THE BLACK & DECKER 2003 STOCK
OPTION PLAN
The proper
execution of the duties and responsibilities of the executives 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.
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The term
“Board of Directors” shall mean the Board of Directors
of the Corporation.
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The term
“Change in Control” shall have the meaning provided in
Section 10:02 of the Plan.
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The term
“Code” shall mean the Internal Revenue Code of 1986, as
amended, and any regulations promulgated thereunder.
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The term
“Committee” shall mean the Compensation Committee of
the Board of Directors.
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The term
“Common Stock” shall mean the shares of common stock,
par value $.50 per share, of the Corporation.
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The term
“Corporation” shall mean The Black & Decker
Corporation.
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The term
“Exchange Act” shall mean the Securities Exchange Act
of 1934, as amended.
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The term
“Fair Market Value of a share of Common Stock” shall
mean the closing 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 closing 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.
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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.
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The term
“Incentive Stock Option” shall mean any Option granted
pursuant to the Plan that is designated as an Incentive Stock
Option and that satisfies the requirements of Section 422(b)
of the Code.
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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.
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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.
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The term
“Non-Qualified Stock Option” shall mean any Option
granted pursuant to the Plan that is not an Incentive Stock
Option.
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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
Non-Qualified Stock Option.
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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.
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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 of the Plan.
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The term
“Plan” shall mean The Black & Decker 2003
Stock Option Plan as approved by the Board of Directors on February
13, 2003, and adopted by the stockholders of the Corporation at the
2003 Annual Meeting of Stockholders, as the same may be amended
from time to time.
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The term
“Rights” shall include Stock Appreciation Rights and
Limited Stock Appreciation Rights.
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The term
“Section 162(m) Regulations” shall mean the regulations
adopted pursuant to Section 162(m) of the Code.
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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.
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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.
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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 of the Plan, 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.
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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 of the Plan.
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The term
“subsidiary” or “subsidiaries” shall mean a
corporation, partnership, limited liability company, joint venture,
or other legal entity of which the Corporation, either directly or
together with any other subsidiary of the Corporation, owns more
than 50% of the voting power in the election of directors or their
equivalents.
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ARTICLE 2:00
Effective Date of the
Plan
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The Plan shall
become effective upon stockholder approval, provided that such
approval is received on or before May 31, 2003, 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.
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ARTICLE 3:00
Administration
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The Plan shall
be administered by the Committee.
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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.
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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 of the Plan.
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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.
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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.
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ARTICLE 4:00
Participation in the
Plan
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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.
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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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No employee may
be granted, in any calendar year, Options or Stock Appreciation
Rights exceeding 1,000,000 in the aggregate under the
Plan.
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ARTICLE 5:00
Stock Subject to the
Plan
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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 5,000,000 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
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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 of the Plan, 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 5,000,000 shares and no more than 5,000,000 Stock
Appreciation Rights shall be granted pursuant to the
Plan.
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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.
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Subject to the
provisions of Section 10:01 of the Plan, 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 of
Options or Stock Appreciation Rights that may be granted to an
employee in any calendar year, 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.
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ARTICLE 6:00
Terms and Conditions of
Options
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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, non-compete, 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.
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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.
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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.
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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.
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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
of the Plan if the applicable Option Agreement or other action of
the Committee expressly provides that the Options are
transferable.
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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 of the Plan)
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 of the Plan, 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 that 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, provided that in no event may any Option be exercised
after the expiration of the term of the Option.
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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.
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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 of the Plan, 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.
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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 of the Plan) 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. Notwithstanding the foregoing and only with
respect to Options granted in April 2009 or afterwards, if an
Initial Holder’s employment is terminated without his or her
Option having been exercised in full and the Initial Holder is 60
years of age or older, then such Initial Holder (or the Option
Holder in the event the Option had been transferred in accordance
with Section 6:12 of the Plan) shall have the right during the
remaining term of the Option to purchase the number of shares of
Common Stock that the Initial Holder (or Option
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