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As filed with the U.S. Securities and Exchange Commission on January 14, 2010
Registration No. 333-163509
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
to
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
The Stanley Works
(Exact name of registrant as specified in its charter)
 
         
Connecticut   3420   06-0548860
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification No.)
 
1000 Stanley Drive
New Britain, CT 06053
(860) 225-5111
(Address, including ZIP code, and telephone number,
including area code, of registrant’s principal executive offices)
 
Bruce H. Beatt, Esq.
Vice President, General Counsel and Secretary
The Stanley Works
1000 Stanley Drive
New Britain, CT 06053
(860) 225-5111
(Name, address, including ZIP code, and telephone number,
including area code, of agent for service)
 
Copies to:
 
             
Robert I. Townsend, III, Esq.
Mark I. Greene, Esq.
Cravath, Swaine & Moore LLP
825 Eighth Avenue
New York, NY 10019
(212) 474-1000
  Charles E. Fenton, Esq.
Senior Vice President and
General Counsel
The Black & Decker Corporation
701 East Joppa Road
Towson, MD 21286
(410) 716-3900
  Glenn C. Campbell, Esq.
Hogan & Hartson LLP
Harbor East
100 International Drive
Baltimore, MD 21202
(410) 659-2700
  Christopher R. Johnson, Esq.
Miles & Stockbridge P.C.
10 Light Street
Baltimore, MD 21202
(410) 727-6464
 
Approximate date of commencement of proposed sale of the securities to the public:  As soon as practicable after this Registration Statement becomes effective and upon completion of the merger described in the enclosed joint proxy statement/prospectus.
 
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  o
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
             
Large accelerated filer þ
       Accelerated filer o   Non-accelerated filer o   Smaller reporting company o
    (Do not check if a smaller reporting company)     
 
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
 
o  Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)
 
o  Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)
 
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the Registration Statement shall become effective on such dates as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
 


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Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This joint proxy statement/prospectus shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of such securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to appropriate registration or qualification under the securities laws of such jurisdiction.
 
PRELIMINARY— SUBJECT TO COMPLETION — DATED JANUARY 14, 2010
 
     
(STANLEY LOGO)   (BLACK & DECKER LOGO)
 
MERGER PROPOSAL — YOUR VOTE IS VERY IMPORTANT
 
The board of directors of The Stanley Works (“Stanley”) and the board of directors of The Black & Decker Corporation (“Black & Decker”) have agreed to a strategic combination of their two companies under the terms of the Agreement and Plan of Merger, dated as of November 2, 2009 (the “merger agreement”). Upon completion of the merger, Black & Decker will become a wholly owned subsidiary of Stanley.
 
If the merger is completed, Black & Decker stockholders will receive a fixed ratio of 1.275 shares of Stanley common stock (and associated Series A Junior Participating Preferred Stock purchase rights) for each share of Black & Decker common stock that they own. This exchange ratio is fixed and will not be adjusted to reflect stock price changes prior to the closing of the merger. Based on the closing price of Stanley common stock on the New York Stock Exchange (the “NYSE”) on October 30, 2009, the last trading day before public announcement of the merger, the 1.275 exchange ratio represented approximately $57.67 in value for each share of Black & Decker common stock. Based on such price on          , 2010, the last trading day before the date of this joint proxy statement/prospectus, the 1.275 exchange ratio represented approximately $           in value for each share of Black & Decker common stock. Stanley shareholders will continue to own their existing Stanley shares.
 
Based on the estimated number of shares of Stanley and Black & Decker common stock to be outstanding immediately prior to the closing of the merger, we estimate that upon such closing, Stanley shareholders will own approximately 50.5% of the combined company and Black & Decker stockholders will own approximately 49.5% of the combined company. Stanley common stock and Black & Decker common stock are both traded on the NYSE under the symbols SWK and BDK, respectively.
 
At the special meeting of Stanley shareholders, Stanley shareholders will be asked to vote on the issuance of Stanley common stock to Black & Decker stockholders in the merger and an amendment to the certificate of incorporation of Stanley to increase the number of authorized shares of Stanley common stock and to change the name of Stanley to “Stanley Black & Decker, Inc.”. Additionally, Stanley shareholders will be asked to vote on an amendment to Stanley’s 2009 Long Term Incentive Plan to, among other things, increase the number of shares available for issuance under such plan. At the special meeting of Black & Decker stockholders, Black & Decker stockholders will be asked to vote on the approval of the merger.
 
We cannot complete the merger unless the shareholders of both of our companies approve the respective proposals related to the merger. Your vote is very important, regardless of the number of shares you own. Whether or not you expect to attend your special meeting in person, please vote your shares as promptly as possible so that your shares may be represented and voted at the Stanley or Black & Decker special meeting, as applicable. If you are a Stanley shareholder, please note that a failure to vote your shares may result in a failure to establish a quorum for the Stanley special meeting. If you are a Black & Decker stockholder, please note that a failure to vote your shares has the same effect as a vote against the merger.
 
The Stanley board of directors recommends that the Stanley shareholders vote “FOR” the proposal to issue shares of Stanley common stock in the merger, “FOR” the proposal to amend the Stanley certificate of incorporation and “FOR” the proposal to amend the Stanley 2009 Long-Term Incentive Plan. The Black & Decker board of directors recommends that the Black & Decker stockholders vote “FOR” the proposal to approve the merger.
 
The obligations of Stanley and Black & Decker to complete the merger are subject to the satisfaction or waiver of several conditions. More information about Stanley, Black & Decker and the merger is contained in this joint proxy statement/prospectus. You should read this entire joint proxy statement/prospectus carefully, including the section entitled “Risk Factors” beginning on page 19.
 
We look forward to the successful combination of Stanley and Black & Decker.
Sincerely,
 
     
John F. Lundgren
  Nolan D. Archibald
Chairman and Chief Executive Officer
  Chairman, President and Chief Executive Officer
The Stanley Works
  The Black & Decker Corporation
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this joint proxy statement/prospectus or determined that this joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.
 
This joint proxy statement/prospectus is dated          , 2010 and is first being mailed to the shareholders of Stanley and stockholders of Black & Decker on or about          , 2010.


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(STANLEY LOGO)
 
The Stanley Works
1000 Stanley Drive
New Britain, CT 06053
(860) 225-5111
 
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held On          , 2010
 
Dear Shareholders of The Stanley Works:
 
We are pleased to invite you to attend a special meeting of shareholders of The Stanley Works, a Connecticut corporation (“Stanley”), which will be held at the Stanley Center for Learning and Innovation, 1000 Stanley Drive, New Britain, CT 06053, on          , 2010, at   a.m. for the following purposes:
 
  •  to vote on a proposal to approve the issuance of Stanley common stock, par value $2.50 per share, in connection with the merger contemplated by the Agreement and Plan of Merger, dated as of November 2, 2009, by and among The Black & Decker Corporation, Stanley and Blue Jay Acquisition Corp., a wholly owned subsidiary of Stanley, a copy of which is included as Annex A to the joint proxy statement/prospectus of which this notice forms a part;
 
  •  to vote on a proposal to amend the certificate of incorporation of Stanley to (a) increase the authorized number of shares of Stanley common stock from 200,000,000 to 300,000,000 and (b) change the name of Stanley to “Stanley Black & Decker, Inc.”;
 
  •  to vote on a proposal to amend the Stanley 2009 Long-Term Incentive Plan to, among other things, increase the number of shares available to be issued under such plan; and
 
  •  to vote upon an adjournment of the Stanley special meeting (if necessary or appropriate, including to solicit additional proxies if there are not sufficient votes for the approval of any of the foregoing proposals).
 
Stanley will transact no other business at the special meeting except such business as may properly be brought before the special meeting or any adjournment or postponement of it. Please refer to the remainder of the joint proxy statement/prospectus of which this notice is a part for further information with respect to the business to be transacted at the Stanley special meeting.
 
Holders of shares of Stanley common stock at the close of business on          , 2010 are entitled to vote at the meeting and any adjournment or postponement thereof.
 
The issuance of Stanley common stock to Black & Decker stockholders and the amendment to the Stanley 2009 Long-Term Incentive Plan will each be approved if a majority of the votes cast on each such proposal vote in favor of such proposal, assuming that the total votes cast on the proposal represents over 50% of all Stanley common stock entitled to vote on such proposal. The amendment to Stanley’s certificate of incorporation will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against the proposal.
 
Completion of the merger is conditioned on approval of the issuance of Stanley common stock in the merger and approval of the amendment to Stanley’s certificate of incorporation, but is not conditioned on approval of the amendment to the Stanley 2009 Long-Term Incentive Plan.
 
Your vote is important. Whether or not you expect to attend in person, we urge you to authorize a proxy to vote your shares as promptly as possible so that your shares may be represented and voted at the Stanley special meeting.
 
Bruce H. Beatt
Secretary
 
New Britain, CT
          , 2010


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(BLACK & DECKER LOGO)
 
The Black & Decker Corporation
701 East Joppa Road
Towson, MD 21286
(410) 716-3900
 
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On          , 2010
 
Dear Stockholders of The Black & Decker Corporation:
 
We are pleased to invite you to attend a special meeting of stockholders of The Black & Decker Corporation (“Black & Decker”), which will be held at          , on          , 2010, at   a.m. for the following purposes:
 
  •  to approve the merger (including the amendment and restatement of the charter of Black & Decker to be effected as part of the merger) on substantially the terms and conditions set forth in the Agreement and Plan of Merger, dated as of November 2, 2009, among Black & Decker, The Stanley Works and Blue Jay Acquisition Corp., a wholly owned subsidiary of The Stanley Works, a copy of which is included as Annex A to the joint proxy statement/prospectus of which this notice forms a part, pursuant to which Blue Jay Acquisition Corp. will be merged with and into Black & Decker and each outstanding share of common stock of Black & Decker will be converted into the right to receive 1.275 shares of common stock of The Stanley Works (and associated Series A Junior Participating Preferred Stock purchase rights), with cash paid in lieu of fractional shares; and
 
  •  to approve an adjournment of the Black & Decker special meeting, if necessary, including to solicit additional proxies if there are not sufficient votes for the proposal to approve the merger.
 
Black & Decker will transact no other business at the special meeting. Please refer to the remainder of the joint proxy statement/prospectus of which this notice is a part for further information with respect to the business to be transacted at the Black & Decker special meeting.
 
Holders of shares of Black & Decker common stock at the close of business on          , 2010, are entitled to vote at the special meeting and any adjournment or postponement of the special meeting.
 
Approval of the merger requires the affirmative vote of at least two-thirds of the votes entitled to be cast by holders of outstanding common stock of Black & Decker.
 
Your vote is important. Whether or not you expect to attend in person, we urge you to authorize a proxy to vote your shares as promptly as possible by (1) accessing the Internet website specified on your proxy card; (2) calling the toll-free number specified on your proxy card; or (3) signing and returning your proxy card in the postage-paid envelope provided, so that your shares may be represented and voted at the Black & Decker special meeting. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished by your bank, broker or other nominee. In lieu of receiving a proxy card, participants in Black & Decker’s 401(k) plan have been furnished with voting instruction cards. If you hold shares through Black & Decker’s 401(k) plan, please follow the instructions on your voting instruction card.
 
Your Board of Directors recommends a vote “FOR” the merger.
 
By Order of the Board of Directors
 
Natalie A. Shields
Vice President and Corporate Secretary
          , 2010


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ADDITIONAL INFORMATION
 
This joint proxy statement/prospectus incorporates important business and financial information about Stanley and Black & Decker from other documents that are not included in or delivered with this joint proxy statement/prospectus. This information is available to you without charge upon your request. You can obtain the documents incorporated by reference into this joint proxy statement/prospectus by requesting them in writing or by telephone from the appropriate company at the following addresses and telephone numbers:
 
     
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Shareholders May Call Toll-Free: (877) 800-5182
Banks and Brokers May Call Collect: (212) 750-5833
  MacKenzie Partners, Inc.
105 Madison Avenue
New York, NY 10016
(800) 929-0308
or
  or
The Stanley Works
  The Black & Decker Corporation
1000 Stanley Drive
  701 East Joppa Road
New Britain, CT 06053
  Towson, MD 21286
(860) 225-5111
  (410) 716-3900
Attn: Investor Relations
  Attn: Investor Relations
 
Investors may also consult Stanley’s or Black & Decker’s website for more information about Stanley or Black & Decker, respectively. Stanley’s website is www.stanleyworks.com. Black & Decker’s website is www.bdk.com. Additional information about the merger is available at www.stanleyblackanddecker.com. Information included on these websites is not incorporated by reference into this joint proxy statement/prospectus.
 
If you would like to request any documents, please do so by          , 2010 in order to receive them before the special meetings.
 
For a more detailed description of the information incorporated by reference in this joint proxy statement/prospectus and how you may obtain it, see “Where You Can Find More Information” beginning on page 152.
 
ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS
 
This joint proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission (the “SEC”) by Stanley, constitutes a prospectus of Stanley under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the Stanley common stock (and associated Series A Junior Participating Preferred Stock purchase rights) to be issued to Black & Decker stockholders in the merger. This joint proxy statement/prospectus also constitutes a joint proxy statement of both Stanley and Black & Decker under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). It also constitutes a notice of meeting with respect to the special meeting of Stanley shareholders and a notice of meeting with respect to the special meeting of Black & Decker stockholders.
 
You should rely only on the information contained or incorporated by reference into this joint proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated          , 2010. You should not assume that the information contained in this joint proxy statement/prospectus is accurate as of any date other than that date. You should not assume that the information incorporated by reference into this joint proxy statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither our mailing of this joint proxy statement/prospectus to Stanley shareholders or Black & Decker stockholders nor the issuance by Stanley of common stock in connection with the merger will create any implication to the contrary.
 
This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation. Information contained in this joint proxy statement/prospectus regarding Stanley has been provided by Stanley and information contained in this joint proxy statement/prospectus regarding Black & Decker has been provided by Black & Decker.


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      AGREEMENT AND PLAN OF MERGER    
      OPINION OF DEUTSCHE BANK SECURITIES INC.    
      OPINION OF GOLDMAN, SACHS & CO.    
      OPINION OF J.P. MORGAN SECURITIES INC.    
      FORM OF CERTIFICATE OF AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION OF STANLEY    
      THE STANLEY WORKS 2009 LONG-TERM INCENTIVE PLAN    
 EX-5.1
 EX-23.4
 EX-23.5
 EX-99.1
 EX-99.2
 EX-99.3
 EX-99.4
 EX-99.5


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QUESTIONS AND ANSWERS
 
The following are some questions that you, as a shareholder of Stanley or stockholder of Black & Decker, may have regarding the merger and the other matters being considered at the special meetings and the answers to those questions. Stanley and Black & Decker urge you to read carefully the remainder of this joint proxy statement/prospectus because the information in this section does not provide all the information that might be important to you with respect to the merger and the other matters being considered at the special meetings. Additional important information is also contained in the Annexes to and the documents incorporated by reference into this joint proxy statement/prospectus. All references in this joint proxy statement/prospectus to “Stanley” refer to The Stanley Works, a Connecticut corporation; all references in this joint proxy statement/prospectus to “Black & Decker” refer to The Black & Decker Corporation, a Maryland corporation; all references in this joint proxy statement/prospectus to “Blue Jay Acquisition Corp.” refer to Blue Jay Acquisition Corp., a Maryland corporation and a direct wholly owned subsidiary of Stanley; unless otherwise indicated or as the context requires, all references in this joint proxy statement/prospectus to “we”, “our” and “us” refer to Stanley and Black & Decker collectively; and all references to the “merger agreement” refer to the Agreement and Plan of Merger, dated as of November 2, 2009, among Black & Decker, Stanley and Blue Jay Acquisition Corp., a copy of which is included as Annex A to this joint proxy statement/prospectus. Stanley following completion of the merger is sometimes referred to in this joint proxy statement/prospectus as the “combined company”.
 
Q:   Why am I receiving this joint proxy statement/prospectus?
 
A:   Stanley and Black & Decker have agreed to combine under the terms of a merger agreement that is described in this joint proxy statement/prospectus. A copy of the merger agreement is included in this joint proxy statement/prospectus as Annex A.
 
In order to complete the merger:
 
  •  Stanley shareholders must approve the issuance of shares of Stanley common stock in connection with the merger;
 
  •  Stanley shareholders must approve an amendment to Stanley’s certificate of incorporation to (a) increase the authorized number of shares of Stanley common stock from 200,000,000 to 300,000,000 and (b) change Stanley’s name to “Stanley Black & Decker, Inc.”; and
 
  •  Black & Decker stockholders must approve the merger.
 
Stanley shareholders are also being asked to approve an amendment to the Stanley 2009 Long-Term Incentive Plan to, among other things, increase the number of shares available to be issued under such plan.
 
Stanley and Black & Decker will hold separate special meetings to obtain these approvals. This joint proxy statement/prospectus contains important information about the merger and the meetings of the shareholders of Stanley and stockholders of Black & Decker, and you should read it carefully.
 
Your vote is important. You do not need to attend the special meetings in person to vote. We encourage you to vote as soon as possible.
 
Q:   What will I receive in the merger?
 
A:   If the merger is completed, holders of Black & Decker common stock will receive, for each share of Black & Decker common stock outstanding immediately prior to the merger, 1.275 shares of Stanley common stock, together with associated rights to purchase Series A Junior Participating Preferred Stock under Stanley’s rights plan, or “poison pill”. Black & Decker stockholders will not receive any fractional shares of Stanley common stock in the merger. Instead, Stanley will pay cash for any fractional shares of Stanley common stock that a Black & Decker stockholder would otherwise have been entitled to receive.
 
Stanley shareholders will not receive any merger consideration and will continue to hold their shares of Stanley common stock.


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Q:   What is the value of the merger consideration?
 
A:   Because Stanley will issue a fixed number of 1.275 shares of Stanley common stock in exchange for each share of Black & Decker common stock, the value of the merger consideration that Black & Decker stockholders will receive will depend on the price per share of Stanley common stock at the time the merger is completed. That price will not be known at the time of the special meetings and may be less than the current price or the price at the time of the special meetings.
 
Q:   When and where will the special meetings be held?
 
A:   The Stanley special meeting will be held at the Stanley Center for Learning and Innovation, 1000 Stanley Drive, New Britain, CT 06053, on          , 2010, at   a.m. The Black & Decker special meeting will be held at           , on          , 2010, at   a.m.
 
Q:   How do I vote?
 
A:   If you are a shareholder of record of Stanley as of the close of business on the record date for the Stanley special meeting or a stockholder of record of Black & Decker as of the close of business on the record date for the Black & Decker special meeting, you may vote in person by attending your special meeting or, to ensure your shares are represented at the meeting, you may authorize a proxy to vote by:
 
  •  accessing the Internet website specified on your proxy card;
 
  •  calling the toll-free number specified on your proxy card; or
 
  •  signing and returning your proxy card in the postage-paid envelope provided.
 
If you hold Stanley shares or Black & Decker shares in “street name” through a stock brokerage account or through a bank or other nominee, please follow the voting instructions provided by your broker, bank or other nominee to ensure that your shares are represented at your special meeting. If you hold shares through an employee plan provided by Stanley or Black & Decker, please see the question below “Q: How are my employee plan shares voted?”.
 
Q:   My shares are held in “street name” by my broker. Will my broker automatically vote my shares for me?
 
A:   No. If your shares are held in the name of a broker, bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” You are not the “record holder” of such shares. If this is the case, this joint proxy statement/prospectus has been forwarded to you by your broker, bank or other nominee. As the beneficial holder, unless your broker, bank or other nominee has discretionary authority over your shares, you generally have the right to direct your broker, bank or other nominee as to how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which your broker, bank or other nominee does not have discretionary authority. This is often called a “broker non-vote”.
 
Please follow the voting instructions provided by your broker, bank or other nominee so that they may vote your shares on your behalf. Please note that you may not vote shares held in street name by returning a proxy card directly to Stanley or Black & Decker or by voting in person at your special meeting unless you first provide a proxy from your broker, bank or other nominee.
 
If you are a Stanley shareholder and you do not instruct your broker, bank or other nominee on how to vote your shares, your broker, bank or other nominee will not vote your shares on any matter over which they do not have discretionary authority. Such a broker non-vote will have no effect on the vote on any of the Stanley proposals, assuming a quorum is present and, in the case of the votes to approve the issuance of shares of Stanley common stock in the merger and to approve the amendment to the Stanley 2009 Long-Term Incentive Plan, over 50% of all shares of Stanley common stock are voted (or vote to abstain) on such proposal.
 
If you are a Black & Decker stockholder and you do not instruct your broker, bank or other nominee on how to vote your shares, your broker, bank or other nominee will not vote your shares over which they


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do not have discretionary authority, which will have the same effect as a vote against the proposal to approve the merger.
 
Q:   How are my employee plan shares voted?
 
A:   Employees of Stanley:   If you hold shares through the Stanley Account Value Plan (the “Stanley 401(k) Plan”) you can instruct the trustee, The Bank of New York Mellon Corporation, in a confidential manner, how to vote the shares allocated to you in the Stanley 401(k) Plan by one of the following three methods:
 
  •  call the number indicated on your instruction card to vote by telephone anytime up to      a.m. eastern time on          , 2010, and follow the instructions provided in the recorded message;
 
  •  go to the web site indicated on your instruction card to vote over the Internet anytime up to      a.m. eastern time on          , 2010 and follow the instructions provided on that site; or
 
  •  mark, sign and mail your instruction card to the address indicated on your instruction card. Your instruction card must be received by Computershare Investor Services, LLC, Stanley’s transfer agent, no later than          , a.m. eastern time on          , 2010, to ensure that the trustee of the Stanley 401(k) Plan is able to vote the shares allocated to you in accordance with your wishes.
 
In addition, since only the trustee of the Stanley 401(k) Plan can vote the shares allocated to you, you will not be able to vote your Stanley 401(k) Plan shares personally at the special meeting. Please note that the trust agreement governing the Stanley 401(k) Plan provides that if the trustee does not receive your voting instructions, the trustee will vote your allocated shares in the same proportion as it votes the allocated shares for which instructions are received from participants and beneficiaries of deceased participants. The trust agreement also provides that unallocated shares are to be voted by the trustee in the same proportion as it votes allocated shares for which instructions are received from participants and beneficiaries of deceased participants. Therefore, by providing voting instructions with respect to your allocated shares, you will in effect be providing instructions with respect to a portion of the unallocated shares and a portion of the allocated shares for which instructions were not provided as well. Voting of the Stanley 401(k) Plan shares by the trustee is subject to federal pension laws, which require the trustee to act as a fiduciary for Stanley 401(k) Plan participants in deciding how to vote the shares. Therefore, irrespective of these voting provisions, it is possible that the trustee may decide to vote allocated shares for which it does not receive instructions (as well as unallocated shares) in a manner other than on a proportionate basis if it believes that proportionate voting would violate applicable law. The only way to ensure that the trustee votes shares allocated to you in the Stanley 401(k) Plan in accordance with your wishes is to provide instructions to the trustee in the manner set forth above. If you are a participant (or a beneficiary of a deceased participant) in the Stanley 401(k) Plan and you also own other shares of common stock outside of your Stanley 401(k) Plan account, you should receive a voting instruction card for shares credited to your account in the Stanley 401(k) Plan, and a separate proxy card if you are a record holder of additional shares of Stanley common stock, or voting instruction card if you hold additional shares of Stanley common stock through a broker, bank or other nominee. You must vote shares that you hold as a shareholder of record, shares that you hold through a broker, bank or other nominee and shares that are allocated to your Stanley 401(k) Plan account separately in accordance with each of the proxy cards and voting instruction cards you receive with respect to your shares of Stanley common stock.
 
A:   Employees of Black & Decker:  If you hold shares through The Black & Decker Retirement Saving Plan (the “Black & Decker 401(k) Plan”) you can instruct the trustee, T. Rowe Price Trust Company, in a confidential manner, how to vote the shares allocated to you in the Black & Decker 401(k) Plan by one of the following methods:
 
  •  call the number indicated on your instruction card to vote by telephone anytime up to      a.m. eastern time on          , 2010, and follow the instructions provided in the recorded message;
 
  •  go to the web site indicated on your instruction card to vote over the Internet anytime up to      a.m. eastern time on          , 2010 and follow the instructions provided on that site; or


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  •  mark, sign and mail your instruction card to the address indicated on your instruction card. Your instruction card must be received by BNY Mellon Shareowner Services, Black & Decker’s transfer agent, no later than          , a.m. eastern time on          , 2010, to ensure that the trustee of the Black & Decker 401(k) Plan is able to vote the shares allocated to you in accordance with your wishes.
 
In addition, since only the trustee of the Black & Decker 401(k) Plan can vote the shares allocated to you, you will not be able to vote your Black & Decker 401(k) Plan shares personally at the special meeting. Please note that the trust agreement governing the Black & Decker 401(k) Plan provides that if the trustee does not receive your voting instructions, the trustee will vote your shares in the same proportion as it votes the shares for which instructions are received from participants and beneficiaries of deceased participants. Therefore, by providing voting instructions with respect to your shares, you will in effect be providing instructions with respect to a portion of the shares allocated to other participants for which instructions were not provided as well. Voting of the Black & Decker 401(k) Plan shares by the trustee is subject to federal pension laws, which require the trustee to act as a fiduciary for Black & Decker 401(k) Plan participants in deciding how to vote the shares. Therefore, it is possible that the trustee may vote shares for which it does not receive instructions in a manner other than on a proportionate basis if it believes that proportionate voting would violate applicable law. The only way to ensure that the trustee votes your shares in the Black & Decker 401(k) Plan in accordance with your wishes is to provide instructions to the trustee in the manner set forth above. If you are a participant (or a beneficiary of a deceased participant) in the Black & Decker 401(k) Plan and you also own other shares of common stock outside of your Black & Decker 401(k) Plan account, you should receive a voting instruction card for shares credited to your account in the Black & Decker 401(k) Plan, and a separate proxy card if you are a record holder of additional shares of Black & Decker common stock, or voting instruction card if you hold additional shares of Black & Decker common stock through a broker, bank or other nominee. You must vote shares that you hold as a stockholder of record, shares that you hold through a broker, bank or other nominee and shares that are allocated to your Black & Decker 401(k) Plan account separately in accordance with each of the proxy cards and voting instruction cards you receive with respect to your shares of Black & Decker common stock.
 
Q:   Who is entitled to vote at the Stanley and Black & Decker special meetings?
 
A:   Stanley:  Stanley has fixed          , 2010 as the record date for the Stanley special meeting. If you were a Stanley shareholder at the close of business on such date, you are entitled to vote on matters that come before the Stanley special meeting.
 
A:   Black & Decker:  Black & Decker has fixed          , 2010 as the record date for the Black & Decker special meeting. If you were a Black & Decker stockholder at the close of business on such date, you are entitled to vote on matters that come before the Black & Decker special meeting.
 
Q:   How many votes do I have?
 
A:   Stanley:  You are entitled to one vote for each share of Stanley common stock that you owned as of the close of business on the Stanley record date. As of the close of business on the Stanley record date, there were approximately           outstanding shares of Stanley common stock.
 
A:   Black & Decker:  You are entitled to one vote for each share of Black & Decker common stock that you owned as of the close of business on the Black & Decker record date. As of the close of business on the Black & Decker record date, there were approximately           outstanding shares of Black & Decker common stock.
 
Q:   What vote is required to approve each proposal?
 
A:   Stanley:  The issuance of Stanley common stock to Black & Decker stockholders and the amendment to the Stanley 2009 Long Term Incentive Plan will each be approved if a majority of the votes cast on each such proposal vote in favor of such proposal, assuming that the total votes cast on the proposal represents over 50% of all Stanley common stock entitled to vote on such proposal. Votes to abstain are treated the


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same as shares voted against the proposal. Broker non-votes will have no effect, assuming over 50% of all shares of Stanley common stock entitled to vote are voted (or vote to abstain) on the proposal.
 
The amendment to Stanley’s certificate of incorporation will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against the proposal. Votes to abstain and broker non-votes will have no effect on this proposal, assuming a quorum is present.
 
A:   Black & Decker:  The proposal at the Black & Decker special meeting to approve the merger requires the affirmative vote of at least two-thirds of the votes entitled to be cast by holders of outstanding common stock of Black & Decker as of the close of business on the record date of the Black & Decker special meeting. Failures to vote, votes to abstain and broker non-votes will have the effect of a vote against the merger proposal.
 
Q:   What will happen if I fail to vote or I abstain from voting?
 
A:   Stanley:  If you are a Stanley shareholder and fail to vote or fail to instruct your broker, bank or other nominee to vote, it will have no effect on any of the Stanley proposals, assuming a quorum is present and, in the case of the votes to approve the issuance of shares of Stanley common stock in the merger and to approve the amendment to the Stanley 2009 Long Term Incentive Plan, over 50% of all shares of Stanley common stock entitled to vote on each such proposal are voted (or vote to abstain) on such proposal. If you are a Stanley shareholder and you mark your proxy or voting instructions to abstain, it will have the effect of a vote against the issuance of shares of Stanley common stock in the merger and against the approval of the amendment to the 2009 Stanley Long Term Incentive Plan, but will have no effect on the Stanley proposal to amend Stanley’s certificate of incorporation. If you are a Stanley shareholder through the Stanley 401(k) Plan and fail to instruct the trustee how to vote, the trustee will vote your shares as described above under “Q: How are my employee plan shares voted?”.
 
A:   Black & Decker:  If you are a Black & Decker stockholder and fail to vote, fail to instruct your broker, bank or other nominee to vote, or mark your proxy or voting instructions to abstain, it will have the effect of a vote against the proposal to approve the merger. If you are a Black & Decker stockholder through the Black & Decker 401(k) Plan and fail to instruct the trustee how to vote, the trustee will vote your shares as described above under “Q: How are my employee plan shares voted?”.
 
Q:   What will happen if I return my proxy card without indicating how to vote?
 
A:   If you are a holder of record and sign and return your proxy card without indicating how to vote on any particular proposal, the Stanley common stock or Black & Decker common stock represented by your proxy will be voted in accordance with the recommendation of the board of directors of Stanley or Black & Decker, as applicable.
 
Q:   What constitutes a quorum?
 
A:   Stanley:  Shareholders who hold at least a majority of the shares issued and outstanding and who are entitled to vote at the Stanley special meeting must be present in person or represented by proxy to constitute a quorum for the transaction of business at the Stanley special meeting. Note, however, that even if a quorum is present at the Stanley special meeting, the issuance of Stanley common stock to Black & Decker stockholders and the amendment to the Stanley 2009 Long Term Incentive Plan can only be approved if over 50% of all Stanley common stock entitled to vote on each such proposal votes (or votes to abstain) on such proposal. All shares of Stanley common stock represented at the Stanley special meeting, including shares that are represented but that abstain from voting, and shares that are represented but that are held by brokers, banks and other nominees who do not have authority to vote such shares (i.e., a broker non-vote), will be treated as present and entitled to vote for purposes of determining the presence or absence of a quorum.
 
A:   Black & Decker:  Stockholders entitled to cast a majority of all the votes entitled to be cast at the Black & Decker special meeting must be present in person or by proxy to constitute a quorum for the transaction of business at the Black & Decker special meeting. If a quorum is not present, stockholders present in person or by proxy may, by a majority vote and without further notice, adjourn the meeting


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from time to time to a date not more than 120 days after the original record date for the Black & Decker special meeting, but not for a period of more than 30 days at any one time. Even if a quorum is present at the Black & Decker special meeting, the merger can only be approved if at least two-thirds of the votes entitled to be cast by holders of outstanding common stock of Black & Decker as of the close of business on the record date of the Black & Decker special meeting vote in favor of the proposal.
 
Q:   Can I change my vote after I have returned a proxy or voting instruction card?
 
A:   Yes.
 
If you are a record holder of either Stanley or Black & Decker:  If you are a record holder of shares, you can change your vote at any time before your proxy is voted at your special meeting. You can do this in one of three ways:
 
  •  you can grant a new, valid proxy bearing a later date (including by telephone or Internet);
 
  •  you can send a signed notice of revocation; or
 
  •  you can attend your special meeting and vote in person, which will automatically cancel any proxy previously given, or you may revoke your proxy in person, but your attendance alone will not revoke any proxy that you have previously given.
 
If you choose either of the first two methods, your notice of revocation or your new proxy must be received by Stanley or Black & Decker, as applicable, no later than the beginning of the applicable special meeting. If you have voted your shares by telephone or through the Internet, you may revoke your prior telephone or Internet vote by any manner described above.
 
If you hold shares of either Stanley or Black & Decker in “street name”:  If your shares are held in street name, you must contact your broker, bank or other nominee to change your vote.
 
If you hold Stanley shares in the Stanley 401(k) Plan:  If you hold shares of Stanley common stock in the Stanley 401(k) Plan, there are two ways in which you may revoke your instructions to the trustee and change your vote with respect to voting the shares allocated to you in the Stanley 401(k) Plan:
 
  •  First, you may submit new voting instructions under any one of the three methods described above under “Q: How are my employee plan shares voted?” The latest dated instructions actually received by The Bank of New York Mellon Corporation, the trustee for the Stanley 401(k) Plan, in accordance with the instructions for voting set forth in this joint proxy statement/prospectus, will be the instructions that are followed, and all earlier instructions will be revoked.
 
  •  Second, you may send a written notice to Stanley’s transfer agent, Computershare Investor Services, LLC at 7600 Grant Street, Burr Ridge, IL 60527-7275, stating that you would like to revoke your instructions to The Bank of New York Mellon Corporation, the trustee for the Stanley 401(k) Plan. This written notice must be received no later than  a.m. eastern time on          , 2010, in order to revoke your prior instructions.
 
If you hold Black & Decker shares in the Black & Decker 401(k) Plan:  If you hold shares of Black & Decker common stock in the Black & Decker 401(k) Plan, there are two ways in which you may revoke your instructions to the trustee and change your vote with respect to voting the shares allocated to you in the Black & Decker 401(k) Plan:
 
  •  First, you may submit new voting instructions under any one of the three methods described above under “Q: How are my employee plan shares voted?”. The latest dated instructions actually received by T. Rowe Price Trust Company, the trustee for the Black & Decker 401(k) Plan, in accordance with the instructions for voting set forth in this joint proxy statement/prospectus, will be the instructions that are followed, and all earlier instructions will be revoked.
 
  •  Second, you may send a written notice to Black & Decker’s transfer agent, BNY Mellon Shareowner Services at 480 Washington Boulevard, Jersey City, NJ 07310, stating that you would like to revoke your instructions to T. Rowe Price Trust Company, the trustee for Black & Decker 401(k) Plan. This


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  written notice must be received no later than      a.m. eastern time on          , 2010, in order to revoke your prior instructions.
 
Q:   What are the material U.S. federal income tax consequences of the merger to U.S. holders of Black & Decker common stock?
 
A:   The merger is intended to be treated for U.S. federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Assuming the merger qualifies as such a reorganization, a U.S. holder of Black & Decker common stock generally will not recognize any gain or loss upon receipt of Stanley common stock solely in exchange for Black & Decker common stock in the merger. See “The Merger — Material U.S. Federal Income Tax Consequences of the Merger”.
 
Q:   When do you expect the merger to be completed?
 
A:   Stanley and Black & Decker are working to complete the merger towards the end of the first quarter or the beginning of the second quarter of 2010. However, the merger is subject to various regulatory approvals and other conditions, and it is possible that factors outside the control of both companies could result in the merger being completed at a later time, or not at all. There may be a substantial amount of time between the respective Stanley and Black & Decker special meetings and the completion of the merger. Stanley and Black & Decker hope to complete the merger as soon as reasonably practicable.
 
Q:   What do I need to do now?
 
A:   Carefully read and consider the information contained in and incorporated by reference into this joint proxy statement/prospectus, including its Annexes. Then please authorize a proxy to vote your shares as soon as possible so that they may be represented at your special meeting.
 
Q:   Do I need to do anything with my shares of common stock now?
 
A:   No. If you are a Black & Decker stockholder, after the merger is completed, your shares of Black & Decker common stock will be converted automatically into the right to receive 1.275 shares of Stanley common stock (and associated Series A Junior Participating Preferred Stock purchase rights) and cash in lieu of fractional shares. You do not need to take any action at the current time.
 
If you are a Stanley shareholder, you are not required to take any action with respect to your shares of Stanley common stock.
 
Q:   Are shareholders entitled to appraisal rights?
 
A:   No. Neither the shareholders of Stanley nor the stockholders of Black & Decker are entitled to appraisal rights in connection with the merger.
 
Q:   What happens if I sell my shares of Black & Decker common stock before the Black & Decker special meeting?
 
A:   The record date of the Black & Decker special meeting is earlier than the date of the Black & Decker special meeting and the date that the merger is expected to be completed. If you transfer your Black & Decker shares after the Black & Decker record date but before the Black & Decker special meeting, you will retain your right to vote at the Black & Decker special meeting, but will have transferred the right to receive the merger consideration in the merger. In order to receive the merger consideration, you must hold your shares through effective time of the merger.
 
Q:   What if I hold shares in both Stanley and Black & Decker?
 
A:   If you are a shareholder of both Stanley and Black & Decker, you will receive two separate packages of proxy materials. A vote as a Stanley shareholder will not count as a vote as a Black & Decker stockholder, and a vote as a Black & Decker stockholder will not count as a vote as a Stanley shareholder. Therefore, please separately vote each of your Stanley and Black & Decker shares.


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Q:   Who can help answer my questions?
 
A:   Stanley shareholders or Black & Decker stockholders who have questions about the merger or the other matters to be voted on at the special meetings or desire additional copies of this joint proxy statement/prospectus or additional proxy cards should contact:
 
     
If you are a Stanley shareholder:   If you are a Black & Decker stockholder:
     
     
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Shareholders May Call Toll-Free: (877) 800-5182
Banks and Brokers May Call Collect: (212) 750-5833
  MacKenzie Partners, Inc.
105 Madison Avenue
New York, NY 10016
(800) 929-0308
     
     
or   or
     
     
The Stanley Works   The Black & Decker Corporation
1000 Stanley Drive
New Britain, CT 06053
(860) 225-5111
Attn: Investor Relations
  701 East Joppa Road
Towson, MD 21286
(410) 716-3900
Attn: Investor Relations


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SUMMARY
 
This summary highlights information contained elsewhere in this joint proxy statement/prospectus and may not contain all the information that is important to you. Stanley and Black & Decker urge you to read carefully the remainder of this joint proxy statement/prospectus, including the Annexes, and the other documents to which we have referred you because this summary does not provide all the information that might be important to you with respect to the merger and the other matters being considered at the Stanley and Black & Decker special meetings. See also the section entitled “Where You Can Find More Information” on page 152. We have included page references in this summary to direct you to a more complete description of the topics presented below.
 
The Companies
 
The Stanley Works (see page 25)
 
The Stanley Works
1000 Stanley Drive
New Britain, CT 06053
Telephone: (860) 225-5111
 
Stanley, a Connecticut corporation, is a diversified worldwide supplier of tools and engineered solutions for professional, industrial and construction and do-it-yourself use, as well as engineered security solutions for industrial and commercial applications. Stanley’s operations are classified into three business segments: Security, Industrial, and Construction & Do-It-Yourself. The Security segment is a provider of access and security solutions primarily for retailers, educational, and financial and healthcare institutions, as well as commercial, governmental and industrial customers. The Industrial segment manufactures and markets professional industrial and automotive mechanics tools and storage systems, hydraulic tools and accessories, plumbing, heating and air conditioning tools, assembly tools and systems, and specialty tools. The Construction & Do-It-Yourself segment manufactures and markets hand tools, consumer mechanics tools, storage systems, pneumatic tools and fasteners.
 
Additional information about Stanley and its subsidiaries is included in documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” on page 152.
 
Blue Jay Acquisition Corp. (see page 25)
 
Blue Jay Acquisition Corp., a wholly owned subsidiary of Stanley, is a Maryland corporation that was formed on October 30, 2009 for the purpose of effecting the merger. In the merger, Blue Jay Acquisition Corp. will be merged with and into Black & Decker, with Black & Decker surviving as a wholly owned subsidiary of Stanley.
 
The Black & Decker Corporation (see page 25)
 
The Black & Decker Corporation
701 East Joppa Rd.
Towson, MD 21286
Telephone: (410) 716-3900
 
Black & Decker, a Maryland corporation, is a leading global manufacturer and marketer of power tools and accessories, hardware and home improvement products, and technology-based fastening systems. With products and services marketed in over 100 countries, Black & Decker enjoys worldwide recognition of its strong brand names and a superior reputation for quality, design, innovation, and value.
 
Additional information about Black & Decker and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information” on page 152.


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The Merger and the Merger Agreement
 
The Merger (see page 35)
 
The board of directors of Stanley and the board of directors of Black & Decker have agreed to a strategic combination of their two companies under the terms of the merger agreement, which is included in this joint proxy statement/prospectus as Annex A. Upon completion of the merger, Black & Decker will become a wholly owned subsidiary of Stanley. Stanley and Black & Decker encourage you to read the entire merger agreement carefully because it is the principal document governing the merger.
 
Terms of the Merger; Merger Consideration (see page 90)
 
The merger agreement provides for the merger of Blue Jay Acquisition Corp. with and into Black & Decker, with Black & Decker surviving as a wholly owned subsidiary of Stanley. Upon completion of the merger, each share of Black & Decker common stock issued and outstanding immediately prior to the completion of the merger, except for any shares of Black & Decker common stock held by Stanley or Blue Jay Acquisition Corp. (which will be cancelled), will be converted into the right to receive 1.275 shares of Stanley common stock (and associated Series A Junior Participating Preferred Stock purchase rights).
 
Stanley will not issue any fractional shares of Stanley common stock in the merger. Instead, a Black & Decker stockholder who otherwise would have received a fraction of a share of Stanley common stock will receive an amount in cash equal to such fractional amount multiplied by the closing sale price of Stanley common stock on the NYSE on the last trading day prior to the effective time of the merger.
 
Treatment of Stock Options and Other Equity-Based Awards (see page 87)
 
Stock Options.  Upon completion of the merger, each outstanding stock option to purchase Black & Decker common stock will be converted pursuant to the merger agreement into a stock option to acquire shares of Stanley common stock on the same terms and conditions as were in effect immediately prior to the completion of the merger. The number of shares of Stanley common stock underlying each converted Black & Decker stock option will be determined by multiplying the number of shares of Black & Decker common stock subject to such stock option immediately prior to the completion of the merger by the 1.275 exchange ratio, and rounding down to the nearest whole share. The exercise price per share of each converted Black & Decker stock option will be determined by dividing the per share exercise price of such stock option by the 1.275 exchange ratio, and rounding up to the nearest whole cent. Pursuant to the terms of severance benefits agreements with certain executive officers of Black & Decker, as described under “The Merger — Financial Interests of Black & Decker Directors and Officers in the Merger — Equity Compensation Plans”, each executive officer who is party to such an agreement (other than Nolan D. Archibald, the current Chairman, President and Chief Executive Officer of Black & Decker) became fully vested in all outstanding stock options held by such executive upon execution of the merger agreement. Mr. Archibald’s stock options will remain subject to their current terms with respect to vesting and will not be accelerated as a result of the merger.
 
Restricted Shares.  With the exception of restricted shares held by Mr. Archibald, each Black & Decker restricted share that did not become fully vested upon execution of the merger agreement will become fully vested shares of Black & Decker common stock immediately prior to completion of the merger. The holders of restricted shares of Black & Decker common stock will be treated in the same manner as other holders of Black & Decker common stock under the merger agreement. Pursuant to the merger and Mr. Archibald’s executive chairman agreement with Stanley, upon completion of the merger, each restricted share of Black & Decker common stock held by Mr. Archibald will be converted into the right to receive restricted shares of Stanley common stock on the same terms and conditions as were in effect with respect to Mr. Archibald’s Black & Decker restricted shares immediately prior to the completion of the merger. Each such restricted share of Black & Decker common stock will be converted into a number of restricted shares of Stanley common stock at the 1.275 exchange ratio.


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Restricted Stock Units.  With the exception of restricted stock units held by Mr. Archibald, upon completion of the merger, each Black & Decker restricted stock unit that did not become fully vested upon execution of the merger agreement will become fully vested and converted pursuant to the merger agreement into a number of shares of Stanley common stock determined by multiplying the number of shares of Black & Decker common stock subject to such restricted stock units by the 1.275 exchange ratio, rounding down to the nearest whole share. Pursuant to Mr. Archibald’s executive chairman agreement with Stanley, upon completion of the merger, each restricted stock unit with respect to shares of Black & Decker common stock held by Mr. Archibald will be converted into restricted stock units with respect to shares of Stanley common stock on the same terms and conditions as were in effect with respect to Mr. Archibald’s Black & Decker restricted stock units immediately prior to the completion of the merger, and the number of shares of Stanley common stock underlying each such converted Black & Decker restricted stock unit will be determined by multiplying the number of shares of Black & Decker common stock subject to such restricted stock unit by the 1.275 exchange ratio, rounding down to the nearest whole share.
 
Material U.S. Federal Income Tax Consequences of the Merger (see page 83)
 
The merger is intended to be treated for U.S. federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Code. Assuming the merger qualifies as such a reorganization, a U.S. holder of Black & Decker common stock generally will not recognize any gain or loss upon receipt of Stanley common stock solely in exchange for Black & Decker common stock in the merger, except with respect to cash received in lieu of a fractional share of Stanley common stock. It is a condition to the completion of the merger that Stanley and Black & Decker receive written opinions from their respective counsel to the effect that the merger will be treated as a “reorganization” within the meaning of Section 368(a) of the Code.
 
Tax matters are very complicated and the tax consequences of the merger to each Black & Decker stockholder will depend on such stockholder’s particular facts and circumstances. Black & Decker stockholders are urged to consult their tax advisors to understand fully the tax consequences to them of the merger.
 
Recommendations of the Board of Directors of Stanley (see page 48)
 
At a special meeting held on November 2, 2009, the Stanley board of directors determined that the merger and the other transactions contemplated by the merger agreement, including the issuance of Stanley common stock in the merger and the amendment of Stanley’s certificate of incorporation, are advisable and in the best interests of Stanley and its shareholders. Accordingly, the Stanley board of directors recommends that the Stanley shareholders vote “FOR” the proposal to issue shares of Stanley common stock in the merger and “FOR” the proposal to amend Stanley’s certificate of incorporation to increase the number of authorized shares of Stanley common stock and to change Stanley’s name to “Stanley Black & Decker, Inc.”.
 
Recommendation of the Board of Directors of Black & Decker (see page 63)
 
At a special meeting held on November 2, 2009, the Black & Decker board of directors, by the unanimous vote of its directors, with Mr. Archibald abstaining, declared advisable the merger (including the amendment and restatement of the charter of Black & Decker to be effected as part of the merger), on substantially the terms and conditions set forth in the merger agreement, and directed that the merger be submitted for consideration by the Black & Decker stockholders at the Black & Decker special meeting.
 
Opinions of Stanley’s Financial Advisors (see page 50)
 
In connection with the merger, Stanley’s board of directors received separate opinions, each dated November 2, 2009, from Deutsche Bank Securities Inc., which we refer to in this joint proxy statement/prospectus as “Deutsche Bank,” and Goldman, Sachs & Co., which we refer to in this joint proxy statement/


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prospectus as “Goldman Sachs.” Deutsche Bank and Goldman Sachs delivered to the Stanley board of directors their respective oral opinions, which opinions were confirmed by delivery of written opinions each dated November 2, 2009, to the effect that, as of that date and based on and subject to various assumptions, matters considered and limitations described in such opinions, the exchange ratio of 1.275 shares of Stanley common stock to be issued by Stanley in exchange for each share of Black & Decker common stock pursuant to the merger agreement was fair, from a financial point of view, to Stanley. The Deutsche Bank opinion and the Goldman Sachs opinion, the full texts of which describe the assumptions made, procedures followed, matters considered and limitations on the review undertaken, are included in this joint proxy statement/prospectus as Annex B and Annex C, respectively. Each opinion was provided for the information and assistance of the Stanley board of directors in connection with its consideration of the merger and was limited to the fairness to Stanley, from a financial point of view, of the exchange ratio of 1.275 shares of Stanley common stock to be issued by Stanley in exchange for each share of Black & Decker common stock pursuant to the merger agreement, and neither Deutsche Bank nor Goldman Sachs expressed any opinion as to the fairness of the merger to the holders of any class of securities, creditors or other constituencies of Stanley or as to the underlying decision by Stanley to engage in the merger. Neither opinion constitutes a recommendation to any shareholder as to how such holder should vote with respect to the merger or any other matter.
 
Opinion of Black & Decker’s Financial Advisor (see page 65)
 
J.P. Morgan Securities Inc., which we refer to in this joint proxy statement/prospectus as “J.P. Morgan”, delivered its written and oral opinion to the board of directors of Black & Decker that, as of the date of the fairness opinion and based upon and subject to the factors and assumptions set forth therein, the exchange ratio in the proposed merger was fair, from a financial point of view, to Black & Decker’s common stockholders.
 
The full text of the written opinion of J.P. Morgan, dated November 2, 2009, which sets forth the assumptions made, matters considered and limits on the review undertaken, is included as Annex D to this joint proxy statement/prospectus. J.P. Morgan provided its opinion for the information and assistance of the board of directors of Black & Decker in connection with its consideration of the merger. J.P. Morgan’s written opinion is addressed to the board of directors of Black & Decker, is directed only to the exchange ratio in the merger and does not constitute a recommendation as to how any stockholder of Black & Decker should vote with respect to the proposed merger.
 
Financial Interests of Stanley Directors and Officers in the Merger (see page 73)
 
In considering the recommendation of the Stanley board of directors that you vote to approve the issuance of Stanley common stock in connection with the merger and the amendment of Stanley’s certificate of incorporation, you should be aware that some of Stanley’s directors and officers have financial interests in the merger that are different from, or in addition to, those of Stanley shareholders generally. The Stanley board of directors was aware of and considered these potential interests, among other matters, in evaluating the merger agreement and the merger, and in recommending to you that you approve the issuance of Stanley common stock in connection with the merger and the amendment of Stanley’s certificate of incorporation.
 
Following the completion of the merger, all members of the Stanley board of directors will continue to be directors of the combined company, and it is anticipated that many executive officers of Stanley will continue to be executive officers of the combined company. Additionally, John F. Lundgren, the current Chairman and Chief Executive Officer of Stanley, and James M. Loree, the current Executive Vice President and Chief Operating Officer of Stanley, both entered into employment agreements with Stanley, the effectiveness of which are contingent on completion of the merger.
 
Financial Interests of Black & Decker Directors and Officers in the Merger (see page 75)
 
In considering the recommendation of the Black & Decker board of directors that you vote “FOR” the merger proposal, you should note that some Black & Decker directors and executive officers have financial


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interests in the merger that are different from, or in addition to, those of other Black & Decker stockholders generally. The board of directors of Black & Decker was aware of these differences and considered them, among other matters, in approving the merger agreement and in recommending to the stockholders that the stockholders approve the merger proposal.
 
These interests include the following:
 
  •  six members of the Black & Decker board of directors (including Mr. Archibald) are expected to become directors of the combined company, and certain of the executive officers of Black & Decker will become executive officers of the combined company,
 
  •  Mr. Archibald is a party to an agreement with Black & Decker that provides him with certain benefits upon a change in control of Black & Decker, and Mr. Archibald and Stanley entered into an executive chairman agreement that only becomes effective upon completion of the merger,
 
  •  certain executive officers of Black & Decker (other than Mr. Archibald) are parties to severance benefits agreements with Black & Decker that provide for the payment of specified benefits if the executive’s employment terminates under certain circumstances following the merger,
 
  •  all of the executive officers of Black & Decker are entitled to payment of a cash award under certain long-term incentive plans upon completion of the merger that are otherwise payable in January 2011,
 
  •  all outstanding shares of restricted stock, restricted stock units, and stock options held by the executive officers of Black & Decker (other than Mr. Archibald) vested upon execution of the merger agreement,
 
  •  the entry into the merger agreement resulted in an increase in each participant’s benefits under The Black & Decker Supplemental Executive Retirement Plan, and
 
  •  the directors and executive officers of Black & Decker are entitled to rights to indemnification, advancement of expenses and exculpation and to continued coverage under a directors and officers insurance policy.
 
Board of Directors and Management After the Merger (see page 82)
 
Upon the effective time of the merger, the Stanley board of directors will be expanded from its current size of nine members to 15 members. All nine members of the pre-merger Stanley board of directors will remain on the post-merger Stanley board, and six members of the pre-merger Black & Decker board will be appointed to the post-merger Stanley board at the effective time of the merger. Mr. Archibald will be one of the six Black & Decker directors appointed to the Stanley board. Of the independent directors from the pre-merger Stanley board of directors, the merger agreement requires one to be appointed the lead independent director of the post-merger board of directors.
 
Following the merger, Mr. Lundgren, currently Chairman and Chief Executive Officer of Stanley, will continue to serve as Chief Executive Officer of Stanley. Mr. Archibald, currently the Chairman, President, and Chief Executive Officer of Black & Decker, will serve as Executive Chairman of the board of directors of Stanley. Many other executive officers of Stanley, including Mr. Loree, currently Executive Vice President and Chief Operating Officer of Stanley, and certain executive officers of Black & Decker, are anticipated to be executive officers of Stanley following the merger.
 
Regulatory Approvals Required for the Merger (see page 85)
 
Stanley and Black & Decker have agreed to use their reasonable best efforts to obtain all governmental and regulatory approvals required to complete the transactions contemplated by the merger agreement.
 
United States Antitrust.  Under the Hart-Scott-Rodino Antitrust Improvements Act and related rules (the “HSR Act”), certain transactions, including the merger, may not be completed until notifications have been given and information furnished to the Antitrust Division of the Department of Justice and the Federal Trade Commission and all statutory waiting period requirements have been satisfied. Stanley and Black & Decker filed Notification and Report Forms with the Antitrust Division of the Department of Justice and the Federal


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Trade Commission on November 25, 2009. The waiting period under the HSR Act with respect to the proposed merger expired at 11:59 p.m., eastern time, on December 28, 2009. Stanley and Black & Decker did not receive a request for additional information (a “Second Request”) from the Federal Trade Commission before the waiting period under the HSR Act expired. No other approvals are required under the United States antitrust laws to complete the transaction. However, at any time before or after the effective time of the merger, public or private entities (including states and private parties) could take action under the antitrust laws, including but not limited to seeking to prevent the merger in court, to rescind the merger or to conditionally approve the merger upon the divestiture of assets of Stanley or Black & Decker. There can be no assurance that a challenge to the merger on antitrust grounds will not be made or, if such a challenge is made, that it would not be successful.
 
Europe.  Both Stanley and Black & Decker conduct business in member states of the European Union. Council Regulation (EC) No. 139/2004, as amended, and accompanying regulations require notification to and approval by the European Commission of specific mergers or acquisitions involving parties with worldwide sales and individual European Union sales exceeding specified thresholds before these mergers and acquisitions can be implemented. Stanley and Black & Decker are in the process of preparing formal notifications to the European Commission of the merger. Pursuant to European Community regulations, the European Commission has 25 business days from the day following the date of such notification, which period may be extended to 35 business days after the date of notification under certain circumstances, in which to consider whether the merger would significantly impede effective competition in the common market (as defined by European Community regulations) or a substantial part of it, in particular as a result of the creation or strengthening of a dominant position. By the end of that period, the European Commission must issue a decision either clearing the merger, which may be conditional upon satisfaction of the parties’ undertakings, or open an in-depth “Phase II” investigation. A Phase II investigation may last a maximum of an additional 125 business days. It is possible that an investigation could result in a challenge to the merger based on European Union competition law or regulations.
 
Other Laws.  In addition to the regulatory matters described above, the merger will require the approval of other governmental agencies under foreign regulatory laws, including under the Competition Act of Canada. It is possible that any of the governmental entities with which filings are made may seek, as conditions for granting approval of the merger, various regulatory concessions.
 
Completion of the Merger (see page 90)
 
Stanley and Black & Decker currently expect to complete the merger towards the end of the first quarter or the beginning of the second quarter of 2010, subject to receipt of required shareholder and regulatory approvals and the satisfaction or waiver of the conditions to the merger described in the merger agreement.
 
Conditions to Completion of the Merger (see page 97)
 
As more fully described in this joint proxy statement/prospectus and in the merger agreement, the completion of the merger depends on a number of conditions being satisfied or, where legally permissible, waived. These conditions include, among others, the receipt of the approval of Black & Decker stockholders of the merger, the receipt of the approval of Stanley shareholders of the issuance of Stanley common stock in the merger and the amendment of Stanley’s certificate of incorporation, the receipt of all necessary regulatory approvals under antitrust laws, the accuracy of representations and warranties made by the parties in the merger agreement, performance by the parties of their obligations under the merger agreement (subject in each case to certain materiality standards), the absence of a material adverse effect on each party, and the receipt of legal opinions by each party regarding the qualification of the merger as a “reorganization” for U.S. federal income tax purposes. We cannot be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.
 
Approval of Stanley’s shareholders of the amendment to the Stanley 2009 Long-Term Incentive Plan is not a condition to completion of the merger.


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Termination of the Merger Agreement (see page 98)
 
The merger agreement may be terminated at any time prior to the effective time of the merger, even after the receipt of the requisite shareholder approvals, under the following circumstances:
 
  •  by mutual written consent of Stanley and Black & Decker;
 
  •  by either Stanley or Black & Decker if:
 
  •  the merger is not completed by June 30, 2010, subject to a three-month extension under certain circumstances;
 
  •  certain legal restraints regarding the merger become final and nonappealable;
 
  •  the Stanley shareholders fail to approve either the issuance of Stanley common stock in connection with the merger or the amendment to Stanley’s certificate of incorporation;
 
  •  the Black & Decker stockholders fail to approve the merger; or
 
  •  the other party breaches the merger agreement in a way that would entitle the party seeking to terminate the agreement not to complete the merger, subject to the right of the breaching party to cure the breach.
 
Either party may also terminate the merger agreement prior to the shareholder approval of the other party being obtained if the board of directors of the other party withdraws or modifies in any adverse manner, or proposes publicly to withdraw or modify in any adverse manner, its approval or recommendation with respect to the merger, or approves or recommends, or proposes publicly to approve or recommend, any alternative transaction with a third party.
 
Expenses and Termination Fees: Liability for Breach (see page 99)
 
Generally, all fees and expenses incurred in connection with the merger and the transactions contemplated by the merger agreement will be paid by the party incurring those expenses. However, upon termination of the merger agreement under certain circumstances, Stanley may be obligated to pay Black & Decker a termination fee of $125 million and, in other circumstances, Black & Decker may be obligated to pay Stanley a termination fee of $125 million.
 
No Appraisal Rights (see page 150)
 
Under the Connecticut Business Corporation Act, the holders of Stanley common stock are not entitled to appraisal rights in connection with the merger or any of the Stanley proposals. Under the Maryland General Corporation Law, the holders of Black & Decker common stock are not entitled to appraisal rights in connection with the merger.
 
The Stanley Special Meeting
 
Date, Time and Place (see page 26)
 
The special meeting of Stanley shareholders will be held at the Stanley Center for Learning and Innovation, 1000 Stanley Drive, New Britain, CT 06053, on          , 2010, at      a.m.
 
Purpose of the Stanley Special Meeting (see page 26)
 
At the Stanley special meeting, Stanley shareholders will be asked:
 
  •  to vote on a proposal to approve the issuance of Stanley common stock to Black & Decker stockholders in connection with the merger;
 
  •  to vote on a proposal to amend the certificate of incorporation of Stanley to (a) increase the authorized number of shares of Stanley common stock from 200,000,000 to 300,000,000 and (b) change the name of Stanley to “Stanley Black & Decker, Inc.”;


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  •  to vote on a proposal to amend the Stanley 2009 Long-Term Incentive Plan to, among other things, increase the number of shares available to be issued under such plan; and
 
  •  to vote upon an adjournment of the Stanley special meeting (if necessary or appropriate, including to solicit additional proxies if there are not sufficient votes for the approval of any of the foregoing proposals).
 
Completion of the merger is conditioned on approval of the issuance of Stanley common stock in the merger and approval of the amendment to Stanley’s certificate of incorporation, but is not conditioned on approval of the amendment to the Stanley 2009 Long-Term Incentive Plan.
 
Stanley Record Date; Stock Entitled to Vote (see page 26)
 
Only holders of shares of Stanley common stock at the close of business on          , 2010, the record date for the Stanley special meeting, will be entitled to notice of, and to vote at, the Stanley special meeting or any adjournments or postponements thereof. On the record date, there were outstanding a total of           shares of Stanley common stock. Each outstanding share of Stanley common stock is entitled to one vote on each proposal and any other matter coming before the Stanley special meeting.
 
Required Vote (see page 27)
 
The required votes to approve the Stanley proposals are as follows:
 
  •  The issuance of Stanley common stock to Black & Decker stockholders in connection with the merger and the amendment to the Stanley 2009 Long Term Incentive Plan will each be approved if a majority of the votes cast on each such proposal vote in favor of such proposal, assuming that the total votes cast on such proposal represents over 50% of all Stanley common stock entitled to vote on such proposal. Votes to abstain are treated the same as shares voted against the proposal. Broker non-votes will have no effect, assuming over 50% of all shares of Stanley common stock entitled to vote are voted (or vote to abstain) on the proposal.
 
  •  The amendment to Stanley’s certificate of incorporation will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against the proposal. Votes to abstain and broker non-votes will have no effect.
 
  •  The adjournment of the Stanley special meeting will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against the proposal. Votes to abstain and broker non-votes will have no effect.
 
As of the close of business on the Stanley record date, directors and executive officers of Stanley and their affiliates had the right to vote           shares of Stanley common stock, or          % of the combined voting power of the outstanding shares of Stanley common stock entitled to vote at the Stanley special meeting.
 
The Black & Decker Special Meeting
 
Date, Time and Place (see page 31)
 
The special meeting of Black & Decker stockholders will be held at      on          , 2010 at      a.m.
 
Purpose of the Black & Decker Special Meeting (see page 31)
 
At the Black & Decker special meeting, Black & Decker stockholders will be asked:
 
  •  to approve the merger (including the amendment and restatement of the charter of Black & Decker to be effected as part of the merger) on substantially the terms and conditions set forth in the merger agreement, pursuant to which Blue Jay Acquisition Corp. will be merged with and into Black & Decker and each outstanding share of common stock of Black & Decker will be converted into the right to


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  receive 1.275 shares of common stock of Stanley (and associated Series A Junior Participating Preferred Stock purchase rights), with cash paid in lieu of fractional shares; and
 
  •  to approve an adjournment of the special meeting, if necessary, including to solicit additional proxies if there are not sufficient votes for the proposal to approve the merger.
 
Black & Decker Record Date; Stock Entitled to Vote (see page 31)
 
Only holders of shares of Black & Decker common stock at the close of business on          , 2010, the record date for the Black & Decker special meeting, will be entitled to notice of, and to vote at, the Black & Decker special meeting or any adjournments or postponements thereof. On the record date, there were outstanding a total of           shares of Black & Decker common stock. Each outstanding share of Black & Decker common stock is entitled to one vote on each proposal and any other matter coming before the Black & Decker special meeting.
 
Required Vote (see page 32)
 
The required votes to approve the Black & Decker proposals are as follows:
 
  •  Approval of the merger proposal requires approval by the affirmative vote of at least two-thirds of the votes entitled to be cast by holders of outstanding common stock of Black & Decker.
 
  •  Approval of any proposal to adjourn the Black & Decker special meeting, if necessary, including for the purpose of soliciting additional proxies, requires the affirmative vote of a majority of the votes cast on the proposal at the Black & Decker special meeting.
 
As of the close of business on the Black & Decker record date, directors and executive officers of Black & Decker and their affiliates had the right to vote            shares of Black & Decker common stock, or          % of the combined voting power of the outstanding shares of Black & Decker common stock entitled to vote at the Black & Decker special meeting.
 
Litigation Related to the Merger (see page 88)
 
Since the announcement of the merger on November 2, 2009, Black & Decker, members of the Black & Decker board of directors, Stanley and, in one case, Blue Jay Acquisition Corp. were named as defendants in three purported stockholder class actions and two stockholder derivative actions brought by Black & Decker stockholders challenging the proposed merger, seeking, among other things, to enjoin the defendants from completing the merger on the agreed upon terms. On January 14, 2010, Black & Decker, members of the Black & Decker board, Stanley and Blue Jay Acquisition Corp. entered into a memorandum of understanding with the various stockholder plaintiffs to settle all such class action and stockholder derivative actions.
 
Amendment to the Stanley 2009 Long-Term Incentive Plan (see page 124)
 
Stanley is seeking shareholder approval of an amendment to The Stanley Works 2009 Long-Term Incentive Plan. Generally, the only amendments proposed to be made are to increase the number of shares available for issuance under the plan and, subject to such limitation, to increase the maximum fair market value of payments allowable during any three-year period to any executive officer in connection with long-term performance awards and provide for a fungible equity grant pool. The current version of the plan contains a limit on the number of shares available for issuance under the plan. An increase in the number of shares available for issuance under the plan is necessary due to the merger, the completion of which will dramatically increase the size of Stanley’s work force and those key employees and other individuals who will be eligible to receive equity awards under the plan. If the current plan is not amended to increase the number of shares available for issuance, after the merger, Stanley will not have sufficient share capacity to make appropriate grants to key employees and other individuals. The change to a fungible equity pool will provide Stanley more flexibility in allocating equity awards among various types of stock-based awards.
 
Following completion of the merger, the combined company will not make any grants of equity awards under any Black & Decker equity compensation plan. If the merger is not completed, the amendment to the


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Stanley 2009 Long-Term Incentive Plan will not go into effect, and the current version of the plan will remain in place. Shareholder approval of the amendment to the Stanley 2009 Long-Term Incentive Plan is not a condition to completion of the merger.
 
The Stanley board of directors recommends that Stanley shareholders vote “FOR” the proposal to amend the Stanley 2009 Long-Term Incentive Plan.


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Selected Historical Consolidated Financial Data of Stanley
 
The following selected consolidated financial information of Stanley as of the end of the fiscal years 2008 and 2007 and for the 2008, 2007 and 2006 fiscal years, has been derived from the audited financial statements appearing in Stanley’s Current Report on Form 8-K filed July 9, 2009, incorporated by reference in this joint proxy statement/prospectus. The Form 8-K was filed to recast such financial statements to give effect to the adoption in 2009 of the following new accounting standards requiring retrospective application: Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 470-20, “Debt with Conversion and Other Options,” ASC 260-10, “Earnings Per Share — Overall” and ASC 810-10, “Consolidation — Overall”. The selected financial information as of the end of the fiscal years 2006, 2005 and 2004 and for the 2005 and 2004 fiscal years were derived from historical financial statements not incorporated by reference in this joint proxy statement/prospectus, adjusted to give effect to the retrospective application of the accounting standards noted above, as applicable.
 
The selected consolidated financial data of Stanley as of and for the nine months ended October 3, 2009 and September 27, 2008 are derived from Stanley’s unaudited condensed consolidated financial statements and related notes contained in its Quarterly Report on Form 10-Q for the quarterly period ended October 3, 2009, which is incorporated by reference in this joint proxy statement/prospectus. In the opinion of management, all adjustments necessary for a fair presentation of the interim nine months financial information have been included. The information set forth below is only a summary and is not necessarily indicative of the results of future operations of Stanley or the combined company, and you should read the following information together with Stanley’s audited consolidated financial statements, the notes related thereto and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Stanley’s Annual Report on Form 10-K for the year ended January 3, 2009, the aforementioned Form 8-K filed on July 9, 2009 reflecting the retrospective application of accounting standards, and Stanley’s unaudited condensed consolidated financial statements, the notes related thereto and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Stanley’s Quarterly Report on Form 10-Q for the quarterly period ended October 3, 2009, which are incorporated by reference in this joint proxy statement/prospectus. For more information, see the section entitled “Where You Can Find More Information” beginning on page 152.
 
                                                         
    As of and for the
       
    Nine Months Ended                                
    Oct. 3,
    Sept. 27,
    As of the End of and for the Fiscal Year  
    2009     2008     2008(f)     2007     2006(g)     2005     2004  
    (Unaudited)                                
    ($ in millions, except per share amounts)  
 
Continuing Operations:
                                                       
Net sales
  $ 2,768     $ 3,340     $ 4,426     $ 4,360     $ 3,897     $ 3,183     $ 2,930  
Net earnings attributable to Stanley
  $ 171     $ 215     $ 219     $ 321     $ 279     $ 262     $ 229  
Basic earnings per share:
                                                       
Continuing operations
  $ 2.15     $ 2.72     $ 2.77     $ 3.89     $ 3.40     $ 3.14     $ 2.79  
Discontinued operations(a)(b)
  $ (0.04 )   $ 1.17     $ 1.11     $ 0.14     $ 0.13     $ 0.09     $ 1.68  
                                                         
Total basic earnings per share
  $ 2.11     $ 3.89     $ 3.88     $ 4.03     $ 3.53     $ 3.23     $ 4.47  
Diluted earnings per share:
                                                       
Continuing operations
  $ 2.14     $ 2.69     $ 2.74     $ 3.82     $ 3.33     $ 3.07     $ 2.72  
Discontinued operations(a)(b)
  $ (0.04 )   $ 1.15     $ 1.10     $ 0.13     $ 0.13     $ 0.08     $ 1.64  
                                                         
Total diluted earnings per share
  $ 2.10     $ 3.84     $ 3.84     $ 3.95     $ 3.46     $ 3.16     $ 4.36  
Percent of net sales:
                                                       
Cost of sales
    59.7 %     61.7 %     62.2 %     62.1 %     63.7 %     64.1 %     63.3 %
Selling, general and administrative(c)
    27.4 %     24.9 %     25.0 %     23.8 %     23.9 %     22.5 %     23.2 %
Other, net
    1.9 %     2.1 %     2.3 %     1.9 %     1.3 %     1.4 %     1.4 %
Interest, net
    1.7 %     1.9 %     1.9 %     2.0 %     1.7 %     1.1 %     1.2 %
Earnings before income taxes
    8.4 %     8.7 %     6.6 %     9.8 %     9.0 %     10.8 %     10.7 %
Net earnings
    6.2 %     6.4 %     4.9 %     7.4 %     7.2 %     8.2 %     7.8 %


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    As of and for the
       
    Nine Months Ended                                
    Oct. 3,
    Sept. 27,
    As of the End of and for the Fiscal Year  
    2009     2008     2008(f)     2007     2006(g)     2005     2004  
    (Unaudited)                                
    ($ in millions, except per share amounts)  
 
Balance sheet data:
                                                       
Total assets(d)
  $ 4,803     $ 5,111     $ 4,867     $ 4,741     $ 3,926     $ 3,545     $ 2,851  
Long-term debt
  $ 1,087     $ 1,155     $ 1,384     $ 1,165     $ 679     $ 895     $ 482  
The Stanley Works Shareowners’ equity(e)
  $ 1,911     $ 1,893     $ 1,706     $ 1,754     $ 1,548     $ 1,437     $ 1,229  
Ratios:
                                                       
Current ratio
    1.1       1.2       1.3       1.4       1.4       2.2       1.7  
Total debt to total capital
    43.1 %     46.0 %     48.6 %     45.4 %     39.2 %     42.6 %     32.2 %
Income tax rate — continuing operations
    25.1 %     25.6 %     24.7 %     24.9 %     19.8 %     23.4 %     26.4 %
Return on average equity — continuing operations
    9.6 %     11.9 %     12.8 %     19.5 %     18.9 %     19.8 %     21.7 %
Common stock data:
                                                       
Dividends per share
  $ 0.97     $ 0.94     $ 1.26     $ 1.22     $ 1.18     $ 1.14     $ 1.08  
Equity per share
  $ 23.86     $ 24.03     $ 21.63     $ 21.82     $ 18.92     $ 17.15     $ 14.92  
Market price per share — high
  $ 43.35     $ 52.18     $ 52.18     $ 64.25     $ 54.59     $ 51.75     $ 49.33  
Market price per share — low
  $ 22.61     $ 40.56     $ 24.19     $ 47.01     $ 41.60     $ 41.51     $ 36.42  
Average shares outstanding (in thousands):
                                                       
Basic
    79,499       78,867       78,897       82,313       81,866       83,347       82,058  
Diluted
    79,951       80,025       79,874       84,046       83,704       85,406       84,244  
Other information:
                                                       
Average number of employees
    17,832       17,698       17,862       17,344       16,699       13,605       12,817  
Shareowners of record at end of the period
    12,393       12,549       12,593       12,482       12,755       13,137       13,238  
 
 
(a) Amounts in 2008 reflect an $84 million after-tax gain recorded in discontinued operations for the sale of Stanley’s CST/berger laser measuring business.
 
(b) Amounts in 2004 reflect an after-tax gain of $119 million in discontinued operations for the sale of Stanley’s residential entry door business and home décor business.
 
(c) SG&A is inclusive of the Provision for Doubtful Accounts.
 
(d) Item includes assets held for sale related to discontinued operations at September 27, 2008 and as of the fiscal years ended 2007, 2006, 2005, and 2004.
 
(e) Shareowners’ equity was reduced by $14 million in fiscal 2007 for the adoption of FASB ASC Topic 740 “Income Taxes”. Shareowners’ equity as of December 30, 2006 decreased $61 million from the adoption of FASB ASC Topic 715 “Compensation-Retirement Benefits”.
 
(f) In the fourth quarter of 2008, Stanley recognized $61 million, or $0.54 per diluted share, of pre-tax restructuring and asset impairment charges from continuing operations pertaining to cost actions taken in response to weak economic conditions.
 
(g) Diluted earnings per share in 2006 reflects $0.07 of expense for stock options related to the adoption of FASB ASC Topic 718 “Compensation — Stock Compensation”.

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Selected Historical Consolidated Financial Data of Black & Decker
 
The following selected consolidated financial information of Black & Decker as of December 31, 2008 and 2007 and for each of the years in the three-year period ended December 31, 2008, has been derived from the audited financial statements and related notes contained in Black & Decker’s Annual Report on Form 10-K for the year ended December 31, 2008, incorporated by reference in this joint proxy statement/prospectus, with the exception of earnings per share data. Effective January 1, 2009, Black & Decker adopted a new accounting standard that clarifies whether instruments granted in share-based payment transactions should be included in the computation of earnings per share using the two-class method prior to vesting, and, as required, retrospectively adjusted basic and diluted earnings per share for all prior periods to reflect the adoption of that standard. The selected consolidated financial information as of December 31, 2006, 2005 and 2004 and for each of the years in the two-year period ended December 31, 2005, were derived from the historical financial statements not incorporated by reference in this joint proxy statement/prospectus, adjusted to give effect to the retrospective application of the accounting standard noted above.
 
The selected consolidated financial information of Black & Decker as of September 27, 2009 and for the nine months ended September 27, 2009 and September 28, 2008 has been derived from Black & Decker’s unaudited consolidated financial statements and related notes contained in its Quarterly Report on Form 10-Q for the quarter ended September 27, 2009, which is incorporated by reference in this joint proxy statement/prospectus. The selected consolidated financial information of Black & Decker as of September 28, 2008 has been derived from the historical financial statements not incorporated by reference in this joint proxy statement/prospectus. In the opinion of Black & Decker’s management, all adjustments considered necessary for a fair presentation of the interim nine-month financial information have been included. The information set forth below is only a summary and is not necessarily indicative of the results of future operations of Black & Decker or the combined company. The following information should be read together with Black & Decker’s consolidated financial statements and the notes related to those financial statements, together with the related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” incorporated herein by reference. See “Where You Can Find More Information” beginning on page 152.
 
                                                         
    As of and for the
   
    Nine Months Ended                    
    Sept. 27,
  Sept. 28,
  As of and for the Year Ended December 31,(a)
    2009(b)   2008(a)(c)   2008(d)   2007(e)   2006   2005(f)(g)   2004(f)
    (Unaudited)                    
    ($ in millions, except per share amounts)
 
Sales
  $ 3,473.8     $ 4,708.3     $ 6,086.1     $ 6,563.2     $ 6,447.3     $ 6,523.7     $ 5,398.4  
Net earnings from continuing operations
  $ 98.6     $ 249.9     $ 293.6     $ 518.1     $ 486.1     $ 532.2     $ 430.7  
(Loss) earnings from discontinued operations(h)
                                $ (0.1 )   $ 14.9  
Net earnings
  $ 98.6     $ 249.9     $ 293.6     $ 518.1     $ 486.1     $ 532.1     $ 445.6  
Basic earnings per share:
                                                       
Continuing operations
  $ 1.63     $ 4.11     $ 4.83     $ 7.96     $ 6.67     $ 6.68     $ 5.37  
Discontinued operations
                                      $ 0.19  
Net earnings per common share — basic
  $ 1.63     $ 4.11     $ 4.83     $ 7.96     $ 6.67     $ 6.68     $ 5.56  
Diluted earnings per share:
                                                       
Continuing operations
  $ 1.62     $ 4.04     $ 4.77     $ 7.78     $ 6.51     $ 6.51     $ 5.30  
Discontinued operations
                                      $ 0.18  
Net earnings per common share — assuming dilution
  $ 1.62     $ 4.04     $ 4.77     $ 7.78     $ 6.51     $ 6.51     $ 5.48  
Total assets
  $ 5,388.0     $ 5,567.0     $ 5,183.3     $ 5,410.9     $ 5,247.7     $ 5,842.4     $ 5,555.0  
Long-term debt
  $ 1,722.2     $ 1,405.3     $ 1,444.7     $ 1,179.1     $ 1,170.3     $ 1,030.3     $ 1,200.6  
Redeemable preferred stock of subsidiary
                                      $ 192.2  
Cash dividends per common share
  $ 0.66     $ 1.26     $ 1.68     $ 1.68     $ 1.52     $ 1.12     $ 0.84  
 
 
(a) Effective January 1, 2009, Black & Decker adopted a new accounting standard that clarifies whether instruments granted in share-based payment transactions should be included in the computation of earnings per share using the two-class method prior to vesting, and, as required, retrospectively adjusted basic and diluted earnings per share for all prior periods to reflect the adoption of that standard.


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(b) Earnings from continuing operations for the nine months ended September 27, 2009 include a restructuring charge of $11.9 million before taxes ($8.4 million after taxes).
 
(c) Earnings from continuing operations for the nine months ended September 28, 2008 include a restructuring charge of $33.9 million before taxes ($24.8 million after taxes).
 
(d) Earnings from continuing operations for 2008 include a restructuring charge of $54.7 million before taxes ($39.6 million after taxes).
 
(e) Earnings from continuing operations for 2007 include a favorable $153.4 million settlement of tax litigation. In addition, earnings from continuing operations for 2007 include a charge for an environmental remediation matter of $31.7 million before taxes ($20.6 million after taxes) and a restructuring charge of $19.0 million before taxes ($12.8 million after taxes).
 
(f) Black & Decker adopted the stock-based compensation expense recognition requirements of Accounting Standards Codification (ASC) 718, “Compensation — Stock Compensation,” effective January 1, 2006, using the modified retrospective method of adoption whereby Black & Decker restated all prior periods presented based on amounts previously recognized for purposes of pro forma disclosures. Amounts in this table for 2005 and 2004 reflect such restated amounts.
 
(g) Earnings from continuing operations for 2005 include a favorable $55.0 million before taxes ($35.8 million after taxes) settlement of environmental and product liability coverage litigation with an insurer. In addition, earnings from continuing operations for 2005 includes $51.2 million of incremental tax expense resulting from the repatriation of $888.3 million of foreign earnings under the American Jobs Creation Act of 2004.
 
(h) (Loss) earnings from discontinued operations represent the earnings, net of applicable income taxes, of Black & Decker’s discontinued European security hardware business. Loss from discontinued operations for the year ended December 31, 2005, includes a loss on sale of discontinued operations of $0.1 million. Earnings from discontinued operations for the year ended December 31, 2004, include a gain on sale of discontinued operations of $12.7 million. That gain was net of a $24.4 million goodwill impairment charge associated with the DOM security hardware business. The earnings of the discontinued operations do not reflect any expense for interest allocated by or management fees charged by Black & Decker.


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Summary Unaudited Pro Forma Condensed Combined Financial Information
 
The following table shows summary unaudited pro forma condensed combined financial information regarding the financial condition and results of operations of the combined company after giving effect to the merger. The summary unaudited pro forma condensed combined financial statements have been prepared using the acquisition method of accounting under U.S. generally accepted accounting principles, or GAAP standards, under which the assets and liabilities of Black & Decker will be recorded by Stanley at their respective fair values as of the date the merger is completed. The summary unaudited pro forma condensed combined balance sheet assumes that the merger took place on October 3, 2009. The summary unaudited pro forma condensed combined income statements for the nine months ended October 3, 2009 and the fiscal year ended January 3, 2009 assume that the merger took place on December 30, 2007, the first day of Stanley’s 2008 fiscal year.
 
The summary unaudited pro forma condensed combined financial information has been derived from and should be read in conjunction with the more detailed unaudited pro forma condensed combined financial statements of the combined company appearing elsewhere in this joint proxy statement/prospectus and the accompanying notes to the unaudited pro forma condensed combined financial statements. In addition, the summary unaudited pro forma condensed combined financial statements were based on and should be read in conjunction with the historical consolidated financial statements and related notes of both Stanley and Black & Decker for the applicable periods, which have been incorporated in this joint proxy statement/prospectus by reference. See “Where You Can Find More Information” on page 152 and “Stanley and Black & Decker Unaudited Pro Forma Condensed Combined Financial Information” on page 102.
 
The summary unaudited pro forma condensed combined financial information has been presented for informational purposes only and is not necessarily indicative of what the combined company’s financial position or results of operations actually would have been had the merger been completed as of the dates indicated. In addition, the summary unaudited pro forma condensed combined financial information does not purport to project the future financial position or operating results of the combined company. Also, as explained in more detail in the accompanying notes to the unaudited pro forma condensed combined financial statements, the preliminary allocation of the pro forma purchase price reflected in the unaudited pro forma condensed combined financial information is subject to adjustment and may vary significantly from the actual purchase price allocation that will be recorded upon completion of the merger. Furthermore, the determination of the final purchase price will be based on the number of shares of Black & Decker common stock outstanding immediately prior to completion of the merger and the price of Stanley common stock immediately prior to completion of the merger.
 
                 
    Twelve Months Ended
  Nine Months Ended
    January 3, 2009   October 3, 2009
    ($ in millions, except per share amounts)
 
Summary Statement of Pro Forma Combined Income Data:
               
Net sales
  $ 10,512.3     $ 6,241.5  
Net earnings from continuing operations attributable to Stanley/Black & Decker
  $ 463.1     $ 218.2  
Basic earnings per share of common stock from continuing operations attributable to Stanley/Black & Decker
  $ 2.93     $ 1.38  
Diluted earnings per share of common stock from continuing operations attributable to Stanley/Black & Decker
  $ 2.90     $ 1.37  
 
         
    As of
    October 3, 2009
    ($ in millions)
 
Summary Pro Forma Combined Balance Sheet Data:
       
Total assets
  $ 14,288.4  
Long-term debt
  $ 2,687.2  
Total shareowners’ equity
  $ 6,429.2  


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Selected Comparative Per Share Market Price and Dividend Information
 
Stanley’s common stock is listed and traded on the NYSE under the symbol “SWK.” Black & Decker’s common stock is listed and traded on the NYSE under the symbol “BDK.” The following table sets forth, for the fiscal quarters indicated, the high and low closing sales prices per share of Stanley common stock and the high and low closing sales prices per share of Black & Decker common stock, in each case as reported on the NYSE. In addition, the table also sets forth the quarterly cash dividends per share declared by Stanley and Black & Decker with respect to their common stock. On the Stanley record date (          , 2010), there were           shares of Stanley common stock outstanding. On the Black & Decker record date (          , 2010), there were           shares of Black & Decker common stock outstanding.
 
                                                 
    Stanley   Black & Decker
            Dividends
          Dividends
    High   Low   Declared   High   Low   Declared
 
2007
                                               
First Quarter
  $ 58.99     $ 49.95     $ 0.30     $ 90.91     $ 78.81     $ 0.42  
Second Quarter
  $ 63.68     $ 54.63     $ 0.30     $ 96.07     $ 81.40     $ 0.42  
Third Quarter
  $ 64.25     $ 52.41     $ 0.31     $ 97.01     $ 79.30     $ 0.42  
Fourth Quarter
  $ 58.99     $ 47.01     $ 0.31     $ 92.30     $ 69.15     $ 0.42  
2008
                                               
First Quarter
  $ 52.18     $ 43.69     $ 0.31     $ 74.24     $ 61.71     $ 0.42  
Second Quarter
  $ 51.08     $ 44.50     $ 0.31     $ 71.23     $ 57.50     $ 0.42  
Third Quarter
  $ 49.58     $ 40.56     $ 0.32     $ 69.50     $ 51.56     $ 0.42  
Fourth Quarter
  $ 43.93     $ 24.19     $ 0.32     $ 62.09     $ 32.31     $ 0.42  
2009
                                               
First Quarter
  $ 36.68     $ 22.61     $ 0.32     $ 46.66     $ 20.10     $ 0.42  
Second Quarter
  $ 40.05     $ 28.32     $ 0.32     $ 41.28     $ 27.10     $ 0.12  
Third Quarter
  $ 43.35     $ 31.20     $ 0.33     $ 51.12     $ 26.44     $ 0.12  
Fourth Quarter
  $ 53.13     $ 42.09     $ 0.33     $ 66.71     $ 42.98     $ 0.12  


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Certain Historical and Pro Forma Per Share Data
 
The following tables set forth certain historical, pro forma and pro forma equivalent per share financial information for Stanley’s common stock and Black & Decker’s common stock. The pro forma and pro forma equivalent per share information gives effect to the merger as if the merger had occurred on October 3, 2009 in the case of book value per share data and as of December 30, 2007 in the case of net income per share data.
 
The pro forma per share balance sheet information combines Stanley’s October 3, 2009 unaudited consolidated balance sheet with Black & Decker’s September 27, 2009 unaudited consolidated balance sheet. The pro forma per share income statement information for the fiscal year ended January 3, 2009 combines Stanley’s audited consolidated statement of income for the fiscal year ended January 3, 2009 with Black & Decker’s audited consolidated statement of income for the fiscal year ended December 31, 2008. The pro forma per share income statement information for the nine months ended October 3, 2009 combines Stanley’s unaudited consolidated statement of income for the nine months ended October 3, 2009 with Black & Decker’s unaudited consolidated statement of income for the nine months ended September 27, 2009. The Black & Decker pro forma equivalent per share financial information is calculated by multiplying the unaudited Stanley pro forma combined per share amounts by the 1.275 exchange ratio.
 
The following information should be read in conjunction with the audited consolidated financial statements of Stanley and Black & Decker, which are incorporated by reference in this joint proxy statement/prospectus, and the financial information contained in the section entitled “Stanley and Black & Decker Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 102. The unaudited pro forma information below is not necessarily indicative of the operating results or financial position that would have occurred if the merger had been completed as of the periods presented, nor is it necessarily indicative of the future operating results or financial position of the combined company. In addition, the unaudited pro forma information does not purport to indicate balance sheet data or results of operations data as of any future date or for any future period.
 
                 
    As of and for the
  As of and for the
    Nine Months Ended
  Year Ended
    October 3, 2009   January 3, 2009
 
Stanley Historical Data Per Common Share
               
Income from continuing operations
               
Basic
  $ 2.15     $ 2.77  
Diluted
  $ 2.14     $ 2.74  
Dividends declared per common share
  $ 0.97     $ 1.26  
Book value per share
  $ 23.86     $ 21.63  
 
                 
    As of and for the
  As of and for the
    Nine Months Ended
  Year Ended
    September 27, 2009   December 31, 2008
 
Black & Decker Historical Data Per Common Share
               
Income from continuing operations
               
Basic
  $ 1.63     $ 4.83  
Diluted
  $ 1.62     $ 4.77  
Dividends declared per common share
  $ 0.66     $ 1.68  
Book value per share
  $ 20.71     $ 18.72  
 


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    As of and for the
  As of and for the
    Nine Months Ended
  Year Ended
    October 3, 2009   January 3, 2009
 
Stanley Pro Forma Combined Data Per Common Share
               
Income from continuing operations
               
Basic
  $ 1.38     $ 2.93  
Diluted
  $ 1.37     $ 2.90  
Dividends declared per common share
  $ 0.97     $ 1.26  
Book value per share(1)
  $ 40.51       N/A  
 
                 
    As of and for the
  As of and for the
    Nine Months Ended
  Year Ended
    September 27, 2009   December 31, 2008
 
Black & Decker Pro Forma Equivalent Per Common Share
               
Income from continuing operations
               
Basic
  $ 1.76     $ 3.74  
Diluted
  $ 1.75     $ 3.70  
Dividends declared per common share
  $ 1.24     $ 1.61  
Book value per share(1)
  $ 51.65       N/A  
 
 
(1) Pro forma book value per share as of January 3, 2009 or December 31, 2008 is not meaningful as purchase accounting adjustments were calculated as of October 3, 2009.

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RISK FACTORS
 
In addition to the other information included and incorporated by reference into this joint proxy statement/prospectus, including the matters addressed in the section entitled “Special Note Regarding Forward-Looking Statements,” you should carefully consider the following risks before deciding whether to vote for the Stanley proposals, in the case of Stanley shareholders, or the Black & Decker proposal, in the case of Black & Decker stockholders. In addition, you should read and consider the risks associated with each of the businesses of Stanley and Black & Decker because these risks will also affect the combined company — these risks can be found in Stanley’s and Black & Decker’s respective Annual Reports on Form 10-K, as updated by subsequent Quarterly Reports on Form 10-Q, all of which are filed with the SEC and incorporated by reference into this joint proxy statement/prospectus. You should also read and consider the other information in this joint proxy statement/prospectus and the other documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 152.
 
Risk Factors Relating to the Merger
 
The exchange ratio is fixed and will not be adjusted in the event of any change in either Stanley’s or Black & Decker’s stock price.
 
Upon closing of the merger, each share of Black & Decker common stock will be converted into the right to receive 1.275 shares of Stanley common stock (and associated Series A Junior Participating Preferred Stock purchase rights). This exchange ratio is fixed in the merger agreement and will not be adjusted for changes in the market price of either Stanley common stock or Black & Decker common stock. Changes in the price of Stanley common stock prior to completion of the merger will affect the market value that Black & Decker stockholders will receive on the date of the merger. Stock price changes may result from a variety of factors (many of which are beyond our control), including the following factors:
 
  •  changes in Stanley’s and Black & Decker’s respective businesses, operations and prospects, or the market assessments thereof;
 
  •  market assessments of the likelihood that the merger will be completed, including related considerations regarding regulatory approvals of the merger; and
 
  •  general market and economic conditions and other factors generally affecting the price of Stanley’s and Black & Decker’s common stock.
 
The price of Stanley common stock at the closing of the merger may vary from its price on the date the merger agreement was executed, on the date of this joint proxy statement/prospectus and on the date of the special meetings of Stanley and Black & Decker. As a result, the market value represented by the exchange ratio will also vary. For example, based on the range of closing prices of Stanley common stock during the period from October 30, 2009, the last trading day before public announcement of the merger, through          ,          , the last trading date before the date of this joint proxy statement/prospectus, the exchange ratio represented a market value ranging from a low of $      to a high of $      for each share of Black & Decker common stock.
 
Because the date that the merger is completed will be later than the date of the special meetings, at the time of your special meeting, you will not know the exact market value of the Stanley common stock that Black & Decker stockholders will receive upon completion of the merger.
 
If the price of Stanley common stock increases between the date of the special meetings and the effective time of the merger, Black & Decker stockholders will receive shares of Stanley common stock that have a market value that is greater than the market value of such shares on the date of the special meetings. If the price of Stanley common stock decreases between the date of the special meetings and the effective time of the merger, Black & Decker stockholders will receive shares of Stanley common stock that have a market value that is less than the market value of such shares on the date of the special meetings. Therefore, because the exchange ratio is fixed, shareholders cannot be sure at the time of the special meetings of the market value of the consideration that will be paid to Black & Decker stockholders upon completion of the merger.


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Obtaining required approvals necessary to satisfy closing conditions may delay or prevent completion of the merger.
 
Completion of the merger is conditioned upon the receipt of certain governmental authorizations, consents, orders or other approvals, including the expiration or termination of the waiting period under the HSR Act and approval by the European Commission under applicable merger regulations. The waiting period under the HSR Act expired at 11:59 p.m., eastern time, on December 28, 2009. Stanley and Black & Decker are pursuing all other required approvals in accordance with the merger agreement. These approvals may impose conditions on or require divestitures relating to the operations or assets of Stanley or Black & Decker. Such conditions or divestitures may jeopardize or delay completion of the merger or may reduce the anticipated benefits of the merger. Further, no assurance can be given that the required approvals will be obtained and, even if all such approvals are obtained, no assurance can be given as to the terms, conditions and timing of the approvals or that they will satisfy the terms of the merger agreement. See “The Merger — Summary of the Merger Agreement — Conditions to Completion of the Merger” beginning on page 97 for a discussion of the conditions to the completion of the merger and “The Merger — Regulatory Approvals Required for the Merger” beginning on page 85 for a description of the regulatory approvals necessary in connection with the merger.
 
Failure to complete the merger could negatively impact the stock prices and the future business and financial results of Stanley and Black & Decker.
 
If the merger is not completed, the ongoing businesses of Stanley and Black & Decker may be adversely affected. Additionally, if the merger is not completed, Stanley or Black & Decker may be required to pay a termination fee under the merger agreement of $125 million, and will have to pay certain costs relating to the merger, such as legal, accounting, financial advisor, filing, printing and mailing fees. Any of the foregoing, or other risks arising in connection with the failure of the merger, including the diversion of management attention from pursuing other opportunities during the pendency of the merger, may have an adverse effect on the business, financial results and stock prices of Stanley and Black & Decker.
 
The merger agreement contains provisions that could discourage a potential competing acquiror of either Stanley or Black & Decker.
 
The merger agreement contains “no shop” provisions that, subject to limited exceptions, restrict Stanley’s and Black & Decker’s ability to solicit, encourage, facilitate or discuss competing third-party proposals to acquire stock or assets of Stanley or Black & Decker. Further, even if the Stanley board of directors or the Black & Decker board of directors withdraws or qualifies its recommendation with respect to the merger, it will still be required to submit the matter to a vote at its special meeting. In addition, the other party generally has an opportunity to offer to modify the terms of its proposal in response to any competing acquisition proposals before the board of directors of the company that has received a third-party proposal may withdraw or qualify its recommendation with respect to the merger. In some circumstances, upon termination of the merger agreement one of the parties will be required to pay a termination fee of $125 million to the other party. See “The Merger — Summary of the Merger Agreement — No Solicitation of Alternative Proposals” beginning on page 93, “— Termination of the Merger Agreement” beginning on page 98 and “— Expenses and Termination Fees; Liability for Breach” beginning on page 99.
 
These provisions could discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of Stanley or Black & Decker from considering or proposing that acquisition, even if it were prepared to pay consideration with a higher per share cash or market value than the market value proposed to be received or realized in the merger, or might result in a potential competing acquiror proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the $125 million termination fee that may become payable in certain circumstances.
 
If the merger agreement is terminated and either Stanley or Black & Decker determines to seek another business combination, it may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the merger.


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The pendency of the merger could adversely affect the business and operations of Stanley and Black & Decker.
 
In connection with the pending merger, some customers of Stanley and Black & Decker may delay or defer decisions, which could negatively impact revenues, earnings and cash flows of Stanley and Black & Decker, regardless of whether the merger is completed. Similarly, current and prospective employees of Stanley and Black & Decker may experience uncertainty about their future roles with Stanley following the merger, which may materially and adversely affect the ability of each of Stanley and Black & Decker to attract and retain key personnel.
 
Several lawsuits have been filed against Stanley and Black & Decker challenging the merger and an adverse ruling in any such lawsuit may prevent the merger from being completed.
 
Black & Decker, members of the Black & Decker board of directors, Stanley and, in one case, Blue Jay Acquisition Corp. were named as defendants in three purported class actions and two stockholder derivative actions brought by Black & Decker stockholders challenging the proposed merger, seeking, among other things, to enjoin the defendants from completing the merger on the agreed-upon terms. On January 14, 2010, Black & Decker, members of the Black & Decker board, Stanley and Blue Jay Acquisition Corp. entered into a memorandum of understanding with the various stockholder plaintiffs to settle all such class action and stockholder derivative actions. See “The Merger — Litigation Related to the Merger” beginning on page 88 for more information about the lawsuits related to the merger that have been filed.
 
One of the conditions to the closing of the merger is that no judgment, injunction (whether preliminary, temporary or permanent) or other legal restraint or prohibition shall be in effect that prevents the completion of the merger. As such, if the proposed settlement is not completed and, thereafter, any of the plaintiffs are successful in obtaining an injunction prohibiting the defendants from completing the merger, then such injunction may prevent the merger from becoming effective, or from becoming effective within the expected time frame.
 
If the merger does not qualify as a tax-free reorganization under Section 368(a) of the Code, the stockholders of Black & Decker may be required to pay substantial U.S. federal income taxes.
 
The obligations of Stanley and Black & Decker to complete the merger are conditioned on, respectively, Stanley’s receipt of an opinion of counsel to Stanley, and Black & Decker’s receipt of an opinion of counsel to Black & Decker, to the effect that the merger will qualify as a tax-free reorganization under Section 368(a) of the Code, and that no gain or loss will be recognized as a result of the merger. These opinions will be based upon, among other things, certain representations and assumptions as to factual matters made by Stanley and Black & Decker. The failure of any such representation or assumption to be true could adversely affect the validity of the opinions. Additionally, an opinion of counsel represents counsel’s legal judgment, and is not binding on the IRS or the courts. If the IRS or a court determines that the merger is taxable, Black & Decker stockholders would recognize taxable gain or loss on their receipt of Stanley stock in the merger.
 
Risk Factors Relating to the Combined Company Following the Merger
 
The failure to integrate successfully the businesses of Stanley and Black & Decker in the expected time frame would adversely affect Stanley’s future results post-merger.
 
The success of the merger will depend, in large part, on the ability of the post-merger Stanley to realize the anticipated benefits, including cost savings, from combining the businesses of Stanley and Black & Decker. To realize these anticipated benefits, the businesses of Stanley and Black & Decker must be successfully integrated. This integration will be complex and time-consuming. The failure to integrate successfully and to manage successfully the challenges presented by the integration process may result in the combined company not achieving the anticipated benefits of the merger.


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Potential difficulties that may be encountered in the integration process include the following:
 
  •  the inability to successfully integrate the businesses of Stanley and Black & Decker in a manner that permits the combined company to achieve the cost savings anticipated to result from the merger;
 
  •  lost sales and customers as a result of customers of either of the two companies deciding not to do business with the combined company;
 
  •  complexities associated with managing the larger, more complex, combined business;
 
  •  integrating personnel from the two companies while maintaining focus on providing consistent, high quality products;
 
  •  potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with the merger; and
 
  •  performance shortfalls at one or both of the companies as a result of the diversion of management’s attention caused by completing the merger and integrating the companies’ operations.
 
Stanley’s future results will suffer if Stanley does not effectively manage its expanded operations following the merger.
 
Following the merger, the size of Stanley’s business will increase dramatically. Stanley’s future success depends, in part, upon its ability to manage this expanded business, which will pose substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. Stanley cannot assure you that it will be successful or that Stanley will realize the expected operating efficiencies, cost savings, revenue enhancements and other benefits currently anticipated from the merger.
 
Stanley is expected to incur substantial expenses related to the merger and the integration of Black & Decker.
 
Stanley is expected to incur substantial expenses in connection with the merger and the integration of Black & Decker. There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated, including purchasing, accounting and finance, sales, billing, payroll, manufacturing, marketing and benefits. While Stanley has assumed that a certain level of expenses would be incurred, there are many factors beyond its control that could affect the total amount or the timing of the integration expenses. Moreover, many of the expenses that will be incurred are, by their nature, difficult to estimate accurately. These expenses could, particularly in the near term, exceed the savings that Stanley expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings. These integration expenses likely will result in Stanley taking significant charges against earnings following the completion of the merger, and the amount and timing of such charges are uncertain at present.
 
The credit ratings of Stanley will likely be lowered upon completion of the merger, and Stanley currently intends to increase the size of its credit lines in connection with the merger.
 
Completion of the merger will likely result in the credit rating of Stanley being revised downward. Following the announcement of the merger, Moody’s Investors Service placed several of Stanley’s credit ratings under review for possible downgrade. Also, Standard & Poor’s Ratings Services placed all of its credit ratings of Stanley on CreditWatch with negative implications. If Stanley’s credit ratings are downgraded, it may adversely impact the availability and cost of credit to Stanley.
 
Additionally, in connection with closing the merger, Stanley intends to refinance some or all of the bank indebtedness of Black & Decker. Stanley plans to fund such refinance, as well as its merger transaction expenses, with available cash of the combined company and proceeds (if any) that Stanley obtains from bank borrowings or capital markets issuances on or before the closing date. If these sources of cash are unavailable, unattractive or inadequate, Stanley may be forced to raise funds in alternative manners, which may be more


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costly or unavailable. Completion of the merger is not conditioned on completing these financing transactions. See “Indebtedness of Stanley Following the Merger” beginning on page 101.
 
Other Risk Factors of Stanley and Black & Decker
 
Stanley’s and Black & Decker’s businesses are and will be subject to the risks described above. In addition, Stanley and Black & Decker are, and will continue to be, subject to the risks described in Stanley’s and Black & Decker’s respective Annual Reports on Form 10-K, as updated by subsequent Quarterly Reports on Form 10-Q, all of which are filed with the SEC and incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 152 for the location of information incorporated by reference in this joint proxy statement/prospectus.


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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
This joint proxy statement/prospectus and the documents incorporated by reference into this joint proxy statement/prospectus contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, business strategies, operating efficiencies, synergies, revenue enhancements, competitive positions, plans and objectives of management and growth opportunities of Stanley and Black & Decker, and with respect to the merger and the markets for Stanley and Black & Decker common stock and other matters. Statements in this joint proxy statement/prospectus and the documents incorporated by reference herein that are not historical facts are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Exchange Act and Section 27A of the Securities Act. These forward-looking statements, including, without limitation, those relating to the future business prospects, revenues and income of Stanley and Black & Decker, and those related to the merger and the expected benefits thereof, wherever they occur in this joint proxy statement/prospectus or the documents incorporated by reference herein, are necessarily estimates reflecting the judgment of the respective managements of Stanley and Black & Decker and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. These forward-looking statements should, therefore, be considered in light of various important factors, including those set forth in this joint proxy statement/prospectus and incorporated by reference into this joint proxy statement/prospectus.
 
Words such as “estimate,” “project,” “plan,” “intend,” “expect,” “anticipate,” “believe,” “would,” “should,” “could” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are found at various places throughout this joint proxy statement/prospectus. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include those set forth in Stanley’s and Black & Decker’s filings with the SEC, including their respective Annual Reports on Form 10-K and subsequent Quarterly Reports on Form 10-Q. These important factors also include those set forth under “Risk Factors,” beginning on page 19, as well as, among others, risks and uncertainties relating to:
 
  •  the risk that the cost savings and other synergies anticipated to be realized from the merger may not be fully realized or may take longer to realize than expected;
 
  •  disruption from the merger making it difficult to maintain relationships with customers, employees or suppliers;
 
  •  the risk that the merger will not be completed;
 
  •  the risk that the businesses will not be integrated successfully, or that the integration will be more costly or more time consuming and complex than anticipated;
 
  •  the ability to obtain regulatory approvals for the merger in a timely manner and subject to conditions not adverse to Stanley or Black & Decker;
 
  •  continued access to credit markets on favorable terms, and the maintenance by Stanley of an investment grade credit rating;
 
  •  general market, labor and economic conditions and related uncertainties; and
 
  •  the outcome of pending litigation in which Stanley or Black & Decker is involved.
 
Readers are cautioned not to rely on any forward-looking statement, which speaks only as of the date of this joint proxy statement/prospectus or, if such statement is included in another document incorporated into this joint proxy statement/prospectus, as of the date of such other document. Except to the extent required by applicable law, the parties undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. Readers also should understand that it is not possible to predict or identify all relevant factors that may impact forward-looking statements and that the above list should not be considered a complete statement of all potential risks and uncertainties.


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THE COMPANIES
 
The Stanley Works
 
The Stanley Works
1000 Stanley Drive
New Britain, CT 06053
Telephone: (860) 225-5111
 
Stanley, a Connecticut corporation, is a diversified worldwide supplier of tools and engineered solutions for professional, industrial and construction and do-it-yourself use, as well as engineered security solutions for industrial and commercial applications. Stanley’s operations are classified into three business segments: Security, Industrial, and Construction & Do-It-Yourself. The Security segment is a provider of access and security solutions primarily for retailers, educational, and financial and healthcare institutions, as well as commercial, governmental and industrial customers. The Industrial segment manufactures and markets professional industrial and automotive mechanics tools and storage systems, hydraulic tools and accessories, plumbing, heating and air conditioning tools, assembly tools and systems, and specialty tools. The Construction & Do-It-Yourself segment manufactures and markets hand tools, consumer mechanics tools, storage systems, pneumatic tools and fasteners.
 
Additional information about Stanley and its subsidiaries is included in documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” on page 152.
 
Blue Jay Acquisition Corp.
 
Blue Jay Acquisition Corp., a wholly owned subsidiary of Stanley, is a Maryland corporation that was formed on October 30, 2009 for the purpose of effecting the merger. In the merger, Blue Jay Acquisition Corp. will be merged with and into Black & Decker, with Black & Decker surviving as a wholly owned subsidiary of Stanley.
 
The Black & Decker Corporation
 
The Black & Decker Corporation
701 East Joppa Rd.
Towson, MD 21286
Telephone: (410) 716-3900
 
Black & Decker, a Maryland corporation, is a leading global manufacturer and marketer of power tools and accessories, hardware and home improvement products, and technology-based fastening systems. With products and services marketed in over 100 countries, Black & Decker enjoys worldwide recognition of its strong brand names and a superior reputation for quality, design, innovation, and value.
 
Additional information about Black & Decker and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information” on page 152.


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THE STANLEY SPECIAL MEETING
 
Date, Time and Place
 
The special meeting of Stanley shareholders will be held at the Stanley Center for Learning and Innovation, 1000 Stanley Drive, New Britain, CT 06053, on          , 2010, at   a.m.
 
Purpose of the Stanley Special Meeting
 
At the Stanley special meeting, Stanley shareholders will be asked:
 
  •  to vote on a proposal to approve the issuance of Stanley common stock to Black & Decker stockholders in connection with the merger;
 
  •  to vote on a proposal to amend the certificate of incorporation of Stanley to (a) increase the authorized number of shares of Stanley common stock from 200,000,000 to 300,000,000 and (b) change the name of Stanley to “Stanley Black & Decker, Inc.”;
 
  •  to vote on a proposal to amend the Stanley 2009 Long-Term Incentive Plan to, among other things, increase the number of shares available to be issued under such plan; and
 
  •  to vote upon an adjournment of the Stanley special meeting (if necessary or appropriate, including to solicit additional proxies if there are not sufficient votes for the approval of any of the foregoing proposals).
 
Completion of the merger is conditioned on approval of the issuance of Stanley common stock in the merger and approval of the amendment to Stanley’s certificate of incorporation, but is not conditioned on approval of the amendment to the Stanley 2009 Long-Term Incentive Plan.
 
Recommendation of the Board of Directors of Stanley
 
At a special meeting held on November 2, 2009, the Stanley board of directors determined that the merger and the other transactions contemplated by the merger agreement, including the issuance of Stanley common stock in the merger and the amendment of Stanley’s certificate of incorporation, are advisable and in the best interests of Stanley and its shareholders. Accordingly, the Stanley board of directors recommends that the Stanley shareholders vote “FOR” the proposal to issue shares of Stanley common stock in the merger and “FOR” the proposal to amend Stanley’s certificate of incorporation to increase the number of authorized shares of Stanley common stock and to change Stanley’s name to “Stanley Black & Decker, Inc.”.
 
Additionally, the Stanley board of directors recommends that Stanley shareholders vote “FOR” the proposal to amend the Stanley 2009 Long-Term Incentive Plan.
 
Stanley shareholders should carefully read this joint proxy statement/prospectus in its entirety for more detailed information concerning the merger (including the amendment to Stanley’s certificate of incorporation) and the amendment to the Stanley 2009 Long-Term Incentive Plan. In addition, Stanley shareholders are directed to the merger agreement, the form of amendment to Stanley’s certificate of incorporation and the form of amended and restated Stanley 2009 Long-Term Incentive Plan, all of which are included as Annexes in this joint proxy statement/prospectus.
 
Stanley Record Date; Stock Entitled to Vote
 
Only holders of shares of Stanley common stock at the close of business on          , 2010, the record date for the Stanley special meeting, will be entitled to notice of, and to vote at, the Stanley special meeting or any adjournments or postponements thereof. On the record date, there were outstanding a total of           shares of Stanley common stock. Each outstanding share of Stanley common stock is entitled to one vote on each proposal and any other matter coming before the Stanley special meeting.


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Voting by Stanley’s Directors and Executive Officers
 
On the record date, approximately     % of the outstanding shares of Stanley common stock were held by Stanley directors and executive officers and their affiliates. We currently expect that Stanley’s directors and executive officers will vote their shares in favor of all Stanley proposals, although no director or executive officer has entered into any agreement obligating him or her to do so.
 
Quorum
 
Shareholders who hold at least a majority of the shares issued and outstanding and who are entitled to vote at the Stanley special meeting must be present in person or represented by proxy to constitute a quorum for the transaction of business at the Stanley special meeting. Note, however, that even if a quorum is present at the Stanley special meeting, the issuance of Stanley common stock to Black & Decker stockholders and the amendment to the Stanley 2009 Long-Term Incentive Plan can only be approved if over 50% of all Stanley common stock entitled to vote on each such proposal votes (or votes to abstain) on such proposal.
 
All shares of Stanley common stock represented at the Stanley special meeting, including shares that are represented but that vote to abstain, and shares that are represented but that are held by brokers, banks and other nominees who do not have authority to vote such shares (i.e., a broker non-vote), will be treated as present and entitled to vote for purposes of determining the presence or absence of a quorum.
 
Required Vote
 
The required votes to approve the Stanley proposals are as follows:
 
  •  The issuance of Stanley common stock to Black & Decker stockholders in connection with the merger and the amendment to the Stanley 2009 Long-Term Incentive Plan will each be approved if a majority of the votes cast on each such proposal vote in favor of such proposal, assuming that the total votes cast on such proposal represents over 50% of all Stanley common stock entitled to vote on such proposal. Votes to abstain are treated the same as shares voted against the proposal. Broker non-votes will have no effect, assuming over 50% of all shares of Stanley common stock entitled to vote are voted (or vote to abstain) on the proposal.
 
  •  The amendment to Stanley’s certificate of incorporation will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against the proposal. Votes to abstain and broker non-votes will have no effect.
 
  •  The adjournment of the Stanley special meeting will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against the proposal. Votes to abstain and broker non-votes will have no effect.
 
Failure to Vote and Broker Non-Votes
 
If you are a Stanley shareholder and fail to vote or fail to instruct your broker, bank or other nominee to vote, it will have no effect on any of the Stanley proposals, assuming a quorum is present and, in the case of the votes to approve the issuance of shares of Stanley common stock in the merger and to approve the amendment to the Stanley 2009 Long-Term Incentive Plan, over 50% of all shares of Stanley common stock entitled to vote on each such proposal are voted (or vote to abstain) on such proposal. If you are a Stanley shareholder through the Stanley 401(k) Plan and fail to instruct the trustee how to vote, the trustee will vote your shares as described below under “— Shares Held in the Stanley 401(k) Plan”.
 
Abstentions
 
If you are a Stanley shareholder and you vote to abstain, it will have the effect of a vote against the issuance of shares of Stanley common stock in the merger and against the amendment to the Stanley 2009 Long-Term Incentive Plan, but will have no effect on the amendment to Stanley’s certificate of incorporation.


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Record Holders
 
If you are a record holder of Stanley common stock, a proxy card is enclosed for your use. Stanley requests that you vote your shares by telephone or through the Internet, or sign the accompanying proxy card and return it promptly in the enclosed postage-paid envelope. Information and applicable deadlines for voting by telephone or through the Internet are set forth on the enclosed proxy card. When the enclosed proxy card is returned properly executed, the shares of Stanley common stock represented by it will be voted at the Stanley special meeting or any adjournment thereof in accordance with the instructions contained in the proxy card. Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you had marked, signed and returned a proxy card.
 
Your vote is important. Accordingly, if you are a record holder of Stanley common stock, please sign and return the enclosed proxy card or vote via telephone or the Internet whether or not you plan to attend the Stanley special meeting in person.
 
If a proxy card is signed and returned without an indication as to how the shares of Stanley common stock represented are to be voted with regard to a particular proposal, the Stanley common stock represented by the proxy will be voted in accordance with the recommendation of the Stanley board of directors. At the date hereof, the Stanley board of directors has no knowledge of any business that will be presented for consideration at the special meeting and which would be required to be set forth in this joint proxy statement/prospectus or the related Stanley proxy card other than the matters set forth in Stanley’s Notice of Special Meeting of Shareholders. In accordance with Connecticut law, business transacted at the Stanley special meeting will be limited to those matters set forth in such notice. Nonetheless, if any other matter is properly presented at the Stanley special meeting for consideration, it is intended that the persons named in the enclosed proxy and acting thereunder will vote in accordance with their best judgment on such matter.
 
Shares Held in Street Name
 
If your shares are held in the name of a broker, bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” You are not the “record holder” of such shares. If this is the case, this joint proxy statement/prospectus has been forwarded to you by your broker, bank or other nominee. As the beneficial holder, unless your broker, bank or other nominee has discretionary authority over your shares, you generally have the right to direct your broker, bank or other nominee as to how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which your broker, bank or other nominee does not have discretionary authority. This is often called a “broker non-vote”.
 
Please follow the voting instructions provided by your broker, bank or other nominee, so that they may vote your shares on your behalf. Please note that you may not vote shares held in street name by returning a proxy card directly to Stanley or Black & Decker or by voting in person at your special meeting unless you first provide a proxy from your broker, bank or other nominee.
 
If you are a Stanley shareholder and you do not instruct your broker, bank or other nominee on how to vote your shares, your broker, bank or other nominee will not vote your shares on any matter over which they do not have discretionary authority. Such a broker non-vote will have no effect on the vote on any of the Stanley proposals, assuming a quorum is present and, in the case of the votes to approve the issuance of shares of Stanley common stock in the merger and to approve the amendment to the Stanley 2009 Long-Term Incentive Plan, over 50% of all shares of Stanley common stock are voted (or vote to abstain) on such proposal.


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Shares Held in the Stanley 401(k) Plan
 
If you hold shares through the Stanley 401(k) Plan you can instruct the trustee, The Bank of New York Mellon Corporation, in a confidential manner, how to vote the shares allocated to you in the Stanley 401(k) Plan by one of the following three methods:
 
  •  call the number indicated on your instruction card to vote by telephone anytime up to   a.m. eastern time on          , 2010, and follow the instructions provided in the recorded message;
 
  •  go to the web site indicated on your instruction card to vote over the Internet anytime up to   a.m. eastern time on          , 2010 and follow the instructions provided on that site; or
 
  •  mark, sign and mail your voting instruction card to the address indicated on your instruction card. Your instruction card must be received by Computershare Investor Services, LLC, Stanley’s transfer agent, no later than     , a.m. eastern time on          , 2010, to ensure that the trustee of the Stanley 401(k) Plan is able to vote the shares allocated to you in accordance with your wishes.
 
In addition, since only the trustee of the Stanley 401(k) Plan can vote the shares allocated to you, you will not be able to vote your Stanley 401(k) Plan shares personally at the special meeting. Please note that the trust agreement governing the Stanley 401(k) Plan provides that if the trustee does not receive your voting instructions, the trustee will vote your allocated shares in the same proportion as it votes the allocated shares for which instructions are received from participants and beneficiaries of deceased participants. The trust agreement also provides that unallocated shares are to be voted by the trustee in the same proportion as it votes allocated shares for which instructions are received from participants and beneficiaries of deceased participants. Therefore, by providing voting instructions with respect to your allocated shares, you will in effect be providing instructions with respect to a portion of the unallocated shares and a portion of the allocated shares for which instructions were not provided as well. Voting of the Stanley 401(k) Plan shares by the trustee is subject to federal pension laws, which require the trustee to act as a fiduciary for Stanley 401(k) Plan participants and beneficiaries in deciding how to vote the shares. Therefore, irrespective of these voting provisions, it is possible that the trustee may decide to vote allocated shares for which it does not receive instructions (as well as unallocated shares) in a manner other than on a proportionate basis if it believes that proportionate voting would violate applicable law. The only way to ensure that the trustee votes shares allocated to you in the Stanley 401(k) Plan in accordance with your wishes is to provide instructions to the trustee in the manner set forth above. If you are a participant (or a beneficiary of a deceased participant) in the Stanley 401(k) Plan and you also own other shares of common stock outside of your Stanley 401(k) Plan account, you should receive a voting instruction card for shares credited to your account in the Stanley 401(k) Plan, and a separate proxy card if you are a record holder of additional shares of Stanley common stock, or voting instruction card if you hold additional shares of Stanley common stock through a broker, bank or other nominee. You must vote shares that you hold as a shareholder of record, shares that you hold through a broker, bank or other nominee and shares that are allocated to your Stanley 401(k) Plan account separately in accordance with each of the proxy cards and voting instruction cards you receive with respect to your shares of Stanley common stock.
 
Changing Your Vote
 
If you are a record holder of Stanley:   If you are a record holder of shares of Stanley common stock, you can change your vote at any time before your proxy is voted at your special meeting. You can do this in one of three ways:
 
  •  you can grant a new, valid proxy bearing a later date (including by telephone or Internet);
 
  •  you can send a signed notice of revocation; or
 
  •  you can attend the special meeting and vote in person, which will automatically cancel any proxy previously given, or you may revoke your proxy in person, but your attendance alone will not revoke any proxy that you have previously given.


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If you choose either of the first two methods, your notice of revocation or your new proxy must be received no later than the beginning of the Stanley special meeting. If you have voted your shares by telephone or through the Internet, you may revoke your prior telephone or Internet vote by any manner described above.
 
If you hold shares of Stanley in “street name”:  If your shares are held in street name, you must contact your broker, bank or other nominee to change your vote.
 
If you hold Stanley shares in the Stanley 401(k) Plan:  If you hold shares of Stanley common stock in the Stanley 401(k) Plan, there are two ways in which you may revoke your instructions to the trustee and change your vote with respect to voting the shares allocated to you in the Stanley 401(k) Plan:
 
  •  First, you may submit new voting instructions under any one of the three methods described above under “— Shares Held in the Stanley 401(k) Plan”. The latest dated instructions actually received by The Bank of New York Mellon Corporation, the trustee for the Stanley 401(k) Plan, in accordance with the instructions for voting set forth in this joint proxy statement/prospectus, will be the instructions that are followed, and all earlier instructions will be revoked.
 
  •  Second, you may send a written notice to Stanley’s transfer agent, Computershare Investor Services, LLC at 7600 Grant Street, Burr Ridge, IL 60527-7275, stating that you would like to revoke your instructions to The Bank of New York Mellon Corporation, the trustee for the Stanley 401(k) Plan. This written notice must be received no later than     a.m. eastern time on          , 2010, in order to revoke your prior instructions.
 
Solicitation of Proxies
 
Stanley is soliciting proxies for the Stanley special meeting and, in accordance with the merger agreement, the cost of proxy solicitation for the Stanley special meeting will be borne by Stanley. In addition to the use of the mail, proxies may be solicited by officers and directors and regular employees of Stanley, without additional remuneration, by personal interview, telephone, facsimile or otherwise. Stanley will also request brokerage firms, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of shares and will provide customary reimbursement to such firms for the cost of forwarding these materials. Stanley has retained Innisfree M&A Incorporated to assist in its solicitation of proxies and has agreed to pay them a fee of approximately $75,000, plus a success fee of $25,000 and expenses, for these services.
 
Confidential Voting
 
It is Stanley’s policy that all proxies, ballots and tabulations of shareholders who check the box indicated for confidential voting be kept confidential, except where mandated by law and other limited circumstances.
 
For participants in the Stanley 401(k) Plan, your instructions to the trustee on how to vote the shares allocated to you under the Stanley 401(k) Plan will be kept confidential. You do not need to request confidential treatment in order to maintain the confidentiality of your vote.


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THE BLACK & DECKER SPECIAL MEETING
 
Date, Time and Place
 
The special meeting of Black & Decker stockholders will be held at           on           , 2010 at   a.m.
 
Purpose of the Black & Decker Special Meeting
 
At the Black & Decker special meeting, Black & Decker stockholders will be asked:
 
  •  to approve the merger (including the amendment and restatement of the charter of Black & Decker to be effected as part of the merger), on substantially the terms and conditions set forth in the merger agreement, pursuant to which Blue Jay Acquisition Corp. will be merged with and into Black & Decker and each outstanding share of common stock of Black & Decker will be converted into the right to receive 1.275 shares of common stock of Stanley, together with an associated right to purchase 1/200th of a share of Series A Junior Participating Preferred Stock of Stanley, with cash paid in lieu of fractional shares; and
 
  •  to approve an adjournment of the special meeting, if necessary, including to solicit additional proxies if there are not sufficient votes to approve the merger.
 
Recommendation of the Board of Directors of Black & Decker
 
At a special meeting held on November 2, 2009, the Black & Decker board of directors, by the unanimous vote of its directors, with Mr. Archibald abstaining, declared advisable the merger (including the amendment and restatement of the charter of Black & Decker to be effected as part of the merger), on substantially the terms and conditions set forth in the merger agreement, and directed that the merger be submitted for consideration by the Black & Decker stockholders at the Black & Decker special meeting.
 
The Black & Decker board of directors recommends that the Black & Decker stockholders vote “FOR” the merger proposal.
 
Black & Decker stockholders should carefully read this joint proxy statement/prospectus in its entirety for more detailed information concerning the merger. In addition, Black & Decker stockholders are directed to the merger agreement, which is included as Annex A in this joint proxy statement/prospectus.
 
Black & Decker Record Date; Stock Entitled to Vote
 
Only holders of shares of Black & Decker common stock at the close of business on          , 2010, the record date for the Black & Decker special meeting, will be entitled to notice of, and to vote at, the Black & Decker special meeting or any adjournments or postponements thereof. On the record date, there were outstanding a total of           shares of Black & Decker common stock. Each outstanding share of Black & Decker common stock is entitled to one vote on each proposal and any other matter coming before the Black & Decker special meeting.
 
Voting by Black & Decker’s Directors and Executive Officers
 
On the record date, approximately     % of the outstanding shares of Black & Decker common stock were held by Black & Decker directors and executive officers. We currently expect that Black & Decker’s directors and executive officers will vote their shares in favor of the merger proposal, although no director or executive officer has entered into any agreement obligating him or her to do so.
 
Quorum
 
Stockholders entitled to cast a majority of all the votes entitled to be cast at the Black & Decker special meeting must be present in person or by proxy to constitute a quorum for the transaction of business at the Black & Decker special meeting. If a quorum is not present, stockholders present in person or by proxy may,


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by a majority vote and without further notice, adjourn the meeting from time to time to a date not more than 120 days after the original record date for the Black & Decker special meeting, but not for a period of more than 30 days at any one time.
 
All shares of Black & Decker common stock represented at the Black & Decker special meeting that are represented but that abstain from voting will be treated as present for purposes of determining the presence or absence of a quorum.
 
Required Vote
 
The required votes to approve the Black & Decker proposals are as follows:
 
  •  Approval of the merger proposal requires approval by the affirmative vote of at least two-thirds of the votes entitled to be cast by holders of outstanding common stock of Black & Decker.
 
  •  Approval of any proposal to adjourn the Black & Decker special meeting, if necessary, including for the purpose of soliciting additional proxies, requires the affirmative vote of holders of a majority of the votes cast on the proposal at the Black & Decker special meeting.
 
Failure to Vote and Broker Non-Votes
 
If you are a Black & Decker stockholder and fail to vote or fail to instruct your broker, bank or nominee to vote, it will have the same effect as a vote against the merger proposal but will have no effect on any proposal to adjourn the Black & Decker special meeting.
 
Abstentions
 
If you are a Black & Decker stockholder and you vote to abstain or instruct your broker, bank or nominee to vote to abstain, it will have the same effect as a vote against the merger proposal but will have no effect on any proposal to adjourn the Black & Decker special meeting.
 
Record Holders
 
If you are a record holder of Black & Decker common stock, a proxy card is enclosed for your use. Black & Decker requests that you vote your shares by telephone or through the Internet, or sign the accompanying proxy card and return it promptly in the enclosed postage-paid envelope. Information and applicable deadlines for authorizing a proxy by telephone or through the Internet are set forth on the enclosed proxy card. When the enclosed proxy card is returned properly executed, the shares of Black & Decker common stock represented by it will be voted at the Black & Decker special meeting or any adjournment thereof in accordance with the instructions contained in the proxy card.
 
Your vote is important. Accordingly, if you are a record holder of Black & Decker, please sign and return the enclosed proxy card or vote via telephone or the Internet whether or not you plan to attend the Black & Decker special meeting in person.
 
If a proxy card is signed and returned without an indication as to how the shares of Black & Decker common stock represented are to be voted with regard to a particular proposal, the Black & Decker common stock represented by the proxy will be voted in accordance with the recommendation of the Black & Decker board of directors. In accordance with Black & Decker’s bylaws and Maryland law, business transacted at the Black & Decker special meeting will be limited to those matters set forth in Black & Decker’s Notice of Special Meeting of Stockholders.
 
Shares Held in Street Name
 
If your shares are held in the name of a broker, bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” You are not the “record holder” of such shares. If this is the case, this joint proxy statement/prospectus has been forwarded to you by your broker, bank or other nominee. As the beneficial owner, you must provide the record holder of your


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shares with instructions on how to vote your shares if you wish them to be voted. Please follow the voting instructions provided by your bank, broker or other nominee. Please note that you may not vote shares held in street name by returning a proxy card directly to Black & Decker or by voting in person at the special meeting unless you provide a “legal proxy,” which you must obtain from your bank or broker. Further, brokers who hold shares of Black & Decker common stock on behalf of their customers may not give a proxy to Black & Decker to vote those shares with respect to the merger proposal without specific instructions from their customers.
 
If you are a Black & Decker stockholder and you do not instruct your broker, bank or other nominee on how to vote your shares, your broker will not vote your shares on any matter over which they do not have discretionary authority (a broker non-vote), which will have the effect of a vote against the merger proposal.
 
Shares Held in Black & Decker 401(k) Plan
 
If you hold shares through the Black & Decker 401(k) Plan, you can instruct the trustee, T. Rowe Price Trust Company, in a confidential manner, how to vote the shares allocated to you in the Black & Decker 401(k) Plan by one of the following methods:
 
  •  call the number indicated on your instruction card to vote by telephone anytime up to     a.m. eastern time on          , 2010, and follow the instructions provided in the recorded message;
 
  •  go to the web site indicated on your instruction card to vote over the Internet anytime up to      a.m. eastern time on          , 2010 and follow the instructions provided on that site; or
 
  •  mark, sign and mail your instruction card to the address indicated on your instruction card. Your instruction card must be received by BNY Mellon Shareowner Services, Black & Decker’s transfer agent, no later than     , a.m. eastern time on          , 2010, to ensure that the trustee of the Black & Decker 401(k) Plan is able to vote the shares allocated to you in accordance with your wishes.
 
In addition, since only the trustee of the Black & Decker 401(k) Plan can vote the shares allocated to you, you will not be able to vote your Black & Decker 401(k) Plan shares personally at the special meeting. Please note that the trust agreement governing the Black & Decker 401(k) Plan provides that if the trustee does not receive your voting instructions, the trustee will vote your shares in the same proportion as it votes the shares for which instructions are received from participants and beneficiaries of deceased participants. Therefore, by providing voting instructions with respect to your shares, you will in effect be providing instructions with respect to a portion of the shares for which instructions were not provided as well. Voting of the Black & Decker 401(k) Plan shares by the trustee is subject to federal pension laws, which require the trustee to act as a fiduciary for Black & Decker 401(k) Plan participants in deciding how to vote the shares. Therefore, it is possible that the trustee may vote shares for which it does not receive instructions in a manner other than on a proportionate basis if it believes that proportionate voting would violate applicable law. The only way to ensure that the trustee votes your shares in the Black & Decker 401(k) Plan in accordance with your wishes is to provide instructions to the trustee in the manner set forth above. If you are a participant (or a beneficiary of a deceased participant) in the Black & Decker 401(k) Plan and you also own other shares of common stock outside of your Black & Decker 401(k) Plan account, you should receive a voting instruction card for shares credited to your account in the Black & Decker 401(k) Plan, and a separate proxy card if you are a record holder of additional shares of Black & Decker common stock, or voting instruction card if you hold additional shares of Black & Decker common stock through a broker, bank or other nominee. You must vote shares that you hold as a stockholder of record, shares that you hold through a broker, bank or other nominee and shares that are allocated to your Black & Decker 401(k) Plan account separately in accordance with each of the proxy cards and voting instruction cards you receive with respect to your shares of Black & Decker common stock.


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Changing Your Vote
 
If you are a record holder of Black & Decker:  If you are a record holder of shares of Black & Decker common stock, you can change your vote at any time before your proxy is voted at your special meeting. You can do this in one of three ways:
 
  •  you can grant a new, valid proxy bearing a later date (including by telephone or Internet);
 
  •  you can send a signed notice of revocation; or
 
  •  you can attend the special meeting and vote in person, which will automatically cancel any proxy previously given, or you may revoke your proxy in person, but your attendance alone will not revoke any proxy that you have previously given.
 
If you choose either of the first two methods, your notice of revocation or your new proxy must be received by Black & Decker’s Corporate Secretary, no later than the beginning of the Black & Decker special meeting. If you have voted your shares by telephone or through the Internet, you may revoke your prior telephone or Internet vote by any manner described above.
 
If you hold shares of Black & Decker in “street name”:  If your shares are held in street name, you must contact your broker, bank or other nominee to change your vote.
 
If you hold Black & Decker shares in the Black & Decker 401(k) Plan:  If you hold shares of Black & Decker common stock in the Black & Decker 401(k) Plan, there are two ways in which you may revoke your instructions to the trustee and change your vote with respect to voting the shares allocated to you in the Black & Decker 401(k) Plan:
 
  •  First, you may submit new voting instructions under any one of the three methods described above under “— Shares Held in the Black & Decker 401(k) Plan”. The latest dated instructions actually received by T. Rowe Price Trust Company, the trustee for the Black & Decker 401(k) Plan, in accordance with the instructions for voting set forth in this joint proxy statement/prospectus, will be the instructions that are followed, and all earlier instructions will be revoked.
 
  •  Second, you may send a written notice to Black & Decker’s transfer agent, BNY Mellon Shareowner Services at 480 Washington Boulevard, Jersey City, NJ 07310, stating that you would like to revoke your instructions to T. Rowe Price Trust Company, the trustee for the Black & Decker 401(k) Plan. This written notice must be received no later than   a.m. eastern time on          , 2010, in order to revoke your prior instructions.
 
Solicitation of Proxies
 
Black & Decker is soliciting proxies for the Black & Decker special meeting and, in accordance with the merger agreement, the cost of proxy solicitation for the Black & Decker special meeting will be borne by Black & Decker. In addition to the use of the mail, proxies may be solicited by officers and directors and regular employees of Black & Decker, without additional remuneration, by personal interview, telephone, facsimile or otherwise. Black & Decker also will request brokerage firms, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of shares held of record as of the close of business on the record date and will provide customary reimbursement to such firms for the cost of forwarding these materials. Black & Decker has retained MacKenzie Partners, Inc. to assist in its solicitation of proxies and has agreed to pay them a fee of approximately $250,000, plus reasonable expenses, for these services.


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THE MERGER
 
Effects of the Merger
 
Upon completion of the merger, Blue Jay Acquisition Corp., a wholly owned subsidiary of Stanley that has been organized to effect the merger, will merge with and into Black & Decker. Black & Decker will be the surviving corporation in the merger and will become a wholly owned subsidiary of Stanley.
 
In the merger, each outstanding share of Black & Decker common stock (other than shares owned by Stanley or Blue Jay Acquisition Corp., which will be cancelled) will be converted into the right to receive 1.275 shares of Stanley common stock (and associated Series A Junior Participating Preferred Stock purchase rights), with cash paid in lieu of fractional shares. This exchange ratio is fixed and will not be adjusted to reflect stock price changes prior to the closing of the merger. Stanley shareholders will continue to hold their existing Stanley shares.
 
Background of the Merger
 
In light of the nature of Stanley’s and Black & Decker’s businesses, management of each of Stanley and Black & Decker generally is familiar with the other’s businesses. In addition, both companies periodically review and assess developments in the industries in which they participate and the strategic alternatives that are available to enhance stockholder value. As a result of these periodic reviews and assessments, Stanley and Black & Decker have discussed the possibility of a strategic business combination several times over the past 30 years. These discussions included negotiations in the early 1980s as well as preliminary explorations by the companies’ then chief executive officers of possible combinations of the Stanley and Black & Decker businesses later in the 1980s and in the early 1990s.
 
In February of 2009, Stanley, with the assistance of Deutsche Bank, which was selected by Stanley to act as its financial advisor, began to consider again a strategic business combination with Black & Decker and, on April 23, 2009, the Stanley board of directors authorized Mr. Lundgren, the Chairman and Chief Executive Officer of Stanley, to contact Black & Decker to discuss such a combination. Deutsche Bank was selected by Stanley to act as its financial advisor based upon, among other things, the fact that Deutsche Bank is an internationally recognized investment banking firm that has substantial experience in transactions similar to the merger, the members of the Deutsche Bank team who would be working on the transaction, the existing relationship between Stanley and certain of the members of the Deutsche Bank team and the consistent high-quality service that such members had provided to Stanley in the past.
 
On April 27, 2009, Mr. Lundgren called Mr. Archibald, the Chairman, President and Chief Executive Officer of Black & Decker, and indicated that Stanley was interested in discussing the possible combination of Stanley’s and Black & Decker’s businesses in a strategic transaction. Mr. Lundgren indicated that Stanley had been reviewing the possibility of a transaction with Black & Decker for some time and that he believed a combination of Stanley’s and Black & Decker’s businesses in a stock-for-stock transaction would offer compelling benefits to both companies and their stockholders. In the course of the conversation, Mr. Archibald indicated that the Black & Decker board was not considering a sale of the company, but that he would give the stock-for-stock merger proposal further thought. On April 30, 2009, Mr. Archibald called Mr. Lundgren and indicated that he would be willing to meet with Mr. Lundgren to discuss Stanley’s interest in such a transaction.
 
On June 9, 2009, Mr. Lundgren and Mr. Archibald met for lunch in New York City. In the course of that meeting, Mr. Lundgren outlined Stanley’s concept of a combination of the two companies, the benefits of such a combination and the need for management continuity in connection with integrating the two companies. He indicated that the Stanley board believed a combination represented a good fit for both companies and presented significant cost synergy opportunities that would benefit both companies and their stockholders. In this meeting, Mr. Lundgren and Mr. Archibald both indicated that if a transaction was considered, it was the preference of each of them that his respective company be the surviving company in the transaction. In connection with these discussions, Mr. Archibald stated that, while the economy continued to be a challenge for everyone, Black & Decker was focused on executing its strategic plan to position the company properly


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when the economy recovered, and reiterated the fact that the Black & Decker board was not considering a sale of the company. At the end of the discussions, Mr. Archibald indicated that he was willing to discuss the benefits to the two companies and their stockholders of a possible combination of Stanley and Black & Decker, but would only be supportive of a transaction if the benefits were compelling to Black & Decker and its stockholders.
 
On June 16, 2009, Mr. Archibald sent Mr. Lundgren a letter thanking him for taking the time to meet the prior week and exploring structural, financial, governance and employment issues associated with a possible business combination between Stanley and Black & Decker regardless of which company was the surviving company in the transaction. Mr. Archibald indicated that if a combination of Stanley and Black & Decker was to be pursued, Black & Decker would prefer to be the acquiror, but regardless of the structure, the key objective was a strategic transaction that was financially beneficial to the stockholders of both companies.
 
Also on June 16, 2009, the Stanley board of directors held a special meeting at which they discussed, among other things, the current status of discussions with Black & Decker and the terms and conditions that Stanley would be willing to consider. During the meeting, the Stanley board directed Mr. Lundgren to continue pursuing a potential transaction with Black & Decker in the form of a stock-for-stock merger in which Stanley was the surviving parent company and would retain control of the board of directors and senior management of the combined company. The Stanley board also authorized Mr. Lundgren to offer an exchange ratio of 1.1 shares of Stanley common stock for each share of Black & Decker common stock and to seek a commitment from Mr. Archibald to remain with the combined company post closing.
 
Mr. Lundgren and Mr. Archibald then had several conversations between June 18 and June 22, 2009, in which they continued to discuss the possible structural, financial, governance and employment issues of a combination of Stanley’s and Black & Decker’s businesses, including the roles of Mr. Lundgren and Mr. Archibald at the combined company. In the course of these discussions, Mr. Lundgren conveyed Stanley’s position that Stanley shareholders should own a majority of the shares of the combined company and that Stanley should survive as the parent company, with Stanley directors representing a preponderance of the board of the combined company. Mr. Lundgren also indicated that the Stanley board expected that Stanley executives would remain as executives of the combined company and would retain management control, but that to ensure a successful integration of the companies and to realize the synergy potential in the transaction, the Stanley board would seek a commitment from Mr. Archibald for his ongoing service to the combined company. Mr. Archibald indicated that if a transaction was to be considered he believed the Black & Decker board likely would prefer Black & Decker as the ultimate parent company with the board of the combined company consisting of close to an even number of Stanley and Black & Decker directors. He further acknowledged in his discussions with Mr. Lundgren that regardless of the structural, financial and governance approach of the combined company, the successful integration of the two companies would be necessary to achieve any anticipated transaction synergies and would require both Mr. Archibald’s and Mr. Lundgren’s commitment to the transaction and the combined company. Without committing to a particular structure or governance model, Mr. Lundgren and Mr. Archibald discussed the possibility of an executive chairman position at the combined company and how the responsibilities between such a possible position and the position of chief executive officer could be divided. In the course of these discussions, Mr. Archibald also suggested an approach to senior management compensation, which was to honor existing contractual agreements and to maintain compensation at levels generally consistent with existing arrangements.
 
On June 23, 2009, Mr. Lundgren responded by letter to Mr. Archibald’s letter of June 16 and confirmed their mutual belief that a combination of the two companies could be strategically compelling and financially beneficial to the stockholders of both companies. Among other things, Mr. Lundgren indicated that Stanley was prepared to consider a stock-for-stock merger in which Stanley was the acquiror and Black & Decker stockholders would receive a significant premium for their shares of common stock. Mr. Lundgren also indicated that Stanley was prepared to offer 1.1 shares of Stanley common stock for each share of Black & Decker common stock and, that as part of this proposal, Stanley would seek a commitment from Mr. Archibald to remain with the combined company following the closing of the transaction. Additionally, Mr. Lundgren indicated that Stanley was prepared to begin discussions with Black & Decker to review the cost synergy potential of the transaction as soon as possible.


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Following receipt of the letter from Mr. Lundgren on June 23, Mr. Archibald had conversations with each of the members of the Black & Decker board in which he advised the directors of Stanley’s interest in a strategic business combination with Black & Decker and reviewed with the directors the letter from Mr. Lundgren setting forth the terms contemplated by Stanley. Mr. Archibald advised the directors that, in addition to conducting the Black & Decker board’s annual strategic business review and planning session at its regularly scheduled July 16 board meeting, he would review the Stanley proposal in detail at the meeting.
 
Additionally, following receipt of the letter from Mr. Lundgren and through July 11, 2009, Mr. Lundgren and Mr. Archibald had several conversations regarding the possible terms of the transaction and the current status of their company’s respective evaluation of the proposed transaction. These conversations continued the earlier discussions between Mr. Archibald and Mr. Lundgren relating to the possible structural, financial, governance and employment issues. Mr. Archibald and Mr. Lundgren each sought clarification concerning the initial views of the other as to a possible approach to the issues that had been discussed previously in advance of their respective upcoming board meetings, and discussed the actions that would be necessary to evaluate the prospects of achieving cost synergies in the range of those Stanley believed were possible for the combined company.
 
At Black & Decker’s July 16, 2009 board meeting, as part of its annual strategic business review and planning session, Black & Decker management reviewed Black & Decker’s financial position and operating strategy, the then-current economic challenges and state of the global economy, and Black & Decker management’s forecast for the global economy and Black & Decker’s prospects over the next three calendar years. As has been the case in its annual strategic business review and planning sessions, the Black & Decker board also reviewed Black & Decker’s opportunities for growth by acquisition as well as organically, and the company’s financing capacity to support acquisitions. At the meeting, Mr. Archibald briefed the Black & Decker board on the interest expressed by Stanley, the substance of his communications with Mr. Lundgren since the initial call from Mr. Lundgren and the terms outlined by Mr. Lundgren in his letter of June 23. Black & Decker management further briefed the Black & Decker board on its preliminary views as to the prospects of a combination of Stanley’s and Black & Decker’s businesses, the advantages and disadvantages of such a transaction, the premium being offered to Black & Decker stockholders by Stanley and the value to Black & Decker stockholders if cost synergies in the range of those Stanley believed were achievable were realized. Based on the information known at the time, Black & Decker management’s preliminary view was that if significant synergies existed in a combination of Black & Decker’s and Stanley’s businesses, the benefits to Black & Decker’s stockholders of a transaction with Stanley could be significant. The combined company would be more profitable, have a stronger balance sheet, and have much greater cash flow than Black & Decker on a stand-alone basis, which would allow for faster and greater growth. In addition, the combined company would be much larger and have a more diverse customer base and product offering resulting in a stronger and more stable company than Black & Decker on a stand-alone basis.
 
At the conclusion of the July 16 meeting, the Black & Decker board authorized the formation of a committee of the board consisting of three independent directors, M. Anthony Burns, Benjamin H. Griswold IV and Robert L. Ryan (the “Black & Decker Transaction Committee”), to assist management and the Black & Decker board in reviewing the Stanley proposal and directed Black & Decker management and the Black & Decker Transaction Committee to evaluate further the possible benefits to Black & Decker stockholders of a strategic business combination with Stanley. The members of the Black & Decker Transaction Committee were selected and recommended to the Black & Decker board by the Corporate Governance Committee of the Black & Decker board, following, among other things, discussions between Mr. Archibald and Manuel A. Fernandez, the Chairman of the Corporate Governance Committee. In selecting the members of the Black & Decker Transaction Committee, the Corporate Governance Committee sought members of the Black & Decker board who had experience serving on similar committees for other companies and who had experience in investment banking matters (including in the case of Mr. Griswold as chairman of Alex. Brown & Sons, senior chairman of BT Alex. Brown and senior chairman of Deutsche Banc Alex. Brown, the predecessor to Deutsche Bank Securities Inc. until his retirement in February 2005), and considered but did not adopt all of the suggestions made by Mr. Archibald. Following the formation of the Black & Decker Transaction Committee, the Black & Decker board excused Black & Decker management,


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including Mr. Archibald, so that the non-management directors of the Black & Decker board could discuss the Stanley proposal separately.
 
Following the conclusion of the Black & Decker board meeting on July 16, the Black & Decker Transaction Committee held its initial meeting and invited Mr. Archibald and Charles E. Fenton, Black & Decker’s Senior Vice President and General Counsel, to join the meeting. Mr. Archibald indicated that following the conclusion of the Black & Decker board meeting, Mark H. Willes, Black & Decker’s presiding director, had informed him that the sense of the Black & Decker board was that any transaction with Stanley would need to be as equivalent as possible to a merger of equals. Mr. Willes indicated to Mr. Archibald that the non-management directors believed that a possible transaction with Stanley was worth evaluating, but noted that the willingness to consider further such a transaction was dependent upon an evaluation of the scope and amount of the synergies, the likelihood of achieving the synergies and the ultimate exchange ratio, which Mr. Willes indicated would have to be higher than the exchange ratio initially suggested by Stanley. The members of the Black & Decker Transaction Committee confirmed that Mr. Willes’ statements accurately described the strong sense of the Black & Decker board. Mr. Fenton reviewed with the Black & Decker Transaction Committee the substance of the proposals he had received from, and the discussions he had conducted with, financial advisors who had been involved with Black & Decker leading up to the July 16 board meeting as well as the need to retain legal counsel to advise the Black & Decker Transaction Committee and the Black & Decker board in connection with its consideration of a possible transaction with Stanley. Mr. Fenton indicated that he had interviewed several firms as prospective financial advisor and recommended J.P. Morgan based on its overall proposal, including the proposed compensation terms, the members of the J.P. Morgan team who would be committed to the transaction, the existing relationship between Black & Decker and J.P. Morgan and the consistent high-quality service J.P. Morgan had provided to Black & Decker in the past. Following a discussion, the Black & Decker Transaction Committee authorized the retention of J.P. Morgan as financial advisor and Hogan & Hartson L.L.P. as legal counsel. The Black & Decker Transaction Committee reminded Black & Decker management that the Black & Decker board did not have any interest in a transaction unless it was an all-stock strategic transaction in which Black & Decker stockholders would share in the future growth of the combined company and that, for all practical purposes, was as equivalent as possible to a merger of equals.
 
On July 16, 2009, Mr. Archibald called Mr. Lundgren and advised him that the Black & Decker board had discussed Stanley’s interest in a transaction with Black & Decker. Mr. Archibald indicated that the Black & Decker board had a predisposition for Black & Decker to remain independent, but had authorized Black & Decker management to explore the possible benefits of an all-stock transaction to Black & Decker and its stockholders. Mr. Archibald advised Mr. Lundgren that the Black & Decker board stressed that the transaction would need to be as equivalent as possible to a merger of equals in terms of share ownership and board representation and would have to offer compelling value to Black & Decker and its stockholders, and that the Black & Decker board did not view an exchange ratio of 1.1 as consistent with that approach. Mr. Archibald indicated that the exchange ratio would have to be in the range of 1.2 to 1.3 shares of Stanley common stock for each share of Black & Decker common stock and that a meeting would not be productive if Stanley was unwilling to offer more than an exchange ratio of 1.1. The range of 1.2 to 1.3 shares indicated by Mr. Archibald was based on his understanding of the sense of the non-management directors that the transaction would have to be structured to be as equivalent as possible to a merger of equals. At the time, this exchange ratio represented a substantial premium to the then current market price of Black & Decker’s shares, without any consideration of the value of the synergies, and put Black & Decker’s stockholders’ interest in the combined company close to 50%. Mr. Lundgren stated that sharing of additional information by the parties, including a joint review of the cost synergy potential of the combination, would be critical to Stanley’s ability to offer an exchange ratio of more than 1.1 and that he thought it made sense for Stanley’s and Black & Decker’s respective financial and legal advisors to meet with management of the two companies and then for Mr. Lundgren and Mr. Archibald to meet to discuss the results of those meetings. Mr. Archibald and Mr. Lundgren decided to proceed with such meetings and indicated that they would have their respective financial advisors discuss the timing and location of the meetings.


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On July 17, 2009, the Stanley board of directors held a regular meeting. Among other matters, the Stanley board discussed the current status of the proposed transaction with Black & Decker and the terms and conditions that Mr. Archibald described to Mr. Lundgren the previous day and how those terms differed from Stanley’s original proposal. Also on July 17, 2009, Stanley selected Goldman Sachs to act as a financial advisor in connection with the proposed transaction based upon, among other things, the fact that Goldman Sachs is an internationally recognized investment banking firm that has substantial experience in transactions similar to the merger, the members of the Goldman Sachs team who would be working on the transaction, the existing relationship between Stanley and Goldman Sachs and the consistent high-quality service Goldman Sachs had provided to Stanley in the past.
 
Following the Stanley board meeting, Hogan & Hartson and Cravath, Swaine & Moore LLP, counsel to Stanley, negotiated the terms of a mutual confidentiality agreement between Stanley and Black & Decker. The confidentiality agreement was executed on July 22, 2009. On July 25, 2009, Cravath sent an initial draft of a merger agreement to Hogan & Hartson. Hogan & Hartson advised Cravath at that time that the Black & Decker board had only authorized Black & Decker management to evaluate the possible benefits to Black & Decker’s stockholders of a strategic business combination with Stanley and that Black & Decker was not prepared to discuss or negotiate a merger agreement at that time.
 
From July 17 through July 27, 2009, Stanley’s and Black & Decker’s financial advisors and members of Stanley’s and Black & Decker’s financial management teams discussed the scope of information that would be appropriate to share with each other in connection with the planned meetings to enable the parties to understand better each other’s businesses more thoroughly and to evaluate the cost synergy potential of a possible strategic combination of the two companies. In the course of these discussions, financial information and general views as to cost synergy potential were discussed and shared.
 
From July 28 through July 30, 2009, representatives of Stanley and Black & Decker senior management, together with Stanley’s and Black & Decker’s financial and legal advisors, met at Cravath’s offices in New York City. At these meetings, management representatives and the financial and legal advisors to Stanley and Black & Decker, including Miles & Stockbridge, P.C., Black & Decker’s regular outside corporate counsel, conducted due diligence regarding each other and discussed the cost synergy potential available to the companies if they were to combine their businesses. The parties also discussed generally the potential terms of the transaction, including the service of Mr. Archibald as Executive Chairman of the combined company, the positions of Mr. Archibald and Mr. Lundgren as co-chairs of the integration committee of the combined company and the role of the integration committee in ensuring that synergy opportunities would be appropriately identified and plans would be put in place and executed by management to achieve those synergies. The existing compensation arrangements between Black & Decker and its senior management, including Mr. Archibald, and the approach of Stanley’s board to compensation generally, were also discussed by the parties. At the conclusion of the meetings, Mr. Lundgren and Mr. Archibald met to discuss the results of the meetings, the information shared by both companies and the terms of a possible business combination. In the course of that meeting, Mr. Lundgren indicated that while he believed Stanley might be in a position to offer an exchange ratio of more than 1.1 shares of Stanley common stock for each share of Black & Decker common stock, he did not believe that, based on the then current stock price and current and future earnings of both companies and other factors, the Stanley board would be able to offer an exchange ratio of 1.2 or better, which was the bottom end of the range Mr. Archibald had indicated was required by Black & Decker. At the end of the meeting, Mr. Lundgren indicated that he would be discussing the matter the next day with his board and would advise Mr. Archibald if Stanley was able to increase its offer further, but that he hoped Black & Decker would remain open to further discussions now or in the future in light of the benefits such a transaction would offer to both companies and their stockholders.
 
On July 31, 2009, the Stanley board of directors held a special meeting at which they discussed, among other things, the results of the various meetings and negotiations that had taken place over the preceding two weeks and the issues regarding the potential business combination that remained unresolved between the companies. After discussion, the Stanley board determined that Stanley should not indicate a willingness to increase the exchange ratio above 1.2 and, therefore, that discussions would likely be suspended between the


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companies. Thereafter, Mr. Lundgren called Mr. Archibald and notified Mr. Archibald of the Stanley board’s determination.
 
In early August 2009, J.P. Morgan indicated to Deutsche Bank and Goldman Sachs that the Black & Decker Transaction Committee was meeting on August 10 to review with Black & Decker management the course of the discussions with Stanley and that if Stanley had a revised proposal that it wanted the Black & Decker Transaction Committee to consider, the proposal should be submitted in advance of that meeting. No such revised proposal was submitted by Stanley prior to the August 10 meeting of the Black & Decker Transaction Committee.
 
The Black & Decker Transaction Committee met with Black & Decker management on August 10, 2009. At that meeting, Black & Decker management reviewed with the Black & Decker Transaction Committee the substance of the discussions that had occurred with Stanley since the Black & Decker board and Black & Decker Transaction Committee meetings of July 17. Black & Decker management advised the Black & Decker Transaction Committee that no further proposal had been received from Stanley. The Black & Decker Transaction Committee confirmed that the original offer from Stanley was not consistent with the expectations of the Black & Decker board for a business combination that was the equivalent of a merger of equals.
 
On September 11, 2009, J.P. Morgan contacted Deutsche Bank and Goldman Sachs on behalf of Black & Decker to discuss, among other things, changes in the financial markets, the performance of Stanley’s and Black & Decker’s stock subsequent to the meetings in July and various corporate governance issues and other items in connection with the proposed transaction, and inquired whether Stanley still was interested in discussing the possibility of a business combination with Black & Decker. J.P. Morgan indicated that it had been advised by Black & Decker that the transaction still would need to be structured in a way that was as close as possible to a merger of equals. In the course of the discussions, J.P. Morgan indicated that Black & Decker considered a proposal in which the Black & Decker stockholders received shares of Stanley common stock totaling 49.9% of the combined equity at closing, which J.P. Morgan indicated was equivalent to an exchange ratio of 1.286 shares of Stanley common stock for each share of Black & Decker common stock, and where the board of the combined company consisted of eight former Stanley directors and seven former Black & Decker directors, to be consistent with the Black & Decker board’s desire for a transaction that was as close as possible to a merger of equals.
 
On September 16, 2009, J.P. Morgan provided updated financial information on behalf of Black & Decker to Deutsche Bank and Goldman Sachs regarding, among other things, Black & Decker’s performance and improved outlook for the third quarter of 2009 and the remainder of the period of the Black & Decker forecasts which had previously been provided to Stanley management and Stanley’s financial advisors. During the next several days, Deutsche Bank and Goldman Sachs discussed this and other related information with Stanley management, including the implications for the potential exchange ratio.
 
During the remainder of the month of September, Stanley’s and Black & Decker’s financial advisors continued to discuss the possibilities of a business combination and various related terms, including the possibility that a substantial portion of Mr. Archibald’s compensation in his proposed capacity as Executive Chairman of the combined company would be contingent on the achievement of cost synergies. The notion of a substantial portion of Mr. Archibald’s compensation as Executive Chairman being contingent on the achievement of cost synergies was suggested by Stanley based upon recommendations from Towers, Perrin, Forster & Crosby, Inc. (currently named Towers Watson & Co.), an independent compensation consultant retained by Stanley to assist with the compensation arrangements to be entered into in connection with the proposed transaction, as an alternative to continuing certain of Mr. Archibald’s long-term incentive arrangements with Black & Decker. The contingent payment was an element of a total compensation package designed by Stanley and Towers Perrin that was performance-based through equity incentives and through the cost synergy bonus, which itself was keyed to a principal value driver for the transaction. In the course of these discussions, Deutsche Bank and Goldman Sachs indicated that they believed, subject to review of the matter by the Stanley board, that Stanley would consider a proposal in which Black & Decker stockholders received 1.250 shares of Stanley common stock for each share of Black & Decker common stock and the


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board of the combined company consisted of nine former Stanley directors and five former Black & Decker directors.
 
On October 1 and October 2, 2009, James M. Loree, Stanley’s Chief Operating Officer, and Mr. Fenton spoke by phone and reviewed the various terms that had been discussed by Stanley’s and Black & Decker’s respective financial advisors as well as the timing of upcoming Stanley and Black & Decker board meetings. During the course of the conversations, Mr. Fenton and Mr. Loree each updated the other generally on his company’s financial performance during the third quarter of 2009. Mr. Loree and Mr. Fenton discussed the fact that the parties’ most recent discussions concerning the terms of a potential transaction were not significantly different, that the transaction appeared to offer a compelling financial proposition to both companies and their stockholders and that, if they decided to proceed with further discussions, it was the hope of each of Mr. Loree and Mr. Fenton that the parties would be able to resolve the open issues. Mr. Fenton indicated that Black & Decker management would present the recently discussed terms to the Black & Decker Transaction Committee as soon as Stanley management reviewed such terms with the Stanley board and the Stanley board was supportive of pursuing a possible transaction on such terms.
 
On October 3, 2009, the Stanley board of directors held a special meeting. Among other matters, the Stanley board discussed the items that remained open between the parties, including the exchange ratio and the role and terms of employment of Mr. Archibald at the combined company. At the conclusion of this discussion, the Stanley board authorized Stanley management and its advisors to continue to pursue the possible transaction on, among other terms, an exchange ratio of 1.250.
 
On or about October 4, 2009, Mr. Lundgren called Mr. Archibald and advised him that the Stanley board was willing to continue discussing a transaction at a 1.250 exchange ratio. Mr. Lundgren also stated that Stanley was willing to offer Mr. Archibald the role of Executive Chairman of the combined company on certain terms and conditions of employment, including that a substantial portion of Mr. Archibald’s long-term compensation be contingent on the achievement of cost synergies so as to better align Mr. Archibald’s compensation with one of the principal value drivers for the merger. In the course of the conversation, Mr. Archibald raised the possibility of an exchange ratio of 1.275 and having seven, as opposed to five, directors from Black & Decker join the board of directors of the combined company.
 
On October 7, 2009, the Black & Decker Transaction Committee convened a meeting and received an update from Black & Decker management regarding the discussions with Stanley and its financial advisors since the last Black & Decker Transaction Committee meeting in August. At the meeting, Black & Decker management presented to the Black & Decker Transaction Committee the revised proposal that had been approved by the Stanley board of directors and reviewed with the members of the Black & Decker Transaction Committee the preliminary financial results of Black & Decker’s quarter ended September 27, 2009. The Black & Decker Transaction Committee also discussed the fact that Stanley’s original proposal and revised proposal contemplated a commitment from Mr. Archibald to remain with the combined company after the closing to ensure a successful integration of the companies and achievement of the cost synergies that would be important in realizing the intended stockholder value associated with the transaction, and reviewed the terms and conditions under which Stanley proposed that Mr. Archibald remain with the combined company as Executive Chairman. The Black & Decker Transaction Committee also reviewed the terms of the Stanley proposal relating to other matters, including the composition of the Stanley board of directors following completion of the merger and the treatment of other Black & Decker officers and employees. At the conclusion of the meeting, the Black & Decker Transaction Committee confirmed that the revised Stanley proposal was consistent with the type of transaction that the Black & Decker board had indicated would be required, and concluded that it would be advisable for the Black & Decker board to consider the revised proposal and to authorize the Black & Decker Transaction Committee and Black & Decker management to evaluate the proposal further.
 
Following the Black & Decker Transaction Committee meeting on October 7, Mr. Archibald met or spoke by phone with the Black & Decker directors individually to update them on the recent developments with Stanley in advance of the regularly scheduled meeting of the Black & Decker board on October 15,


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2009. Mr. Fenton joined Mr. Archibald for several of these discussions and meetings with the Black & Decker directors.
 
On October 15, 2009, the Black & Decker board held a regularly scheduled board meeting. At that meeting, the Black & Decker board reviewed the financial performance of Black & Decker for the quarter ended September 27, 2009, as well as Black & Decker management’s expectations for the balance of the year. The Black & Decker Transaction Committee and Black & Decker management reviewed with the Black & Decker board the substance and course of discussions with Stanley since the Black & Decker board meeting in July as well as the actions taken by the Black & Decker Transaction Committee since the July meeting, the terms and conditions of the revised Stanley proposal, the terms and conditions under which Mr. Archibald would remain with the combined company as Executive Chairman, the terms of the Stanley proposal relating to other matters, including the composition of the Stanley board of directors following completion of the merger and the treatment of other Black & Decker officers and employees, the conclusion of the Black & Decker Transaction Committee that the revised Stanley proposal was consistent with the requirements of the Black & Decker board in the discussions at the July board meeting, and the recommendation of the Black & Decker Transaction Committee that the Stanley proposal should be considered and evaluated further to determine if the proposal was in the best interests of Black & Decker and its stockholders. Mr. Fenton reviewed with the Black & Decker board a financial analysis of the benefits to Black & Decker and its stockholders of the revised Stanley proposal and various elements of value that were inherent in the proposal, including the present value of the cost synergies that were anticipated in connection with a combination of Stanley’s and Black & Decker’s businesses and the extent to which Black & Decker’s stockholders would share in the value of the cost synergies, and compared the potential value to Black & Decker’s stockholders of a transaction with Stanley to the value to the Black & Decker stockholders of the company on a stand-alone basis. This financial analysis was prepared by J.P. Morgan with input from Black & Decker management based on the earlier discussions among Black & Decker and Stanley representatives. After extensive discussion about the revised Stanley proposal, the Black & Decker board concluded that it would be advisable for the Black & Decker board to consider the revised proposal and authorized the Black & Decker Transaction Committee and Black & Decker management, together with Black & Decker’s financial, legal and other advisors, to evaluate the proposal and to make a recommendation to the Black & Decker board as to whether the revised Stanley proposal was in the best interests of Black & Decker and its stockholders. The Black & Decker board also authorized Black & Decker management and the Black & Decker Transaction Committee, as part of its evaluation of the Stanley proposal, to commence negotiations with Stanley and its counsel regarding the terms and conditions of a possible merger agreement.
 
Immediately following the conclusion of the meeting of the Black & Decker board on October 15, 2009, the Black & Decker Transaction Committee met and authorized management to retain additional advisors to, among other things, assist management, the Black & Decker Transaction Committee and the Black & Decker board in their financial due diligence of Stanley and their evaluation of the potential cost synergies in connection with the proposed combination of Stanley’s and Black & Decker’s businesses.
 
Also on October 15, 2009, Mr. Archibald called Mr. Lundgren and advised him that, while the Black & Decker board had a predisposition for Black & Decker to remain independent, the Black & Decker board recognized the possible cost synergies and the benefits to Black & Decker and its stockholders that could come from a transaction with Stanley if the cost synergies were realized. He indicated to Mr. Lundgren that the Black & Decker board had authorized management to continue discussions with Stanley based on an exchange ratio of 1.275 shares of Stanley common stock for each share of Black & Decker common stock, with a minimum of six Black & Decker directors being added to the Stanley board. Mr. Archibald stressed the view of the Black & Decker directors that the achievement of the cost synergies was an integral part of the value proposition in the transaction and wanted to make sure that there was sufficient Black & Decker representation on the Stanley board to ensure that the understanding of Black & Decker’s businesses was appropriately reflected in the board deliberations following completion of the merger. Mr. Archibald asked Mr. Lundgren to request that the Stanley board consider adding seven directors from Black & Decker to the Stanley board as part of the transaction.


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On October 16, 2009, the Stanley board held a regular meeting. Among other matters, the Stanley board considered the discussions with Black & Decker that had taken place since their last board meeting on October 3, 2009 and the terms and conditions of the proposed transaction, including those that remained subject to further negotiation. Additionally, Deutsche Bank and Goldman Sachs discussed with the Stanley board a financial analysis of the proposed transaction and an overview of the recent financial performance of both Stanley and Black & Decker. The Stanley board authorized management and its advisors to continue to negotiate the potential transaction.
 
During the period from October 16 until October 21, 2009, representatives of Stanley and Black & Decker management and Stanley’s and Black & Decker’s financial advisors exchanged additional information relating to the prospects for achieving cost synergies in connection with the combination of Stanley’s and Black & Decker’s businesses and shared additional non-public information relating to each of the companies and their respective businesses, operating performance and updated forecasts.
 
On October 22, 2009, representatives of Stanley and Black & Decker management, Stanley’s and Black & Decker’s financial advisors and representatives from PricewaterhouseCoopers LLP and Bain & Company, which had been retained by Stanley, and KPMG LLP, which had been retained by Black & Decker, to, among other things, assist management of Stanley and Black & Decker, respectively, in their due diligence investigations and their evaluations of, among other things, the cost synergy potential inherent in the combination of the businesses of the combined company, met at Cravath’s offices in New York City to review, among other matters, the prospects for achieving cost synergies in connection with the combination of Stanley’s and Black & Decker’s businesses.
 
On October 23, 2009 and October 26, 2009, Stanley’s and Black & Decker’s management, financial and legal advisors and certain other advisors, including PricewaterhouseCoopers, Bain and KPMG, met at Cravath’s offices in New York City. At these meetings, the companies engaged in mutual financial and legal due diligence, reviewed the financial results of each company for the third quarter of 2009 and the forecasts for the balance of 2009, reviewed financial forecasts of the companies for 2010 and 2011, reviewed the cost synergies identified by the parties in their discussions and the prospects for achieving those cost synergies, and reviewed the integration challenges and opportunities and the approach Stanley would take to integrating the two companies. In connection with these meetings, Cravath and Hogan & Hartson discussed the terms of the merger agreement and related documents and discussed various due diligence matters. In these discussions, a number of issues in the draft merger agreement and related documentation were negotiated, including governance matters relating to the board, transaction certainty, the treatment of Black & Decker equity awards, and restrictions on the parties’ respective businesses prior to the closing of the merger. In the course of these meetings and discussions, Stanley confirmed that an exchange ratio of 1.275 was acceptable, but stated that more than six directors was not, given the other terms being offered by Stanley, including most notably the premium that the Black & Decker stockholders would receive in the transaction, and concerns regarding the functionality of such a large board.
 
On October 24, 2009, the Compensation and Organization Committee of the Stanley board of directors held a special meeting to discuss, among other things, the proposed terms and conditions of Mr. Archibald’s possible employment as Executive Chairman of the combined company and the terms and conditions of Mr. Lundgren’s and Mr. Loree’s proposed employment arrangements that would become effective upon completion of the transaction. During the course of this discussion, the Compensation and Organization Committee received a presentation and recommendations from Towers Perrin. At the conclusion of this discussion, the Compensation and Organization Committee authorized the negotiation of the compensation arrangements with Mr. Archibald, Mr. Lundgren and Mr. Loree. Shortly thereafter, Cravath sent a draft of the proposed executive chairman agreement to Mr. Archibald’s counsel. The terms of the draft agreement were substantially consistent with the performance-based compensation arrangements discussed by Stanley’s and Black & Decker’s financial advisors in their conversations during the second half of September.
 
From October 23 through October 30, Cravath and Hogan & Hartson continued to discuss various provisions of the merger agreement and exchanged further drafts of the merger agreement. Additionally, from


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October 24 through October 30, Cravath and Mr. Archibald’s counsel discussed and exchanged drafts of the executive chairman agreement.
 
On October 29, 2009, the Black & Decker Transaction Committee met with representatives of Black & Decker management, J.P. Morgan, Hogan & Hartson and Miles & Stockbridge, as well as representatives of KPMG, MacKenzie Partners, Inc., Black & Decker’s proxy solicitor, and Watson Wyatt Worldwide (currently named Towers Watson & Co.), the compensation consultant to Black & Decker’s board, each of which had been engaged to assist the Black & Decker Transaction Committee and the Black & Decker board in connection with the evaluation of the revised Stanley proposal. At the beginning of the meeting, the members of the Black & Decker Transaction Committee were given a package containing the presentations to be reviewed with the Black & Decker Transaction Committee and the Black & Decker board at its meetings that day, including a copy of the most recent draft of the merger agreement together with a summary of the principal terms of the merger agreement. At the meeting, representatives of Hogan & Hartson provided an overview of the applicable legal standards in the context of considering a business combination transaction of the type proposed by Stanley, Black & Decker management and the Black & Decker advisors reviewed Stanley’s businesses, financial results and the cost synergy potential in connection with the proposed transaction as well as the due diligence review of Stanley’s businesses, representatives of J.P. Morgan reviewed the Stanley proposal and Black & Decker’s prospects on a stand-alone basis, Hogan & Hartson and Miles & Stockbridge reviewed the corporate governance and certain other aspects of the Stanley proposal, including the composition of the Stanley board of directors following closing, the proposed terms and conditions of Mr. Archibald’s employment as Executive Chairman of Stanley and the terms and conditions of Mr. Archibald’s employment arrangements with Black & Decker as well as the treatment of other Black & Decker officers and employees, and Hogan & Hartson reviewed the principal terms and conditions of the merger agreement proposed by Stanley in connection with the transaction and the substance of the negotiations between the parties to date. The Black & Decker Transaction Committee considered the fact that, while the transaction would result in Black & Decker becoming a wholly owned subsidiary of Stanley, the Black & Decker stockholders would remain significant stockholders of the combined company and would be the beneficiaries of any cost synergies that might be achieved as a result of the transaction. At the end of the meeting, Mr. Archibald and the other members of Black & Decker management and all of the advisors, other than Hogan & Hartson, Miles & Stockbridge and Watson Wyatt, left the meeting. The Black & Decker Transaction Committee then discussed the Stanley proposal and the terms and conditions of Mr. Archibald’s employment agreement with Black & Decker as well as the proposed employment arrangement proposed by Stanley with Mr. Archibald. After discussion of these issues, Mr. Archibald and Mr. Fenton then rejoined the meeting. After further discussion, the Black & Decker Transaction Committee concluded that, while it was not making a final decision as to the advisability of the transaction, the Black & Decker Transaction Committee believed that the proposed transaction appeared to offer a compelling value proposition to Black & Decker and its stockholders and it was comfortable recommending to the Black & Decker board that the Black & Decker Transaction Committee and Black & Decker management continue negotiations of the merger agreement and the final terms and conditions of the transaction with a view toward making a final recommendation to the Black & Decker board promptly following the completion of its work.
 
On October 29, 2009, following the conclusion of the meeting of the Black & Decker Transaction Committee, the Black & Decker board met with representatives of Black & Decker management, J.P. Morgan, Hogan & Hartson and Miles & Stockbridge, as well as representatives of KPMG, MacKenzie and Watson Wyatt. At the beginning of the meeting, the members of the Black & Decker board were given a package containing the presentations to be reviewed with the Black & Decker board at its meetings that day, including a copy of the most recent draft of the merger agreement together with a summary of the principal terms of the merger agreement. At this meeting, representatives of Hogan & Hartson provided an overview of applicable legal standards in the context of considering a business combination transaction of the type proposed by Stanley, Black & Decker management and the Black & Decker advisors reviewed Stanley’s businesses, financial results and the cost synergy potential in connection with the proposed transaction as well as the due diligence review of Stanley’s businesses, representatives of J.P. Morgan reviewed the Stanley proposal and Black & Decker’s prospects on a stand-alone basis, Hogan & Hartson and Miles & Stockbridge reviewed the corporate governance and certain other aspects of the Stanley proposal, including the composition of the


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Stanley board of directors following closing, the proposed terms and conditions of Mr. Archibald’s employment as Executive Chairman of Stanley and the terms and conditions of Mr. Archibald’s employment arrangements with Black & Decker as well as the treatment of other Black & Decker officers and employees, Hogan & Hartson reviewed the principal terms and conditions of the merger agreement proposed by Stanley in connection with the transaction and the substance of the negotiations between the parties to date and MacKenzie Partners reviewed the likely responses of institutional investors as well as the role of third party proxy review firms in the proxy solicitation process. The Black & Decker board discussed a number of the provisions of the draft merger agreement and the regulatory requirements in connection with the consummation of the transaction, including the provisions relating to the commitments of Stanley and Black & Decker to proceed with stockholders’ meetings to consider the transaction, the termination fee payable by Black & Decker or Stanley and the circumstances under which such a termination fee would be payable, corporate governance issues and certain provisions relating to transaction certainty. At the end of the meeting, Mr. Archibald and the other members of Black & Decker management and all of the advisors, other than Hogan & Hartson, Miles & Stockbridge and Watson Wyatt, left the meeting. The Black & Decker board then discussed the Stanley proposal and the terms and conditions of Mr. Archibald’s employment agreement with Black & Decker as well as the proposed employment arrangement proposed by Stanley with Mr. Archibald. After discussion of these issues, Mr. Archibald and Mr. Fenton, along with J.P. Morgan, rejoined the meeting, the Black & Decker board discussed with Mr. Archibald the terms and conditions of his employment as Executive Chairman of Stanley and the terms and conditions of Mr. Archibald’s employment arrangements with Black & Decker, and the Black & Decker board advised Black & Decker management and the Black & Decker Transaction Committee that it should continue its negotiations of the merger agreement and the final terms and conditions of the transaction with a view toward making a final recommendation to the Black & Decker board promptly following the completion of its work.
 
Following the conclusion of the Black & Decker board meeting on October 29, 2009, Mr. Archibald called Mr. Lundgren and indicated that the Black & Decker board was continuing its evaluation of the Stanley proposal and that, while no decision had been reached, the Black & Decker board had authorized Black & Decker management and the Black & Decker Transaction Committee to continue its negotiations of the merger agreement and the final terms and conditions of the transaction.
 
On October 30, 2009, Stanley’s and Black & Decker’s management and financial and certain other advisors, including Bain, met at Cravath’s offices in New York City. At these meetings, the parties engaged in various discussions regarding the proposed transaction.
 
On October 31, 2009, each of the Black & Decker directors was provided with a revised version of the merger agreement that had been discussed by Hogan & Hartson and Cravath and a related summary of its terms that reflected those further negotiations between the parties.
 
From the conclusion of the Black & Decker board meeting on October 29 through the end of the day on October 31, 2009, Mr. Archibald had a number of conversations with Mr. Fenton and with the members of the Black & Decker board regarding the terms of Mr. Archibald’s compensation arrangements with Black & Decker and the proposed terms and conditions of Mr. Archibald’s agreement with Stanley under which he would become Executive Chairman of Stanley following closing of the transaction. Among other things, Mr. Archibald and members of the Black & Decker board discussed those elements of his existing compensation that he would become entitled to under his existing employment agreement if the merger were to be completed in light of the fact that he was going to continue with the combined company as Executive Chairman and also receive new compensation in such capacity. At the conclusion of these discussions, Mr. Archibald advised the Black & Decker directors that he was willing to modify his existing employment arrangements with Black & Decker to eliminate the severance payable under those arrangements as a result of the closing of the Stanley transaction, to eliminate the accelerated vesting otherwise associated with his stock options and restricted stock as a result of the terms of Black & Decker’s equity incentive plans and to delete the tax gross up provisions of his existing arrangement as it related to the Stanley transaction. Mr. Archibald indicated that he would instruct his counsel who was working with Cravath on the draft executive chairman agreement to make the appropriate changes to the document.


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On October 31, 2009, the Stanley board met with representatives of Stanley management, Deutsche Bank, Goldman Sachs and Cravath. In advance of the meeting, the members of the Stanley board were sent a package containing the presentations to be reviewed with the Stanley board, including a copy of the most recent draft of the merger agreement together with a summary of the principal terms of the merger agreement, and the most recent drafts of the employment agreements with Mr. Archibald, Mr. Lundgren and Mr. Loree, together with summaries of the principal terms thereof. At the meeting, among other things, representatives of Cravath discussed with the Stanley board the applicable legal standards in the context of considering a business combination transaction of the type proposed, Stanley management discussed the results of its due diligence investigation of Black & Decker, including their determination of the cost synergy potential in connection with the proposed transaction, representatives of Deutsche Bank and Goldman Sachs discussed their financial analysis of the proposed transaction and Cravath discussed the principal terms and conditions of the merger agreement. At that point, all non-board members, other than Cravath, Mark J. Mathieu, Vice President, Human Resources, and Bruce H. Beatt, Vice President, General Counsel and Secretary, left the meeting. Thereafter, the Stanley board (including all the members of Stanley’s Compensation and Organization Committee) discussed the proposed terms and conditions of Mr. Archibald’s executive chairman agreement. After discussion of this agreement, Mr. Lundgren left the meeting and the Stanley board (including all the members of Stanley’s Compensation and Organization Committee) met in executive session to discuss the terms and conditions of the proposed employment agreements with Mr. Lundgren and Mr. Loree. The Stanley board also generally discussed in executive session the proposed transaction with Black & Decker, and authorized Stanley management and Stanley’s advisors to finalize the terms of the transaction.
 
Between October 31 and November 2, 2009, representatives of Stanley, Black & Decker, Cravath and Hogan & Hartson finalized the terms of the merger agreement. At the same time, Cravath and Mr. Archibald’s counsel finalized the terms of Mr. Archibald’s executive chairman agreement.
 
On November 2, 2009, the Black & Decker Transaction Committee met with representatives of Black & Decker management, J.P. Morgan, Hogan & Hartson, Miles & Stockbridge and MacKenzie Partners. Prior to this meeting the members of the Black & Decker Transaction Committee and the other members of the Black & Decker board had been provided with a summary of the merger agreement and copies of the most recent drafts of the merger agreement as well as a summary of the terms of Mr. Archibald’s proposed executive chairman agreement with Stanley and the final draft of the executive chairman agreement. At this meeting, representatives of Hogan & Hartson reminded the directors of the applicable legal standards in the context of considering a business combination transaction of the type proposed by Stanley, Mr. Archibald reviewed with the Black & Decker Transaction Committee the changes he had agreed to make to his existing employment arrangements with Black & Decker, Miles & Stockbridge reviewed the terms and conditions of Mr. Archibald’s employment agreement and related benefits with Black & Decker, as proposed to be amended, and the terms and conditions of Mr. Archibald’s proposed executive chairman agreement with Stanley, Hogan & Hartson reviewed certain corporate governance and other aspects of the Stanley proposal, the terms and conditions of the merger agreement and the regulatory approval process for the proposed transaction, and MacKenzie Partners reviewed the likely reactions of institutional investors and third party proxy review firms. In the course of the meeting, representatives of J.P. Morgan reviewed J.P. Morgan’s financial analysis of the proposed transaction and indicated that they were prepared to deliver J.P. Morgan’s opinion to the Black & Decker board that, as of November 2, 2009 and based upon and subject to the factors and assumptions set forth in its written opinion, the 1.275 exchange ratio in the proposed merger was fair, from a financial point of view, to Black & Decker’s common stockholders. Following a discussion among the members of the Black & Decker Transaction Committee, the Black & Decker Transaction Committee unanimously concluded that the merger on the terms and conditions presented was advisable and in the best interests of Black & Decker and its stockholders and resolved to recommend to the full Black & Decker board the merger and the other actions required to give effect to the merger.
 
Following the meeting of the Black & Decker Transaction Committee on November 2, 2009, the Black & Decker board convened a meeting to consider the Stanley proposal. Present at the meeting were representatives of Black & Decker management, J.P. Morgan, Hogan & Hartson, Miles & Stockbridge and MacKenzie Partners. At this meeting, representatives of Hogan & Hartson reminded the Black & Decker


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directors of the applicable legal standards in the context of considering a business combination transaction of the type proposed by Stanley, Mr. Archibald reviewed with the Black & Decker board the changes he had agreed to make to his existing employment arrangements with Black & Decker, Miles & Stockbridge reviewed the terms and conditions of Mr. Archibald’s employment agreement and related benefits with Black & Decker, as proposed to be amended, and the terms and conditions of Mr. Archibald’s proposed executive chairman agreement with Stanley, Hogan & Hartson reviewed certain corporate governance and other aspects of the Stanley proposal, the terms and conditions of the merger agreement and the regulatory approval process for the proposed transaction, and MacKenzie Partners reviewed the likely reactions of institutional investors and third party proxy review firms. In the course of the meeting, representatives of J.P. Morgan reviewed J.P. Morgan’s financial analysis of the proposed transaction and delivered J.P. Morgan’s written and oral opinion to the Black & Decker board that, as of November 2, 2009 and based upon and subject to the factors and assumptions set forth in its written opinion, the 1.275 exchange ratio in the proposed merger was fair, from a financial point of view, to Black & Decker’s common stockholders. After each of the presentations had been given, Mr. Archibald advised the Black & Decker board that he had given a great deal of thought to the proposed transaction and believed that the transaction was both strategically and financially compelling from the perspective of Black & Decker and its stockholders and that he was very supportive of the transaction. Mr. Archibald indicated that in light of the position he would have as Executive Chairman of the combined company and the interest he would have by virtue of his employment arrangements following the closing, he intended to abstain on the vote on the transaction. Following a discussion of the information that had been presented at the meeting and at the earlier meetings of the Black & Decker board and following further deliberations, with Mr. Archibald abstaining on the matter, the remaining members of the Black & Decker board unanimously approved the merger agreement and the merger in accordance with Maryland law and recommended that Black & Decker’s stockholders approve the merger on the terms presented. The Black & Decker board authorized the appropriate officers of Black & Decker to finalize, execute and deliver the merger agreement and related documents.
 
Also on November 2, 2009, the Stanley board convened a meeting to consider the proposed transaction. Present at the meeting were representatives of Stanley management, Deutsche Bank, Goldman Sachs and Cravath. At the meeting, among other things, Stanley management discussed with the Stanley board the current status of negotiations with Black & Decker, including the recent changes agreed to by Mr. Archibald with respect to his employment arrangements, Deutsche Bank and Goldman Sachs discussed their financial analysis of the proposed transaction and delivered their respective oral opinions, which opinions were confirmed by delivery of written opinions each dated November 2, 2009, to the effect that as of such date, and based on and subject to various assumptions, matters considered and limitations described in such opinions (as more fully described below under the caption “— Opinions of Stanley’s Financial Advisors”), the exchange ratio of 1.275 shares of Stanley common stock to be issued by Stanley in exchange for each share of Black & Decker common stock pursuant to the merger agreement was fair, from a financial point of view, to Stanley, and Cravath discussed the most recent drafts of the merger agreement and the employment agreements and the changes made to such agreements since the last drafts circulated to the Stanley board. During such discussion, the Compensation and Organization Committee of the Stanley board unanimously recommended to the Stanley board that the Stanley board approve the employment agreements with Mr. Archibald, Mr. Lundgren and Mr. Loree. Following further discussion, the Stanley board unanimously approved the merger agreement and the merger and the employment agreements with Mr. Archibald, Mr. Lundgren and Mr. Loree and recommended that Stanley shareholders approve the issuance of Stanley stock in connection with the merger and the amendment of Stanley’s certificate of incorporation as contemplated by the merger agreement. The Stanley board authorized the appropriate officers of Stanley to finalize, execute and deliver the merger agreement, the employment agreements and related documents.
 
Following the board meetings, all agreements were finalized and the merger agreement was then executed by Black & Decker, Stanley and Blue Jay Acquisition Corp. and the employment agreements were executed by Stanley, Mr. Archibald, Mr. Lundgren and Mr. Loree, as applicable. On November 2, 2009, following the closing of trading on the NYSE, Black & Decker and Stanley issued a joint press release announcing the transaction.


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Recommendation of the Board of Directors of Stanley; Stanley’s Reasons for the Merger
 
At a special meeting held on November 2, 2009, the Stanley board of directors determined that the merger and the other transactions contemplated by the merger agreement, including the issuance of Stanley common stock in the merger and the amendment of Stanley’s certificate of incorporation, are advisable and in the best interests of Stanley and its shareholders. Accordingly, the Stanley board of directors recommends that the Stanley shareholders vote “FOR” the proposal to issue shares of Stanley common stock in the merger and “FOR” the proposal to amend Stanley’s certificate of incorporation to increase the number of authorized shares of Stanley common stock and to change Stanley’s name to “Stanley Black & Decker, Inc.”. In reaching these determinations, the Stanley board of directors consulted with Stanley’s management and its legal, financial and other advisors, and also considered numerous factors, including the following factors which the Stanley board of directors viewed as supporting its decisions:
 
  •  that combining Stanley and Black & Decker would create a more globally diversified company, with a broader array of products and services than that offered by Stanley alone;
 
  •  that both Stanley and Black & Decker own well known and respected brands, and the expectation that the combination of such brands would create a supplier of choice in various markets for retailers, commercial customers and individual consumers;
 
  •  that Stanley’s and Black & Decker’s product lines are generally complementary, and do not present areas of significant overlap;
 
  •  the expectation that the combined company would achieve approximately $350 million in annual cost savings by the end of the third year after closing, coming from, among other things, reductions in corporate overhead (estimated at $95 million), business unit and regional consolidation (estimated at $135 million), manufacturing and distribution (estimated at $45 million), and purchasing (estimated at $75 million);
 
  •  the expectation that the combined company would achieve earnings per share accretion (in comparison to Stanley on a stand-alone basis) of approximately $1.00 per share by the end of the third year after closing;
 
  •  the expectation that the combined company would have increased resources to invest in future growth opportunities in comparison to Stanley on a stand-alone basis;
 
  •  the expectation that the combined company would have a broader geographic sales footprint, with greater strength in emerging markets than Stanley on a stand-alone basis;
 
  •  the expectation that the Stanley Fulfillment System could be leveraged at Black & Decker to increase the financial and operational performance of Black & Decker;
 
  •  the expectation that the combined company would generate approximately $1.0 billion in free cash flow annually by the end of the third year after closing;
 
  •  the opportunity to combine two strong senior management teams, as described under “— Board of Directors and Management After the Merger,” with the result that Mr. Lundgren will continue as Chief Executive Officer, Mr. Archibald will serve as Executive Chairman of the board of directors and Mr. Loree will continue as Executive Vice President and Chief Operating Officer, and that the board of directors of the combined company will consist of the nine existing Stanley directors and six directors from Black & Decker, with a lead independent director from Stanley;
 
  •  that Mr. Archibald agreed to forego significant change of control payments and other benefits he was contractually entitled to in connection with the merger, and that a significant portion of his future compensation as Executive Chairman is in the form of equity in Stanley or is contingent on the realization of cost synergies;
 
  •  the opinion of Deutsche Bank, dated November 2, 2009, to the Stanley board of directors to the effect that, as of that date and based on and subject to various assumptions, matters considered and limitations


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  described in the Deutsche Bank opinion included with this joint proxy statement/prospectus as Annex B, the exchange ratio of 1.275 shares of Stanley common stock to be issued by Stanley in exchange for each share of Black & Decker common stock was fair, from a financial point of view, to Stanley as more fully described below under the caption “— Opinions of Stanley’s Financial Advisors — Deutsche Bank”;
 
  •  the opinion of Goldman Sachs, dated November 2, 2009, to the Stanley board of directors to the effect that, as of that date and based on and subject to various assumptions, matters considered and limitations described in the Goldman Sachs opinion included with this joint proxy statement/prospectus as Annex C, the exchange ratio of 1.275 shares of Stanley common stock to be issued by Stanley in exchange for each share of Black & Decker common stock was fair, from a financial point of view, to Stanley as more fully described below under the caption “— Opinions of Stanley’s Financial Advisors — Goldman Sachs”; and
 
  •  the expectation that, after closing, Stanley will continue to have a strong financial profile, with an investment grade credit rating and the continuing ability to pay regular quarterly dividends to its shareholders.
 
In addition to considering the factors described above, the Stanley board of directors also considered the following factors:
 
  •  its knowledge of Stanley’s business, operations, financial condition, earnings and prospects and its knowledge of Black & Decker’s business, operations, financial condition, earnings and prospects, taking into account the results of Stanley’s due diligence review of Black & Decker;
 
  •  the current and prospective competitive climate in the industry in which Stanley and Black & Decker operate, including the potential for further consolidation;
 
  •  the terms and conditions of the merger agreement, including the commitments by both Stanley and Black & Decker to complete the merger, and the likelihood of completing the merger;
 
  •  the terms and conditions of the employment agreements entered into with Mr. Lundgren, Mr. Loree and Mr. Archibald, and the recommendations of Stanley’s compensation consultant in connection therewith;
 
  •  the fact that the merger agreement does not preclude a third party from making a proposal for an acquisition of or business combination with Stanley and, that under certain circumstances more fully described in the sections “— Summary of the Merger Agreement — No Solicitation of Alternative Proposals” beginning on page 93 and “— Summary of the Merger Agreement — Changes in Board Recommendations” beginning on page 93, Stanley may provide information to and negotiate with such a third party and the Stanley board may change its recommendations to Stanley shareholders regarding the transaction with Black & Decker;
 
  •  the fact that the shareholders of both Stanley and Black & Decker would vote on approval of the transaction, including the fact that the required vote of Black & Decker stockholders is approval of at least two-thirds of those shares entitled to vote; and
 
  •  the premium to Black & Decker stockholders implied by the exchange ratio and the fact that the exchange ratio is fixed and will not fluctuate based upon changes in the market price of Stanley or Black & Decker stock between the date of the merger agreement and the date of the completion of the merger.
 
The Stanley board of directors weighed the foregoing against a number of potentially negative factors, including:
 
  •  the challenges inherent in the combination of two businesses of the size and complexity of Stanley and Black & Decker, including the possible diversion of management attention for an extended period of time;


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  •  the risk of not being able to realize all of the anticipated cost savings and operational synergies between Stanley and Black & Decker and the risk that other anticipated benefits might not be realized;
 
  •  the costs associated with completion of the merger and the realization of the benefits expected to be obtained in connection with the merger, including payments owed to management and other employees of Black & Decker and that employees of Stanley and Black & Decker may be laid off;
 
  •  the risk that regulatory agencies may not approve the merger or may impose terms and conditions on their approvals that adversely affect the business and financial results of the combined company (see “— Regulatory Approvals Required for the Merger” beginning on page 85); and
 
  •  the risks of the type and nature described under “Risk Factors,” beginning on page 19 and the matters described under “Special Note Regarding Forward-Looking Statements” beginning on page 24.
 
This discussion of the information and factors considered by the Stanley board of directors includes the principal positive and negative factors considered by the board of directors, but is not intended to be exhaustive and may not include all of the factors considered by the board of directors of Stanley. In view of the wide variety of factors considered in connection with its evaluation of the merger and the other transactions contemplated in connection with the merger, and the complexity of these matters, the Stanley board of directors did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the merger and the other transactions contemplated in connection with the merger and to make its recommendations to Stanley shareholders. Rather, the board of directors of Stanley viewed its decisions as being based on the totality of the information presented to it and the factors it considered. In addition, individual members of the Stanley board of directors may have given differing weights to different factors.
 
Opinions of Stanley’s Financial Advisors
 
Stanley has retained Deutsche Bank and Goldman Sachs as its financial advisors to advise the Stanley board of directors in connection with the merger. Deutsche Bank and Goldman Sachs are collectively referred to herein as “Stanley’s Financial Advisors”.
 
On November 2, 2009, at a meeting of the Stanley board of directors held to evaluate the proposed merger, Stanley’s Financial Advisors delivered to the Stanley board of directors their respective oral opinions, which opinions were confirmed by delivery of written opinions each dated November 2, 2009, to the effect that, as of that date and based on and subject to various assumptions, matters considered and limitations described in such opinions, the exchange ratio of 1.275 shares of Stanley common stock to be issued by Stanley in exchange for each share of Black & Decker common stock pursuant to the merger agreement was fair, from a financial point of view, to Stanley.
 
The Deutsche Bank opinion and the Goldman Sachs opinion, the full texts of which describe the assumptions made, procedures followed, matters considered and limitations on the review undertaken, are included in this joint proxy statement/prospectus as Annex B and Annex C, respectively. The summaries of the Deutsche Bank opinion and Goldman Sachs opinion described below are qualified in their entirety by reference to the full texts of the opinions.
 
Opinion of Deutsche Bank
 
Pursuant to an engagement letter dated July 10, 2009, Deutsche Bank acted as Stanley’s financial advisor in connection with the merger. At the meeting of the Stanley board of directors on November 2, 2009, Deutsche Bank rendered its oral opinion, subsequently confirmed in writing, to the Stanley board of directors to the effect that, as of that date and based on and subject to various assumptions, matters considered and limitations described in the Deutsche Bank opinion, the exchange ratio of 1.275 shares of Stanley common stock to be issued by Stanley in exchange for each share of Black & Decker common stock was fair, from a financial point of view, to Stanley.


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The full text of the written opinion of Deutsche Bank, dated November 2, 2009, which sets forth the assumptions made, matters considered and limits on the review undertaken by Deutsche Bank in rendering its opinion, is included as Annex B to this joint proxy statement/prospectus. Stanley encourages its shareholders to read the opinion carefully in its entirety. The Deutsche Bank opinion does not express an opinion or recommendation as to how any holder of Stanley common stock should vote with respect to the transactions contemplated by the merger agreement. The summary of the Deutsche Bank opinion set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion included as Annex B.
 
In connection with its role as Stanley’s financial advisor, and in arriving at its opinion, Deutsche Bank, among other things:
 
  •  reviewed certain publicly available financial and other information concerning Stanley and Black & Decker;
 
  •  reviewed certain internal analyses, financial forecasts and other information relating to Stanley prepared by management of Stanley;
 
  •  reviewed certain internal analyses, financial forecasts and other information relating to Black & Decker prepared by management of Black & Decker;
 
  •  reviewed certain analyses and financial forecasts relating to Black & Decker prepared by management of Stanley;
 
  •  held discussions with members of management of Stanley and Black & Decker regarding the businesses and prospects of Stanley and Black & Decker, respectively, and the prospects of the combined company, including certain cost savings and operating synergies jointly projected by the managements of Black & Decker and Stanley to result from the transactions contemplated by the merger agreement, which are referred to below as the “Transaction Synergies”;
 
  •  reviewed the reported prices and trading activity for both the Stanley common stock and the Black & Decker common stock;
 
  •  to the extent publicly available, compared certain financial and stock market information for Stanley and Black & Decker with similar information for certain other companies Deutsche Bank considered relevant whose securities are publicly traded;
 
  •  to the extent publicly available, reviewed the financial terms of certain recent business combinations which Deutsche Bank deemed relevant;
 
  •  reviewed the merger agreement; and
 
  •  performed such other studies and analyses and considered such other factors as Deutsche Bank deemed appropriate.
 
Deutsche Bank did not assume responsibility for independent verification of, and did not independently verify, any information, whether publicly available or furnished to it, concerning Stanley or Black & Decker, including, without limitation, any financial information considered in connection with the rendering of its opinion. Accordingly, for purposes of its opinion, Deutsche Bank, with Stanley’s permission, assumed and relied upon the accuracy and completeness of all such information. Deutsche Bank did not conduct a physical inspection of any of the properties or assets, and did not prepare or obtain any independent evaluation or appraisal of any of the assets or liabilities (including any contingent, derivative or off-balance-sheet assets and liabilities), of Stanley or Black & Decker or any of their respective subsidiaries, nor did Deutsche Bank evaluate the solvency or fair value of Stanley or Black & Decker under any state or federal law relating to bankruptcy, insolvency or similar matters. With respect to financial forecasts and projections, including the analyses and forecasts of the Transaction Synergies, made available to Deutsche Bank and used in its analyses, Deutsche Bank assumed with Stanley’s permission that they had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of Stanley as to the matters covered thereby. In rendering its opinion, Deutsche Bank expressed no view as to the reasonableness of such forecasts


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and projections, including the Transaction Synergies, or the assumptions on which they were based. Deutsche Bank’s opinion was necessarily based upon economic, market and other conditions, and the information made available to it, as of the date thereof. Deutsche Bank expressly disclaimed any undertaking or obligation to advise any person of any change in any fact or matter affecting its opinion of which it become aware after the date thereof.
 
For purposes of rendering its opinion, Deutsche Bank assumed with Stanley’s permission that, in all respects material to its analysis, the transactions contemplated by the merger agreement will be consummated in accordance with its terms, without any material waiver, modification or amendment of any term, condition or agreement. Deutsche Bank also assumed that all material governmental, regulatory, contractual or other approvals and consents required in connection with the consummation of the merger will be obtained and that in connection with obtaining any necessary governmental, regulatory, contractual or other approvals and consents, no material restrictions, terms or conditions will be imposed. Deutsche Bank is not a legal, regulatory, tax or accounting expert and relied on the assessments made by Stanley and its advisors with respect to such issues.
 
The Deutsche Bank opinion was approved and authorized for issuance by a fairness opinion review committee and was addressed to, and for the use and benefit of, the Stanley board of directors. The opinion was limited to the fairness, from a financial point of view, to Stanley of the exchange ratio of 1.275 shares of Stanley common stock to be issued by Stanley in exchange for each share of Black & Decker common stock. Stanley did not ask Deutsche Bank to, and its opinion did not, address the fairness of the transactions contemplated by the merger agreement, or any consideration received in connection therewith, to the holders of any class of securities, creditors or other constituencies of Stanley, nor did it address the fairness of the contemplated benefits of the transactions contemplated by the merger agreement. Deutsche Bank did not express any view on, and its opinion did not address, any other term or aspect of the merger agreement or transactions contemplated thereby or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with the transactions contemplated thereby. Deutsche Bank expressed no opinion as to the merits of the underlying decision by Stanley to engage in the transactions contemplated by the merger agreement or the relative merits of such transactions as compared to any alternative business strategies, nor did Deutsche Bank express an opinion or recommendation as to how any holder of Stanley’s common stock should vote with respect to the transactions contemplated by the merger agreement. Deutsche Bank did not express any view or opinion as to the fairness, financial or otherwise, of the amount or nature of any compensation payable to or to be received by any of the officers, directors, or employees of Stanley or Black & Decker, or any class of such persons, in connection with the transactions contemplated by the merger agreement whether relative to the amounts to be received by any other person pursuant to the merger agreement or otherwise. Deutsche Bank’s opinion did not in any manner address the prices at which Stanley common stock will trade following the announcement or consummation of the transactions contemplated by the merger agreement.
 
Deutsche Bank is an affiliate of Deutsche Bank AG. During the two years preceding the date of the opinion letter, Deutsche Bank AG and its affiliates had not provided any significant investment banking, commercial banking (including extension of credit) or other financial services to Black & Decker, Stanley or their respective affiliates. Deutsche Bank AG and its affiliates may provide investment and commercial banking services to Stanley, Black & Decker or their respective affiliates in the future for which Deutsche Bank would expect Deutsche Bank AG and its affiliates to receive compensation. In the ordinary course of business, Deutsche Bank AG and its affiliates may actively trade in the securities and other instruments and obligations of Black & Decker, Stanley, or their respective affiliates for their own accounts and for the accounts of their customers. Accordingly, Deutsche Bank AG and its affiliates may at any time hold a long or short position in such securities, instruments and obligations.
 
The Stanley board of directors engaged Deutsche Bank as a financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the merger. Pursuant to its engagement letter with Stanley, Deutsche Bank will be paid a transaction fee for its services as financial advisor to Stanley in connection with the merger in the amount of approximately $14 million, a portion of which was paid upon delivery of its opinion and a substantial portion of which is


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payable contingent upon completion of the merger. Stanley also agreed to reimburse Deutsche Bank for its expenses, and to indemnify Deutsche Bank against certain liabilities, in connection with its engagement.
 
Opinion of Goldman Sachs
 
Pursuant to an engagement letter dated July 23, 2009, Goldman Sachs acted as Stanley’s financial advisor in connection with the merger. At the meeting of the Stanley board of directors on November 2, 2009, Goldman Sachs rendered its oral opinion, subsequently confirmed in writing, to the Stanley board of directors to the effect that, as of that date and based on and subject to various assumptions, matters considered and limitations set forth in the Goldman Sachs opinion, the exchange ratio of 1.275 shares of Stanley common stock to be issued by Stanley in exchange for each share of Black & Decker common stock was fair, from a financial point of view, to Stanley.
 
The full text of the written opinion of Goldman Sachs, dated November 2, 2009, which sets forth the assumptions made, matters considered and limits on the review undertaken by Goldman Sachs in rendering its opinion, is included as Annex C to this joint proxy statement/prospectus. Stanley encourages its shareholders to read the opinion carefully in its entirety. The Goldman Sachs opinion is not a recommendation as to how any holder of Stanley common stock should vote with respect to the merger or any other matter. The summary of the Goldman Sachs opinion set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion included as Annex C.
 
In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:
 
  •  the merger agreement;
 
  •  annual reports to shareholders and Annual Reports on Form 10-K of Stanley and Black & Decker for the five fiscal years ended January 3, 2009 and December 31, 2008 respectively;
 
  •  certain interim reports to shareholders and Quarterly Reports on Form 10-Q of Stanley and Black & Decker;
 
  •  certain other communications from Stanley and Black & Decker to their respective shareholders;
 
  •  certain publicly available research analyst reports for Black & Decker and Stanley;
 
  •  certain internal financial analyses and forecasts for Black & Decker prepared by its management; and
 
  •  certain financial analyses and forecasts for Black & Decker and certain internal financial analyses and forecasts for Stanley, in each case, as prepared by the management of Stanley and approved for Goldman Sachs’ use by Stanley, which are referred to below as the “forecasts”, including the Transaction Synergies that were also approved for Goldman Sachs’ use by Stanley.
 
Goldman Sachs also held discussions with members of the senior managements of Stanley and Black & Decker regarding their assessment of the past and current business operations, financial condition and future prospects of Black & Decker and with the members of senior management of Stanley regarding their assessment of the past and current business operations, financial condition and future prospects of Stanley and the strategic rationale for, and the potential benefits of, the transactions contemplated by the merger agreement. In addition, Goldman Sachs reviewed the reported price and trading activity for the shares of Stanley’s common stock and Black & Decker’s common stock, compared certain financial and stock market information for Stanley and Black & Decker with similar information for certain other companies the securities of which are publicly traded, reviewed the financial terms of certain recent business combinations in the tools industry specifically and in other industries generally and performed such other studies and analyses, and considered such other factors, as Goldman Sachs considered appropriate.
 
For purposes of rendering the opinion described above, Goldman Sachs relied upon and assumed, without assuming any responsibility for independent verification, the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by Goldman


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Sachs, and Goldman Sachs did not assume any liability for any such information. In that regard, Goldman Sachs assumed with Stanley’s consent that the forecasts, including the Transaction Synergies, had been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of Stanley. In addition, Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or off-balance-sheet assets and liabilities) of Stanley or Black & Decker or any of their respective subsidiaries, nor was any such evaluation or appraisal furnished to Goldman Sachs. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the transactions contemplated by the merger agreement will be obtained without any adverse effect on Stanley or Black & Decker or on the expected benefits of the transactions contemplated by the merger agreement in any way meaningful to Goldman Sachs’ analysis. Goldman Sachs also assumed that the transactions contemplated by the merger agreement will be consummated on the terms set forth in the merger agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to Goldman Sachs’ analysis. Goldman Sachs did not express any opinion as to the impact of the transactions contemplated by the merger agreement on the solvency or viability of Stanley or Black & Decker or the ability of Stanley or Black & Decker to pay its obligations when they come due. Goldman Sachs’ opinion did not address any legal, regulatory, tax or accounting matters.
 
Goldman Sachs’ opinion did not address the underlying business decision of Stanley to engage in the transactions contemplated by the merger agreement, or the relative merits of the transactions contemplated by the merger agreement as compared to any strategic alternatives that may be available to Stanley. The opinion addressed only the fairness from a financial point of view to Stanley, as of the date thereof, of the exchange ratio of 1.275 shares of Stanley common stock to be issued by Stanley in exchange for each share of Black & Decker common stock pursuant to the merger agreement. Goldman Sachs did not express any view on, and Goldman Sachs’ opinion does not address, any other term or aspect of the merger agreement or the transactions contemplated thereby or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with the transactions contemplated thereby, including, without limitation, the fairness of the transactions contemplated by the merger agreement to, or any consideration received in connection therewith by, the holders of any class of securities, creditors, or other constituencies of Stanley; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Stanley or Black & Decker, or any class of such persons in connection with the transactions contemplated by the merger agreement, whether relative to the exchange ratio of 1.275 shares of Stanley common stock to be issued by Stanley in exchange for each share of Black & Decker common stock pursuant to the merger agreement or otherwise. Goldman Sachs did not express any opinion as to the prices at which shares of Stanley’s common stock will trade at any time. Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Goldman Sachs as of, the date of its opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming the opinion based on circumstances, developments or events occurring after such date. Goldman Sachs’ advisory services and the opinion expressed therein were provided for the information and assistance of the Stanley board of directors in connection with its consideration of the transactions contemplated by the merger agreement and such opinion did not constitute a recommendation as to how any holder of shares of Stanley’s common stock should vote with respect to such transactions contemplated by the merger agreement or any other matter. The opinion was approved by a fairness committee of Goldman Sachs.
 
Goldman Sachs and its affiliates are engaged in investment banking and financial advisory services, commercial banking, securities trading, investment management, principal investment, financial planning, benefits counseling, risk management, hedging, financing, brokerage activities and other financial and non-financial activities and services for various persons and entities. In the ordinary course of these activities and services, Goldman Sachs and its affiliates may at any time make or hold long or short positions and investments, as well as actively trade or effect transactions, in the equity, debt and other securities (or related derivative securities) and financial instruments (including bank loans and other obligations) of third parties, Stanley, Black & Decker and any of their respective affiliates or any currency or commodity that may be involved in the transaction contemplated by the merger agreement for their own account and for the accounts


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of their customers. Goldman Sachs acted as financial advisor to Stanley in connection with, and participated in certain of the negotiations leading to, the transactions contemplated by the merger agreement. In addition, Goldman Sachs has provided certain investment banking and other financial services to Stanley and its affiliates from time to time, including having acted as lead bookrunner on a public offering of Stanley’s 5.000% notes due 2010 (aggregate principal amount of $200 million) in March 2007; co-manager on a public offering of Stanley’s floating rate convertible notes due 2012 (aggregate principal amount of $330 million) in March 2007; counter-party with respect to a derivative transaction entered into by Stanley in March 2007; and a participant in Stanley’s revolving credit facility (aggregate principal amount of $800 million) in February 2008. During the past two years, Goldman Sachs has received aggregate fees from Stanley for investment banking and other financial services unrelated to the merger of approximately $150,000. Goldman Sachs also may provide investment banking and other financial services to Stanley and Black & Decker in the future, for which it may receive compensation.
 
The Stanley board of directors engaged Goldman Sachs as a financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the merger. Pursuant to the terms of its engagement letter with Stanley, Goldman Sachs will be paid a transaction fee for its services in connection with the merger in the amount of approximately $12 million, a portion of which was paid upon the execution of the merger agreement and a substantial portion of which is payable contingent upon completion of the merger, plus an additional fee at Stanley’s sole discretion of up to $2.5 million. In addition, Stanley has agreed to reimburse Goldman Sachs for its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.
 
Summary of Material Financial Analyses
 
The following is a summary of the material financial analyses contained in the joint presentation that was made by Stanley’s Financial Advisors to the Stanley board of directors on November 2, 2009 and that were used by Stanley’s Financial Advisors in connection with rendering their respective opinions described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Stanley’s Financial Advisors, nor does the order of analyses described represent relative importance or weight given to those analyses by Stanley’s Financial Advisors. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Stanley’s Financial Advisors’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before October 30, 2009, and is not necessarily indicative of current market conditions.
 
Transaction Overview.  Based on the closing price per share of Stanley common stock of $45.23 on October 30, 2009, the last full trading day prior to the meeting of the Stanley board of directors on November 2, 2009, and the exchange ratio of 1.275 shares of Stanley common stock to be issued in the merger for each share of Black & Decker common stock, Stanley’s Financial Advisors noted that the implied aggregate value of the consideration to be paid by Stanley in the merger as of that date was approximately $3.6 billion, or an implied transaction price per share of Black & Decker common stock of approximately $57.67, and the implied enterprise value of Black & Decker as of that date based on that implied transaction price per share of Black & Decker common stock was approximately $4.5 billion.
 
Stanley’s Financial Advisors then calculated the premium to be paid in the merger based on the implied transaction price of approximately $57.67 per share of Black & Decker common stock as of October 30, 2009 relative to the closing price per share of Black & Decker common stock as of that date, the volume-weighted average closing price per share of Black & Decker common stock for the 30-day period ended October 30, 2009, and the 52-week high trading price per share of Black & Decker common stock as of October 30, 2009.


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This analysis indicated the following:
 
                 
        Implied Premium / (Discount) of
        Implied Transaction Price
Period
  Black & Decker Share Price   of $57.67
 
October 30, 2009
  $ 47.22       22.1 %
30-day volume weighted average price
  $ 47.89       20.4 %
52-week high (November 4, 2008)
  $ 52.49       9.9 %
 
Stanley’s Financial Advisors also reviewed and compared the premiums paid in all transactions with a U.S. target company having a transaction value over $500 million and announced between 2004 and 2009. Stanley’s Financial Advisors found the median one-day transaction premiums paid in each year were as follows:
 
                         
                    2009
  2004 - 2009
2004   2005   2006   2007   2008   Year to Date   Year to Date
 
21.3%
  21.5%   20.8%   20.8%   28.5%   33.8%   22.6%
 
Exchange Ratio Analysis.  Stanley’s Financial Advisors reviewed the trading prices of Black & Decker common stock and Stanley common stock for the period from October 30, 2004 through October 30, 2009. For each trading day during that period, Stanley’s Financial Advisors derived the implied historical exchange ratio by dividing the closing price per share of Black & Decker common stock by the closing price per share of Stanley common stock. The following table sets forth the average implied historical exchange ratios as of October 30, 2009 and for the specified periods ended October 30, 2009, and the premium represented by such ratio as compared to the exchange ratio of 1.275 shares of Stanley common stock to be issued in the merger for each share of Black & Decker common stock.
 
                 
        Premium / (Discount) of
        1.275x Exchange Ratio
    Implied Historical
  to Implied Historical
Period
  Exchange Ratio   Exchange Ratio
 
October 30, 2009
    1.044 x     22.1 %
Prior 30 day period
    1.071 x     19.0 %
Prior 90 day period
    1.067 x     19.5 %
Prior 180 day period
    0.977 x     30.5 %
Last 1 year period
    1.048 x     21.6 %
Last 3 year period
    1.332 x     (4.3 )%
Last 5 year period
    1.508 x     (15.5 )%
 
Historical Share Price Analysis.  Stanley’s Financial Advisors noted that the low and high closing prices per share of Black & Decker common stock during the 52-week period ending on October 30, 2009 were approximately $20 and $52, and the low and high closing prices per share of Stanley common stock during the same period were approximately $23 and $48. Stanley’s Financial Advisors also reviewed the range of daily implied exchange ratios during the 52-week period ending on October 30, 2009 by dividing the closing price per share of Black & Decker common stock by the closing price per share of Stanley common stock on each trading day. This analysis indicated a range of implied exchange ratios of 0.808 to 1.551, compared to the exchange ratio of 1.275 shares of Stanley common stock to be issued in the merger for each share of Black & Decker common stock.
 
Illustrative Discounted Cash Flow Analysis.  Stanley’s Financial Advisors performed an illustrative discounted cash flow analysis to determine a range of illustrative implied present values per share of Black & Decker common stock based on projected unlevered free cash flows for Black & Decker on a stand-alone basis for the years ending December 31, 2009 through 2014, using estimates from Stanley management. The analysis was based on a range of discount rates from 9.5% to 11.5% and a terminal value based on EBITDA terminal multiples ranging from 7.0x to 9.0x applied to the estimated 2014 EBITDA of Black & Decker. This analysis resulted in a range of implied present values of approximately $43 to $61 per share of Black & Decker common stock.


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Stanley’s Financial Advisors also performed an illustrative discounted cash flow analysis to determine a range of illustrative implied present values per share of Stanley common stock based on projected unlevered free cash flows for Stanley on a stand-alone basis for the years ending December 31, 2009 through 2014, using estimates from Stanley management and the same ranges of discount rates and terminal values summarized above. This analysis resulted in a range of implied present values of approximately $40 to $55 per share of Stanley common stock.
 
Stanley’s Financial Advisors also calculated the ratio implied by dividing the low end of the implied equity value per share of Black & Decker common stock of $43 by the high end of the implied equity value per share of Stanley common stock of $55. Stanley’s Financial Advisors also calculated the ratio implied by dividing the high end of the implied equity value per share of Black & Decker common stock of $61 by the low end of the implied equity value per share of Stanley common stock of $40. This analysis indicated a range of implied exchange ratios of 0.782 to 1.525, compared to the exchange ratio of 1.275 shares of Stanley common stock to be issued in the merger for each share of Black & Decker common stock.
 
Transaction Synergies Analysis.  Stanley’s Financial Advisors performed an illustrative discounted cash flow analysis to determine a range of illustrative implied present values per share of Black & Decker common stock of the potential Transaction Synergies, including working capital and capital expenditure improvements, change of control costs and costs to achieve those Transaction Synergies. The analysis was based on a range of discount rates from 9.5% to 11.5% and a terminal value based on terminal multiples ranging from 7.0x to 9.0x. This analysis resulted in a range of implied present values of the potential Transaction Synergies projected by Stanley management to be realized from the merger of approximately $34 to $44 per share of Black & Decker common stock.
 
Illustrative Pro Forma Discounted Cash Flow Analysis.  Stanley’s Financial Advisors performed an illustrative discounted cash flow analysis to determine a range of illustrative implied present values per share of Stanley common stock based on projected pro forma unlevered free cash flows for the combined company post-transaction for the years ending December 31, 2009 through 2014, using estimates from Stanley management that included the potential Transaction Synergies, including working capital and capital expenditure improvements, change of control costs and costs to achieve those Transaction Synergies. The analysis was based on a range of discount rates from 9.5% to 11.5% and a terminal value based on EBITDA terminal multiples ranging from 7.0x to 9.0x applied to the estimated 2014 EBITDA of the combined company. This analysis resulted in a range of implied present values of approximately $51 to $70 per share of Stanley common stock.
 
Selected Companies Analysis.  Stanley’s Financial Advisors reviewed and compared certain financial information, ratios and public market multiples for Stanley and Black & Decker to the corresponding financial information, ratios and public market multiples for the following publicly traded corporations in the building products, diversified manufacturing, and security industries:
 
Building Products Companies
 
  •  Masco Corporation
 
  •  Mohawk Industries, Inc.
 
  •  Newell Rubbermaid Inc.
 
  •  Owens Corning
 
  •  Snap-on Incorporated
 
  •  Techtronic Industries Company Limited
 
Diversified Manufacturing Companies
 
  •  Cooper Industries plc
 
  •  Danaher Corporation


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  •  Ingersoll-Rand plc
 
  •  Illinois Tool Works Inc.
 
Security Companies
 
  •  Assa Abloy AB
 
  •  Brink’s Home Security Holdings, Inc. (d/b/a Broadview Security)
 
  •  Checkpoint Systems, Inc.
 
  •  Diebold, Incorporated
 
  •  Niscayah Group AB
 
  •  Tyco International Ltd.
 
Although none of the selected companies is directly comparable to Stanley or Black & Decker, the companies included were chosen because they are publicly traded companies with operations that for purposes of analysis may be considered similar to certain operations of Stanley and Black & Decker.
 
In their analysis, Stanley’s Financial Advisors derived and compared multiples for Stanley, Black & Decker and the selected companies, calculated as follows:
 
  •  the average during the past five years of the price per share divided by estimated earnings per share, or “EPS”, for each then-current projected fiscal year, which is referred to below as “5-Year Average P/E”;
 
  •  the average during the past five years of firm value as a multiple of estimated EBITDA for each then-current projected fiscal year, which is referred to below as “5-year Average FV/EBITDA”;
 
  •  the price per share divided by estimated EPS for calendar year 2009, which is referred to below as “2009E P/E”;
 
  •  the price per share divided by estimated EPS for calendar year 2010, which is referred to below as “2010E P/E”;
 
  •  the firm value as a multiple of estimated EBITDA for calendar year 2009, which is referred to below as “2009E FV/EBITDA”; and
 
  •  the firm value as a multiple of estimated EBITDA for calendar year 2010, which is referred to below as “2010E FV/EBITDA”.
 
The multiples and ratios for each of the selected companies were calculated using the closing price of the selected companies’ common stock on October 30, 2009 and were based on the most recent publicly available information and Capital IQ and analyst estimates for 2009 and 2010. The multiples and ratios for Stanley and Black & Decker were calculated using the respective closing prices per share of Stanley common stock and Black & Decker common stock on October 30, 2009 and were based on Stanley management estimates.
 
This analysis indicated the following multiples:
 
                                                     
    Building Products   Diversified Manufacturing   Security       Black &
    Range   Median   Range   Median   Range   Median   Stanley   Decker
 
5-Year Average P/E
  13.8x - 25.9x     15.9x     12.7x - 19.4x     16.1x     14.4x - 19.2x     16.4x       13.7x       13.3x  
5-year Average FV/EBITDA
  7.7x - 9.3x     8.9x     8.8x - 12.1x     9.7x     5.9x - 10.1x     9.7x       7.8x       8.1x  
2009E P/E
  11.0x - 30.8x     17.3x     16.0x - 25.5x     19.3x     14.3x - 23.6x     15.8x       17.5x       18.8x  
2010E P/E
  9.9x - 21.1x     14.3x     14.0x - 18.0x     16.0x     12.8x - 20.9x     14.0x       14.8x       16.0x  
2009E FV/EBITDA
  7.5x - 13.3x     8.3x     9.9x - 13.1x     11.1x     6.8x - 9.6x     8.6x       8.7x       9.2x  
2010E FV/EBITDA
  7.0x - 10.1x     7.5x     8.9x - 10.9x     9.4x     6.2x - 9.5x     7.5x       8.4x       9.1x  
 
Using a reference range of 9.9x to 21.1x Black & Decker’s and Stanley’s 2010 estimated EPS, which represented the lowest and highest multiples for the range of trading multiples of 2010E P/E summarized in


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the table above, Stanley’s Financial Advisors determined a range of implied equity values per share of Black & Decker common stock and Stanley common stock, respectively. This analysis indicated a range of implied values per share of Black & Decker common stock of approximately $25 to $54, and a range of implied values per share of Stanley common stock of approximately $28 to $60.
 
Stanley’s Financial Advisors also calculated the ratio implied by dividing the low end of the implied equity value per share of Black & Decker common stock of $25 by the high end of the implied equity value per share of Stanley common stock of $60. Stanley’s Financial Advisors also calculated the ratio implied by dividing the high end of the implied equity value per share of Black & Decker common stock of $54 by the low end of the implied equity value per share of Stanley common stock of $28. This analysis indicated a range of implied exchange ratios of 0.417 to 1.929, compared to the exchange ratio of 1.275 shares of Stanley common stock to be issued in the merger for each share of Black & Decker common stock.
 
Selected Transactions Analysis.  Stanley’s Financial Advisors analyzed certain information relating to the following transactions involving companies in the tool manufacturing industry since 2001 and having a transaction value greater than $150 million. The transactions considered and the month and year each transaction was announced were as follows:
 
         
Target
 
Acquiror
  Month and Year Announced
 
Ames True Temper business
  Wind Point Partners   December 2001
American Tool Companies, Inc. 
  Newell Rubbermaid Inc.   March 2002
American Saw & Mfg. Company
  Newell Rubbermaid Inc.   November 2002
Pentair, Inc.’s Tools Group
  Black & Decker   July 2004
Atlas Copco’s Milwaukee Electric Tools Business
  Techtronic Industries Company
Limited
  August 2004
Fimalac, S.A.’s Facom Tools
  Stanley   July 2005
National Manufacturing Corporation (d/b/a National Hardware)
  Stanley   September 2005
 
While none of the companies (other than Stanley and Black & Decker) that participated in the selected transactions are directly comparable to Stanley and Black & Decker and none of the transactions in the selected transactions analysis is directly comparable to the merger, Stanley’s Financial Advisors selected these transactions because each of the target companies in the selected transactions was involved in the tool manufacturing industry and had operating characteristics and products that for purposes of analysis may be considered similar to certain of Black & Decker’s operating characteristics and products.
 
For each of the selected transactions, Stanley’s Financial Advisors calculated and compared enterprise value as a multiple of the target company’s latest twelve months EBITDA, which is referred to below as “LTM EBITDA”. In addition, for those transactions in which the parties disclosed run-rate annual synergy expectations, Stanley’s Financial Advisors also calculated and compared enterprise value as a multiple of the target company’s latest twelve months EBITDA including such disclosed synergies by adding such disclosed run-rate annual synergy expectations to the target’s LTM EBITDA, which is referred to below as “LTM EBITDA (including disclosed synergies).”
 
This analysis indicated the following multiples (including the multiples implied by the merger at the exchange ratio of 1.275 shares of Stanley common stock to be issued in the merger for each share of Black & Decker common stock):
 
                                 
    Implied Multiples
    Low   High   Median   Merger
 
LTM EBITDA
    6.3x       11.6x       7.4x       11.0x  
LTM EBITDA (including disclosed synergies)
    4.3x       6.3x       5.0x       5.9x  
 
Stanley’s Financial Advisors also calculated enterprise value as a multiple of average annual EBITDA for Black & Decker for the five year period from 2006 through 2010, in each case based on publicly available information and Stanley management estimates, which is referred to below as “Cycle Average EBITDA”. In


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addition, Stanley’s Financial Advisors also calculated enterprise value as a multiple of Black & Decker’s Cycle Average EBITDA, including the potential run-rate Transaction Synergies that were added to Black & Decker’s average EBITDA for the five year period from 2006 to 2010, which is referred to below as “Cycle Average EBITDA (including Transaction Synergies)”.
 
This analysis indicated the following multiples implied by the merger at the exchange ratio of 1.275 shares of Stanley common stock to be issued in the merger for each share of Black & Decker common stock:
 
         
    Implied Multiple
 
Cycle Average EBITDA
    7.1x  
Cycle Average EBITDA (including Transaction Synergies)
    4.5x  
 
Using a reference range of 6.3x to 11.6x Black & Decker’s LTM EBITDA, which represented the lowest and highest multiples for LTM EBITDA summarized in the table above, and a reference range of 4.3x to 6.3x Black & Decker’s EBITDA (including the potential run-rate Transaction Synergies that were added to Black & Decker’s LTM EBITDA), which represented the lowest and highest multiples for LTM EBITDA (including disclosed synergies) summarized in the table above, Stanley’s Financial Advisors determined a range of implied equity values for Black & Decker. This analysis indicated a range of implied values per share of Black & Decker common stock of approximately $27 to $62 (excluding Transaction Synergies), and approximately $38 to $63 (including Transaction Synergies).
 
Stanley’s Financial Advisors also calculated the ratio implied by dividing the low end of the implied equity values per share of Black & Decker common stock of $27 and $38, respectively, by the high end of the implied equity value per share of Stanley common stock of $60 calculated using the selected companies analysis summarized above. Stanley’s Financial Advisors also calculated the ratio implied by dividing the high end of the implied equity values per share of Black & Decker common stock of $62 and $63, respectively, by the low end of the implied equity value per share of Stanley common stock of $28 calculated using the selected companies analysis summarized above. This analysis indicated a range of implied exchange ratios of 0.450 to 2.214 (excluding Transaction Synergies) and 0.633x to 2.250x (including Transaction Synergies), compared in each case to the exchange ratio of 1.275 shares of Stanley common stock to be issued in the merger for each share of Black & Decker common stock.
 
Using a reference range of 6.3x to 11.6x Black & Decker’s Cycle Average EBITDA, which represented the lowest and highest multiples for LTM EBITDA summarized in the table above, and a reference range of 4.3x to 6.3x Black & Decker’s Cycle Average EBITDA (including the potential run-rate Transaction Synergies that were added to Black & Decker’s LTM EBITDA), Stanley’s Financial Advisors determined a range of implied equity values per share for Black & Decker common stock. This analysis indicated a range of implied values per share of Black & Decker common stock of approximately $50 to $105 (excluding Transaction Synergies), and approximately $54 to $86 (including Transaction Synergies).
 
Stanley’s Financial Advisors also calculated the ratio implied by dividing the low end of the implied equity values per share of Black & Decker common stock of $50 and $54, respectively, by the high end of the implied equity value per share of Stanley common stock of $60 calculated using the selected companies analysis summarized above. Stanley’s Financial Advisors also calculated the ratio implied by dividing the high end of the implied equity values per share of Black & Decker common stock of $105 and $86, respectively, by the low end of the implied equity value per share of Stanley common stock of $28 calculated using the selected companies analysis summarized above. This analysis indicated a range of implied exchange ratios of 0.833 to 3.750 (excluding Transaction Synergies) and 0.900 to 3.071 (including Transaction Synergies), compared in each case to the exchange ratio of 1.275 shares of Stanley common stock to be issued in the merger for each share of Black & Decker common stock.
 
Contribution Analysis.  Stanley’s Financial Advisors analyzed and compared Stanley and Black & Decker shareholders’ respective expected percentage ownership of the combined company to Stanley’s and Black & Decker’s respective contributions to the combined company based upon revenues, EBITDA and net income for each company on a stand-alone basis for the years from 2008 through 2011, as well as the average


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revenues, EBITDA and net income for each company on a stand-alone basis during the period from 2006 through 2010, in each case based on publicly available information and Stanley management estimates, as well as the market capitalization and enterprise value of each company as of October 30, 2009. Stanley’s Financial Advisors noted that the implied equity ownership of Black & Decker stockholders in the combined company based on the exchange ratio of 1.275 shares of Stanley common stock to be issued in the merger for each share of Black & Decker common stock represented 49.5%. This analysis indicated that the implied equity value percentage contribution of Black & Decker to the combined company based on the contribution analyses described above ranged from 39% to 64%.
 
Pro Forma Analysis.  Stanley’s Financial Advisors analyzed the potential pro forma impact of the merger on Stanley’s estimated EPS for fiscal years 2010 through 2012 both on a GAAP basis, referred to below as “GAAP EPS,” and on an adjusted basis, referred to below as “Adjusted EPS,” which excluded the estimated impact of estimated restructuring and other non-recurring costs associated with the merger, in each case assuming that the potential Transaction Synergies are realized at the rate set forth in the forecasts. In this analysis, earnings estimates for Black & Decker and Stanley were based on earnings estimates prepared by Stanley management. For purposes of this analysis, the earnings estimates assumed for illustrative purposes that the merger would close on December 31, 2009. This analysis indicated that the merger would be dilutive in fiscal year 2010 and accretive in fiscal years 2011 and 2012 on both a GAAP EPS and on an Adjusted EPS basis.
 
General.  The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying each of Stanley’s Financial Advisor’s opinions. In arriving at their fairness determinations, Stanley’s Financial Advisors considered the results of all of their analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Stanley’s Financial Advisors made their determination as to fairness on the basis of experience and professional judgment after considering the results of all of their analyses. No company (other than Stanley or Black & Decker) or transaction used in the above analyses as a comparison is directly comparable to Stanley or Black & Decker or the merger.
 
Stanley’s Financial Advisors prepared these analyses for purposes of providing their respective opinions to the Stanley board of directors as to the fairness to Stanley from a financial point of view of the exchange ratio of 1.275 shares of Stanley common stock to be issued in the merger for each share of Black & Decker common stock. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results, including estimates of the Transaction Synergies, are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Stanley, Black & Decker, Stanley’s Financial Advisors or any other person assumes responsibility if future results are materially different from those forecast.
 
The exchange ratio of 1.275 shares of Stanley common stock to be issued in the merger for each share of Black & Decker common stock was determined through arm’s-length negotiations between Stanley and Black & Decker and was approved by the Stanley board of directors. Stanley’s Financial Advisors provided advice to Stanley during these negotiations. Stanley’s Financial Advisors did not, however, recommend any specific exchange ratio to Stanley or its board of directors or that any specific exchange ratio constituted the only appropriate exchange ratio for the merger.
 
As described above, the respective opinions from Stanley’s Financial Advisors to the Stanley board of directors were one of a number of factors taken into consideration by the Stanley board of directors in making its determination to approve the merger agreement and the merger. The foregoing summary does not purport to be a complete description of the analyses performed by Stanley’s Financial Advisors in connection with their fairness opinions and is qualified in its entirety by reference to the written opinions of Deutsche Bank and Goldman Sachs included as Annex B and C, respectively.


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Certain Stanley Prospective Financial Information
 
Stanley does not as a matter of course make public long-term forecasts as to future performance beyond the current fiscal year, and Stanley is especially wary of making forecasts for extended periods due to the unpredictability of the underlying assumptions and estimates. However, in connection with the due diligence review of Stanley in connection with the merger, Stanley’s management provided to Black & Decker, as well as to Deutsche Bank, Goldman Sachs and J.P. Morgan in connection with their respective evaluation of the fairness of the merger consideration, non-public, internal financial forecasts regarding Stanley’s anticipated future operations for the 2009 through 2012 fiscal years. Stanley has included below a summary of these forecasts to give shareholders and investors access to certain non-public information that was furnished to third parties. These forecasts were considered by the Stanley board of directors for purposes of evaluating the merger.
 
These internal financial forecasts were not prepared with a view toward public disclosure, nor were they prepared with a view toward compliance with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts, or generally accepted accounting principles in the United States. In addition, these internal forecasts were not prepared with the assistance of, or reviewed, compiled or examined by, any independent auditor. The summary of these internal financial forecasts included below is not being included to influence your decision whether to vote for the merger and the transactions contemplated in connection with the merger, but because these internal financial forecasts were provided by Stanley to Black & Decker and Deutsche Bank, Goldman Sachs and J.P. Morgan.
 
These internal financial forecasts were based on numerous variables and assumptions (including, but not limited to, those related to industry performance and competition and general business, economic, market and financial conditions) that are inherently subjective and uncertain and are beyond the control of Stanley’s management. Important factors that may affect actual results and cause these internal financial forecasts to not be achieved include, but are not limited to, risks and uncertainties relating to Stanley’s business (including its ability to achieve strategic goals, objectives and targets over applicable periods), industry performance, general business and economic conditions and other factors described in the “Risk Factors” section of Stanley’s Annual Report on Form 10-K, as updated by subsequent Quarterly Reports on Form 10-Q, all of which are filed with the SEC and incorporated by reference into this joint proxy statement/prospectus. These internal financial forecasts also reflect assumptions as to certain business decisions that are subject to change. As a result, actual results may differ materially from those contained in these internal financial forecasts. Accordingly, there can be no assurance that the forecasted results summarized below will be realized.
 
The inclusion of a summary of these internal financial forecasts in this joint proxy statement/prospectus should not be regarded as an indication that any of Stanley, Black & Decker or their respective affiliates, advisors or representatives considered these internal financial forecasts to be predictive of actual future events, and these internal financial forecasts should not be relied upon as such. None of Stanley, Black & Decker or their respective affiliates, advisors, officers, directors, partners or representatives can give you any assurance that actual results will not differ materially from these internal financial forecasts, and none of them undertakes any obligation to update or otherwise revise or reconcile these internal financial forecasts to reflect circumstances existing after the date these internal financial forecasts were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying these forecasts are shown to be in error. Stanley does not intend to make publicly available any update or other revision to these internal financial forecasts. None of Stanley or its affiliates, advisors, officers, directors, partners or representatives has made or makes any representation to any shareholder or other person regarding Stanley’s ultimate performance compared to the information contained in these internal financial forecasts or that the forecasted results will be achieved. Stanley has made no representation to Black & Decker, in the merger agreement or otherwise, concerning these internal financial forecasts. The below forecasts do not give effect to the merger. Stanley urges all shareholders to review Stanley’s most recent SEC filings for a description of Stanley’s reported financial results.
 


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    Fiscal Year
    2009   2010   2011   2012
    ($ in millions, except per share data)
 
Sales
  $ 3,727     $ 3,787     $ 3,894     $ 4,001  
Net Earnings
  $ 232     $ 239     $ 278     $ 304  
Diluted EPS
  $ 2.89     $ 2.85     $ 3.28     $ 3.58  
 
Recommendation of the Board of Directors of Black & Decker; Black & Decker’s Reasons for the Merger
 
In considering the business combination proposal from Stanley and in reaching its conclusion that the merger is advisable and in the best interests of Black & Decker and its stockholders, the board of directors of Black & Decker consulted with its management and financial, legal and other advisors, and considered a variety of factors weighing in favor of or relevant to the merger, including the factors listed below.
 
Expected Strategic Benefits of the Merger.  The combination of Stanley and Black & Decker is expected to result in several significant strategic benefits to the combined company, which will benefit Black & Decker and its stockholders as stockholders of the combined company. These strategic benefits include the following:
 
  •  The creation of a combined company with a larger and more diverse business base;
 
  •  The complementary products offered by Stanley and Black & Decker and the expected synergy benefits, anticipated to be $350 million in annual cost savings within three years of operations, together with enhanced revenue opportunities;
 
  •  The expected capital structure, market capitalization and strengthened balance sheet of the combined company relative to Black & Decker on a stand-alone basis, including the potential for the combined company to participate in strategic opportunities that might not be available to Black & Decker;
 
  •  The greater cash flow of the combined company and its financial flexibility and borrowing capacity to fund future growth; and
 
  •  The stronger margins of the combined company with significant exposure to growing and profitable product areas.
 
Expected Financial Benefits of the Merger.  The combination of Stanley and Black & Decker is expected to result in several significant financial benefits to the combined company and its shareholders. These financial benefits include the following:
 
  •  Based on the closing prices of the common stock of Black & Decker and Stanley as of October 30, 2009, the trading day immediately prior to the date of the merger agreement, the 1.275 exchange ratio in the merger implied a premium of approximately 22% to Black & Decker stockholders over Black & Decker’s then-current stock price;
 
  •  The significant value to Black & Decker stockholders represented by the increased cash flow and earnings improvement of the combined company as a result of the anticipated synergies of $350 million in annual cost benefits within three years of operations;
 
  •  The fact that, on a pro forma basis and based on the 1.275 exchange ratio in the merger, the estimated market capitalization of the combined company and the estimated intrinsic value of the combined company implied a value per share for Black & Decker common stock that represented a 45.5% premium and a 46.5% premium, respectively, over Black & Decker’s then-current stock price;
 
  •  The value to Black & Decker stockholders of the substantially higher dividend rate paid by Stanley on its shares of common stock;
 
  •  The fact that the present value of the anticipated synergies was significant relative to the market capitalization of each of Black & Decker and Stanley and the anticipated pro forma market capitalization of the combined company;

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  •  The significant reduction of leverage in the combined company relative to Black & Decker on a stand-alone basis;
 
  •  The views of Black & Decker’s management and advisors as to the expected realization of synergies by the combined company, the strength of the combined company’s balance sheet, including the fact that Stanley was a highly rated investment grade company and the combined company was expected to have a higher debt rating than Black & Decker on a stand-alone basis, and the anticipated market value of the combined company’s common stock, which compared favorably to Black & Decker on a stand-alone basis;
 
  •  The fact that Black & Decker stockholders will receive the merger consideration (excluding any cash received in lieu of fractional shares) in the form of shares of Stanley common stock, which will allow Black & Decker stockholders to share in growth and other opportunities of the combined company, including the expected realization of synergies, and the fact that the merger would be tax free to the Black & Decker stockholders (excluding any cash received in lieu of fractional shares);
 
  •  The expectation that the combined company would be able to achieve significantly higher earnings per share compared to Black & Decker on a stand-alone basis and would generate significant incremental annual free cash flow by the end of the third year after closing; and
 
  •  The business operations and prospects of each of Black & Decker, Stanley and the combined company, and the then-current financial market conditions and historical market prices, volatility and trading information with respect to shares of common stock of Black & Decker and Stanley.
 
Other Factors Considered.  During the course of its deliberations relating to the merger, the board of directors of Black & Decker considered the following factors in addition to the benefits described above:
 
  •  The strategic alternatives available to Black & Decker if it proceeded on a stand-alone basis;
 
  •  The history of the Stanley management team in successfully completing acquisitions and the success of the Stanley management team in integrating those acquisitions with Stanley’s other businesses;
 
  •  The fact that Mr. Archibald will be the Executive Chairman of the combined company and will co-head the integration steering committee of the combined company with Mr. Lundgren, and the fact that directors of Black & Decker who have an in-depth knowledge of Black & Decker and its businesses will have substantial representation on the board of directors of the combined company;
 
  •  The financial analyses reviewed and discussed with the Black & Decker board of directors by representatives of J.P. Morgan, as well as the written opinion of J.P. Morgan to the Black & Decker board of directors on November 2, 2009, with respect to the fairness, from a financial point of view, of the 1.275 exchange ratio to holders of shares of common stock of Black & Decker;
 
  •  The results of the due diligence investigations of Stanley by Black & Decker’s management and financial, legal and other advisors;
 
  •  The structure of the merger and terms and conditions of the merger agreement, including the strength of the commitments by both Black & Decker and Stanley to complete the merger and the governance arrangements (see “— Summary of the Merger Agreement” beginning on page 89); and
 
  •  The fact that the merger agreement does not preclude a third party from making a proposal for an acquisition of or business combination with Black & Decker and, that under certain circumstances more fully described in the sections “— Summary of the Merger Agreement — No Solicitation of Alternative Proposals” beginning on page 93 and “— Summary of the Merger Agreement — Changes in Board Recommendations” beginning on page 93, Black & Decker may provide information to and negotiate with such a third party and the Black & Decker board may change its recommendations to Black & Decker stockholders regarding the transaction with Stanley.


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The board of directors of Black & Decker weighed these factors against a number of other factors identified in its deliberations as weighing negatively against the merger, including:
 
  •  The challenges inherent in the combination of companies of the size and geographic scope of Stanley and Black & Decker, the risk of not capturing all of the anticipated synergies and the risk that other anticipated benefits might not be fully realized;
 
  •  The risk that integration of the two businesses may be more costly, and may divert management attention for a greater period of time, than anticipated;
 
  •  The provisions of the merger agreement requiring receipt of certain regulatory approvals and clearances and stockholder approval of both Stanley and Black & Decker;
 
  •  The risk that the merger may not be completed despite the parties’ efforts or that completion may be unduly delayed, even if the requisite approval is obtained from Black & Decker’s and Stanley’s stockholders; and
 
  •  The other risks described in the section entitled “Risk Factors” beginning on page 19 and “Special Note Regarding Forward-Looking Statements” beginning on page 24.
 
This discussion of the information and factors considered by the board of directors of Black & Decker includes the principal positive and negative factors considered by the board of directors, but is not intended to be exhaustive and may not include all of the factors considered by the board of directors of Black & Decker. The board of directors of Black & Decker did not quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination that the merger agreement and the merger are advisable and in the best interests of Black & Decker and its stockholders. Rather, the board of directors of Black & Decker viewed its position and recommendation as being based on the totality of the information presented to it and the factors it considered. In addition, individual members of the board of directors of Black & Decker may have given differing weights to different factors. It should be noted that this explanation of the reasoning of the board of directors of Black & Decker and certain information presented in this section is forward-looking in nature and, therefore, that information should be read in light of the factors discussed in the section entitled “Special Note Regarding Forward-Looking Statements” in this joint proxy statement/prospectus, beginning on page 24.
 
The board of directors of Black & Decker by the unanimous vote of the directors, with Mr. Archibald abstaining, believes that the terms of the merger are advisable and in the best interests of Black & Decker and its stockholders and has approved the terms of the merger agreement and the merger and recommends that the stockholders of Black & Decker vote “FOR” the merger on substantially the terms set forth in the merger agreement.
 
Opinion of Black & Decker’s Financial Advisor
 
Pursuant to an engagement letter dated July 29, 2009, Black & Decker retained J.P. Morgan as its financial advisor in connection with the proposed merger.
 
At the meeting of the board of directors of Black & Decker on November 2, 2009, J.P. Morgan delivered its written and oral opinion to the board of directors of Black & Decker that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the exchange ratio in the proposed merger was fair, from a financial point of view, to Black & Decker’s common stockholders. No limitations were imposed by the board of directors of Black & Decker upon J.P. Morgan with respect to the investigations made or procedures followed by it in rendering its opinions.
 
The full text of the written opinion of J.P. Morgan dated November 2, 2009, which sets forth the assumptions made, matters considered and limits on the review undertaken, is included as Annex D to this joint proxy statement/prospectus and is incorporated herein by reference. Black & Decker’s stockholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion is addressed to the board of directors of Black & Decker, is directed only to the exchange ratio in the merger and does not constitute a recommendation to any stockholder of Black & Decker as to how such stockholder should vote at the Black &


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Decker special meeting. The summary of the opinion of J.P. Morgan set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion.
 
In arriving at its opinions, J.P. Morgan, among other things:
 
  •  reviewed a draft dated October 31, 2009 of the merger agreement;
 
  •  reviewed certain publicly available business and financial information concerning Stanley and Black & Decker and the industries in which they operate;
 
  •  compared the financial and operating performance of Stanley and Black & Decker with publicly available information concerning certain other companies J.P. Morgan deemed relevant and reviewed the current and historical market prices of Black & Decker common stock and Stanley common stock and certain publicly traded securities of such other companies;
 
  •  reviewed certain internal financial analyses and forecasts prepared by or at the direction of the managements of Stanley and Black & Decker relating to their respective businesses, as well as the management estimates of the amount and timing of cost savings and related expenses and synergies expected to result from the merger (the “Synergies”); and
 
  •  performed such other financial studies and analyses and considered such other information (including whether any other transactions involving other companies were relevant for comparison purposes) as J.P. Morgan deemed appropriate for the purposes of its opinion.
 
J.P. Morgan also held discussions with certain members of the management of Stanley and Black & Decker with respect to certain aspects of the merger, and the past and current business operations of Stanley and Black & Decker, the financial condition and future prospects and operations of Stanley and Black & Decker, the effects of the merger on the financial condition and future prospects of Stanley and Black & Decker, the potential Synergies and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry.
 
J.P. Morgan relied upon and assumed, without assuming responsibility or liability for independent verification, the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by Stanley and Black & Decker or otherwise reviewed by or for J.P. Morgan. J.P. Morgan did not conduct or was not provided with any valuation or appraisal of any assets or liabilities, nor did J.P. Morgan evaluate the solvency of Black & Decker or Stanley under any state or federal laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to it, including the Synergies referred to above, J.P. Morgan assumed that they were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of Stanley and Black & Decker to which such analyses or forecasts relate. J.P. Morgan expressed no view as to such analyses or forecasts (including the Synergies) or the assumptions on which they were based. J.P. Morgan also assumed that the merger will qualify as a tax-free reorganization for United States federal income tax purposes, that the other transactions contemplated by the merger agreement will be consummated as described in the merger agreement, and that the definitive merger agreement would not differ in any material respect from the draft thereof provided to J.P. Morgan. J.P. Morgan relied as to all legal matters relevant to the rendering of its opinion upon the advice of counsel. J.P. Morgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the completion of the merger will be obtained without any adverse effect on Black & Decker or Stanley or on the contemplated benefits of the merger.
 
The projections furnished to J.P. Morgan for Stanley and Black & Decker were prepared by or at the direction of the respective managements of each company (other than certain long-term estimates for Stanley and Black & Decker which were jointly developed by the management of Black & Decker and J.P. Morgan and reviewed and approved by the management of Black & Decker). Neither Black & Decker nor Stanley publicly discloses internal management projections of the type provided to J.P. Morgan in connection with J.P. Morgan’s analysis of the merger, and such projections were not prepared with a view toward public disclosure. These projections were based on numerous variables and assumptions that are inherently uncertain


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and may be beyond the control of management, including, without limitation, factors related to general economic and competitive conditions and prevailing interest rates. Accordingly, actual results could vary significantly from those set forth in such projections.
 
J.P. Morgan’s opinion is based on economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of such opinion. Subsequent developments may affect J.P. Morgan’s opinion, and J.P. Morgan does not have any obligation to update, revise, or reaffirm such opinion. J.P. Morgan’s opinion is limited to the fairness, from a financial point of view, of the exchange ratio in the proposed merger to Black & Decker’s common stockholders, and J.P. Morgan has expressed no opinion as to the fairness of the merger to, or any consideration of, the holders of any other class of securities, creditors or other constituencies of Black & Decker or the underlying decision by Black & Decker to engage in the merger. J.P. Morgan expressed no opinion as to the price at which Black & Decker’s common stock or Stanley’s common stock will trade at any future time, whether before or after the closing of the merger.
 
J.P. Morgan noted that it was not authorized to and did not solicit any expressions of interest from any other parties with respect to the sale of all or any part of Black & Decker or any other alternative transaction.
 
In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methods in reaching its opinion. The following is a summary of the material financial analyses utilized by J.P. Morgan in connection with providing its opinion.
 
Black & Decker Analysis
 
Selected Companies Analysis.  Using publicly available information, J.P. Morgan compared selected financial data of Black & Decker with similar data for selected publicly traded companies engaged in businesses which J.P. Morgan judged to be analogous to Black & Decker. The companies selected by J.P. Morgan were:
 
  •  Cooper Industries Plc
 
  •  Masco Corporation
 
  •  Newell Rubbermaid Inc.
 
  •  Snap-on Incorporated
 
  •  SPX Corporation
 
  •  Stanley
 
These companies were selected, among other reasons, because they have a business model or certain operating characteristics, including product mix, end markets, customers and size similar to Black & Decker. It should be noted that no company utilized in the Selected Companies Analysis is identical to Black & Decker. In its analysis, J.P. Morgan derived and compared multiples for Black & Decker and the selected companies as follows:
 
  •  the firm value as a multiple of estimated EBITDA, for calendar year 2010, which is referred to below as “2010E EBITDA”;
 
  •  the firm value as a multiple of estimated EBITDA for calendar year 2011 which is referred to below as “2011E EBITDA”;
 
  •  the price per share divided by estimated (adjusted) earnings per share or “EPS”, for calendar year 2010, which is referred to below as “2010E P/E”; and
 
  •  the price per share divided by estimated (adjusted) EPS for calendar year 2011, which is referred to below as “2011E P/E.”


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This analysis indicated the following:
 
Selected Comparable Companies
 
                                 
Benchmark
  High   Low   Median   Mean
 
2010E EBITDA
    10.2       6.8       7.9       8.2  
2011E EBITDA
    8.2       5.4       7.2       7.1  
2010E P/E
    14.9       9.9       14.3       13.5  
2011E P/E
    15.9       9.0       11.8       11.8  
 
Using a reference range of 8.0x to 9.5x 2010E EBITDA, 7.0x to 8.5x 2011E EBITDA, 13.0x to 16.0x 2010E P/E and 12.0x to 14.0x 2011E P/E, J.P. Morgan determined a range of implied equity values. This analysis indicated a range of implied values per share of Black & Decker common stock of approximately $43 to $53 using Black & Decker’s 2010E EBITDA, $45 to $58 using Black & Decker’s 2011E EBITDA, $33 to $41 using Black & Decker’s 2010E P/E and $43 to $50 using Black & Decker’s 2011E P/E.
 
Discounted Cash Flow Analysis.  J.P. Morgan conducted a discounted cash flow analysis for the purpose of determining the implied equity value per share for Black & Decker common stock on a stand-alone basis (i.e., without Synergies), based upon financial projections and estimates for the years ended 2010 to 2019. The financial projections for the years ended 2010 to 2012 were prepared by the management of Black & Decker. The management of Black & Decker and J.P. Morgan worked together in preparing the financial estimates from 2013 to 2019, which were reviewed and approved by the management of Black & Decker. J.P. Morgan calculated the unlevered free cash flows that Black & Decker is expected to generate and then calculated an implied range of terminal values for Black & Decker by applying a perpetual growth rate for free cash flows ranging from 1.5% to 2.5%. The unlevered free cash flows and the range of terminal asset values were then discounted to present values using a range of discount rates from 9.5% to 11.5%, which were chosen by J.P. Morgan based upon an analysis of the weighted average cost of capital of Black & Decker. This analysis indicated a range of implied values per share of Black & Decker common stock of approximately $43 to $62.
 
Historical Share Price Analysis.  J.P. Morgan referenced the 52-week trading range, the 6-month trading range and the 3-month trading range, each ending on October 30, 2009, of Black & Decker stock price. Specifically, the reference ranges were approximately $20 and $52 per share (with a volume weighted average price or “VWAP,” of $35.90) for the 52-week trading range, $27 to $52 per share (with a VWAP of $38.18) for the 6-month trading range and $38 to $52 per share (with a VWAP of $45.68) for the 3-month trading range, compared to the closing price per share of Black & Decker common stock of $47.22 on October 30, 2009. J.P. Morgan noted that historical stock trading analysis is not a valuation methodology but was presented merely for informational purposes.
 
Analysts’ Price Targets Analysis.  As of October 30, 2009, the equity analysts covering Black & Decker as reported by Bloomberg L.P. on that date were expecting its share price to be in the range of $47 to $63 during the next 12 months. J.P. Morgan noted that analyst price targets analysis is not a valuation methodology but was presented merely for informational purposes.
 
Stanley Analysis
 
Selected Companies Analysis.  Using publicly available information, J.P. Morgan compared selected financial data of Stanley with similar data for selected publicly traded companies engaged in businesses which J.P. Morgan judged to be analogous to Stanley. The companies selected by J.P. Morgan were:
 
  •  Black & Decker
 
  •  Cooper Industries Plc
 
  •  Masco Corporation
 
  •  Newell Rubbermaid Inc.
 
  •  Snap-on Incorporated
 
  •  SPX Corporation


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These companies were selected, among other reasons, because they have a business model or certain operating characteristics, including product mix, end markets, customers and size similar to Stanley. It should be noted that no company utilized in the Selected Companies Analysis is identical to Stanley. In its analysis, J.P. Morgan derived and compared multiples for Stanley and the selected companies as follows:
 
  •  the firm value as a multiple of estimated EBITDA, for calendar year 2010, which is referred to below as “2010E EBITDA”;
 
  •  the firm value as a multiple of estimated EBITDA for calendar year 2011 which is referred to below as “2011E EBITDA”;
 
  •  the price per share divided by estimated (adjusted) earnings per share or EPS, for calendar year 2010, which is referred to below as “2010E P/E”; and
 
  •  the price per share divided by estimated (adjusted) EPS for calendar year 2011, which is referred to below as “2011E P/E.”
 
This analysis indicated the following:
 
Selected Comparable Companies
 
                                 
Benchmark
  High   Low   Median   Mean
 
2010E EBITDA
    10.2       6.8       7.8       8.2  
2011E EBITDA
    8.2       5.4       7.1       6.9  
2010E P/E
    15.4       9.9       14.3       13.6  
2011E P/E
    15.9       9.0       11.6       11.8  
 
Using a reference range of 8.0x to 9.5x 2010E EBITDA, 7.0x to 8.5x 2011E EBITDA, 13.0x to 16.0x 2010E P/E and 12.0x to 14.0x 2011E P/E, J.P. Morgan determined a range of implied equity values. This analysis indicated a range of implied values per share of Stanley common stock of approximately $43 to $54 using Stanley’s 2010E EBITDA, $39 to $50 using Stanley’s 2011E EBITDA, $41 to $50 using Stanley’s 2010E P/E and $42 to $49 using Stanley’s 2011E P/E.
 
Discounted Cash Flow Analysis.  J.P. Morgan conducted a discounted cash flow analysis for the purpose of determining the implied equity value per share for Stanley common stock on a stand-alone basis (i.e., without Synergies), based upon financial projections and estimates for the years ended 2010 to 2019. The financial projections for the years ended 2010 to 2012 were prepared by the management of Stanley. The management of Black & Decker and J.P. Morgan worked together in preparing the financial estimates from 2013 to 2019, which were reviewed and approved by the management of Black & Decker. J.P. Morgan calculated the unlevered free cash flows that Stanley is expected to generate and then calculated an implied range of terminal values for Stanley by applying a perpetual growth rate for free cash flows ranging from 1.5% to 2.5%. The unlevered free cash flows and the range of terminal asset values were then discounted to present values using a range of discount rates from 9.0% to 11.0%, which were chosen by J.P. Morgan based upon an analysis of the weighted average cost of capital of Stanley. This analysis indicated a range of implied values per share of Stanley common stock of approximately $43 to $63.
 
Historical Share Price Analysis.  J.P. Morgan referenced the 52-week trading range, the 6-month trading range and the 3-month trading range, each ending on October 30, 2009, of Stanley stock price. Specifically, the reference ranges were approximately $23 and $48 per share (with a VWAP of $34.66) for the 52-week trading range, $31 to $48 per share (with a VWAP of $39.28) for the 6-month trading range and $40 to $48 per share (with a VWAP of $43.12) for the 3-month trading range, compared to the closing price per share of Stanley common stock of $45.23 on October 30, 2009. J.P. Morgan noted that historical stock trading analysis is not a valuation methodology but was presented merely for informational purposes.
 
Analysts’ Price Targets Analysis.  As of October 30, 2009, the equity analysts covering Stanley as reported by Bloomberg L.P. on that date were expecting its share price to be in the range of $44 to $55 during


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the next 12 months. J.P. Morgan noted that analyst price targets analysis is not a valuation methodology but was presented merely for informational purposes.
 
Relative Valuation Analysis
 
Based upon the implied valuations for each of Stanley and Black & Decker as described above under “Stanley Analysis — Selected Companies Analysis,” “Stanley Analysis — Discounted Cash Flow Analysis,” “Black & Decker Analysis — Selected Companies Analysis” and “Black & Decker Analysis — Discounted Cash Flow Analysis,” J.P. Morgan calculated a range of implied exchange ratios of a share of Stanley common stock to a share of Black & Decker common stock, and then compared that range of implied exchange ratios to the exchange ratio in the merger of 1.275 shares of Stanley common stock per share of Black & Decker stock. J.P. Morgan also calculated a range of implied exchange ratios based upon the relative financial contributions of Stanley and Black & Decker to the future performance of the combined company on a pro forma basis without giving effect to the Synergies anticipated by the managements of Stanley and Black & Decker. For purposes of the contribution analysis, J.P. Morgan reviewed Black & Decker’s and Stanley’s estimated 2010 and 2011 sales, EBITDA, earnings before interest and taxes (“EBIT”) and net income as provided by their respective managements.
 
For each analysis referred to above (other than the contribution analysis), J.P. Morgan calculated the ratio implied by dividing the low end of each implied equity value of Black & Decker by the high end of each implied equity value of Stanley. J.P. Morgan also calculated the ratio implied by dividing the high end of each implied equity value of Black & Decker by the low end of each implied equity value of Stanley. For the contribution analysis, J.P. Morgan calculated the ratio implied by dividing the financial contribution of Black & Decker for each metric on a leverage adjusted basis, (i.e. accounting for the debt of the company), by the financial contribution of Stanley of the same metric on a leverage adjusted basis (i.e. accounting for the debt of the company).
 
This analysis indicated the following implied exchange ratios, compared in each case to the exchange ratio in the merger of 1.275 shares of Stanley common stock per share of Black & Decker common stock.
 
     
Comparison
  Range of Implied Exchange Ratios
 
Selected Company Analysis
   
2010E - 2011E EBITDA
  0.80x - 1.48x
2010E - 2011E P/E
  0.66x - 1.22x
Contribution Analysis
  0.58x - 1.53x
Discounted Cash Flow Analysis
  0.67x - 1.43x
 
J.P. Morgan noted that for the contribution analysis the implied exchange ratios as a result of the earnings metrics, which include EBITDA, EBIT and net income, were in the range of 0.58x — 0.86x.
 
Illustrative Synergy Analysis
 
J.P. Morgan reviewed the Synergies estimates presented by the management of Stanley and Black & Decker. The Synergies of $350 million reflect the incremental cost savings the managements of Stanley and Black & Decker expect to achieve as a result of the merger. The managements of Stanley and Black & Decker expect that the Synergies will be realized in various business areas, including manufacturing and distribution, purchasing, corporate overhead and business unit and regional integration.
 
The analysis is based upon the assumption of Stanley and Black & Decker that the combined company will partially realize the Synergies in 2010 and 2011 and will begin to fully realize the Synergies in 2012. The analysis assumed a 2.0% perpetual growth rate beginning in 2013 and certain implementation and one-time costs. J.P. Morgan analyzed the Synergies by calculating the present value of the net Synergies applying discount rates from 9.5% to 11.5%. This resulted in an implied present value of the Synergies of approximately $1.87 billion to $2.48 billion, assuming 100% of the Synergies are actually realized.
 
J.P. Morgan provided an illustrative analysis of the potential equity value per share for Black & Decker stockholders in the pro forma value of the combined company, accounting for the Synergies. J.P. Morgan


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calculated the potential equity value per share of the combined company based on each company’s market capitalization and intrinsic value (calculated as the mid-point of the discounted cash flow of the firm minus net debt). Both analyses assumed a $57.67 all stock offer price per Black & Decker share based on a 1.275x exchange ratio and a Stanley share price of $45.23.
 
J.P. Morgan noted that on a pro forma basis, the combined company, based on market capitalization, has an equity value of $6.59 billion, which when combined with $2.14 billion in estimated Synergies (the mid-point of the Synergies estimate), yielded a combined equity value of $8.73 billion. This implied a value per share of Black & Decker common stock of $68.69, on a diluted basis, representing a 45.5% premium above the closing price of Black & Decker’s stock on October 30, 2009.
 
J.P. Morgan noted that on a pro forma basis, the combined company, based on intrinsic value of each company, has an equity value of $7.37 billion, which when combined with $2.14 billion in estimated Synergies (the mid-point of the Synergies estimate), yielded a combined equity value of $9.51 billion. This implied a value per share of Black & Decker common stock of $74.45, on a diluted basis, representing a 46.5% premium above the closing price of Black & Decker’s stock on October 30, 2009.
 
The actual Synergies achieved by the combined company may vary from forecasted results and the variations may be material.
 
Sensitivity Analysis
 
J.P. Morgan performed an illustrative sensitivity analysis showing the value of the merger to Black & Decker’s stockholders according to a range of per share prices of Stanley common stock from $40 to $50, as compared to Stanley’s closing price of $45.23 on October 30, 2009. Based on a 1.275x exchange ratio, a merger at a price per share of Stanley common stock of $40 would represent an 8% premium to Black & Decker common stock as of October 30, 2009 and a merger at $50 per share of Stanley common stock would represent a 35% premium to Black & Decker common stock as of October 30, 2009. When including the mid-point estimate of the Synergies of the combined company on a pro forma basis, based on market capitalization, as described in “Illustrative Synergy Analysis” above, the premium to Black & Decker common stock as of October 30, 2009, would be 38.5% and 51.8%, respectively.
 
General
 
The foregoing summary of certain material financial analyses does not purport to be a complete description of the analyses or data presented by J.P. Morgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. J.P. Morgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete view of the processes underlying the analyses and its opinion. In arriving at its opinion, J.P. Morgan did not attribute any particular weight to any analyses or factors considered by it and did not form an opinion as to whether any individual analysis or factor (positive or negative), considered in isolation, supported or failed to support its opinion. Rather, J.P. Morgan considered the totality of the factors and analyses performed in determining its opinion. Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or made by J.P. Morgan are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Moreover, J.P. Morgan’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be bought or sold. None of the selected companies reviewed as described in the above summary is identical to Black & Decker. However, the companies selected were chosen because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analysis, may be considered similar to those of Black & Decker. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies compared to Black & Decker.


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As a part of its investment banking business, J.P. Morgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for estate, corporate and other purposes. J.P. Morgan was selected to advise Black & Decker with respect to the merger on the basis of such experience and its familiarity with Black & Decker.
 
For services rendered in connection with the merger, Black & Decker has agreed to pay J.P. Morgan a fee of up to $15 million, a substantial portion of which will become payable only if the merger or a similar transaction with another party is consummated. In addition, Black & Decker has agreed to reimburse J.P. Morgan for its expenses incurred in connection with its services, including the fees and disbursements of counsel, and will indemnify J.P. Morgan against certain liabilities, including liabilities arising under the federal securities laws.
 
During the two years preceding the date of this letter, J.P. Morgan and its affiliates have had commercial or investment banking relationships with Black & Decker and with Stanley for which J.P. Morgan and such affiliates have received customary compensation. Such services during such period have included (i) acting as Joint Bookrunner on Black & Decker’s $350,000,000 8.95% Notes Offering in 2009 and (ii) acting as financial advisor to Stanley in its July 2008 acquisition of Sonitrol Corporation. In addition, J.P. Morgan and its affiliates maintain banking and other business relationships with Black & Decker and its affiliates, for which it receives customary fees. During the previous two years, J.P. Morgan and its affiliates have received fees of approximately $2 million from Black & Decker for investment banking and other financial services unrelated to the merger. In the ordinary course of their businesses, J.P. Morgan and its affiliates may actively trade the debt and equity securities of Black & Decker or Stanley for their own accounts or for the accounts of customers and, accordingly, they may at any time hold long or short positions in such securities.
 
Certain Black & Decker Prospective Financial Information
 
Black & Decker does not as a matter of course make public long-term forecasts as to future performance beyond the current fiscal year, and Black & Decker is especially wary of making forecasts for extended periods due to the unpredictability of the underlying assumptions and estimates. However, as part of the due diligence review of Black & Decker in connection with the merger, Black & Decker’s management provided to Stanley, as well as to J.P. Morgan, Deutsche Bank and Goldman Sachs in connection with their respective evaluation of the fairness of the merger consideration, certain non-public, internal financial forecasts regarding Black & Decker’s anticipated future operations for fiscal years 2009 through 2011. Black & Decker also provided to J.P. Morgan, in connection with its evaluation of the fairness of the merger consideration, certain non-public, internal financial forecasts regarding Black & Decker’s anticipated future operations for fiscal year 2012. Black & Decker has included below a summary of these forecasts to give stockholders and investors access to certain non-public information that was furnished to third parties. These forecasts were considered by the Black & Decker board of directors for purposes of evaluating the merger.
 
These internal financial forecasts were not prepared with a view toward public disclosure, nor were they prepared with a view toward compliance with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts, or GAAP. In addition, these internal forecasts were not prepared with the assistance of, or reviewed, compiled or examined by, any independent auditor. The summary of these internal financial forecasts included below is not being included to influence your decision whether to vote for the merger and the transactions contemplated in connection with the merger, but are being provided because these internal financial forecasts were provided by Black & Decker to Stanley and J.P. Morgan, Deutsche Bank and Goldman Sachs.
 
These internal financial forecasts were based on numerous variables and assumptions (including but not limited to those related to industry performance and competition and general business, economic, market and financial conditions) that are inherently subjective and uncertain and are beyond the control of Black & Decker’s management. Important factors that may affect actual results and cause these internal financial forecasts to not be achieved include but are not limited to risks and uncertainties relating to Black & Decker’s


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business (including its ability to achieve strategic goals, objectives and targets over applicable periods), industry performance, general business and economic conditions and other factors described under “Special Note Regarding Forward-Looking Statements.” These internal financial forecasts also reflect assumptions as to certain business decisions that are subject to change. As a result, actual results may differ materially from those contained in these internal financial forecasts. Accordingly, there can be no assurance that the forecasted results summarized below will be realized.
 
The inclusion of a summary of these internal financial forecasts in this joint proxy statement/prospectus should not be regarded as an indication that any of Black & Decker, Stanley or their respective affiliates, advisors or representatives considered these internal financial forecasts to be predictive of actual future events, and these internal financial forecasts should not be relied upon as such. None of Black & Decker, Stanley or their respective affiliates, advisors, officers, directors, partners or representatives can give you any assurance that actual results will not differ materially from these internal financial forecasts, and none of them undertakes any obligation to update or otherwise revise or reconcile these internal financial forecasts to reflect circumstances existing after the date these internal financial forecasts were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying these forecasts are shown to be in error. Black & Decker does not intend to make publicly available any update or other revision to these internal financial forecasts. None of Black & Decker or its affiliates, advisors, officers, directors, partners or representatives has made or makes any representation to any shareholder or other person regarding Black & Decker’s ultimate performance compared to the information contained in these internal financial forecasts or that the forecasted results will be achieved.
 
Black & Decker has made no representation to Stanley, in the merger agreement or otherwise, concerning these internal financial forecasts. The below forecasts do not give effect to the merger or the restructuring charge taken in 2009. Black & Decker urges all stockholders to review Black & Decker’s most recent SEC filings for a description of Black & Decker’s reported financial results.
 
                                 
    Fiscal Year
    2009   2010   2011   2012
    ($ in millions, except per share data)
 
Sales
  $ 4,684     $ 4,779     $ 4,966     $ 5,215  
Net Earnings
  $ 152     $ 155     $ 216     $ 241  
Diluted EPS
  $ 2.50     $ 2.55     $ 3.58     $ 3.94  
 
Financial Interests of Stanley Directors and Officers in the Merger
 
In considering the recommendation of the Stanley board of directors that you vote to approve the issuance of Stanley common stock in connection with the merger and the amendment of Stanley’s certificate of incorporation, you should be aware that some of Stanley’s directors and officers have financial interests in the merger that are different from, or in addition to, those of Stanley shareholders generally. The Stanley board of directors was aware of and considered these potential interests, among other matters, in evaluating the merger agreement and the merger, and in recommending to you that you approve the issuance of Stanley common stock in connection with the merger and the amendment of Stanley’s certificate of incorporation.
 
Positions with the Combined Company
 
Following the completion of the merger, all members of the Stanley board of directors will continue to be directors of the combined company, and it is anticipated that many executive officers of Stanley will continue to be executive officers of the combined company, as described under “— Board of Directors and Management After the Merger.”
 
Lundgren Amended and Restated Employment Agreement
 
On November 2, 2009, in connection with entry into the merger agreement, Stanley entered into an amended and restated employment agreement with Mr. Lundgren. Mr. Lundgren’s amended and restated employment agreement, which becomes effective upon the completion of the merger, amends and restates, in


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its entirety, Stanley’s previous employment agreement with Mr. Lundgren, dated as of December 10, 2008. Mr. Lundgren’s amended and restated employment agreement is attached as an exhibit to Stanley’s Current Report on Form 8-K filed on November 3, 2009, and such Current Report is incorporated by reference into this joint proxy statement/prospectus. Except for the material terms described below, Mr. Lundgren’s amended and restated employment agreement is substantially similar to his prior employment agreement with Stanley, which is described in Stanley’s most recent proxy statement on Schedule 14A filed on March 20, 2009, which is incorporated by reference into this joint proxy statement/prospectus.
 
Under Mr. Lundgren’s amended and restated employment agreement, following the completion of the merger, Mr. Lundgren will serve as Stanley’s President and Chief Executive Officer and will receive an annual base salary of at least $1,250,000, subject to review for increase annually. Mr. Lundgren will be entitled to participate in an annual bonus plan, with an annual target bonus opportunity equal to 150% of his annual base salary, a threshold potential bonus opportunity equal to 75% of his annual base salary and a maximum potential bonus opportunity equal to 300% of his annual base salary. In addition, promptly following the completion of the merger, Mr. Lundgren will be entitled to receive a grant of restricted stock units, the aggregate value of which will equal the value, as of the completion of the merger, of an option to purchase 1.1 million shares of Stanley common stock. The value of such a stock option will be determined based on the full grant-date value as determined for purposes of Stanley’s financial reporting and will assume that such stock option has a 10-year term and otherwise has terms consistent with the most recent stock option awards made to Mr. Lundgren. Generally, the restricted stock units will vest 50% on each of the fourth and fifth anniversaries of the completion of the merger. The restricted stock units will become fully vested and settled sooner, however, in the event Mr. Lundgren’s employment is terminated by Stanley other than for “Cause”, by Mr. Lundgren for “Good Reason” or upon Mr. Lundgren’s “Retirement” (as such terms are defined in Mr. Lundgren’s amended and restated employment agreement). In addition to the restricted stock units granted to Mr. Lundgren at the time of the completion of the merger, Mr. Lundgren will also be eligible to receive annual long-term incentive compensation awards in the form of performance awards and stock options. The annual performance awards will have a target annual value equal to 300% of Mr. Lundgren’s annual base salary, a threshold potential annual value equal to 150% of his base salary and a maximum potential annual value of 500% of his annual base salary. The annual awards of stock options will be with respect to 150,000 shares of Stanley common stock. All of the equity awards granted pursuant to Mr. Lundgren’s amended and restated employment agreement will be subject to the terms and conditions of Stanley’s equity incentive plan and customary award agreements.
 
Under Mr. Lundgren’s amended and restated employment agreement, if Mr. Lundgren’s employment is terminated by Stanley other than for “Cause” or by Mr. Lundgren for “Good Reason,” Mr. Lundgren will be entitled to (a) a lump-sum cash payment equal to the sum of two times his annual base salary and bonus opportunity, (b) immediate vesting of any restricted stock units granted to Mr. Lundgren at the time of the completion of the merger, (c) continued health and welfare benefits coverage for himself and his eligible dependents for up to 24 months, and (d) a pro-rata target annual bonus in respect of the year in which the termination of employment occurs. Mr. Lundgren’s receipt of the severance payments under Mr. Lundgren’s amended and restated employment agreement are conditioned upon Mr. Lundgren executing a general release and waiver of claims. In addition, in the event Mr. Lundgren’s employment is terminated, he will be subject to 24-month non-competition and employee and customer non-solicitation covenants.
 
Mr. Lundgren’s amended and restated employment agreement states that Mr. Lundgren will not have “Good Reason” to terminate his employment under his prior employment agreement with Stanley or his amended and restated employment agreement as a result of the transactions contemplated by the merger agreement or the transactions and arrangements contemplated by the agreement between Stanley and Mr. Archibald, as described under “— Financial Interests of Black & Decker Directors and Officers in the Merger — Agreements with Nolan D. Archibald”. In addition, while Mr. Archibald’s executive chairman agreement remains in effect, Stanley may terminate Mr. Lundgren’s employment with or without cause if 80% of the Stanley board (other than Mr. Lundgren) approves the termination. Following the expiration of Mr. Archibald’s executive chairman agreement, a majority of the Stanley board may approve such termination.


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Loree Employment Agreement
 
On November 2, 2009, in connection with entry into the merger agreement, Stanley entered into an employment agreement with Mr. Loree. Mr. Loree’s employment agreement is attached as an exhibit to Stanley’s Current Report on Form 8-K filed on November 3, 2009, and such Current Report is incorporated by reference into this joint proxy statement/prospectus. Mr. Loree’s employment agreement is contingent upon, and will become effective only upon, completion of the merger.
 
Under Mr. Loree’s employment agreement, following the completion of the merger, Mr. Loree will continue to serve as Stanley’s Executive Vice President and Chief Operating Officer and will receive an annual base salary of at least $750,000, subject to review for increase annually. Mr. Loree will be entitled to participate in an annual bonus plan, with an annual target bonus opportunity equal to 100% of his annual base salary, a threshold potential bonus opportunity equal to 50% of his annual base salary and a maximum potential bonus opportunity equal to 200% of his annual base salary. In addition, promptly following the completion of the merger, Mr. Loree will be entitled to receive a grant of restricted stock units, the aggregate value of which will equal the value, as of the completion of the merger, of an option to purchase 675,000 shares of Stanley common stock. The value of such a stock option will be determined based on the full grant-date value as determined for purposes of Stanley’s financial reporting and will assume that such stock option has a 10-year term and otherwise has terms consistent with the most recent stock option awards made to Mr. Loree. Generally, the restricted stock units will vest 50% on each of the fourth and fifth anniversaries of the completion of the merger. The restricted stock units will become fully vested and settled sooner, however, in the event Mr. Loree’s employment is terminated by Stanley other than for “Cause” or by Mr. Loree for “Good Reason”. In addition to the restricted stock units granted to Mr. Loree at the time of the completion of the merger, Mr. Loree will also be eligible to receive annual long-term incentive compensation awards in the form of performance awards and stock options. The annual performance awards will have a target annual value equal to 250% of Mr. Loree’s annual base salary, a threshold potential annual value equal to 125% of his base salary and a maximum potential annual value of 400% of his annual base salary. The annual awards of stock options will be with respect to 100,000 shares of Stanley common stock. All of the equity awards granted pursuant to Mr. Loree’s employment agreement will be subject to the terms and conditions of Stanley’s equity incentive plan and customary award agreements. Mr. Loree is also entitled to participate in all employee benefit plans as are generally made available to Stanley’s senior officers, and to continue to participate in Stanley’s Supplemental Executive Retirement Program.
 
Under Mr. Loree’s employment agreement, if Mr. Loree’s employment is terminated by Stanley other than for “Cause” or by Mr. Loree for “Good Reason”, Mr. Loree will be entitled to (a) a lump-sum cash payment equal to the sum of two times his annual base salary and target annual bonus opportunity, (b) immediate vesting of any restricted stock units granted to Mr. Loree at the time of the completion of the merger, (c) continued health and welfare benefits coverage for himself and his eligible dependents for up to 24 months, (d) a pro-rata target annual bonus in respect of the year in which the termination of employment occurs, and (e) be deemed to have attained service through the greater of Mr. Loree’s actual age as of the date his employment is terminated and age 54 for all purposes (including vesting and benefit accrual) under Stanley’s Supplemental Executive Retirement Program. Mr. Loree’s receipt of the severance payments under Mr. Loree’s employment agreement are conditioned upon Mr. Loree executing a general release and waiver of claims. In addition, in the event Mr. Loree’s employment is terminated, he will be subject to 24-month non-competition and employee and customer non-solicitation covenants.
 
Financial Interests of Black & Decker Directors and Officers in the Merger
 
In considering the recommendation of the Black & Decker board of directors that you vote “FOR” the merger proposal, you should note that some Black & Decker directors and executive officers have financial interests in the merger that are different from, or in addition to, those of other Black & Decker stockholders generally. The board of directors of Black & Decker was aware of these differences and considered them, among other matters, in approving the merger and in recommending to the stockholders that the stockholders approve the merger proposal.


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Positions with the Combined Company
 
Following the completion of the merger, six members of the Black & Decker board of directors (including Mr. Archibald) will become directors of the combined company, and certain of the executive officers of Black & Decker will become executive officers of the combined company, as described below under “— Board of Directors and Management After the Merger.”
 
Agreements with Nolan D. Archibald
 
Prior to the execution of the merger agreement, Mr. Archibald was party to a pre-existing employment agreement with Black & Decker that provided him certain benefits upon a change of control of Black & Decker. On November 2, 2009, in connection with the entry into the merger agreement, Mr. Archibald’s employment agreement was amended. Additionally, on November 2, 2009, in connection with entry into the merger agreement, Mr. Archibald and Stanley entered into an executive chairman agreement that only becomes effective upon completion of the merger. The executive chairman agreement and the amended and restated employment agreement are attached as exhibits to Stanley’s and Black & Decker’s respective Current Reports on Form 8-K filed on November 3, 2009, which are incorporated by reference in this joint proxy statement/prospectus.
 
Under the terms of his amended employment agreement with Black & Decker, Mr. Archibald is entitled to certain benefits upon the termination of his employment by Black & Decker without cause or by Mr. Archibald with good reason. Mr. Archibald has the right to terminate his employment for good reason if, upon the occurrence of a change in control of Black & Decker, Mr. Archibald is not the chairman, president and chief executive officer of the successor entity. Upon the termination of his employment without cause by Black & Decker or by Mr. Archibald with good reason, Mr. Archibald would be entitled to a severance payment in the amount of $20,475,000. In connection with a change in control, Mr. Archibald would also be entitled to a gross-up payment if he is subject to the excise tax imposed by Section 4999 of the Code. Under the terms of the executive chairman agreement with Stanley, however, Mr. Archibald has waived his entitlement to the severance payment and the gross-up payment otherwise payable under his existing employment agreement with Black & Decker upon completion of the merger.
 
The execution of the merger agreement by Black & Decker and Stanley is deemed a change in control under Mr. Archibald’s employment agreement with Black & Decker and under Black & Decker’s restricted stock plans. Prior to November 2, 2009 and the amendment to his existing employment agreement with Black & Decker, Mr. Archibald would have fully vested in all outstanding stock options, shares of restricted stock, and restricted stock units upon execution of the merger agreement. Mr. Archibald waived his entitlement to the accelerated vesting of each of these equity awards. Under the terms of his amended employment agreement, any unvested options, shares of restricted stock, and restricted stock units held by Mr. Archibald no longer vest upon a change in control but will remain subject to the original vesting schedule applicable to those awards (subject to the terms of the executive chairman agreement described below).
 
In 2009, Mr. Archibald received the following compensation while employed at Black & Decker:
 
  •  annual base salary of $1,500,000,
 
  •  a target annual bonus opportunity of $1,875,000 and a maximum annual bonus opportunity of $3,750,000, and
 
  •  annual equity awards with an aggregate value of approximately $8,500,000 on the grant date.
 
Upon consummation of the merger, the executive chairman agreement will replace and supersede Mr. Archibald’s existing employment agreement with Black & Decker. Under the executive chairman agreement, Mr. Archibald will serve as a member and Executive Chairman of the Stanley board of directors and as an employee of Stanley for a period of three years following the completion of the merger. Promptly after the executive chairman agreement becomes effective, Mr. Archibald will be entitled to receive a grant of


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1,000,000 stock options, which generally will vest on the third anniversary of the completion of the merger. While Mr. Archibald is employed by Stanley, he will receive the following compensation and benefits:
 
  •  annual base salary of $1,500,000,
 
  •  annual bonus award, with a target bonus opportunity of $1,875,000,
 
  •  annual equity awards with an aggregate value of $6,650,000, comprised (based on value) of 50% stock options and 50% restricted stock, restricted stock units or other full-value type awards, and
 
  •  certain perquisites and benefits that Mr. Archibald has been receiving under his existing employment agreement with Black & Decker.
 
Mr. Archibald will not be eligible for a long-term incentive award under the executive chairman agreement. Black & Decker historically has awarded Mr. Archibald long-term incentive awards in the form of performance shares with a grant date fair value equal to 70% of his annual salary ($1,050,000) with respect to his target award and 105% of his annual salary ($1,575,000) with respect to his maximum award.
 
Mr. Archibald also will be eligible to receive a cost synergy bonus upon the third anniversary of the completion of the merger based on the achievement of certain goals set forth in the following table:
 
         
Cost Synergy Level Attained
  Bonus Amount
 
Less than $150 million
  $ 0  
$150 million
  $ 0  
$225 million
  $ 15 million  
$300 million
  $ 30 million  
$350 million
  $ 45 million  
More than $350 million
  $ 45 million  
 
For purposes of the cost synergy bonus, “Cost Synergy Level Attained” means the annual run-rate of cost savings achieved by Stanley as of the third anniversary of the completion of the merger that are attributable to the merger. Those cost savings will be calculated on a pre-tax basis, applying generally accepted accounting principles and otherwise consistent with the methods of cost synergy measurements used in reports provided to the board of Stanley and included in its public filings. The calculation will not include any revenue synergies. To the extent the cost synergy level attained is between two values set forth in the table above, the cost synergy bonus will be determined by linear interpolation between the two corresponding cost synergy bonus amount values. In addition, each bonus amount set forth in the table above will be increased at an interest rate of 4.5% compounded annually over the three-year period beginning on the date of completion of the merger.
 
In addition to the compensation and benefits Mr. Archibald will receive as the executive chairman of Stanley, Stanley will continue to honor certain of Mr. Archibald’s entitlements under his existing employment agreement with Black & Decker and other compensation plans or arrangements of Black & Decker, including the following:
 
  •  to the extent not previously paid by Black & Decker, a payment of $3,750,000 in respect of Black & Decker’s executive annual incentive plan for the 2009 performance period;
 
  •  to the extent not previously paid by Black & Decker, a payment of $4,725,000 in respect of Black & Decker’s 2008 Executive Long Term Incentive/Retention Plan;
 
  •  all amounts owed to Mr. Archibald under Black & Decker’s Supplemental Executive Retirement Plan, Supplemental Pension Plan and Supplemental Retirement Savings Plan, which are payable in accordance with the applicable plan, except that the severance payment that Mr. Archibald is waiving under the executive chairman agreement will be considered solely for purposes of calculating Mr. Archibald’s benefit under Black & Decker’s Supplemental Executive Retirement Plan;
 
  •  retiree medical benefit coverage for Mr. Archibald and his spouse, to the extent Mr. Archibald is eligible to receive such benefit coverage upon his retirement under Black & Decker’s applicable plans; and


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  •  reimbursement of all legal fees and expenses incurred by Mr. Archibald resulting from the application of Section 4999 of the Code to all payments and benefits under the executive chairman agreement.
 
Stanley may terminate Mr. Archibald’s employment with or without “Cause” if 80% of the Stanley board (other than Mr. Archibald) approves the termination. Mr. Archibald also has the right to terminate his employment for “Good Reason” upon the occurrence of certain events, including, but not limited to, (1) a reduction in Mr. Archibald’s annual base salary or annual bonus amount opportunity or (2) the failure of Mr. Archibald to be appointed or elected a member of the Stanley board or to be elected its executive chairman. Upon the termination of Mr. Archibald’s employment by Stanley without Cause or for Good Reason, Mr. Archibald would be entitled to the following benefits:
 
  •  Stanley will pay Mr. Archibald the cost synergy bonus following the third anniversary of the effective date as if Mr. Archibald had remained continuously employed by Stanley through such date;
 
  •  all outstanding equity awards granted to Mr. Archibald pursuant to the executive chairman agreement would immediately vest, as well as any Black & Decker stock options, shares of restricted stock, and restricted stock units outstanding prior to the completion of the merger; and
 
  •  continued health and welfare benefits covering for Mr. Archibald and his eligible dependents until up to the third anniversary of the completion of the merger.
 
Severance Benefits Agreements
 
In 1986, Black & Decker entered into severance benefits agreements that provided for payments to be made to certain key management employees who are terminated following a change in control of Black & Decker. These agreements have been amended and restated from time to time and currently cover 19 executive officers.
 
The severance benefits agreements provide for the payment of specified benefits if the executive’s employment terminates under certain circumstances following a change in control. The entry into the merger agreement by Black & Decker was a change in control under the severance benefits agreements.
 
Circumstances triggering payment of severance benefits under these agreements include: (1) involuntary termination of employment for reasons other than death, disability, or cause; or (2) voluntary termination by the executive in the event of significant changes in the nature of his or her employment, including reductions in compensation and changes in responsibilities and powers. Benefits under the severance benefits agreements generally include:
 
  •  a severance payment equal to three times the sum of the executive’s annual base salary, the “maximum participant award,” and the “LTP Amount”,
 
  •  reimbursement of all legal fees and expenses incurred by the executive as a result of his or her termination,
 
  •  a gross-up payment if the executive is subject to the excise tax imposed by Section 4999 of the Code, and
 
  •  life, disability, accident and health insurance benefits for three years following termination substantially similar to those benefits to which the executive was entitled immediately prior to termination.
 
For purposes of the severance benefits agreements, the “maximum participant award” means the maximum payment that the executive could have received under Black & Decker’s executive annual incentive plan, determined as if the executive had remained a participant and all performance goals that would have entitled the executive to a maximum payment are met or exceeded, and “LTP Amount” means an amount equal to, depending on the individual, 60-90% of the executive’s annual base salary.


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The following table sets forth the amount of payments and the estimated value of benefits that each executive officer would receive if a qualifying termination occurs together with an estimate of the gross-up payments for excise and related taxes to be paid by Stanley:
 
                                 
Executive Officer
  Severance Payment   Benefits   Estimated Gross-Up   Total
 
Michael D. Mangan
  $ 7,770,000     $ 120,105     $ 9,063,857     $ 16,953,962  
Charles E. Fenton
  $ 5,544,000     $ 266,365           $ 5,810,365  
John W. Schiech
  $ 4,394,250     $ 83,088     $ 3,795,092     $ 8,272,430  
Stephen F. Reeves
  $ 3,780,000     $ 68,346     $ 4,275,610     $ 8,123,956  
James T. Caudill
  $ 3,881,250     $ 66,888     $ 2,035,488     $ 5,983,626  
Paul F. McBride
  $ 3,671,250     $ 85,010           $ 3,756,260  
Bruce W. Brooks
  $ 3,363,000     $ 68,732     $ 2,134,695     $ 5,566,427  
Les H. Ireland
  $ 3,277,500     $ 69,155           $ 3,346,655  
John H. Wyatt
  $ 2,679,690     $ 20,472           $ 2,700,162  
Mark M. Rothleitner
  $ 2,925,000     $ 68,810           $ 2,993,810  
Ben S. Sihota
  $ 2,633,550     $ 94,368           $ 2,727,918  
Michael A. Tyll
  $ 2,742,750     $ 45,350     $ 1,984,510     $ 4,772,610  
Christina M. McMullen
  $ 2,457,000     $ 51,192           $ 2,508,192  
William S. Taylor
  $ 2,115,705     $ 53,532     $ 1,066,489     $ 3,235,726  
Amy K. O’Keefe
  $ 2,115,000     $ 57,090     $ 1,017,640     $ 3,189,730  
Jaime A. Ramirez
  $ 1,980,000     $ 61,461     $ 1,086,456     $ 3,127,917  
James R. Raskin
  $ 2,044,500     $ 59,146     $ 1,240,636     $ 3,344,282  
Anthony V. Milando
  $ 1,956,375     $ 59,741     $ 1,052,865     $ 3,068,981  
Natalie A. Shields
  $ 1,339,500     $ 53,995     $ 912,391     $ 2,305,886  
 
The foregoing estimates of the “gross-up” for excise and related taxes are based on a number of factors, including assumed individual effective tax rates, the value associated with the acceleration of vesting of equity awards, the timing of any parachute payments and whether the employment of the executive officer is terminated in connection with the merger. Facts and circumstances at the time of any qualifying termination of employment as well as changes in the applicable executive officer’s compensation history preceding such termination could materially impact whether and to what extent the excise tax will be imposed and therefore the amount of any potential gross-up.
 
Long-Term Incentive Plans
 
In February 2008, the Black & Decker board of directors adopted The Black & Decker 2008 Executive Long-Term Incentive/Retention Plan (the “2008 Long-Term Plan”) for corporate officers and The Black & Decker Long-Term Management Compensation Plan for key non-officer employees. Each participant in the 2008 Long-Term Plan is entitled to a cash award payable in January 2011 if the average of Black & Decker’s return on capital employed (as defined in the 2008 Long-Term Plan) during fiscal years 2008, 2009, and 2010 is at least 12%. The Long-Term Management Compensation Plan does not include a performance metric.


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Under the terms of the 2008 Long-Term Plan, each participant is entitled to the payment of his or her award in the event of a change in control without regard to the achievement of the performance metric. Awards under the Long-Term Management Compensation Plan are also payable in the event of a change in control. Under both of these plans, the completion of the merger is a change in control. The following table sets forth the amount that each of Black & Decker’s executive officers would receive under the 2008 Long-Term Plan or the Long-Term Management Compensation Plan upon completion of the merger:
 
         
Executive Officer
  Award
 
Nolan D. Archibald
  $ 4,725,000  
Michael D. Mangan
  $ 1,728,000  
Charles E. Fenton
  $ 1,512,000  
John W. Schiech
  $ 1,046,250  
Stephen F. Reeves
  $ 630,000  
James T. Caudill
  $ 263,250  
Paul F. McBride
  $ 1,001,250  
Bruce W. Brooks
  $ 855,000  
Les H. Ireland
  $ 769,500  
John H. Wyatt
  $ 435,932  
Mark M. Rothleitner
  $ 675,000  
Ben S. Sihota
  $ 733,050  
Michael A. Tyll
  $ 643,950  
Christina M. McMullen
  $ 567,000  
William S. Taylor
  $ 405,135  
Amy K. O’Keefe
  $ 360,305  
Jaime A. Ramirez
  $ 337,500  
James R. Raskin
  $ 522,000  
Anthony V. Milando
  $ 374,625  
Natalie A. Shields
  $ 342,000  
         
Total
  $ 17,926,747  
 
Equity Compensation Plans
 
Under the terms of Black & Decker’s restricted stock plans, all outstanding shares of restricted stock and restricted stock units vest upon a change in control (other than those held by Mr. Archibald). Under the terms of the severance benefits agreements described above, each executive (other than Mr. Archibald) will fully vest in all outstanding stock options held by the executive upon the occurrence of a change in control. For purposes of the restricted stock plans and the severance benefits agreements, the entry into the merger agreement on November 2, 2009 was a change in control that resulted in the vesting of outstanding shares of restricted stock, restricted stock units, and stock options.


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The following table sets forth for each of the executive officers the amount each individual received in respect of vesting of unvested equity compensation awards that were outstanding as of November 2, 2009. The dollar amounts are based on a price per share of Black & Decker common stock of $72.07 (the closing price on January 11, 2010), and calculated assuming all in-the-money stock options were exercised and all restricted stock and shares underlying those stock options were sold.
 
                         
            Cash that would have
            been paid if Unvested
    Unvested Restricted Stock/
  Unvested Stock
  Awards were Exercised
Executive Officer
  Restricted Stock Units   Options   and Cashed Out
 
Michael D. Mangan
    77,000       117,750     $ 7,980,643  
Charles E. Fenton
    44,000       74,350     $ 4,612,472  
John W. Schiech
    48,400       70,000     $ 4,661,926  
Stephen F. Reeves
    29,200       54,850     $ 3,506,543  
James T. Caudill
    28,600       55,150     $ 3,109,033  
Paul F. McBride
    26,000       42,550     $ 2,605,095  
Bruce W. Brooks
    32,500       50,050     $ 3,217,777  
Les H. Ireland
    29,000       51,025     $ 3,099,537  
John H. Wyatt
    14,130       19,200     $ 1,461,862  
Mark M. Rothleitner
    13,400       24,200     $ 1,402,156  
Ben S. Sihota
    17,000       22,825     $ 1,660,097  
Michael A. Tyll
    28,600       54,900     $ 3,109,033  
Christina M. McMullen
    17,000       24,900     $ 1,685,261  
William S. Taylor
    10,100       13,350     $ 1,023,499  
Amy K. O’Keefe
    5,625       9,975     $ 632,283  
Jaime A. Ramirez
    9,910       9,125     $ 946,359  
James R. Raskin
    18,640       23,800     $ 1,751,260  
Anthony V. Milando
    7,300       10,750     $ 762,635  
Natalie A. Shields
    12,500       21,775     $ 1,308,750  
                         
Total
    468,905       750,525     $ 48,536,221  
 
Pension Benefits
 
Black & Decker maintains a non-contributory, tax-qualified defined benefit plan that covers most of the executive officers. Tax code provisions limit the annual benefits that may be paid from tax-qualified retirement plans. Black & Decker also maintains The Black & Decker Supplemental Executive Retirement Plan (“SERP”) for specified executives that authorizes payment outside of the tax-qualified plan of annual benefits in excess of amounts permitted to be paid under the tax-qualified plan. Each of Messrs. Archibald, Mangan, Fenton, Schiech, Reeves, and McBride participates in the SERP.
 
The calculation of benefits under the SERP is determined by a formula that takes into account the participant’s stated average annual compensation and years of credited service. The amount of the benefit is based on the executive’s base annual salary, award under the executive annual incentive plan, any other annual bonus, and, in the event of a change in control, any salary continuance payments. The amount of compensation used when calculating the benefit is an execu