EXHIBIT 10(aa)
February 10, 2006
Mr. Paul F. McBride
c/o The Black & Decker Corporation
701 East Joppa Road
Towson, Maryland 21286
Dear
Paul:
The
Black & Decker Corporation (the “Corporation”)
considers it essential to the best interests of its stockholders to
foster the continuous employment of key management personnel. In
this connection, the Board of Directors of the Corporation (the
“Board”) recognizes that, as is the case with many
publicly held corporations, the possibility of a change in control
of the Corporation may exist and that such possibility, and the
uncertainty and questions that it may raise among management, may
result in the departure or distraction of management personnel to
the detriment of the Corporation and its stockholders. The Board
has determined that appropriate steps should be taken to reinforce
and encourage the continued attention and dedication of members of
the Corporation’s management, including you, to their
assigned duties without distraction in the face of potentially
disturbing circumstances arising from the possibility of a change
in control of the Corporation, although no such change is now
contemplated.
In
order to induce you to remain in the employ of the Corporation, the
Corporation agrees that you shall receive the severance benefits
set forth in this letter agreement (this “Agreement”)
in the event of a “Change in Control of the
Corporation” (as defined in Section 2) under the
circumstances described below.
1.
Term of Agreement . This Agreement shall commence on the
date hereof and shall continue in effect through December 31,
2011; provided, however, that if a Change in Control of the
Corporation shall have occurred prior to December 31, 2011,
this Agreement shall continue in effect for a period of 36 months
beyond the month in which the Change in Control of the Corporation
occurred, at which time this Agreement shall terminate.
Notwithstanding the foregoing, and provided no Change in Control of
the Corporation shall have occurred, this Agreement shall
automatically terminate upon the earlier to occur of (a) your
termination of employment with the Corporation, or (b) the
Corporation’s giving you notice of termination of this
Agreement, regardless of the effective date of such
termination.
2.
Change in Control . No benefits shall be payable under this
Agreement unless there shall have been a Change in Control of the
Corporation. For purposes of this Agreement, a “Change in
Control of the Corporation” shall mean a change in control of
a nature that would be
Mr. Paul F. McBride
February 10, 2006
Page 2
required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended
(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 that 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; (B) during
any period of two consecutive years, individuals who at the
beginning of that period constitute the Board 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 (D) of this Section) whose election by the Board
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 of the
Board; (C) the Corporation enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control of the Corporation; or (D) the stockholders of the
Corporation approve a merger, share exchange or consolidation of
the Corporation with any other corporation or entity, other than a
merger, share exchange or consolidation that 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 the surviving entity outstanding immediately
after the 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.
3.
Vesting of Stock Options . Upon a Change in Control of the
Corporation, you shall fully vest in all outstanding stock options
granted to you under the Corporation’s stock option plans.
Each stock option shall continue to be exercisable for the term of
that stock option. In accordance with the terms of The Black &
Decker Performance Equity Plan (the “PEP”) and The
Black & Decker Corporation 2004 Restricted Stock Plan,
respectively, the maximum number (150% of the target award for each
performance period) of Performance Shares (as defined in the PEP)
held by you shall be deemed to have been earned (and shall be paid
in accordance with the payment provisions of the PEP) and all
shares of restricted stock held by you shall become fully vested
and no longer subject to forfeiture upon the occurrence of a Change
in Control of the Corporation.
4.
Termination Following Change in Control of the Corporation .
If a Change in Control of the Corporation shall have occurred, you
shall be entitled to the benefits provided in Section 5.2 upon the
subsequent termination of your employment during the term of this
Agreement unless the termination is (A) because of your death or
Disability (as defined in
Mr. Paul F. McBride
February 10, 2006
Page 3
Section 4.1), (B) by the
Corporation for Cause (as defined in Section 4.2), or (C) by you
other than for Good Reason (as defined in Section 4.3).
4.1
Disability . If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the
full-time performance of your duties with the Corporation for six
consecutive months and, within 30 days after a Notice of
Termination (as defined in Section 4.4) is given to you, shall not
have returned to the full-time performance of your duties, your
employment may be terminated for
“Disability.”
4.2
Cause . Termination by the Corporation of your employment
for “Cause” shall mean termination upon (a) the willful
and continued failure by you to substantially perform your duties
with the Corporation (other than any such failure resulting from
your incapacity due to physical or mental illness or any such
actual or anticipated failure after the issuance by you of a Notice
of Termination for Good Reason) after a written demand for
substantial performance is delivered to you by the Board, which
demand specifically identifies the manner in which the Board
believes that you have not substantially performed your duties, or
(b) the willful engaging by you in conduct that is demonstrably and
materially injurious to the Corporation, monetarily or otherwise.
For purposes of this Section 4.2, no act or failure to act on your
part shall be deemed “willful” unless done, or omitted
to be done, by you not in good faith and without reasonable belief
that your action or omission was in the best interest of the
Corporation. Notwithstanding the foregoing, you shall not be deemed
to have been terminated for Cause unless and until there shall have
been delivered to you a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held
for that purpose (after reasonable notice to you and an opportunity
for you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were guilty
of conduct set forth above in clauses (a) or (b) of the first
sentence of this Section 4.2 and specifying the particulars thereof
in detail.
4.3
Good Reason . You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement,
“Good Reason” shall mean, without your express written
consent, the occurrence after a Change in Control of the
Corporation of any of the following circumstances unless the
circumstances are fully corrected prior to the Date of Termination
specified in the Notice of Termination given in respect
thereof:
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(a)
the assignment to you of any duties inconsistent with your current
status as an executive of the Corporation or a substantial adverse
alteration in the nature or status of your responsibilities from
those in effect immediately prior to the Change in Control of the
Corporation;
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(b)
a reduction by the Corporation in your annual base salary as in
effect on the date of this Agreement or any subsequently
established higher annual base salary, except for across-the-board
salary reductions similarly affecting all senior executives of the
Corporation and all senior executives of any person in control of
the Corporation;
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Mr. Paul F. McBride
February 10, 2006
Page 4
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(c)
your relocation to a location not within 25 miles of your office or
job location immediately prior to the Change in Control of the
Corporation, except for required travel on the Corporation’s
business to an extent substantially consistent with your business
travel obligations immediately prior to the Change in Control of
the Corporation;
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(d)
the failure by the Corporation, without your consent, to pay to you
any portion of your compensation to which you are entitled when
such compensation is due;
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(e)
the failure by the Corporation to continue in effect any
compensation plan in which you participated immediately prior to
the Change in Control of the Corporation that is material to your
total compensation, including but not limited to the
Corporation’s (i) Executive Annual Incentive Plan
(“EAIP”), Annual Incentive Plan (“AIP”) or
other comparable annual compensation plan, (ii) stock option and
restricted stock plans, and (iii) PEP or other comparable medium-
or long-term compensation plan, or any substitute plan or plans
adopted prior to the Change in Control of the Corporation; unless
an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to the plan and the
equitable arrangement provides substantially equivalent benefits
not materially less favorable to you (both in terms of the amount
of benefits provided and the level of your participation relative
to other participants), or the failure by the Corporation to
continue your participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable (both in
terms of the amount of benefits provided and the level of your
participation relative to other participants) than those you
enjoyed immediately prior to the Change in Control of the
Corporation;
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(f)
the failure by the Corporation to continue in effect any material
benefit available to you immediately prior to the Change in Control
of the Corporation, including without limitation (i) the failure to
provide to you benefits substantially similar to those enjoyed by
you under any of the Corporation’s retirement, savings, life
insurance, medical, dental, health and accident, or disability
plans in which you were participating at the time of the Change in
Control of the Corporation, (ii) the failure to continue to provide
to you any material perquisite provided to you at the time of the
Change in Control of the Corporation, (iii) the failure by the
Corporation to provide to you the number of paid vacation days to
which you are entitled on the basis of years of service with the
Corporation in accordance with the Corporation’s normal
vacation policy in effect at the time of the Change in Control of
the Corporation, or (iii) the taking of any action by the
Corporation that would directly or indirectly materially reduce any
of these benefits or deprive you of any material benefit or
perquisite enjoyed by you at the time of the Change in Control of
the Corporation;
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Mr. Paul F. McBride
February 10, 2006
Page 5
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(g)
the failure of the Corporation to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement,
as contemplated in Section 7.1; or
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(h)
any purported termination of your employm
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