THE BLACK & DECKER PERFORMANCE EQUITY PLAN
Section 1. Purpose
The purpose of The Black & Decker Performance Equity Plan (the "Plan")
is to attract and retain key employees of The Black & Decker Corporation (the
"Corporation") and its Subsidiaries, to motivate those employees to put forth
maximum efforts for the long-term success of the business, and to encourage
ownership of the Corporation's Stock by them.
Section 2. Definitions
The following definitions are applicable to the Plan:
(a) "Committee" shall mean the Organization Committee of the
Corporation's Board of Directors or such other committee of the Board comprised
of not less than three members as the Board of Directors shall from time to time
appoint to administer the Plan. All members of the Committee shall be members of
the Board of Directors of the Corporation who are not eligible to participate in
the Plan and who are (i) disinterested persons as defined in Rule 16b-3 adopted
pursuant to the Exchange Act, and (ii) outside directors as defined in the
Section 162(m) Regulations.
(b) "Designated Beneficiary" shall mean the beneficiary designated by
the Participant, in a manner determined by the Committee, to receive shares of
Stock or other payments due the Participant in the event of the Participant's
death, or in the absence of an effective designation by the Participant, the
Participant's surviving spouse, or, if there is no surviving spouse, the
Participant's estate.
(c) "Employee" shall mean a regular full-time salaried employee of the
Corporation or of a Subsidiary.
(d) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(e) "Executive Officer" shall mean an executive officer of the
Corporation within the meaning of Rule 3b-7 promulgated under the Exchange Act
and a "covered employee" as defined by the Section 162(m) Regulations.
(f) "Fiscal Year" shall mean the fiscal year of the Corporation.
(g) "Participant" shall mean an Employee who is selected by the
Committee to participate in the Plan pursuant to Section 5.
(h) "Performance Goals" shall mean the performance objective or
objectives relating to, in whole or in part, the performance of the Corporation
or any Subsidiary, group, division, or operating unit of the Corporation or any
Subsidiary during a Performance Period. With respect to a Participant who is an
Executive Officer, the performance objective or objectives shall be based on one
of, or a combination of, the following factors: the market price of the Stock at
the close of business on the last business day of the Performance Period,
increases in the market price of the Stock during the Performance Period, the
earnings for the Performance Period or any year or years in the Performance
Period (either before taxes, before interest and taxes, before depreciation,
amortization, interest and taxes, or after all of the foregoing), the earnings
per share for the Performance Period or any year or years in the Performance
Period, or, as to the Corporation or any Subsidiary, group, division or
operating unit thereof, the average annual return on equity or net assets for
the Performance Period or the return on equity or net assets for a specified
year or years in the Performance Period, the average annual gross margin or cost
of goods sold for the Performance Period or the gross margin or cost of goods
sold for a specified year or years in the Performance Period, or the average
annual cash flow from operations or free cash flow for the Performance Period or
the cash flow from operations or free cash flow for a specified year or years in
the Performance Period.
(i) "Performance Period" shall mean with respect to each grant of
Performance Shares a period of two to three Fiscal Years.
(j) "Performance Shares" shall mean a grant pursuant to Sections 5 and
7 of an award in the form of shares of Common Stock or units equivalent thereto.
(k) "Section 162(m) Regulations" shall mean the regulations adopted
pursuant to Section 162(m) of the Internal Revenue Code of 1986 (as amended), as
such regulations may be amended from time to time.
(l) "Stock" shall mean the common stock, $.50 par value, of the
Corporation.
(m) "Subsidiary" shall mean any business entity in which the
Corporation, directly or indirectly, owns 50 percent or more of the total
combined voting power of all classes of stock or other equity interests.
Section 3. Administration
The Plan shall be administered by the Committee. The Committee shall
have full power to establish the form and terms and conditions (including,
without limitation, noncompete, confidentiality or similar provisions) of the
Performance Share Agreement that shall represent the grant of Performance Shares
to a Participant hereunder, to construe and interpret the Plan and to establish
and amend rules and regulations for its administration. All actions taken and
decisions made by the Committee pursuant to the provisions of the Plan shall be
binding and conclusive on all persons for all purposes, including but not
limited to Participants and their legal representatives and beneficiaries. The
rights of a Participant shall at all times be subject to the terms and
conditions set forth in the respective Performance Share Agreement.
Section 4. Maximum Amount Available for Grants
(a) The maximum number of Performance Shares that may be granted and
the maximum number of shares of Stock that may be issued under the Plan is
2,500,000, subject to adjustment as provided in Section 11. If Performance
Shares are forfeited under the Plan, they and any related shares of Stock shall
again be available for grant and issuance under the Plan. Subject to Section 10,
if Performance Shares are paid in cash rather than in shares of Stock, they and
any related shares of Stock shall not be available for grant and issuance.
(b) Shares of Stock delivered under the Plan shall be made available
from authorized but unissued shares.
(c) With respect to each Performance Period beginning on or after
January 1, 1996, the maximum number of Performance Shares that may be granted,
and the maximum number of shares of Stock that may be issued, to any Participant
shall be 75,000.
Section 5. Participation; Grants
The Committee shall from time to time make grants of Performance Shares
to Participants selected from among those Employees who, in the opinion of the
Committee, have the capacity to contribute in substantial measure to the
successful performance of the Corporation and its Subsidiaries. In making
grants, the Committee may take into account a Participant's level of
responsibility, rate of compensation, individual performance and contribution,
and such other criteria as it deems appropriate. If an Employee becomes a
Participant after the commencement of a Performance Period, the number of
Performance Shares granted, if any, may be prorated for the length of time
remaining in the Performance Period. With respect to any Employee who is or
becomes an Executive Officer, the Committee may not designate the Employee a
Participant more than 90 days after the commencement of a Performance Period.
The Committee may not grant Performance Shares to any member of the Committee.
Section 6. Performance Goals
The Committee shall establish Performance Goals for each Performance
Period on the basis of such criteria, and to accomplish such objectives, as the
Committee may from time to time determine. The Committee shall also establish a
schedule or schedules for the Performance Period setting forth the percentage of
the Performance Shares granted that will be earned or forfeited based on the
percentages of the Performance Goals for the period that are actually achieved
or exceeded. To provide Participants with additional motivation, the Committee,
in its discretion, may provide for the issuance to individual Participants,
where Performance Goals in excess of a target are achieved or exceeded, of
additional, fully vested and unrestricted Performance Shares not to exceed 50%
of the Performance Shares granted for the Performance Period; provided, however,
that with respect to Performance Periods beginning on or after January 1, 1996,
if such an additional grant is made to an Executive Officer, the number of
additional Performance Shares to be granted to the Executive Officer shall be
fixed by the Committee within 90 days of the commencement of the Performance
Period, and the grant of additional Performance Shares to the Executive Officer
shall be contingent upon the attainment of the Performance Goals established, in
writing, by the Committee within 90 days of the commencement of the Performance
Period. In setting Performance Goals, the Committee may use return on equity,
earnings growth, revenue growth, peer comparisons or such other measures of
performance in such manner as it deems appropriate; provided, however, that for
Performance Periods beginning on or after January 1, 1996, Performance Goals
established with respect to a Participant who is an Executive Officer shall be
based on one of, or a combination of, the factors set forth in the definition of
Performance Goals. The Committee shall establish Performance Goals before, or as
soon as practicable after, the commencement of the Performance Period; provided
that with respect to a Participant who is an Executive Officer the Performance
Goals shall be established in writing by the Committee not later than 90 days
after the commencement of the Performance Period. During the Performance Period
and until such time thereafter as payment is made in accordance with Section
8(b), the Committee shall have the authority to adjust upward or downward the
Performance Goals or the measure or measures of performance in such manner as it
deems appropriate to reflect unusual, extraordinary or nonrecurring events,
changes in applicable accounting rules or principles or in the Corporation's
methods of accounting, changes in applicable tax law or regulations, changes in
Fiscal Year or such other factors as the Committee may determine, including
authority to determine that all or any portion of any Performance Shares
otherwise earned for the Performance Period have not been earned (even if
applicable Performance Goals originally established have been met).
Notwithstanding the preceding sentence, with respect to a Performance Period
beginning on or after January 1, 1996, the Committee shall have no such
authority to the extent that the existence or exercise of the authority would
result in any awards made to such Participants for the Performance Period not
being excluded from covered compensation under the Section 162(m) Regulations as
a result of the qualified performance based compensation exclusion in the
Section 162(m) Regulations.
Section 7. During Performance Period
(a) Performance Shares may be granted in the form of either shares of
Stock or units equivalent thereto as described in the following paragraphs of
this Section 7.
(b) If Performance Shares are granted in the form of shares of Stock,
certificates representing the Performance Shares shall be issued in the name of
the Participant, but shall be retained in the custody of the Corporation until
the expiration of the Performance Period and the determination of the number of
shares, if any, that are to be forfeited pursuant to the terms of the grant.
During the Performance Period (and until such time thereafter as payment is made
in accordance with Section 8(b)), the Performance Shares shall not be
transferable, except to the extent rights may pass upon the death of the
Participant to a Designated Beneficiary pursuant to the terms of this Plan. The
Participant shall have the right during the Performance Period to receive all
cash dividends and other cash distributions with respect to the Performance
Shares granted to the Participant that have not previously been forfeited and to
vote such shares. Any distribution of shares of stock or other securities or
property made with respect to Performance Shares held in the name of a
Participant shall be treated as part of the Performance Shares of the
Participant and shall be subject to forfeiture and all the other limitations and
restrictions imposed upon such Performance Shares. Upon the expiration of the
Performance Period or the occurrence of any other event that may give rise to
forfeiture under the Plan, the Corporation may defer payment of dividends on
Performance Shares until a determination is made as to the number of such
shares, if any, to be forfeited, and no further dividends shall be paid with
respect to forfeited shares after the date of the forfeiture (regardless of
whether the record date of the dividend is before or after the date of the
forfeiture). The Participant shall retain the right to vote all Performance
Shares until a determination has been made by the Committee as to whether such
shares, or a part thereof, have been forfeited. In the event of the death of the
Participant, his Designated Beneficiary shall have the same right to receive
cash dividends and other cash distributions with respect to the Performance
Shares that are not forfeited and to vote such shares as the Participant would
have had if he had survived.
(c) If Performance Shares are granted in the form of units equivalent
to shares of Stock, no certificates shall be issued with respect to the units,
but the Corporation shall maintain a bookkeeping account in the name of the
Participant to which the units shall relate and the units shall otherwise be
treated in a comparable manner as if the Participant had been awarded shares of
Stock (except that no voting rights or other stock ownership rights shall apply
to the units). Each such unit shall represent the right to receive one share of
Stock or a cash payment of equivalent value at the time, in the manner and
subject to the restrictions set forth in the Plan. If, during the Performance
Period, cash dividends or other cash distributions are paid with respect to
shares of Stock, the Corporation shall pay to the Participant in cash an amount
equal to the cash dividends or cash distributions that he would have received if
the Performance Shares had been granted in the form of shares of Stock rather
than units equivalent thereto. If, during the Performance Period, shares of
stock or other securities or property are distributed with respect to the Stock,
additional units equivalent to such shares, securities or property shall be
added to the Participant's bookkeeping account as additional units and shall be
subject to forfeiture and all other limitations and restrictions imposed upon
the related units. Upon the expiration of the Performance Period or the
occurrence of any other event that may give rise to forfeiture under the Plan,
the Corporation may defer payment of dividend equivalents on units of
Performance Shares until a determination is made as to the number of such units,
if any, to be forfeited, and no further dividend equivalents shall be paid with
respect to forfeited units after the date of the forfeiture (regardless of
whether the record date of the dividend is before or after the date of the
forfeiture). In the event of the death of the Participant, his Designated
Beneficiary shall have the same right to receive cash payments equivalent to
cash dividends and other cash distributions with respect to the units of
Performance Shares which are not forfeited as the Participant would have had if
he had survived. A Participant (or Designated Beneficiary) shall have no right
to or interest in any specific assets of the Corporation or any of its
Subsidiaries by reason of the establishment of the bookkeeping account described
in this paragraph (c), and shall have only the right of an unsecured creditor of
the Corporation with respect to amounts payable from such account under this
Plan.
Section 8. Payment
(a) As soon as practicable after the end of a Performance Period,
except as permitted in paragraph (c) of this Section 8, the Committee shall
determine the extent to which the Performance Goals have been achieved or
exceeded and, on this basis, shall certify and declare in writing what
percentages, if any, of the granted Performance Shares have been earned with
respect to the Performance Period.
(b) In accordance with the procedures specified by the Committee from
time to time, payment of Performance Shares that have been earned shall be made
in Stock, cash equivalent in value to the corresponding shares of Stock, or a
combination thereof as determined by the Committee.
(c) For the first Performance Period established under the Plan (but
not for any subsequent Performance Periods), the Committee may in its discretion
establish interim Performance Goals applicable to a Fiscal Year or Years ending
prior to the end of the Performance Period, and provide for a portion of the
Performance Shares granted for the Performance Period to be earned and paid out
as soon as practicable following the end of each such Fiscal Year or Years to
the extent such interim Performance Goals are satisfied.
Section 9. Termination of Employment and Forfeitures
Subject to the provisions of Section 10:
(a) Except as otherwise provided in paragraph (c) below, Performance
Shares which are granted but not earned by a Participant with respect to the
Performance Period shall be forfeited.
(b) Except as otherwise provided in paragraph (c) below or in Section
8(c), if a Participant ceases to be an Employee prior to the end of the
Performance Period, all of such Participant's Performance Shares for the
Performance Period shall be forfeited.
(c) If prior to the end of a Performance Period, a Participant dies or
ceases to be an Employee by reason of (i) retirement from active employment with
a right to receive an immediate pension benefit under the applicable pension
plan of the Corporation or any of its Subsidiaries, (ii) extended disability
(such as entitles the Participant to long-term disability payments under the
applicable pension plan or long-term disability plan of the Corporation or any
of its Subsidiaries), or (iii) for any other reason specified in each case by
the Committee, there shall be forfeited as of the cessation of employment a
number of Performance Shares equal to the number initially granted to the
Participant for that Performance Period multiplied by a fraction, (i) the
numerator of which shall be the number of full calendar months from the date of
the Participant's cessation of employment to the end of the Performance Period,
and (ii) the denominator of which shall be the number of months representing the
entire Performance Period; provided, that with respect to Performance Periods
beginning before January 1, 1996, the Committee is authorized to declare (before
or as soon as practicable after such cessation of employment) that a lesser
number of Performance Shares shall be forfeited as of the date of such cessation
of employment. With respect to the Performance Shares that are not so forfeited
as of the date of such cessation of employment, the Performance Period shall
continue and the percentage of such remaining Performance Shares that are earned
or forfeited shall be determined based upon the extent to which the applicable
Performance Goals for such Performance Period have been achieved or exceeded
(subject to the last two sentences of Section 6).
(d) Transfer from the Corporation to a Subsidiary, from a Subsidiary to
the Corporation, or from one Subsidiary to another Subsidiary shall not be
considered a termination of employment. Nor shall it be considered a termination
of employment if an Employee is placed on military or sick leave or on other
leave of absence that is considered by the Committee as continuing intact the
employment relationship. In those cases, the employment relationship shall be
continued until the later of the date when the leave equals 90 days or the date
when an Employee's right to reemployment shall no longer be guaranteed either by
law or by contract, except that in the event active employment is not renewed at
the end of the leave of absence, the employment relationship shall be deemed to
have been terminated at the beginning of the leave of absence.
Section 10. Mergers, Sales and Change of Control
(a) In the case of (i) any merger, consolidation, share exchange or
combination of the Corporation with or into another corporation (other than a
merger, consolidation, share exchange or combination in which the Corporation is
the surviving corporation and which does not result in the outstanding Stock
being converted into or exchanged for different securities, cash or other
property, or any combination thereof) or a sale of all or substantially all of
the business or assets of the Corporation or (ii) a Change of Control of the
Corporation, all Performance Periods shall be deemed to have ended as of the end
of the most recent quarterly accounting period prior to the date of the merger,
consolidation, share exchange, combination, sale of assets, or Change of
Control, all Performance Goals to earn the maximum number of Performance Shares
for each Performance Period shall be deemed to have been achieved, and the
maximum number of Performance Shares (150% of the target award for each
Performance Period) shall be deemed to have been earned. In the event that
application of the foregoing provisions results in more than 2,500,000
Performance Shares being deemed to have been earned, then notwithstanding any
other provision of the Plan (including but not limited to the provisions of
Section 4) any Performance Shares in excess of 2,500,000 deemed to have been
earned shall be paid in cash equivalent in value to the corresponding shares of
Stock.
(b) "Change of Control" of the Corporation shall mean a change of
control 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 do so, provided that,
without limitation, such a change of 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 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 (not including any period prior to
the adoption of the Plan), individuals who at the beginning of the 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 definition) 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; or (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, consolidation or share exchange between the Corporation and
any other corporation, other than a merger 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, consolidation or
share exchange, 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.
Section 11. Adjustment of and Changes in Stock
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, share exchange, rights
offering, distribution of assets, or any other change in the corporate structure
or capital stock of the Corporation, the Committee shall make such adjustments,
if any, as it deems appropriate in the number of Performance Shares that have
been or may be granted under the Plan, the number of shares of Stock available
for issuance under the Plan, and the Performance Goals and the number of
Performance Shares that may be earned, to reflect the change, and any
adjustments so made shall be conclusive for all purposes of the Plan.
Section 12. Miscellaneous Provisions
(a) The rights or interest of a Participant or Designated Beneficiary
under the Plan may not be assigned, encumbered or transferred until such time as
payment is made in accordance with Section 8(b), except to the extent rights may
pass upon the death of the Participant to a Designated Beneficiary pursuant to
the terms of this Plan.
(b) No Employee or other person shall have any claim or right to be
granted Performance Shares under the Plan. Neither the Plan nor any action taken
thereunder shall be construed as giving any Employee or other person any right
to be retained in the employ of the Corporation or any of its Subsidiaries.
(c) Performance Shares granted or earned and cash dividends or other
cash distribution paid under the Plan shall not be deemed compensation in
determining the amount of any entitlement under any retirement or other employee
benefit plan of the Corporation or any of its Subsidiaries.
(d) The Committee may adopt and apply rules that will ensure that the
Corporation and its Subsidiaries will be able to comply with applicable
provisions of any Federal, state or local law relating to the withholding of
tax, including but not limited to the withholding of tax on dividends paid on
Performance Shares and on the amount, if any, includable in income of a
Participant after the expiration of the Performance Period. The Committee shall
have the right in its discretion to satisfy withholding tax liability by
retaining or purchasing Performance Shares.
(e) The Plan shall be construed in accordance with and governed by the
laws of the State of Maryland.
(f) In this Plan, whenever the context so requires, the masculine
gender includes the feminine and a singular number includes the plural.
Section 13. Amendment or Termination
The Board of Directors of the Corporation may amend, suspend or
terminate the Plan at any time and in such manner and to such extent as it deems
advisable, but no amendment shall be made without the approval of a majority of
the shares represented and entitled to vote at a duly called meeting of
stockholders at which a quorum is present that would (i) increase the number of
Performance Shares that may be granted under the Plan (except as provided in
Section 11), (ii) increase the maximum number of shares of Stock available for
issuance under the Plan (except as provided in Section 11), (iii) materially
increase the 50% limitation set forth in Section 6, or (iv) change the Plan's
eligibility requirements. No amendment, suspension or termination shall impair
any right theretofore granted to any Participant, without the consent of the
Participant.
Section 14. Effective Date and Term of Plan
Performance Shares may be granted under the Plan after December 31,
2000, only if the amendments to the Plan approved by the Board of Directors of
the Corporation on February 8, 2001, are approved by the affirmative vote of the
holders of a majority of the shares present and entitled to vote at the Annual
Meeting of Stockholders of the Corporation to be held on April 25, 2001, or any
adjournment thereof. No Performance Shares shall be granted under the Plan after
December 31, 2005.
Section 15. Indemnification of Committee
In addition to such other rights of indemnification as they may have as
members of the Corporation's Board of Directors or as members of the Committee,
each member of the Committee shall be indemnified by the Corporation against the
reasonable expenses, including attorney's fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which he may be a party by reason of any
action taken or failure to act under or in connection with the Plan, or any
Performance Shares granted thereunder, and against all amounts paid by him in
settlement thereof, provided such settlement is approved by independent legal
counsel selected by the Corporation, or paid by him in satisfaction of a
judgment in any such action, suit or proceeding except in relation to matters as
to which it shall be adjudged in such action, suit or proceeding that such
Committee member is liable for gross negligence or misconduct in his duties;
provided that within 60 days after the institution of such action, suit or
proceeding, the Committee member shall in writing offer the Corporation the
opportunity, at its own expense, to handle and defend the same.