Item 1.01
Entry into a Material Definitive Agreement.
On
November 2, 2009, The Stanley Works (“Stanley”), Blue Jay
Acquisition Corp. (“Merger Sub”), a
wholly-owned subsidiary of Stanley, and The Black & Decker Corporation
(“Black &
Decker”) entered into an Agreement and Plan of Merger (the “Merger Agreement”),
providing for the combination of Stanley and Black &
Decker. Subject to the terms and conditions of the Merger Agreement,
which has been approved by the boards of directors of all parties, Merger Sub
will be merged (the “Merger”) with and
into Black & Decker, with Black & Decker becoming a wholly-owned
subsidiary of Stanley.
As a
result of the Merger, each outstanding share of Black & Decker’s common
stock will be converted into the right to receive 1.275 shares of common stock
of Stanley (the “Common
Stock”).
The
consummation of the Merger is subject to certain conditions, including, among
others: (i) the approval by Black & Decker’s shareholders of the
Merger, (ii) the approval by Stanley’s shareholders of the issuance of Common
Stock by Stanley and the amendment of Stanley’s certificate of incorporation to
increase the number of authorized shares of Common Stock and to change Stanley’s
name to “Stanley Black & Decker”, and (iii) the receipt of antitrust
approval (or the expiration of applicable waiting periods) in the U.S. and other
jurisdictions, including the European Union, and the absence of legal restraints
preventing consummation of the Merger or that would reasonably be expected to
result in certain adverse effects on Stanley or Black & Decker.
The
Merger Agreement contains customary representations and warranties and
covenants, most of which are reciprocal between Stanley and Black &
Decker. Certain covenants require that each of the
parties: (i) use reasonable best efforts to cause the Merger to
be consummated, including with regard to receiving antitrust approvals,
(ii) not solicit alternate transactions, and (iii) call and hold a
special shareholders’ meeting and, in the case of Black & Decker, recommend
approval of the Merger, and, in the case of Stanley, recommend approval of the
issuance of Common Stock and the amendment to Stanley’s certificate of
incorporation.
The
Merger Agreement contains certain termination rights and provides that
(i) upon the termination of the Merger Agreement under specified
circumstances, including a change in the recommendation of the Black &
Decker board of directors, Black & Decker will owe Stanley a cash
termination fee of $125 million, and (ii) upon the termination of the
Merger Agreement under specified circumstances, including a change in the
recommendation of the Stanley board of directors, Stanley will owe Black &
Decker a cash termination fee of $125 million.
The
Merger Agreement also provides that, upon consummation of the Merger, (i) the
Stanley board of directors shall be comprised of nine directors from Stanley and
six directors from Black & Decker, (ii) of the independent directors from
Stanley, one shall be appointed the lead independent director, and (iii) Nolan
D. Archibald, the current Chairman, President, and Chief Executive Officer of
Black & Decker, shall be elected as Executive Chairman of the Stanley board
of directors. John F. Lundgren, the current Chairman and Chief
Executive Officer of Stanley, shall remain as Chief Executive
Officer.
The
foregoing description of the Merger Agreement is not a complete description of
all of the parties’ rights and obligations under the Merger
Agreement. The above description is qualified in its entirety by
reference to the Merger Agreement, which is filed as Exhibit 2.1 hereto and is
incorporated herein by reference.
Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment
of Certain Officers; Compensatory Arrangements of Certain Officers.
On
November 2, 2009, the Stanley Compensation and Organization Committee (the
“Compensation
Committee”) voted to recommend to the Stanley board of directors its
approval of (i) an amended and restated employment agreement between Stanley and
John F. Lundgren (the “Lundgren Agreement”),
(ii) an employment agreement between Stanley and James M. Loree (the “Loree Agreement”) and
(iii) an executive chairman agreement between Stanley and Nolan D. Archibald
(the “Executive
Chairman Agreement” and, collectively, the “Employment
Agreements”), each of which the Board approved on November 2,
2009. The Employment Agreements become effective upon consummation of
the Merger. If the Merger is not
consummated, the Employment Agreements are
null and void and will not become effective.
The
Lundgren Agreement
Upon its
effective date, the Lundgren Agreement will amend and restate, in its entirety,
Stanley’s previous employment agreement with Mr. Lundgren, dated as of December
10, 2008 (the “Prior
Agreement”). Except for the material terms described below,
the Lundgren Agreement is substantially similar to the Prior
Agreement. Under the Lundgren Agreement, Mr. Lundgren will continue
to 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. In addition, promptly after the Lundgren Agreement
becomes effective, Mr. Lundgren will be entitled to receive a grant of
restricted stock units, which generally will vest 50% on each of the fourth and
fifth anniversaries of the consummation of the Merger. In addition to
the restricted stock units granted to Mr. Lundgren at the time of the
consummation of the Merger, Mr. Lundgren will also be eligible to receive annual
performance awards and annual stock option awards. All of the equity
awards granted pursuant to the Lundgren Agreement will be subject to the terms
and conditions of Stanley’s equity incentive plan and customary award
agreements.
The
Loree Agreement
Under the
Loree Agreement, 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. In
addition, promptly after the Loree Agreement becomes effective, Mr. Loree will
be entitled to receive a grant of restricted stock units, which generally will
vest 50% on each of the fourth and fifth anniversaries of the consummation of
the Merger. In addition to the restricted stock units granted to Mr.
Loree at the time of the consummation of the Merger, Mr. Loree will also be
eligible to receive annual performance awards and annual stock option
awards. All of the equity awards granted pursuant to the Loree
Agreement will be subject to the terms and conditions of Stanley’s equity
incentive plan and customary award agreements
Mr. Loree
will be entitled to certain severance payments if his employment is terminated
by Stanley without cause or if Mr. Loree experiences a constructive termination
of employment and, in connection therewith, Mr. Loree executes a general release
and waiver. In addition, in the event Mr. Loree’s employment is
terminated, he will be subject to certain restrictive covenants.
The
Archibald Agreement
Upon its
effective date, the Archibald Agreement will replace and supersede Mr.
Archibald’s existing employment agreement with Black &
Decker. Under the Archibald 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 consummation of
the Merger. While Mr. Archibald is employed by Stanley, he will
receive an annual base salary of $1,500,000 and will be entitled to participate
in an annual bonus plan, with an annual target bonus opportunity equal to
$1,875,000. In addition, promptly after the Archibald Agreement
becomes effective, Mr. Archibald will be entitled to receive a grant of stock
options, which generally will vest on the third anniversary of the consummation
of the Merger. In addition to the stock options granted to Mr.
Archibald at the time of the consummation of the Merger, Mr. Archibald will also
be eligible to receive annual equity awards, comprised (based on value) of 50%
stock options and 50% restricted stock, restricted stock units or other
full-share type awards. All of the equity awards granted pursuant to
the Archibald Agreement will be subject to the terms and conditions of Stanley’
equity incentive plan and customary award agreements. Mr. Archibald
will also be eligible to receive a cost synergy bonus upon the third anniversary
of the consummation of the Merger based on the achievement of certain
goals.
Mr.
Archibald will remain entitled to receive certain perquisites and benefits that
he has been receiving pursuant to his existing employment agreement with Black
& Decker. In addition, Mr. Archibald has agreed to waive certain
rights to payments and benefits provided for under his existing employment
agreement with Black & Decker, including the right to receive an
approximately $20.5 million change in control severance payment, a tax gross-up
for excise taxes under Section 280G of the Internal Revenue Code of 1986 and
immediate accelerated vesting of his outstanding Black & Decker stock
options, restricted stock and restricted stock units.
Mr.
Archibald will be entitled to certain severance payments if his employment is
terminated by Stanley without cause or if Mr. Archibald experiences a
constructive termination of employment and, in connection therewith, Mr.
Archibald executes a general release and waiver. In addition, in the
event Mr. Archibald’s employment is terminated, he will be subject to certain
restrictive covenants.
The
foregoing description of the Employment Agreements is not a complete description
of all of the parties’ rights and obligations under the Employment
Agreements. The above description is qualified in its entirety by
reference to the Employment Agreements, which are
attached as Exhibits 10.1, 10.2 and 10.3 to this Current Report on Form 8-K and
incorporated herein by reference
Additional
Information
The
proposed transaction involving Stanley and Black & Decker will be submitted
to the respective stockholders of Stanley and Black & Decker for their
consideration. In connection with the proposed transaction, Stanley
will file with the Securities and Exchange Commission (the “SEC”) a registration
statement on Form S-4 that will include a joint proxy statement of Stanley and
Black & Decker that will also constitute a prospectus of
Stanley. Investors and security holders are urged to read the joint proxy statement/prospectus
and any other relevant documents filed with the SEC when they become available,
because they will contain important information. Investors and
security holders may obtain a free copy of the joint proxy statement/prospectus
and other documents (when available) that Stanley and Black & Decker file
with the SEC at the SEC’s website at www.sec.gov and Stanley’s website related
to the transaction at www.stanleyblackanddecker.com. In addition,
these documents may be obtained from Stanley or Black & Decker free of
charge by directing a request to Investor Relations, The Stanley Works, 1000
Stanley Drive, New Britain, CT 06053, or to Investor Relations, The Black &
Decker Corporation, 701 E. Joppa Road, Towson, Maryland 21286,
respectively.
Certain
Information Regarding Participants
Stanley,
Black & Decker and certain of their respective directors and executive
officers may be deemed to be participants in the proposed transaction under the
rules of the SEC. Investors and security holders may obtain
information regarding the names, affiliations and interests of Stanley’s
directors and executive officers in Stanley’s Annual Report on Form 10-K
for the year ended January 3, 2009, which was filed with the SEC on
February 26, 2009, and its proxy statement for its 2009 Annual Meeting,
which was filed with the SEC on March 20, 2009. Investors and
security holders may obtain information regarding the names, affiliations and
interests of Black & Decker’s directors and executive officers in Black
& Decker’s Annual Report on Form 10-K for the year ended
December 31, 2008, which was filed with the SEC on February 17,
2009, and its proxy statement for its 2009 Annual Meeting, which was filed with
the SEC on March 16, 2009. These documents can be obtained free
of charge from the sources listed above. Additional information
regarding the interests of these individuals will also be included in the joint
proxy statement/prospectus regarding the proposed transaction when it becomes
available.
Non-Solicitation
A
registration statement relating to the securities to be issued by Stanley in the
proposed transaction will be filed with the SEC, and Stanley will not issue,
sell or accept offers to buy such securities prior to the time such registration
statement becomes effective. This document 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.
Item
9.01 Financial Statements and Exhibits.
(d) Exhibits
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Exhibit
No.
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Description
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2.1
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Agreement
and Plan of Merger, dated as of November 2, 2009, among The Stanley Works,
The Black & Decker Corporation and Blue Jay Acquisition
Corp.
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10.1
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Second
Amended and Restated Employment Agreement, dated as of November 2, 2009,
among The Stanley Works and John F. Lundgren.
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10.2
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Employment
Agreement, dated as of November 2, 2009, among The Stanley Works and James
M. Loree.
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10.3
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Executive
Chairman Agreement, dated as of November 2, 2009, among The Stanley Works
and Nolan D. Archibald.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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The
Stanley Works
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November
3, 2009
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By:
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/s/
Bruce H. Beatt
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Name:
Bruce H. Beatt
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Title:
Vice President, General Counsel and
Secretary
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Exhibit Index
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Exhibit
No.
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Description
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2.1
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Agreement
and Plan of Merger, dated as of November 2, 2009, among The Stanley Works,
The Black & Decker Corporation and Blue Jay Acquisition
Corp.
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10.1
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Second
Amended and Restated Employment Agreement, dated as of November 2, 2009,
among The Stanley Works and John F. Lundgren.
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10.2
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Employment
Agreement, dated as of November 2, 2009, among The Stanley Works and James
M. Loree.
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10.3
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Executive
Chairman Agreement, dated as of November 2, 2009, among The Stanley Works
and Nolan D. Archibald.
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