option granted pursuant to the Plan as to all or part of the
shares of Common Stock covered by the Option shall (i) notify
the Corporation in writing at its principal office at 701 East
Joppa Road, Towson, Maryland 21286, to that effect, specifying
the number of shares of Common Stock to be purchased and the
method of payment therefor, and (ii) make payment or provision
for payment for the shares of Common Stock so purchased in
accordance with this Article 7:00. Such written notice may be
given by means of a facsimile transmission. If a facsimile
transmission is used, the Option Holder should mail the
original executed copy of the written notice to the
Corporation promptly thereafter.
7:02 Payment or provision for payment shall be made as follows:
(a) The Option Holder shall deliver to the Corporation at
the address set forth in Section 7:01 United States
currency in an amount equal to the aggregate purchase
price of the shares of Common Stock as to which such
exercise relates; or
(b) The Option Holder shall tender to the Corporation
shares of Common Stock already owned by the Option
Holder that, together with any cash tendered
therewith, have an aggregate fair market value
(determined based on the Fair Market Value of a share
of Common Stock on the date the notice set forth in
Section 7:01 is received by the Corporation) equal to
the aggregate purchase price of the shares of Common
Stock as to which such exercise relates; or
(c) The Option Holder shall deliver to the Corporation an
exercise notice together with irrevocable
instructions to a broker to deliver promptly to the
Corporation the amount of sale or loan proceeds
necessary to pay the aggregate purchase price of the
shares of Common Stock as to which such exercise
relates and to sell the shares of Common Stock to be
issued upon exercise of the Option and deliver the
cash proceeds less commissions and brokerage fees to
the Option Holder or to deliver the remaining shares
of Common Stock to the Option Holder.
Notwithstanding the foregoing provisions, the Committee, in
granting Options pursuant to the Plan, may limit the methods
in which an Option may be exercised by any person and, in
processing any purported exercise of an Option granted
pursuant to the Plan, may refuse to recognize the method of
exercise selected by the Option Holder (other than the method
of exercise set forth in Section 7:02(a)) if, in the opinion
of counsel to the Corporation, (i) the Initial Holder or the
Option Holder is or within the six months preceding such
exercise was subject to reporting under Section 16(a) of the
Exchange Act and (ii) there is a substantial likelihood that
the method of exercise selected by the Option Holder would
subject the Initial Holder or the Option Holder to a
substantial risk of liability under Section 16 of the Exchange
Act.
7:03 In addition to the alternative methods of exercise set forth
in Section 7:02, holders of Nonqualified Stock Options shall
be entitled, at or prior to the time the written notice
provided for in Section 7:01 is delivered to the Corporation,
to elect to have the Corporation withhold from the shares of
Common Stock to be delivered upon exercise of the Nonqualified
Stock Option that number of shares of Common Stock (determined
based on the Fair Market Value of a share of Common Stock on
the date the notice set forth in Section 7:01 is received by
the Corporation) necessary to satisfy any withholding taxes
attributable to the exercise of the Nonqualified Stock Option.
Alternatively, such holder of a Nonqualified Stock Option may
elect to deliver previously owned shares of Common Stock upon
exercise of the Nonqualified Stock Option to satisfy any
withholding taxes
- 7 -
<PAGE>
attributable to the exercise of the Nonqualified Stock Option.
The maximum amount that an Option Holder may elect to have
withheld from the shares of Common Stock otherwise deliverable
upon exercise or the maximum number of previously owned shares
an Option Holder may deliver shall be based on the maximum
federal, state and local taxes payable by the Option Holder.
Notwithstanding the foregoing provisions, the Committee may
include in the Option Agreement relating to any such
Nonqualified Stock Option provisions limiting or eliminating
the Option Holder's ability to pay his or her withholding tax
obligation with shares of Common Stock or, if no such
provisions are included in the Option Agreement but in the
opinion of the Committee such withholding would have an
adverse tax or accounting effect to the Corporation, at or
prior to exercise of the Nonqualified Stock Option the
Committee may so limit or eliminate the Option Holder's
ability to pay his or her withholding tax obligation with
shares of Common Stock. Notwithstanding the foregoing
provisions, a holder of a Nonqualified Stock Option may not
elect any of the methods of satisfying his or her withholding
tax obligation in respect of any exercise if, in the opinion
of counsel to the Corporation, (i) the Initial Holder or the
holder of the Nonqualified Stock Option is or within the six
months preceding such exercise was subject to reporting under
Section 16(a) of the Exchange Act and (ii) there is a
substantial likelihood that the election or timing of the
election would subject the Initial Holder or the holder of the
Nonqualified Stock Option to a substantial risk of liability
under Section 16 of the Exchange Act.
7:04 An Option Holder at any time may elect in writing to abandon
an Option in respect of all or part of the number of shares of
Common Stock as to which the Option shall not have been
exercised.
7:05 An Option Holder shall have none of the rights of a
stockholder of the Corporation until the shares of Common
Stock covered by the Option are issued upon exercise of the
Option.
ARTICLE 8:00
Terms and Conditions of Stock Appreciation Rights
8:01 Each Stock Appreciation Right granted pursuant to the Plan
shall be evidenced by a Stock Appreciation Right Agreement in
such form and with such terms and conditions (including,
without limitation, noncompete, confidentiality or other
similar provisions or provisions relating to transfer) as the
Committee from time to time may determine. Notwithstanding the
foregoing provision, Stock Appreciation Rights granted in
tandem with a related Option shall be evidenced by the Option
Agreement in respect of the related Option. The right of a
Stock Appreciation Right Holder to exercise his, her or its
Stock Appreciation Right shall at all times be subject to the
terms and conditions set forth in the respective Stock
Appreciation Right Agreement.
8:02 Each Stock Appreciation Right shall entitle the holder,
subject to the terms and conditions of the Plan, to receive
upon exercise of the Stock Appreciation Right an amount,
payable in cash or shares of Common Stock (determined based on
the Fair Market Value of a share of Common Stock on the date
the notice set forth in Section 9:01 is received by the
Corporation), equal to the Fair Market Value of a share of
Common Stock on the date of receipt by the Corporation of the
notice required by Section 9:01 less the Stock Appreciation
Right Base Price. Notwithstanding the foregoing provision,
each Stock Appreciation Right that is granted in tandem with a
related Option shall entitle the holder, subject to the terms
and conditions of the Plan, to surrender to the Corporation
for cancellation all or a portion of the related Option, but
only to the extent such Stock Appreciation Right and related
Option then are exercisable, and to be paid therefor an
amount, payable in cash or shares of Common Stock (determined
based on the Fair Market Value of a share of Common Stock on
the date the notice set forth in Section 9:01 is received by
the Corporation), equal to the Fair Market Value of a share of
Common Stock on the date of receipt by the Corporation of the
notice required by Section 9:01 less the Stock Appreciation
Right Base Price.
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<PAGE>
8:03 Each Stock Appreciation Right, subject to the other
limitations set forth in the Plan, may extend for a period of
up to 10 years from the date on which it is granted. The term
of each Stock Appreciation Right shall be determined by the
Committee at the time of grant of the Stock Appreciation
Right, provided that if no term is established by the
Committee the term of the Stock Appreciation Right shall be 10
years from the date on which it is granted.
8:04 Unless otherwise provided by the Committee, the number of
Stock Appreciation Rights granted pursuant to each Stock
Appreciation Right Agreement shall be divided into four
installments of 25% each. The first installment shall be
exercisable 12 months after the date the Stock Appreciation
Right was granted, and each succeeding installment shall be
exercisable 12 months after the date the immediately preceding
installment became exercisable. If a Stock Appreciation Right
Holder does not exercise the Stock Appreciation Right to the
extent that he, she or it at any time has become entitled to
exercise, the Stock Appreciation Right Holder may exercise all
or any part of the Stock Appreciation Right at any subsequent
time during the term of the Stock Appreciation Right.
8:05 Stock Appreciation Rights shall be nontransferable and
nonassignable, except that (i) Stock Appreciation Rights may
be transferred by testamentary instrument or by the laws of
descent and distribution, and (ii) subject to the terms and
conditions of the Stock Appreciation Right Agreement or any
other terms and conditions imposed by the Committee from time
to time, Stock Appreciation Rights may be transferred in
accordance with the terms and conditions provided in Section
8:11 if the applicable Stock Appreciation Right Agreement or
other action of the Committee expressly provides that the
Stock Appreciation Rights are transferable.
8:06 Upon voluntary or involuntary termination of an Initial
Holder's employment, his or her Stock Appreciation Right
(including any Stock Appreciation Right transferred in
accordance with the terms and conditions provided in Section
8:11) and all rights thereunder shall terminate effective as
of the close of business on the date the Initial Holder ceases
to be a regular, full-time employee of the Corporation or any
of its subsidiaries, except (i) to the extent previously
exercised, (ii) except as provided in Sections 8:07, 8:08, and
8:09, and (iii) in the case of involuntary termination of
employment, for a period of 30 days thereafter the Stock
Appreciation Right Holder shall be entitled to exercise that
portion of the Stock Appreciation Right which was exercisable
at the close of business on the date the Initial Holder ceased
to be a regular, full-time employee of the Corporation or any
of its subsidiaries.
8:07 In the event an Initial Holder (i) ceases to be an executive
or other key employee of the Corporation or any of its
subsidiaries due to involuntary termination, (ii) takes a
leave of absence from the Corporation or any of its
subsidiaries for personal reasons or as a result of entry into
the armed forces of the United States, or any of the
departments or agencies of the United States government, or
(iii) terminates employment by reason of illness, disability,
or other special circumstance, the Committee may consider his
or her case and may take such action in respect of the related
Stock Appreciation Right Agreement as it may deem appropriate
under the circumstances, including accelerating the time
previously granted Stock Appreciation Rights may be exercised
and extending the time following the Initial Holder's
termination of employment during which the Stock Appreciation
Right Holder is entitled to exercise the Stock Appreciation
Rights, provided that in no event may any Stock Appreciation
Right be exercised after the expiration of the term of the
Stock Appreciation Right.
8:08 If an Initial Holder dies during the term of his or her Stock
Appreciation Right without the Stock Appreciation Right having
been exercised in full, (i) the executor or administrator of
the Stock Appreciation Right Holder's estate or the person who
inherits the right to exercise the Stock Appreciation Right by
bequest or inheritance in the event the Initial Holder was the
Stock Appreciation Right Holder at the date of death or (ii)
the Stock Appreciation Right Holder in the event the Stock
Appreciation Right had been transferred in accordance with the
terms and conditions provided in
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<PAGE>
Section 8:11, shall have the right within three years of the
Initial Holder's death to exercise the Stock Appreciation
Rights that the deceased Initial Holder (or the Stock
Appreciation Right Holder, as the case may be) was entitled to
purchase at the date of death, after which the Stock
Appreciation Right shall lapse, provided that in no event may
any Stock Appreciation Right be exercised after the expiration
of the term of the Stock Appreciation Right.
8:09 If an Initial Holder's employment is terminated without his or
her Stock Appreciation Rights having been exercised in full
and (i) the Initial Holder is 62 years of age or older, or
(ii) the Initial Holder has been employed by the Corporation
or any of its subsidiaries for at least 10 years and the
Initial Holder's age plus years of such employment total not
less than 55 years, then such Initial Holder (or the Stock
Appreciation Right Holder in the event the Stock Appreciation
Right had been transferred in accordance with the terms and
conditions provided in Section 8:11) shall have the right
within three years of the Initial Holder's termination of
employment to exercise the Stock Appreciation Rights that the
Initial Holder (or Stock Appreciation Right Holder, as the
case may be) was entitled to exercise at the date of
termination, after which the Stock Appreciation Right shall
lapse, provided that in no event may any Stock Appreciation
Right be exercised after the expiration of the term of the
Stock Appreciation Right.
8:10 The granting of a Stock Appreciation Right pursuant to the
Plan shall not constitute or be evidence of any agreement or
understanding, expressed or implied, on the part of the
Corporation or any of its subsidiaries to employ the Initial
Holder for any specified period.
8:11 The Committee may provide, in the original grant of a Stock
Appreciation Right or in an amendment or supplement to a
previous grant, that some or all of the Stock Appreciation
Rights granted under the Plan are transferable by the Initial
Holder to an Immediate Family Member of the Initial Holder,
provided that (i) the Stock Appreciation Right Agreement, as
it may be amended from time to time, expressly so provides or
the Committee otherwise designates the Stock Appreciation
Right as transferable, (ii) the transfer by the Initial Holder
is a bona fide gift without consideration, (iii) the transfer
is irrevocable, (iv) the Initial Holder and any such
transferee provides such documentation or other information
concerning the transfer or the transferee as the Committee or
any employee of the Corporation acting on behalf of the
Committee may from time to time request, and (v) the Initial
Holder or the Stock Appreciation Right Holder complies with
all of the terms and conditions (including, without
limitation, any further restrictions or limitations) included
in the Stock Appreciation Right Agreement. Any Stock
Appreciation Right transferred in accordance with the terms
and conditions provided in this Section 8:11 shall continue to
be subject to the same terms and conditions that were
applicable to such Stock Appreciation Right prior to the
transfer. Notwithstanding any other provisions of the Plan,
the Corporation shall not be required to honor any exercise of
a Stock Appreciation Right by an Immediate Family Member of a
Stock Appreciation Right transferred in accordance with the
terms and conditions provided in this Section 8:11 unless and
until payment or provision for payment of any applicable
withholding taxes has been made.
ARTICLE 9:00
Methods of Exercise of Stock Appreciation Rights
9:01 A Stock Appreciation Right Holder (or other person or persons,
if any, entitled to exercise a Stock Appreciation Right
hereunder) desiring to exercise a Stock Appreciation Right
granted pursuant to the Plan shall notify the Corporation in
writing at its principal office at 701 East Joppa Road,
Towson, Maryland 21286, to that effect, specifying the number
of Stock Appreciation Rights to be exercised. Such written
notice may be given by means of a facsimile transmission. If a
facsimile transmission is used, the Stock Appreciation Right
Holder should mail the original executed copy of the written
notice to the Corporation promptly thereafter.
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<PAGE>
9:02 The Committee in its sole and absolute discretion shall
determine whether a Stock Appreciation Right shall be settled
upon exercise in cash or in shares of Common Stock. The
Committee, in making such a determination, may from time to
time adopt general guidelines or determinations as to whether
Stock Appreciation Rights shall be settled in cash or in
shares of Common Stock.
ARTICLE 10:00
Limited Stock Appreciation Rights
10:01 Notwithstanding any other provision of the Plan, the
Committee, in their sole and absolute discretion, may grant
Limited Stock Appreciation Rights entitling Option Holders to
receive, in connection with a Change in Control (as defined in
Section 10:02), a cash payment in cancellation of all of their
Options which are outstanding on the date the Change in
Control occurs (whether or not such Options are then presently
exercisable), which payment shall be equal to the number of
shares covered by the cancelled Options multiplied by the
excess over the exercise price of the Options of the higher of
the (i) Fair Market Value of a share of Common Stock on the
date of the Change in Control or (ii) the highest per share
price paid for the shares of Common Stock in connection with
the Change in Control (with the value of any noncash
consideration paid in connection with the Change in Control to
be determined by the Committee in its sole and absolute
discretion). For purposes of this Section 10:01 as well as the
other provisions of this Plan, once an Option or portion of an
Option has terminated, lapsed or expired, or has been
abandoned, in accordance with the provisions of the Plan, the
Option (or the portion of the Option) that has terminated,
lapsed or expired, or has been abandoned, shall cease to be
outstanding. Limited Stock Appreciation Rights shall not be
exercisable at the discretion of the Option Holder but shall
automatically be exercised upon a Change in Control.
10:02 For purposes of Section 10:01 of the Plan, a "Change in
Control" shall mean a change in control of the Corporation of
a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under
the Exchange Act, whether or not the Corporation is in fact
required to comply therewith, provided that, without
limitation, such a Change in Control shall be deemed to have
occurred if (A) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than a trustee or
other fiduciary holding securities under an employee benefit
plan of the Corporation or any of its subsidiaries, or a
corporation owned, directly or indirectly, by the stockholders
of the Corporation in substantially the same proportions as
their ownership of stock of the Corporation, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Corporation representing 20% or more of the combined voting
power of the Corporation's then outstanding securities; or (B)
during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors
and any new director (other than a director designated by a
person who has entered into an agreement with the Corporation
to effect a transaction described in clauses (A) or (C) of
this Section 10.02) whose election by the Board of Directors
or nomination for election by the Corporation's stockholders
was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute a majority thereof; or (C) the stockholders of the
Corporation approve a merger, share exchange or consolidation
of the Corporation with any other corporation, other than a
merger, share exchange or consolidation which would result in
the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) at least 60% of the
combined voting power of the voting securities of the
Corporation or such surviving entity outstanding immediately
after such merger, share exchange or consolidation, or the
stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all the
Corporation's assets.
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<PAGE>
10:03 Limited Stock Appreciation Rights shall be nontransferable and
nonassignable, except that Limited Stock Appreciation Rights
shall automatically be transferred and assigned in tandem with
a transfer of the related Options in accordance with Section
6:05.
ARTICLE 11:00
Terms and Conditions of Cash Appreciation Rights
11:01 Cash Appreciation Rights may be granted concurrently with
Options or Stock Appreciation Rights granted pursuant to the
Plan in the sole and absolute discretion of the Committee. If
Cash Appreciation Rights are granted to an Initial Holder, the
number of Cash Appreciation Rights granted to the Initial
Holder shall equal the number of shares of Common Stock that
may be purchased upon exercise of the related Option or the
number of Stock Appreciation Rights granted, as the case may
be.
11:02 Cash Appreciation Rights shall entitle the Initial Holder or
the Option Holder, as the case may be, subject to the terms
and conditions of the Plan including but not limited to the
limitations set forth in Section 11:03, to receive from the
Corporation or the subsidiary employing the Initial Holder
upon exercise of all or part of the related Option or Stock
Appreciation Right, as the case may be, or in the case of
Options granted in tandem with Stock Appreciation Rights upon
the surrender of all or part of the related Option granted in
exchange for the exercise of Stock Appreciation Rights granted
to the Initial Holder pursuant to the Plan, whether or not
such exercise or surrender was by the Initial Holder or a
permitted transferee, a payment in cash equal to the sum of
(i) the increase in income taxes, if any, incurred by the
Initial Holder or the Option Holder, as the case may be, as a
result of the full or partial exercise of the related Option
or Stock Appreciation Right, as the case may be, and (ii) the
increase in income taxes, if any, incurred by the Initial
Holder or the Option Holder, as the case may be, as a result
of receipt of this cash payment.
11:03 In no event shall the payment in respect of a Cash
Appreciation Right exceed the increase, if any, of the Fair
Market Value of a share of Common Stock on the date of
exercise of the related Option or Stock Appreciation Right, as
the case may be, over the exercise price per share of the
related Option or the Stock Appreciation Right Base Price of
the related Stock Appreciation Right, as the case may be.
11:04 Except as otherwise contemplated in this Article 11:00, Cash
Appreciation Rights shall be nontransferable and
nonassignable.
ARTICLE 12:00
Amendments and Discontinuance of the Plan
12:01 The Board of Directors shall have the right at any time and
from time to time to amend, modify, or discontinue the Plan
provided that, except as provided in Section 5:03, no such
amendment, modification, or discontinuance of the Plan shall
(i) revoke or alter the terms of any valid Option, Stock
Appreciation Right, Limited Stock Appreciation Right, or Cash
Appreciation Right previously granted pursuant to the Plan,
(ii) increase the number of shares of Common Stock to be
reserved for issuance and sale pursuant to Options or Stock
Appreciation Rights granted pursuant to the Plan, (iii)
decrease the price determined pursuant to the provisions of
Section 6:02 or increase the amount of cash or shares of
Common Stock that a Stock Appreciation Right Holder is
entitled to receive upon exercise of a Stock Appreciation
Right, (iv) change the class of employee to whom Options or
Stock Appreciation Rights may be granted pursuant to the Plan,
or (v) provide for Options or Stock Appreciation Rights
exercisable more than 10 years after the date
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<PAGE>
granted.
ARTICLE 13:00
Plan Subject to Governmental Laws and Regulations
13:01 The Plan and the grant and exercise of Options, Stock
Appreciation Rights, Limited Stock Appreciation Rights, and
Cash Appreciation Rights pursuant to the Plan shall be subject
to all applicable governmental laws and regulations.
Notwithstanding any other provision of the Plan to the
contrary, the Board of Directors may in its sole and absolute
discretion make such changes in the Plan as may be required to
conform the Plan to such laws and regulations.
ARTICLE 14:00
Duration of the Plan
14:01 No Option or Stock Appreciation Right shall be granted
pursuant to the Plan after the close of business on February
19, 2002.
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Exhibit 10(d)
THE BLACK & DECKER CORPORATION
1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
Attracting and retaining qualified individuals to serve as non-employee
directors is vital to the continued success of The Black & Decker Corporation.
To that end and to bind the interests of those individuals to the interests of
the Corporation and its stockholders, this stock option plan offers them an
attractive opportunity to acquire a proprietary interest in the Corporation.
ARTICLE 1:00
Definitions
1:01 The term "Board of Directors" shall mean the Board of
Directors of the Corporation.
1:02 The term "Change in Control" shall have the meaning provided
in Section 7:02 of the Plan.
1:03 The term "Code" shall mean the Internal Revenue Code of 1986,
as amended, and any regulations promulgated thereunder.
1:04 The term "Common Stock" shall mean the shares of common stock,
par value $.50 per share, of the Corporation.
1:05 The term "Corporation" shall mean The Black & Decker
Corporation.
1:06 The term "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
1:07 The term "Fair Market Value of a share of Common Stock" shall
mean the average of the high and low sale price per share of
Common Stock as finally reported in the New York Stock
Exchange Composite Transactions for the New York Stock
Exchange, or if shares of Common Stock are not sold on such
date, the average of the high and low sale price per share of
Common Stock as finally reported in the New York Stock
Exchange Composite Transactions for the New York Stock
Exchange for the most recent prior date on which shares of
Common Stock were sold.
1:08 The term "Immediate Family Member" shall mean each of (i) the
children, step children or grandchildren of the Initial
Holder, (ii) the spouse or any parent of the Initial Holder,
(iii) any trust solely for the benefit of any such family
members, and (iv) any partnership or other entity in which
such family members are the only partners or other equity
holders.
1:09 The term "Initial Holder," with respect to an Option or
Limited Stock Appreciation Right granted under the Plan, shall
mean the non-employee director of the Corporation granted the
Option or Limited Stock Appreciation Right.
1:10 The term "Limited Stock Appreciation Right" shall mean a
limited tandem stock appreciation right that entitles the
holder to receive cash upon a Change in Control pursuant to
Article 7:00 of the Plan.
1:11 The term "Option" or "Stock Option" shall mean a right granted
pursuant to the Plan to purchase shares of Common Stock.
1:12 The term "Option Agreement" shall mean the written agreement
representing Options granted pursuant to the Plan as
contemplated by Article 5:00 of the Plan.
<PAGE>
1:13 The term "Option Holder" shall mean the Initial Holder so long
as he or she holds an Option initially granted to the Initial
Holder, and thereafter shall mean the beneficiary or the
Immediate Family Member to whom the Option has been
transferred in accordance with Section 5:10.
1:14 The term "Plan" shall mean The Black & Decker Corporation 1995
Stock Option Plan for Non-Employee Directors as approved by
the Board of Directors on December 8, 1994, and adopted by the
stockholders of the Corporation at the 1995 Annual Meeting of
Stockholders, as the same may be amended from time to time.
ARTICLE 2:00
Effective Date of the Plan
2:01 The Plan shall become effective upon stockholder approval,
provided that such approval is received on or before May 31,
1995.
ARTICLE 3:00
Participation in the Plan
3:01 Participation in the Plan shall be limited to individuals who
are directors of the Corporation but not full-time employees
of the Corporation on the date of grant of an Option together
with any permitted transferees in accordance with the terms
and conditions of the Plan.
3:02 No member of the Board of Directors who is a full-time
employee shall be eligible to participate in the Plan. No
director who owns beneficially more than 10% of the total
combined voting power of all classes of stock of the
Corporation shall be eligible to participate in the Plan.
3:03 Upon initial election to the Board of Directors, a director
who on the date of election is not a full-time employee of
the Corporation shall automatically receive an Option to
purchase 2,000 shares of Common Stock. Upon each reelection, a
director who on the date of reelection is not a full-time
employee of the Corporation shall automatically receive an
Option to purchase 1,500 shares of Common Stock. For the
purpose of this Section, election or reelection at the 1995
Annual Meeting of Stockholders shall be deemed an "initial
election."
ARTICLE 4:00
Stock Subject to the Plan
4:01 There shall be reserved for the granting of Options pursuant
to the Plan and for issuance and sale pursuant to such Options
150,000 shares of Common Stock. To determine the number of
shares of Common Stock available at any time for the granting
of Options, there shall be deducted from the total number of
reserved shares of Common Stock the number of shares of Common
Stock in respect of which Options have been granted pursuant
to the Plan that are still outstanding or have been exercised.
The shares of Common Stock to be issued upon the exercise of
Options granted pursuant to the Plan shall be made available
from the authorized and unissued shares of Common Stock. If
for any reason shares of Common Stock as to which an Option
has been granted cease to be subject to purchase thereunder,
then such shares of Common Stock again shall be available for
issuance pursuant to the Plan. Except as provided in Section
4:03, however, the aggregate number of shares of Common Stock
that may be issued upon the exercise of Options pursuant to
the Plan shall not exceed 150,000 shares.
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<PAGE>
4:02 Proceeds from the purchase of shares of Common Stock upon the
exercise of Options granted pursuant to the Plan shall be used
for the general business purposes of the Corporation.
4:03 Subject to the provisions of Section 7:02, in the event of
reorganization, recapitalization, stock split, stock dividend,
combination of shares of Common Stock, merger, consolidation,
share exchange, acquisition of property or stock, or any
change in the capital structure of the Corporation, the number
and kind of shares reserved for the granting of Options and
the number, kind and price of shares covered by Options
granted pursuant to the Plan but not then exercised shall be
adjusted appropriately by resolution of the Board.
ARTICLE 5:00
Terms and Conditions of Options
5:01 Each Option granted pursuant to the Plan shall be evidenced by
an Option Agreement in such form as the Board of Directors
from time to time may determine.
5:02 The exercise price per share for Options shall be equal to the
Fair Market Value of a share of Common Stock on the date of
grant of the Options.
5:03 Subject to the other limitations set forth in the Plan, the
term of the Option shall be 10 years from the date on which it
is granted.
5:04 Unless otherwise provided by the Board of Directors, each
Option shall become exercisable on the date of the first
Annual Meeting of Stockholders following the date the Option
was granted. If an Option Holder does not purchase the full
number of shares of Common Stock that he or she at any time
has become entitled to purchase, he or she may purchase all or
any part of those shares of Common Stock at any subsequent
time during the term of the Option.
5:05 Options shall be nontransferable and nonassignable, except
that (i) Options may be transferred by testamentary instrument
or by the laws of descent and distribution, (ii) Options may
be transferred pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986, as
amended, or Title I of the Employee Retirement Income Security
Act, and (iii) Options may be transferred to an Immediate
Family Member of the Initial Holder, provided that (a) the
transfer by the Initial Holder is a bona fide gift without
consideration, (b) the transfer is irrevocable, (c) the
Initial Holder and any such transferee provides such
documentation or other information concerning the transfer or
the transferee as the Board of Directors or any employee of
the Corporation acting on behalf of the Board of Directors may
from time to time request, and (d) the Initial Holder or the
Option Holder complies with all of the terms and conditions
(including, without limitation, any further restrictions or
limitations) included in the Option Agreement. Any Option
transferred in accordance with the terms and conditions
provided in this Section 5:05 shall continue to be subject to
the same terms and conditions that were applicable to such
Option prior to the transfer. Notwithstanding any other
provisions of the Plan, the Corporation shall not be required
to honor any exercise of an Option by an Immediate Family
Member of an Option transferred in accordance with the terms
and conditions provided in Section 5:05(iii) unless and until
payment or provision for payment of any applicable withholding
taxes has been made.
5:06 If an Initial Holder ceases to be a director of the
Corporation, his or her Option and all rights thereunder shall
terminate effective at the close of business on the date the
Initial Holder ceases to be a director of the Corporation,
except (i) to the extent previously exercised, (ii) as
provided in Sections 5:07 and 5:08 and (iii) for a period of
30 days after the Initial Holder ceases to be a director of
the Corporation, the Option Holder shall be entitled to
exercise any Option that was exercisable at the close of
business on the date the Initial Holder ceased to be a
director of the
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<PAGE>
Corporation.
5:07 If an Initial Holder dies during the term of his or her Option
without the Option having been exercised in full, (i) the
executor or administrator of his or her estate or the person
who inherits the right to exercise the Option by bequest or
inheritance in the event the Initial Holder was the Option
Holder at the date of death or (ii) the Option Holder in the
event the Option had been transferred in accordance with the
terms and conditions provided in Section 5.05(iii), shall have
the right within three years of the Initial Holder's death to
purchase the number of shares of Common Stock that the
deceased Initial Holder (or Option Holder, as the case may be)
was entitled to purchase at the date of his or her death,
after which the Option shall lapse, provided that in no event
may any Option be exercised after the expiration of the term
of the Option.
5:08 If an Initial Holder ceases to be a director of the
Corporation without his or her Option having been exercised in
full and (i) the Initial Holder is 65 years of age or older,
or (ii) the Initial Holder has been a director of the
Corporation or any of its subsidiaries for at least 5 years,
then the Initial Holder (or the Option Holder in the event the
Option had been transferred in accordance with the terms and
conditions provided in Section 5:05) shall have the right
within three years of the Initial Holder's termination as a
director to purchase the number of shares of Common Stock that
the Initial Holder (or the Option Holder, as the case may be)
was entitled to purchase at the date of termination, after
which the Option shall lapse, provided that in no event may
any Option be exercised after the expiration of the term of
the Option.
5:09 The granting of an Option pursuant to the Plan shall not
constitute or be evidence of any agreement or understanding,
express or implied, on the part of the Corporation to continue
the Initial Holder as a director for any specified period.
ARTICLE 6:00
Methods of Exercise of Options
6:01 An Option Holder (or other person or persons, if any, entitled
to exercise an Option hereunder) desiring to exercise an
Option granted pursuant to the Plan as to all or part of the
shares of Common Stock covered by the Option shall (i) notify
the Corporation in writing at its principal office at 701 East
Joppa Road, Towson, Maryland 21286, to that effect, specifying
the number of shares of Common Stock to be purchased and the
method of payment therefor, and (ii) make payment or provision
for payment for the shares of Common Stock so purchased in
accordance with this Article 6:00. Such written notice may be
given by means of a facsimile transmission. If a facsimile
transmission is used, the Option Holder should mail the
original executed copy of the written notice to the
Corporation promptly thereafter.
6:02 Payment or provision for payment shall be made as follows:
(a) The Option Holder shall deliver to the Corporation at
the address set forth in Section 6:01 United States
currency in an amount equal to the aggregate purchase
price of the shares of Common Stock as to which such
exercise relates; or
(b) The Option Holder shall tender to the Corporation
shares of Common Stock already owned by the Option
Holder that, together with any cash tendered
therewith, have an aggregate fair market value
(determined based on the Fair Market Value of a share
of Common Stock on the date the notice set forth in
Section 6:01 is received by the Corporation) equal to
the aggregate purchase price of the shares of Common
Stock as to
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<PAGE>
which such exercise relates; or
(c) The Option Holder shall deliver to the Corporation an
exercise notice together with irrevocable
instructions to a broker to deliver promptly to the
Corporation the amount of sale or loan proceeds
necessary to pay the aggregate purchase price of the
shares of Common Stock as to which such exercise
relates and to sell the shares of Common Stock to be
issued upon exercise of the Option and deliver the
cash proceeds less commissions and brokerage fees to
the Option Holder or to deliver the remaining shares
of Common Stock to the Option Holder. Notwithstanding
the foregoing provisions, the Board of Directors may
limit the methods in which an Option may be exercised
by any person and, in processing any purported
exercise of an Option granted pursuant to the Plan,
may refuse to recognize the method of exercise
selected by the Option Holder (other than the method
of exercise set forth in Section 6:02(a)) if, in the
opinion of counsel to the Corporation, (i) the
Initial Holder or the Option Holder is or within the
six months preceding such exercise was subject to
reporting under Section 16(a) of the Exchange Act and
(ii) there is a substantial likelihood that the
method of exercise selected by the Option Holder
would subject the Initial Holder or the Option Holder
to a substantial risk of liability under Section 16
of the Exchange Act.
6:03 In addition to the alternative methods of exercise set forth
in Section 6:02, the Option Holder shall be entitled, at or
prior to the time the written notice provided for in Section
6:01 is delivered to the Corporation, to elect to have the
Corporation withhold from the shares of Common Stock to be
delivered upon exercise of the Option that number of shares of
Common Stock (determined based on the Fair Market Value of a
share of Common Stock on the date the notice set forth in
Section 6:01 is received by the Corporation) necessary to
satisfy any withholding taxes attributable to the exercise of
the Option. Alternatively the holder may elect to deliver
previously owned shares of Common Stock upon exercise of the
Stock Option to satisfy any withholding taxes attributable to
the exercise of the Stock Option. The maximum amount that an
Option Holder may elect to have withheld from the shares of
Common Stock otherwise deliverable upon exercise or the
maximum number of previously owned shares an Option holder may
deliver shall be equal to his or her federal and state
withholding. Notwithstanding the foregoing provisions, the
Board of Directors may include in the Option Agreement
relating to any such Option provisions limiting or eliminating
the Option Holder's ability to pay his or her withholding tax
obligation with shares of Common Stock or, if no such
provisions are included in the Option Agreement but in the
opinion of the Board of Directors such withholding would have
an adverse tax or accounting effect to the Corporation, at or
prior to exercise of the Option, the Board of Directors may so
limit or eliminate the Option Holder's ability to pay
withholding tax obligations with shares of Common Stock.
Notwithstanding the foregoing provisions, a holder of an
Option may not elect any of the methods of satisfying his or
her withholding tax obligation in respect of any exercise if,
in the opinion of counsel to the Corporation, (i) the Initial
Holder or the holder of the Stock Option is or within the six
months preceding such exercise was subject to reporting under
Section 16(a) of the Exchange Act and (ii) there is a
substantial likelihood that the election or timing of the
election would subject the Initial Holder or the holder of the
Nonqualified Stock Option Holder to a substantial risk of
liability under Section 16 of the Exchange Act.
6:04 An Option Holder at any time may elect in writing to abandon
an Option in respect of all or part of the number of shares of
Common Stock as to which the Option shall not have been
exercised.
6:05 An Option Holder shall have none of the rights of a
stockholder of the Corporation until the shares of Common
Stock covered by the Option are issued upon exercise of the
Option.
-5-
<PAGE>
ARTICLE 7:00
Limited Stock Appreciation Rights
7:01 Option Holders shall have Limited Stock Appreciation Rights
entitling Option Holders to receive, in connection with a
Change in Control (as defined in Section 7:02), a cash payment
in cancellation of all of their Options that are outstanding
on the date the Change in Control occurs (whether or not such
Options are then presently exercisable), which payment shall
be equal to the number of shares covered by the cancelled
Options multiplied by the excess over the exercise price of
the Options of the higher of (i) the Fair Market Value of a
share of Common Stock on the date of the Change in Control or
(ii) the highest per share price paid for the shares of Common
Stock in connection with the Change in Control (with the value
of any noncash consideration paid in connection with the
Change in Control to be determined by the Board of Directors
in its sole and absolute discretion). For purposes of this
Section 7:01 as well as the other provisions of this Plan,
once an Option or portion of an Option has terminated, lapsed
or expired, or has been abandoned, in accordance with the
provisions of the Plan, the Option (or the portion of the
Option) that has terminated, lapsed or expired, or has been
abandoned, shall cease to be outstanding. Limited Stock
Appreciation Rights shall not be exercisable at the discretion
of the Option Holder but shall automatically be exercised upon
a Change in Control.
7:02 For purposes of Section 7:01, a "Change in Control" shall mean
a change in control of the Corporation of a nature that would
be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange
Act, whether or not the Corporation is in fact required to
comply therewith, provided that, without limitation, such a
Change in Control shall be deemed to have occurred if (A) any
"person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the
Corporation or any of its subsidiaries, or a corporation
owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their
ownership of stock of the Corporation, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Corporation representing 20% or more of the combined voting
power of the Corporation's then outstanding securities; or (B)
during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors
and any new director (other than a director designated by a
person who has entered into an agreement with the Corporation
to effect a transaction described in clauses (A) or (C) of
this Section 7:02) whose election by the Board of Directors or
nomination for election by the Corporation's stockholders was
approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute a majority thereof; or (C) the stockholders of the
Corporation approve a merger, share exchange or consolidation
of the Corporation with any other corporation, other than a
merger, share exchange or consolidation which would result in
the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) at least 60% of the
combined voting power of the voting securities of the
Corporation or such surviving entity outstanding immediately
after such merger, share exchange or consolidation, or the
stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all the
Corporation's assets.
7:03 Limited Stock Appreciation Rights shall be nontrans-ferable
and nonassignable, except that Limited Stock Appreciation
Rights shall automatically be transferred and assigned in
tandem with a transfer of the related Options in accordance
with Section 5:05.
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<PAGE>
ARTICLE 8:00
Amendments and Discontinuance of the Plan
8:01 The Board of Directors shall have the right at any time and
from time to time to amend, modify, or discontinue the Plan
provided that, except as provided in Section 4:03, no such
amendment, modification, or discontinuance of the Plan shall
(i) revoke or alter the terms of any valid Option or Limited
Stock Appreciation Right previously granted pursuant to the
Plan, (ii) increase the number of shares of Common Stock to be
reserved for issuance and sale pursuant to Options or Stock
Appreciation Rights granted pursuant to the Plan, (iii)
decrease the price determined pursuant to the provisions of
Section 5:02 or increase the amount of cash that a holder of a
Limited Stock Appreciation Right is entitled to receive upon
exercise of a Limited Stock Appreciation Right, (iv) change
the class of individuals to whom Options or Limited Stock
Appreciation Rights may be granted pursuant to the Plan, or
(v) provide for Options or Limited Stock Appreciation Rights
exercisable more than 10 years after the date granted.
Notwithstanding the foregoing, the provisions of the Plan that
determine the amount, price or timing of benefits or the grant
or exercise of Options as Limited Stock Appreciation Rights
shall not be amended more than once every six months, unless
the amendment would be consistent with the provisions of Rule
16b-3(c)(2)(ii) promulgated under the Exchange Act (or any
successor provision thereto).
ARTICLE 9:00
Plan Subject to Governmental Laws and Regulations
9:01 The Plan and the grant and exercise of Options and Limited
Stock Appreciation Rights pursuant to the Plan shall be
subject to all applicable governmental laws and regulations.
Notwithstanding any other provision of the Plan to the
contrary, the Board of Directors may in its sole and absolute
discretion make such changes in the Plan as may be required to
conform the Plan to such laws and regulations.
ARTICLE 10:00
Duration of the Plan
10:01 No Option or Limited Stock Appreciation Right shall be granted
pursuant to the Plan after the close of business on April 30,
2005.
-7-
Exhibit 10(e)
THE BLACK & DECKER 1996 STOCK OPTION PLAN
The proper execution of the duties and responsibilities of the
executive and other key employees of The Black & Decker Corporation and its
subsidiaries is a vital factor in the continued growth and success of the
Corporation. Toward this end, it is necessary to attract and retain effective
and capable employees to assume positions that contribute materially to the
successful operation of the business of the Corporation. It will benefit the
Corporation, therefore, to bind the interests of these persons more closely to
its own interests by offering them an attractive opportunity to acquire a
proprietary interest in the Corporation and thereby provide them with added
incentive to remain in its employ and to increase the prosperity, growth, and
earnings of the Corporation. This stock option plan will serve these purposes.
ARTICLE 1:00
Definitions
The following terms wherever used herein shall have the meanings set
forth below.
1:01 The term "Board of Directors" shall mean the Board of
Directors of the Corporation.
1:02 The term "Change in Control" shall have the meaning provided
in Section 10:02 of the Plan.
1:03 The term "Code" shall mean the Internal Revenue Code of 1986,
as amended, and any regulations promulgated thereunder.
1:04 The term "Committee" shall mean a committee to be appointed by
the Board of Directors to consist of two or more of those
members of the Board of Directors who are Non-Employee
Directors within the meaning of Rule 16b-3 promulgated under
the Exchange Act and are outside directors within the meaning
of the Section 162(m) Regulations, as each may be amended from
time to time.
1:05 The term "Common Stock" shall mean the shares of common stock,
par value $.50 per share, of the Corporation.
1:06 The term "Corporation" shall mean The Black & Decker
Corporation.
1:07 The term "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
1:08 The term "Fair Market Value of a share of Common Stock" shall
mean the average of the high and low sale price per share of
Common Stock as finally reported in the New York Stock
Exchange Composite Transactions for the New York Stock
Exchange, or if shares of Common Stock are not sold on such
date, the average of the high and low sale price per share of
Common Stock as finally reported in the New York Stock
Exchange Composite Transactions for the New York Stock
Exchange for the most recent prior date on which shares of
Common Stock were sold.
1:09 The term "Immediate Family Member" shall mean each of (i) the
children, step children or grandchildren of the Initial
Holder, (ii) the spouse or any parent of the Initial Holder,
(iii) any trust solely for the benefit of any such family
members, and (iv) any partnership or other entity in which
such family members are the only partners or other equity
holders.
1:10 The term "Incentive Stock Option" shall mean any Option
granted pursuant to the Plan that is designated as an
Incentive Stock Option and which satisfies the requirements of
Section 422(b) of the Code.
<PAGE>
1:11 The term "Initial Holder," with respect to an Option or Right
granted under the Plan, shall mean the executive or other key
employee of the Corporation granted the Option or Right.
1:12 The term "Limited Stock Appreciation Right" shall mean a
limited tandem stock appreciation right that entitles the
holder to receive cash upon a Change in Control pursuant to
Article 10:00 of the Plan.
1:13 The term "Nonqualified Stock Option" shall mean any Option
granted pursuant to the Plan that is not an Incentive Stock
Option.
1:14 The term "Option" or "Stock Option" shall mean a right granted
pursuant to the Plan to purchase shares of Common Stock, and
shall include the terms Incentive Stock Option and
Nonqualified Stock Option.
1:15 The term "Option Agreement" shall mean the written agreement
representing Options granted pursuant to the Plan as
contemplated by Article 6:00 of the Plan.
1:16 The term "Option Holder" shall mean the Initial Holder so long
as he or she holds an Option initially granted to the Initial
Holder, and thereafter shall mean the beneficiary or the
Immediate Family Member to whom the Option has been
transferred in accordance with Section 6:05.
1:17 The term "Plan" shall mean The Black & Decker 1996 Stock
Option Plan as approved by the Board of Directors on February
14, 1996, and adopted by the stockholders of the Corporation
at the 1996 Annual Meeting of Stockholders, as the same may be
amended from time to time.
1:18 The term "Rights" shall include Stock Appreciation Rights and
Limited Stock Appreciation Rights.
1:19 The term "Section 162(m) Regulations" shall mean the
regulations adopted pursuant to Section 162(m) of the Code.
1:20 The term "Stock Appreciation Right" shall mean a right to
receive cash or shares of Common Stock pursuant to Article
8:00 of the Plan.
1:21 The term "Stock Appreciation Right Agreement" shall mean the
written agreement representing Stock Appreciation Rights
granted pursuant to the Plan as contemplated by Article 8:00
of the Plan.
1:22 The term "Stock Appreciation Right Base Price" shall mean the
base price for determining the value of a Stock Appreciation
Right under Section 8:02, which Stock Appreciation Right Base
Price shall be established by the Committee at the time of the
grant of Stock Appreciation Rights pursuant to the Plan and
shall not be less than the Fair Market Value of a share of
Common Stock on the date of grant. If the Committee does not
establish a specific Stock Appreciation Right Base Price at
the time of grant, the Stock Appreciation Right Base Price
shall be equal to the Fair Market Value of a share of Common
Stock on the date of grant of the Stock Appreciation Right.
1:23 The term "Stock Appreciation Right Holder" shall mean the
Initial Holder so long as he or she holds a Stock Appreciation
Right initially granted to the Initial Holder, and thereafter
shall mean the beneficiary or the Immediate Family Member to
whom the Stock Appreciation Right has been transferred in
accordance with Section 8:05.
1:24 The term "subsidiary" or "subsidiaries" shall mean a
corporation of which capital stock possessing 50% or more of
the total combined voting power of all classes of its capital
stock entitled to vote generally in the election of directors
is owned in the aggregate by the Corporation directly or
indirectly through one or more subsidiaries.
- 2 -
<PAGE>
ARTICLE 2:00
Effective Date of the Plan
2:01 The Plan shall become effective upon stockholder approval,
provided that such approval is received on or before May 31,
1996, and provided further that the Committee may grant
Options or Rights pursuant to the Plan prior to stockholder
approval if such Options or Rights by their terms are
contingent upon subsequent stockholder approval of the Plan.
ARTICLE 3:00
Administration
3:01 The Plan shall be administered by the Committee.
3:02 The Committee may establish, from time to time and at any
time, subject to the limitations of the Plan as set forth
herein, such rules and regulations and amendments and
supplements thereto, as it deems necessary to comply with
applicable law and regulation and for the proper
administration of the Plan. A majority of the members of the
Committee shall constitute a quorum. The vote of a majority of
a quorum shall constitute action by the Committee.
3:03 The Committee shall from time to time determine the names of
those executives and other key employees who, in its opinion,
should receive Options or Rights, and shall determine the
numbers of shares on which Options should be granted or upon
which Rights should be based to each such person and the
nature of the Options or Rights to be granted, including
without limitation whether the Options or Rights shall be
transferable in accordance with the terms and conditions
provided in Section 6:12 or Section 8:11.
3:04 Options and Rights shall be granted by the Corporation only
upon the prior approval of the Committee and upon the
execution of an Option Agreement or Stock Appreciation Right
Agreement between the Corporation and the Initial Holder.
3:05 The Committee's interpretation and construction of the
provisions of the Plan and the rules and regulations adopted
by the Committee shall be final. No member of the Committee or
the Board of Directors shall be liable for any action taken or
determination made, in respect of the Plan, in good faith.
ARTICLE 4:00
Participation in the Plan
4:01 Participation in the Plan shall be limited to such executives
and other key employees of the Corporation and its
subsidiaries who at the date of grant of an Option or Right
are regular, full-time employees of the Corporation or any of
its subsidiaries and who shall be designated by the Committee
together with any permitted transferees in accordance with the
terms and conditions of the Plan.
4:02 No member of the Board of Directors who is not also an
employee shall be eligible to participate in the Plan. No
employee who owns beneficially more than 10% of the total
combined voting power of all classes of stock of the
Corporation shall be eligible to participate in the Plan.
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<PAGE>
4:03 No employee may be granted, in any calendar year, Options or
Stock Appreciation Rights exceeding 100,000 in the aggregate.
ARTICLE 5:00
Stock Subject to the Plan
5:01 There shall be reserved for the granting of Options or Stock
Appreciation Rights pursuant to the Plan and for issuance and
sale pursuant to such Options or Stock Appreciation Rights
2,400,000 shares of Common Stock. To determine the number of
shares of Common Stock available at any time for the granting
of Options or Stock Appreciation Rights, there shall be
deducted from the total number of reserved shares of Common
Stock, the number of shares of Common Stock in respect of
which Options have been granted pursuant to the Plan that are
still outstanding or have been exercised. The shares of Common
Stock to be issued upon the exercise of Options or Stock
Appreciation Rights granted pursuant to the Plan shall be made
available from the authorized and unissued shares of Common
Stock. If for any reason shares of Common Stock as to which an
Option has been granted cease to be subject to purchase
thereunder, then such shares of Common Stock again shall be
available for issuance pursuant to the exercise of Options or
Stock Appreciation Rights pursuant to the Plan. Except as
provided in Section 5:03, however, the aggregate number of
shares of Common Stock that may be issued upon the exercise of
Options and Stock Appreciation Rights pursuant to the Plan
shall not exceed 2,400,000 shares and no more than 2,400,000
Stock Appreciation Rights shall be granted pursuant to the
Plan.
5:02 Proceeds from the purchase of shares of Common Stock upon the
exercise of Options granted pursuant to the Plan shall be used
for the general business purposes of the Corporation.
5:03 Subject to the provisions of Section 10:02, in the event of
reorganization, recapitalization, stock split, stock dividend,
combination of shares of Common Stock, merger, consolidation,
share exchange, acquisition of property or stock, or any
change in the capital structure of the Corporation, the
Committee shall make such adjustments as may be appropriate in
the number and kind of shares reserved for purchase by
executives or other key employees, in the number, kind and
price of shares covered by Options and Stock Appreciation
Rights granted pursuant to the Plan but not then exercised,
and in the number of Rights, if any, granted pursuant to the
Plan but not then exercised.
ARTICLE 6:00
Terms and Conditions of Options
6:01 Each Option granted pursuant to the Plan shall be evidenced by
an Option Agreement in such form and with such terms and
conditions (including, without limitation, noncompete,
confidentiality or other similar provisions or provisions
relating to transfer) as the Committee from time to time may
determine. The right of an Option Holder to exercise his, her
or its Option shall at all times be subject to the terms and
conditions set forth in the respective Option Agreement.
6:02 The exercise price per share for Options shall be established
by the Committee at the time of the grant of Options pursuant
to the Plan and shall not be less than the Fair Market Value
of a share of Common Stock on the date on which the Option is
granted. If the Committee does not establish a specific
exercise price per share at the time of grant, the exercise
price per share shall be equal to the Fair Market Value of a
share of Common Stock on the date of grant of the Options.
6:03 Each Option, subject to the other limitations set forth in the
Plan, may extend for a period of up
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<PAGE>
to 10 years from the date on which it is granted. The term of
each Option shall be determined by the Committee at the time
of grant of the Option, provided that if no term is
established by the Committee the term of the Option shall be
10 years from the date on which it is granted.
6:04 Unless otherwise provided by the Committee, the number of
shares of Common Stock subject to each Option shall be divided
into four installments of 25% each. The first installment
shall be exercisable 12 months after the date the Option was
granted, and each succeeding installment shall be exercisable
12 months after the date the immediately preceding installment
became exercisable. If an Option Holder does not purchase the
full number of shares of Common Stock that he, she or it at
any time has become entitled to purchase, the Option Holder
may purchase all or any part of those shares of Common Stock
at any subsequent time during the term of the Option.
6:05 Options shall be nontransferable and nonassignable, except
that (i) Options may be transferred by testamentary instrument
or by the laws of descent and distribution, and (ii) subject
to the terms and conditions of the Option Agreement or any
other terms and conditions imposed by the Committee from time
to time, Options may be transferred in accordance with the
terms and conditions provided in Section 6:12 if the
applicable Option Agreement or other action of the Committee
expressly provides that the Options are transferable.
6:06 Upon voluntary or involuntary termination of an Initial
Holder's employment, his or her Option (including any Option
transferred in accordance with the terms and conditions
provided in Section 6:12) and all rights thereunder shall
terminate effective at the close of business on the date the
Initial Holder ceases to be a regular, full-time employee of
the Corporation or any of its subsidiaries, except (i) to the
extent previously exercised, (ii) as provided in Sections
6:07, 6:08, and 6:09, and (iii) in the case of involuntary
termination of employment, for a period of 30 days thereafter
the Option Holder shall be entitled to exercise that portion
of the Option which was exercisable at the close of business
on the date the Initial Holder ceased to be a regular,
full-time employee of the Corporation or any of its
subsidiaries.
6:07 In the event an Initial Holder (i) ceases to be an executive
or other key employee of the Corporation or any of its
subsidiaries due to involuntary termination, (ii) takes a
leave of absence from the Corporation or any of its
subsidiaries for personal reasons or as a result of entry into
the armed forces of the United States, or any of the
departments or agencies of the United States government, or
(iii) terminates employment by reason of illness, disability,
or other special circumstance, the Committee may consider
his or her case and may take such action in respect of the
related Option Agreement as it may deem appropriate under the
circumstances, including accelerating the time previously
granted Options may be exercised and extending the time
following the Initial Holder's termination of employment
during which the Option Holder is entitled to purchase the
shares of Common Stock subject to such Options, provided that
in no event may any Option be exercised after the expiration
of the term of the Option.
6:08 If an Initial Holder dies during the term of his or her Option
without the Option having been exercised in full, (i) the
executor or administrator of his or her estate or the person
who inherits the right to exercise the Option by bequest or
inheritance in the event the Initial Holder was the Option
Holder at the date of death or (ii) the Option Holder in the
event the Option had been transferred in accordance with the
terms and conditions provided in Section 6:12, shall have the
right within three years of the Initial Holder's death to
purchase the number of shares of Common Stock that the
deceased Initial Holder (or Option Holder, as the case may be)
was entitled to purchase at the date of death, after which the
Option shall lapse, provided that in no event may any Option
be exercised after the expiration of the term of the Option.
6:09 If an Initial Holder's employment is terminated without his or
her Option having been exercised in full and (i) the Initial
Holder is 62 years of age or older, or (ii) the Initial Holder
has been employed by the Corporation or any of its
subsidiaries for at least 10 years and the Initial Holder's
- 5 -
<PAGE>
age plus years of such employment total not less than 55
years, then such Initial Holder (or the Option Holder in the
event the Option had been transferred in accordance with the
terms and conditions provided in Section 6:12) shall have the
right within three years of the Initial Holder's termination
of employment to purchase the number of shares of Common Stock
that the Initial Holder (or Option Holder, as the case may be)
was entitled to purchase at the date of termination, after
which the Option shall lapse, provided that in no event may
any Option be exercised after the expiration of the term of
the Option.
6:10 The granting of an Option pursuant to the Plan shall not
constitute or be evidence of any agreement or understanding,
express or implied, on the part of the Corporation or any of
its subsidiaries to employ the Initial Holder for any
specified period.
6:11 In addition to the general terms and conditions set forth in
this Article 6:00 in respect of Options granted pursuant to
the Plan, Incentive Stock Options granted pursuant to the Plan
shall be subject to the following additional terms and
conditions:
(a) The aggregate fair market value (determined at the
time the Incentive Stock Option is granted) of the
shares of Common Stock in respect of which "incentive
stock options" are exercisable for the first time by
the Option Holder during any calendar year (under all
such plans of the Corporation and its subsidiaries)
shall not exceed $100,000;
(b) The Option Agreement in respect of an Incentive Stock
Option may contain any other terms and conditions
specified by the Board of Directors that are not
inconsistent with the Plan, except that such terms
and conditions must be consistent with the
requirements for "incentive stock options" under
Section 422 of the Code; and
(c) Incentive Stock Options shall not be transferable in
accordance with the terms and conditions provided in
Section 6:12.
6:12 The Committee may provide, in the original grant of a
Nonqualified Stock Option or in an amendment or supplement to
a previous grant, that some or all of the Nonqualified Stock
Options granted under the Plan are transferable by the Initial
Holder to an Immediate Family Member of the Initial Holder,
provided that (i) the Option Agreement, as it may be amended
from time to time, expressly so provides or the Committee
otherwise designates the Option as transferable, (ii) the
transfer by the Initial Holder is a bona fide gift without
consideration, (iii) the transfer is irrevocable, (iv) the
Initial Holder and any such transferee provides such
documentation or other information concerning the transfer or
the transferee as the Committee or any employee of the
Corporation acting on behalf of the Committee may from time to
time request, and (v) the Initial Holder or the Option Holder
complies with all of the terms and conditions (including,
without limitation, any further restrictions or limitations)
included in the Option Agreement. Any Nonqualified Stock
Option transferred in accordance with the terms and conditions
provided in this Section 6:12 shall continue to be subject to
the same terms and conditions that were applicable to such
Nonqualified Stock Option prior to the transfer.
Notwithstanding any other provisions of the Plan, the
Corporation shall not be required to honor any exercise of an
Option by an Immediate Family Member of an Option transferred
in accordance with the terms and conditions provided in this
Section 6:12 unless and until payment or provision for payment
of any applicable withholding taxes has been made.
- 6 -
<PAGE>
ARTICLE 7:00
Methods of Exercise of Options
7:01 An Option Holder (or other person or persons, if any, entitled
to exercise an Option hereunder) desiring to exercise an
Option granted pursuant to the Plan as to all or part of the
shares of Common Stock covered by the Option shall (i) notify
the Corporation in writing at its principal office at 701 East
Joppa Road, Towson, Maryland 21286, to that effect, specifying
the number of shares of Common Stock to be purchased and the
method of payment therefor, and (ii) make payment or provision
for payment for the shares of Common Stock so purchased in
accordance with this Article 7:00. Such written notice may be
given by means of a facsimile transmission. If a facsimile
transmission is used, the Option Holder should mail the
original executed copy of the written notice to the
Corporation promptly thereafter.
7:02 Payment or provision for payment shall be made as follows:
(a) The Option Holder shall deliver to the Corporation at
the address set forth in Section 7:01 United States
currency in an amount equal to the aggregate purchase
price of the shares of Common Stock as to which such
exercise relates; or
(b) The Option Holder shall tender to the Corporation
shares of Common Stock already owned by the Option
Holder that, together with any cash tendered
therewith, have an aggregate fair market value
(determined based on the Fair Market Value of a share
of Common Stock on the date the notice set forth in
Section 7:01 is received by the Corporation) equal to
the aggregate purchase price of the shares of Common
Stock as to which such exercise relates; or
(c) The Option Holder shall deliver to the Corporation an
exercise notice together with irrevocable
instructions to a broker to deliver promptly to the
Corporation the amount of sale or loan proceeds
necessary to pay the aggregate purchase price of the
shares of Common Stock as to which such exercise
relates and to sell the shares of Common Stock to be
issued upon exercise of the Option and deliver the
cash proceeds less commissions and brokerage fees to
the Option Holder or to deliver the remaining shares
of Common Stock to the Option Holder.
Notwithstanding the foregoing provisions, the Committee, in
granting Options pursuant to the Plan, may limit the methods
in which an Option may be exercised by any person and, in
processing any purported exercise of an Option granted
pursuant to the Plan, may refuse to recognize the method of
exercise selected by the Option Holder (other than the method
of exercise set forth in Section 7:02(a)) if, (A) in the
opinion of counsel to the Corporation, (i) the Initial Holder
or the Option Holder is or within the six months preceding
such exercise was subject to reporting under Section 16(a) of
the Exchange Act and (ii) there is a substantial likelihood
that the method of exercise selected by the Option Holder
would subject the Initial Holder or the Option Holder to a
substantial risk of liability under Section 16 of the Exchange
Act, or (B) in the opinion of the Committee, the method of
exercise could have an adverse tax or accounting effect to the
Corporation.
7:03 In addition to the alternative methods of exercise set forth
in Section 7:02, holders of Nonqualified Stock Options shall
be entitled, at or prior to the time the written notice
provided for in Section 7:01 is delivered to the Corporation,
to elect to have the Corporation withhold from the shares of
Common Stock to be delivered upon exercise of the Nonqualified
Stock Option that number of shares of Common Stock (determined
based on the Fair Market Value of a share of Common Stock on
the date the notice set forth in Section 7:01 is received by
the Corporation) necessary to satisfy any withholding taxes
attributable to the exercise of the Nonqualified Stock Option.
Alternatively, such holder of a Nonqualified Stock Option may
elect to deliver previously owned shares of
- 7 -
<PAGE>
Common Stock upon exercise of the Nonqualified Stock Option to
satisfy any withholding taxes attributable to the exercise of
the Nonqualified Stock Option. The maximum amount that an
Option Holder may elect to have withheld from the shares of
Common Stock otherwise deliverable upon exercise or the
maximum number of previously owned shares an Option Holder may
deliver shall be based on the maximum federal, state and local
taxes payable by the Option Holder. Notwithstanding the
foregoing provisions, the Committee may include in the Option
Agreement relating to any such Nonqualified Stock Option
provisions limiting or eliminating the Option Holder's ability
to pay his or her withholding tax obligation with shares of
Common Stock or, if no such provisions are included in the
Option Agreement but in the opinion of the Committee such
withholding could have an adverse tax or accounting effect to
the Corporation, at or prior to exercise of the Nonqualified
Stock Option the Committee may so limit or eliminate the
Option Holder's ability to pay his or her withholding tax
obligation with shares of Common Stock. Notwithstanding the
foregoing provisions, a holder of a Nonqualified Stock Option
may not elect any of the methods of satisfying his or her
withholding tax obligation in respect of any exercise if, in
the opinion of counsel to the Corporation, (i) the Initial
Holder or the holder of the Nonqualified Stock Option is or
within the six months preceding such exercise was subject to
reporting under Section 16(a) of the Exchange Act and (ii)
there is a substantial likelihood that the election or timing
of the election would subject the Initial Holder or the holder
of the Nonqualified Stock Option to a substantial risk of
liability under Section 16 of the Exchange Act.
7:04 An Option Holder at any time may elect in writing to abandon
an Option in respect of all or part of the number of shares of
Common Stock as to which the Option shall not have been
exercised.
7:05 An Option Holder shall have none of the rights of a
stockholder of the Corporation until the shares of Common
Stock covered by the Option are issued upon exercise of the
Option.
ARTICLE 8:00
Terms and Conditions of Stock Appreciation Rights
8:01 Each Stock Appreciation Right granted pursuant to the Plan
shall be evidenced by a Stock Appreciation Right Agreement in
such form and with such terms and conditions (including,
without limitation, noncompete, confidentiality or other
similar provisions or provisions relating to transfer) as the
Committee from time to time may determine. Notwithstanding the
foregoing provision, Stock Appreciation Rights granted in
tandem with a related Option shall be evidenced by the Option
Agreement in respect of the related Option. The right of a
Stock Appreciation Right Holder to exercise his, her or its
Stock Appreciation Right shall at all times be subject to the
terms and conditions set forth in the respective Stock
Appreciation Right Agreement.
8:02 Each Stock Appreciation Right shall entitle the holder,
subject to the terms and conditions of the Plan, to receive
upon exercise of the Stock Appreciation Right an amount,
payable in cash or shares of Common Stock (determined based on
the Fair Market Value of a share of Common Stock on the date
the notice set forth in Section 9:01 is received by the
Corporation), equal to the Fair Market Value of a share of
Common Stock on the date of receipt by the Corporation of the
notice required by Section 9:01 less the Stock Appreciation
Right Base Price. Notwithstanding the foregoing provision,
each Stock Appreciation Right that is granted in tandem with a
related Option shall entitle the holder, subject to the terms
and conditions of the Plan, to surrender to the Corporation
for cancellation all or a portion of the related Option, but
only to the extent such Stock Appreciation Right and related
Option then are exercisable, and to be paid therefor an
amount, payable in cash or shares of Common Stock (determined
based on the Fair Market Value of a share of Common Stock on
the date the notice set forth in Section 9:01 is received by
the Corporation), equal to the Fair Market Value of a share of
Common Stock on the date of receipt by the Corporation of the
notice required by Section 9:01 less the Stock Appreciation
Right Base Price.
- 8 -
<PAGE>
8:03 Each Stock Appreciation Right, subject to the other
limitations set forth in the Plan, may extend for a period of
up to 10 years from the date on which it is granted. The term
of each Stock Appreciation Right shall be determined by the
Committee at the time of grant of the Stock Appreciation
Right, provided that if no term is established by the
Committee the term of the Stock Appreciation Right shall be 10
years from the date on which it is granted.
8:04 Unless otherwise provided by the Committee, the number of
Stock Appreciation Rights granted pursuant to each Stock
Appreciation Right Agreement shall be divided into four
installments of 25% each. The first installment shall be
exercisable 12 months after the date the Stock Appreciation
Right was granted, and each succeeding installment shall be
exercisable 12 months after the date the immediately preceding
installment became exercisable. If a Stock Appreciation Right
Holder does not exercise the Stock Appreciation Right to the
extent that he, she or it at any time has become entitled to
exercise, the Stock Appreciation Right Holder may exercise all
or any part of the Stock Appreciation Right at any subsequent
time during the term of the Stock Appreciation Right.
8:05 Stock Appreciation Rights shall be nontransferable and
nonassignable, except that (i) Stock Appreciation Rights may
be transferred by testamentary instrument or by the laws of
descent and distribution, and (ii) subject to the terms and
conditions of the Stock Appreciation Right Agreement or any
other terms and conditions imposed by the Committee from time
to time, Stock Appreciation Rights may be transferred in
accordance with the terms and conditions provided in Section
8:11 if the applicable Stock Appreciation Right Agreement or
other action of the Committee expressly provides that the
Stock Appreciation Rights are transferable.
8:06 Upon voluntary or involuntary termination of an Initial
Holder's employment, his or her Stock Appreciation Right
(including any Stock Appreciation Right transferred in
accordance with the terms and conditions provided in Section
8:11) and all rights thereunder shall terminate effective as
of the close of business on the date the Initial Holder ceases
to be a regular, full-time employee of the Corporation or any
of its subsidiaries, except (i) to the extent previously
exercised, (ii) except as provided in Sections 8:07, 8:08, and
8:09, and (iii) in the case of involuntary termination of
employment, for a period of 30 days thereafter the Stock
Appreciation Right Holder shall be entitled to exercise that
portion of the Stock Appreciation Right which was exercisable
at the close of business on the date the Initial Holder ceased
to be a regular, full-time employee of the Corporation or any
of its subsidiaries.
8:07 In the event an Initial Holder (i) ceases to be an executive
or other key employee of the Corporation or any of its
subsidiaries due to involuntary termination, (ii) takes a
leave of absence from the Corporation or any of its
subsidiaries for personal reasons or as a result of entry into
the armed forces of the United States, or any of the
departments or agencies of the United States government, or
(iii) terminates employment by reason of illness, disability,
or other special circumstance, the Committee may consider his
or her case and may take such action in respect of the related
Stock Appreciation Right Agreement as it may deem appropriate
under the circumstances, including accelerating the time
previously granted Stock Appreciation Rights may be exercised
and extending the time following the Initial Holder's
termination of employment during which the Stock Appreciation
Right Holder is entitled to exercise the Stock Appreciation
Rights, provided that in no event may any Stock Appreciation
Right be exercised after the expiration of the term of the
Stock Appreciation Right.
8:08 If an Initial Holder dies during the term of his or her Stock
Appreciation Right without the Stock Appreciation Right having
been exercised in full, (i) the executor or administrator of
his or her estate or the person who inherits the right to
exercise the Stock Appreciation Right by bequest or
inheritance in the event the Initial Holder was the Stock
Appreciation Right Holder at the date of death or (ii) the
Stock Appreciation Right Holder in the event the Stock
Appreciation Right had been transferred in accordance with the
terms and conditions provided in Section 8:11, shall have
- 9 -
<PAGE>
the right within three years of the Initial Holder's death to
exercise the Stock Appreciation Rights that the Initial Holder
(or Stock Appreciation Right Holder, as the case may be) was
entitled to purchase at the date of death, after which the
Stock Appreciation Right shall lapse, provided that in no
event may any Stock Appreciation Right be exercised after the
expiration of the term of the Stock Appreciation Right.
8:09 If an Initial Holder's employment is terminated without his or
her Stock Appreciation Right having been exercised in full and
(i) the Initial Holder is 62 years of age or older, or (ii)
the Initial Holder has been employed by the Corporation or any
of its subsidiaries for at least 10 years and the Initial
Holder's age plus years of such employment total not less than
55 years, then such Initial Holder (or the Stock Appreciation
Right Holder in the event the Stock Appreciation Right had
been transferred in accordance with the terms and conditions
provided in Section 8:11) shall have the right within three
years of the Initial Holder's termination of employment to
exercise the Stock Appreciation Rights that the Initial Holder
(or Stock Appreciation Right Holder, as the case may be) was
entitled to exercise at the date of termination, after which
the Stock Appreciation Right shall lapse, provided that in no
event may any Stock Appreciation Right be exercised after the
expiration of the term of the Stock Appreciation Right.
8:10 The granting of a Stock Appreciation Right pursuant to the
Plan shall not constitute or be evidence of any agreement or
understanding, expressed or implied, on the part of the
Corporation or any of its subsidiaries to employ the Initial
Holder for any specified period.
8:11 The Committee may provide, in the original grant of a Stock
Appreciation Right or in an amendment or supplement to a
previous grant, that some or all of the Stock Appreciation
Rights granted under the Plan are transferable by the Initial
Holder to an Immediate Family Member of the Initial Holder,
provided that (i) the Stock Appreciation Right Agreement, as
it may be amended from time to time, expressly so provides or
the Committee otherwise designates the Stock Appreciation
Right as transferable, (ii) the transfer by the Initial Holder
is a bona fide gift without consideration, (iii) the transfer
is irrevocable, (iv) the Initial Holder and any such
transferee provides such documentation or other information
concerning the transfer or the transferee as the Committee or
any employee of the Corporation acting on behalf of the
Committee may from time to time request, and (v) the Initial
Holder or the Stock Appreciation Right Holder complies with
all of the terms and conditions (including, without
limitation, any further restrictions or limitations) included
in the Stock Appreciation Right Agreement. Any Stock
Appreciation Right transferred in accordance with the terms
and conditions provided in this Section 8:11 shall continue to
be subject to the same terms and conditions that were
applicable to such Stock Appreciation Right prior to the
transfer. Notwithstanding any other provisions of the Plan,
the Corporation shall not be required to honor any exercise of
a Stock Appreciation Right by an Immediate Family Member of a
Stock Appreciation Right transferred in accordance with the
terms and conditions provided in this Section 8:11 unless and
until payment or provision for payment of any applicable
withholding taxes has been made.
ARTICLE 9:00
Methods of Exercise of Stock Appreciation Rights
9:01 A Stock Appreciation Right Holder (or other person or persons,
if any, entitled to exercise a Stock Appreciation Right
hereunder) desiring to exercise a Stock Appreciation Right
granted pursuant to the Plan shall notify the Corporation in
writing at its principal office at 701 East Joppa Road,
Towson, Maryland 21286, to that effect, specifying the number
of Stock Appreciation Rights to be exercised. Such written
notice may be given by means of a facsimile transmission. If a
facsimile transmission is used, the Stock Appreciation Right
Holder should mail the original executed copy of the written
notice to the Corporation promptly thereafter.
- 10 -
<PAGE>
9:02 The Committee in its sole and absolute discretion shall
determine whether a Stock Appreciation Right shall be settled
upon exercise in cash or in shares of Common Stock. The
Committee, in making such a determination, may from time to
time adopt general guidelines or determinations as to whether
Stock Appreciation Rights shall be settled in cash or in
shares of Common Stock.
ARTICLE 10:00
Limited Stock Appreciation Rights
10:01 Notwithstanding any other provision of the Plan, the
Committee, in its sole and absolute discretion, may grant
Limited Stock Appreciation Rights entitling Option Holders to
receive, in connection with a Change in Control (as defined in
Section 10:02), a cash payment in cancellation of all of their
Options which are outstanding on the date the Change in
Control occurs (whether or not such Options are then presently
exercisable), which payment shall be equal to the number of
shares covered by the cancelled Options multiplied by the
excess over the exercise price of the Options of the higher of
the (i) Fair Market Value of a share of Common Stock on the
date of the Change in Control or (ii) the highest per share
price paid for the shares of Common Stock in connection with
the Change in Control (with the value of any noncash
consideration paid in connection with the Change in Control to
be determined by the Committee in its sole and absolute
discretion). For purposes of this Section 10:01 as well as the
other provisions of this Plan, once an Option or portion of an
Option has terminated, lapsed or expired, or has been
abandoned, in accordance with the provisions of the Plan, the
Option (or the portion of the Option) that has terminated,
lapsed or expired, or has been abandoned, shall cease to be
outstanding. Limited Stock Appreciation Rights shall not be
exercisable at the discretion of the Option Holder but shall
automatically be exercised upon a Change in Control.
10:02 For purposes of Section 10:01 of the Plan, a "Change in
Control" shall mean a change in control of the Corporation of
a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under
the Exchange Act, whether or not the Corporation is in fact
required to comply therewith, provided that, without
limitation, such a Change in Control shall be deemed to have
occurred if (A) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than a trustee or
other fiduciary holding securities under an employee benefit
plan of the Corporation or any of its subsidiaries, or a
corporation owned, directly or indirectly, by the stockholders
of the Corporation in substantially the same proportions as
their ownership of stock of the Corporation, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Corporation representing 20% or more of the combined voting
power of the Corporation's then outstanding securities; or (B)
during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors
and any new director (other than a director designated by a
person who has entered into an agreement with the Corporation
to effect a transaction described in clauses (A) or (C) of
this Section 10.02) whose election by the Board of Directors
or nomination for election by the Corporation's stockholders
was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute a majority thereof; or (C) the stockholders of the
Corporation approve a merger, share exchange or consolidation
of the Corporation with any other corporation, other than a
merger, share exchange or consolidation which would result in
the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) at least 60% of the
combined voting power of the voting securities of the
Corporation or such surviving entity outstanding immediately
after such merger, share exchange or consolidation, or the
stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all the
Corporation's assets.
- 11 -
<PAGE>
10:03 Limited Stock Appreciation Rights shall be nontransferable and
nonassignable, except that Limited Stock Appreciation Rights
shall automatically be transferred and assigned in tandem with
a transfer of the related Options in accordance with Section
6:05.
ARTICLE 11:00
Amendments and Discontinuance of the Plan
11:01 The Board of Directors shall have the right at any time and
from time to time to amend, modify, or discontinue the Plan
provided that, except as provided in Section 5:03, no such
amendment, modification, or discontinuance of the Plan shall
(i) revoke or alter the terms of any valid Option, Stock
Appreciation Right, or Limited Stock Appreciation Right
previously granted pursuant to the Plan, (ii) increase the
number of shares of Common Stock to be reserved for issuance
and sale pursuant to Options or Stock Appreciation Rights
granted pursuant to the Plan, (iii) decrease the price
determined pursuant to the provisions of Section 6:02 or
increase the amount of cash or shares of Common Stock that a
Stock Appreciation Right Holder is entitled to receive upon
exercise of a Stock Appreciation Right, (iv) change the class
of employee to whom Options or Stock Appreciation Rights may
be granted pursuant to the Plan, or (v) provide for Options or
Stock Appreciation Rights exercisable more than 10 years after
the date granted.
ARTICLE 12:00
Plan Subject to Governmental Laws and Regulations
12:01 The Plan and the grant and exercise of Options, Stock
Appreciation Rights, and Limited Stock Appreciation Rights
pursuant to the Plan shall be subject to all applicable
governmental laws and regulations. Notwithstanding any other
provision of the Plan to the contrary, the Board of Directors
may in its sole and absolute discretion make such changes in
the Plan as may be required to conform the Plan to such laws
and regulations.
ARTICLE 13:00
Duration of the Plan
13:01 No Option or Stock Appreciation Right shall be granted
pursuant to the Plan after the close of business on February
13, 2006.
- 12 -
Exhibit 11(a)
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Millions of Dollars Except Per Share Data)
<TABLE>
<CAPTION>
For The Three Months Ended
March 30,1997 March 31, 1996
Amount Per Share Amount Per Share
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding 94.4 87.0
Dilutive stock options and stock issuable under employee
benefit plans--based on the Treasury stock method
using the average market price 1.8 2.1
---- ----
Adjusted shares outstanding 96.2 89.1
==== ====
Earnings (loss) from continuing operations $26.3 $(32.4)
Less preferred stock dividend (Note 1) 2.9
-------- ----
Earnings (loss) from continuing operations
attributable to common stock $26.3 $.27 $(35.3) $(.40)
===== ==== ======= ======
Fully Diluted:
Average shares outstanding 94.4 87.0
Dilutive stock options and stock issuable under employee
benefit plans--based on the Treasury stock method
using the higher of the average market price or
ending market price 1.8 2.5
---- ----
Adjusted shares outstanding 96.2 89.5
Average shares assumed to be
converted through convertible
preferred stock (Note 1) 6.3 (Note 2)
-------- ---
Fully diluted average
shares outstanding 96.2 95.8
==== ====
Earnings (loss) from continuing operations $26.3 $.27 $(32.4) $(.34)
===== ==== ======= ======
<FN>
Notes: 1. The convertible preferred stock was converted to common stock on
October 14, 1996.
2. The assumed conversion of convertible preferred stock is
anti-dilutive and, therefore, is not used in the calculation of
fully diluted earnings per share included in the financial
statements.
</FN>
</TABLE>
<PAGE>
Exhibit 11(b)
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Millions of Dollars Except Per Share Data)
<TABLE>
<CAPTION>
For The Three Months Ended
March 30,1997 March 31,1996
Amount Per Share Amount Per Share
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding 94.4 87.0
Dilutive stock options and stock issuable under employee
benefit plans--based on the Treasury stock method
using the average market price 1.8 2.1
---- ----
Adjusted shares outstanding 96.2 89.1
==== ====
Net earnings $26.3 $38.0
Less preferred stock dividend (Note 1) 2.9
-------- ---
Net earnings attributable to common stock $26.3 $.27 $35.1 $ .39
===== ==== ===== =====
Fully Diluted:
Average shares outstanding 94.4 87.0
Dilutive stock options and stock issuable under employee
benefit plans--based on the Treasury stock method
using the higher of the average market price or
ending market price 1.8 2.5
---- ----
Adjusted shares outstanding 96.2 89.5
Average shares assumed to be
converted through convertible
preferred stock (Note 1) 6.3 (Note 2)
-------- -----
Fully diluted average
shares outstanding 96.2 95.8
==== ====
Net earnings $26.3 $.27 $38.0 $ .40
===== ==== ===== =====
<FN>
Notes: 1. The convertible preferred stock was converted to common stock on
October 14, 1996.
2. The assumed conversion of convertible preferred stock is
anti-dilutive and, therefore, is not used in the calculation of
fully diluted earnings per share included in the financial
statements.
</FN>
</TABLE>
EXHIBIT 12
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Millions of Dollars Except Ratios)
<TABLE>
<CAPTION>
Three Months Ended
March 30, 1997
<S> <C>
EARNINGS:
Earnings from continuing operations before
income taxes $40.4
Interest expense 33.3
Portion of rent expense representative of an
interest factor 5.9
-----
Adjusted earnings from continuing operations
before taxes and fixed charges $79.6
=====
FIXED CHARGES:
Interest expense $33.3
Portion of rent expense representative of an
interest factor 5.9
-----
Total fixed charges $39.2
=====
RATIO OF EARNINGS TO FIXED CHARGES 2.03
=====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains financial information extracted from the Corporation's
unaudited interim financial statements as of and for the three months ended
March 30, 1997, and the accompanying footnotes and is qualified in its entirety
by the reference to such financial statements.
</LEGEND>
<CIK> 0000012355
<NAME> THE BLACK & DECKER CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-30-1997
<CASH> 119,600
<SECURITIES> 0
<RECEIVABLES> 655,700<F1>
<ALLOWANCES> 0
<INVENTORY> 842,400
<CURRENT-ASSETS> 1,804,100
<PP&E> 875,500<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,126,800
<CURRENT-LIABILITIES> 1,333,400
<BONDS> 1,652,000
0
0
<COMMON> 47,200
<OTHER-SE> 1,561,200
<TOTAL-LIABILITY-AND-EQUITY> 5,126,800
<SALES> 1,015,000
<TOTAL-REVENUES> 1,015,000
<CGS> 650,500
<TOTAL-COSTS> 941,700
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,300
<INCOME-PRETAX> 40,400
<INCOME-TAX> 14,100
<INCOME-CONTINUING> 26,300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,300
<EPS-PRIMARY> .27
<EPS-DILUTED> .27
<FN>
<F1>Represents net trade receivables.
<F2>Represents net property, plant, and equipment.
</FN>
</TABLE>
