Exhibit 10(cc)(2)





                                December 12, 2002


Mr. Paul A. Gustafson
The Black & Decker Corporation
701 East Joppa Road Towson,
Maryland 21286

Dear Paul:

         The  Black  &  Decker  Corporation  (the  "Corporation")  considers  it
essential to the best  interests of its  stockholders  to foster the  continuous
employment  of key  management  personnel.  In this  connection,  the  Board  of
Directors of the Corporation (the "Board")  recognizes that, as is the case with
many publicly held  corporations,  the possibility of a change in control of the
Corporation  may  exist  and that  such  possibility,  and the  uncertainty  and
questions  that it may raise among  management,  may result in the  departure or
distraction of management  personnel to the detriment of the Corporation and its
stockholders.

         The Board has  determined  that  appropriate  steps  should be taken to
reinforce and encourage the continued attention and dedication of members of the
Corporation's  management,  including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the  Corporation,  although no such change
is now contemplated.

         In order to induce you to remain in the employ of the Corporation,  the
Corporation  agrees that you shall receive the  severance  benefits set forth in
this letter  agreement (the  "Agreement")  in the event your employment with the
Corporation is terminated subsequent to a "change in control of the Corporation"
(as defined in Section 2 hereof) under the circumstances described below.

         1. Term of Agreement.  This Agreement shall commence on the date hereof
and shall continue in effect through December 31, 2007; provided,  however, that
if a change in control of the Corporation  shall have occurred prior to December
31,  2007,  this  Agreement  shall  continue in effect for a period of 36 months
beyond the month in which the change in control of the Corporation  occurred, at
which time this Agreement shall terminate.  Notwithstanding  the foregoing,  and
provided  no change in control of the  Corporation  shall  have  occurred,  this
Agreement  shall  automatically  terminate upon the earlier to occur of (i) your
termination of employment with the Corporation, or (ii) the Corporation's giving
you notice of termination, regardless of the effective date of such termination.

         2. Change in Control.  No benefits  shall be payable  hereunder  unless
there  shall  have been a change in  control  of the  Corporation,  as set forth
below. For purposes of this Agreement,  a "change in control of the Corporation"
shall mean a change in control of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not
the Corporation is in fact required to comply therewith,  provided that, without
limitation, such a change in control shall be deemed to have occurred if (A) any
"person" (as that term is used in Sections 13(d) and 14(d) of the Exchange Act),
other than a trustee or other  fiduciary  holding  securities  under an employee
benefit plan of the  Corporation  or any of its  subsidiaries  or a  corporation
owned,  directly  or  indirectly,  by the  stockholders  of the  Corporation  in
substantially   the  same  proportions  as  their  ownership  of  stock  of  the
Corporation,  is or becomes  the  "beneficial  owner" (as  defined in Rule 13d-3
under  the  Exchange  Act),  directly  or  indirectly,   of  securities  of  the
Corporation  representing  20% or  more  of the  combined  voting  power  of the
Corporation's  then  outstanding  securities;  (B)  during  any  period  of  two
consecutive  years,  individuals who at the beginning of that period  constitute
the Board and any new director (other than a director designated by a person who
has entered  into an  agreement  with the  Corporation  to effect a  transaction
described in clauses (A) or (D) of this Section)  whose election by the Board or
nomination for election by the Corporation's stockholders was approved by a vote
of at least  two-thirds  of the  directors  then still in office who either were
directors at the  beginning of the period or whose  election or  nomination  for
election  was  previously  so  approved,  cease for any reason to  constitute  a
majority  of the  Board;  (C) the  Corporation  enters  into an  agreement,  the
consummation  of which would result in the  occurrence of a change in control of
the Corporation;  or (D) the  stockholders of the Corporation  approve a merger,
share exchange or consolidation of the Corporation with any other corporation or
entity,  other than a merger,  share exchange or consolidation that would result
in the  voting  securities  of the  Corporation  outstanding  immediately  prior
thereto  continuing to represent  (either by remaining  outstanding  or by being
converted  into voting  securities of the surviving  entity) at least 60% of the
combined  voting  power  of the  voting  securities  of the  Corporation  or the
surviving entity  outstanding  immediately  after the merger,  share exchange or
consolidation, or the stockholders of the Corporation approve a plan of complete
liquidation  of the  Corporation  or an agreement for the sale or disposition by
the Corporation of all or substantially all the Corporation's assets.

         3. Termination  Following Change in Control of the Corporation.  If any
of the events described in Section 2 hereof  constituting a change in control of
the  Corporation  shall have  occurred,  you shall be entitled  to the  benefits
provided in Subsection  4(iii) hereof upon the  subsequent  termination  of your
employment  during  the term of this  Agreement  unless the  termination  is (A)
because of your death or Disability, (B) by the Corporation for Cause, or (C) by
you other than for Good Reason.

               (i)  Disability.  If,  as a  result  of  your  incapacity  due to
physical  or mental  illness,  you shall  have been  absent  from the  full-time
performance of your duties with the Corporation for six consecutive  months, and
within 30 days after written  notice of  termination is given you shall not have
returned to the full-time  performance  of your duties,  your  employment may be
terminated for "Disability."

               (ii) Cause. Termination by the Corporation of your employment for
"Cause" shall mean termination upon (A) the willful and continued failure by you
to substantially  perform your duties with the Corporation,  other than any such
failure  resulting from your incapacity due to physical or mental illness or any
such  actual or  anticipated  failure  after the  issuance by you of a Notice of
Termination (as defined in Subsection  3(iv) hereof) for Good Reason (as defined
in Subsection 3(iii) hereof), after a written demand for substantial performance
is  delivered  to you by the Board,  which demand  specifically  identifies  the
manner in which the Board  believes  that you have not  substantially  performed
your duties,  or (B) the willful engaging by you in conduct that is demonstrably
and  materially  injurious to the  Corporation,  monetarily  or  otherwise.  For
purposes  of this  Subsection,  no act or  failure  to act on your part shall be
deemed  "willful"  unless done,  or omitted to be done, by you not in good faith
and without  reasonable  belief  that your  action or  omission  was in the best
interest of the  Corporation.  Notwithstanding  the foregoing,  you shall not be
deemed to have been  terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative  vote of
not less than  three-quarters of the entire membership of the Board at a meeting
of the Board called and held for that purpose  (after  reasonable  notice to you
and an opportunity for you,  together with your counsel,  to be heard before the
Board),  finding that in the good faith  opinion of the Board you were guilty of
conduct  set forth  above in clauses  (A) or (B) of the first  sentence  of this
Subsection and specifying the particulars thereof in detail.

               (iii)  Good  Reason.  You shall be  entitled  to  terminate  your
employment for Good Reason. For purposes of this Agreement,  "Good Reason" shall
mean,  without your express written  consent,  the occurrence  after a change in
control of the Corporation of any of the following  circumstances unless, in the
case of  paragraphs  (A),  (E),  (F),  (G) or (H), the  circumstances  are fully
corrected  prior  to  the  Date  of  Termination  specified  in  the  Notice  of
Termination,  as those terms are defined in  Subsections  3(v) and 3(iv) hereof,
respectively, given in respect thereof:

                    (A) the  assignment to you of any duties  inconsistent  with
         your current status as an executive of the Corporation or a substantial
         adverse  alteration  in the  nature or status of your  responsibilities
         from those in effect  immediately prior to the change in control of the
         Corporation;

                    (B) a  reduction  by the  Corporation  in your  annual  base
         salary as in effect on the date hereof or as the same may be  increased
         from  time to  time,  except  for  across-the-board  salary  reductions
         similarly  affecting all senior  executives of the  Corporation and all
         senior executives of any person in control of the Corporation;

                    (C) your  relocation  to a  location  not within 25 miles of
         your office or job location  immediately prior to the change in control
         of the  Corporation,  except for required  travel on the  Corporation's
         business  to an  extent  substantially  consistent  with  your  present
         business travel obligations;

                    (D) the failure by the Corporation, without your consent, to
         pay to you any portion of your current  compensation,  or to pay to you
         any  portion  of an  installment  of  deferred  compensation  under any
         deferred compensation program of the Corporation,  within seven days of
         the date such compensation is due;

                    (E) the failure by the Corporation to continue in effect any
         bonus to which you were entitled, or any compensation plan in which you
         participated  immediately  prior  to  the  change  in  control  of  the
         Corporation that is material to your total compensation,  including but
         not limited to the Corporation's (i) Executive Annual Incentive Plan or
         other annual  incentive  compensation  plan ("AIP");  (ii)  Performance
         Equity Plan or other  long-term  incentive  compensation  plan ("PEP");
         (iii) stock option plans;  (iv)  retirement and savings plans;  and (v)
         Supplemental Executive Retirement Plan ("SERP"); or any substitute plan
         or plans  adopted  prior to the change in  control of the  Corporation,
         unless an equitable  arrangement  (embodied in an ongoing substitute or
         alternative  plan)  has  been  made  with  respect  to the plan and the
         equitable  arrangement provides  substantially  equivalent benefits not
         materially  less  favorable  to you  (both in terms  of the  amount  of
         benefits provided and the level of your participation relative to other
         participants),  or the  failure by the  Corporation  to  continue  your
         participation  therein (or in such substitute or alternative plan) on a
         basis not  materially  less  favorable  (both in terms of the amount of
         benefits provided and the level of your participation relative to other
         participants) than those you enjoyed immediately prior to the change in
         control of the Corporation;

                    (F) the failure by the Corporation to continue to provide to
         you benefits substantially similar to those enjoyed by you under any of
         the Corporation's life insurance, medical, dental, health and accident,
         or disability plans in which you were  participating at the time of the
         change in control  of the  Corporation,  the  failure  to  continue  to
         provide  to you an  automobile  or  allowance  in lieu  thereof,  if an
         automobile or allowance in lieu thereof was provided to you at the time
         of the change in control of the  Corporation,  the taking of any action
         by the Corporation that would directly or indirectly  materially reduce
         any of these  benefits or deprive you of any  material  fringe  benefit
         enjoyed by you at the time of the change in control of the Corporation,
         or the failure by the  Corporation to provide to you the number of paid
         vacation  days to  which  you are  entitled  on the  basis  of years of
         service  with the  Corporation  in  accordance  with the  Corporation's
         normal  vacation  policy in effect at the time of the change in control
         of the Corporation;

                    (G) the failure of the  Corporation to obtain a satisfactory
         agreement  from any  successor  to  assume  and agree to  perform  this
         Agreement, as contemplated in Section 6 hereof; or

                    (H) any purported termination of your employment that is not
         effected   pursuant  to  a  Notice  of   Termination   satisfying   the
         requirements  of  Subsection  3(iv) hereof  (and,  if  applicable,  the
         requirements  of  Subsection  3(ii)  hereof);   for  purposes  of  this
         Agreement, no such purported termination shall be effective.

Your rights to terminate your employment  pursuant to this Subsection  shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment  shall not constitute  consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.

               (iv) Notice of  Termination.  Any purported  termination  of your
employment by the  Corporation or by you shall be communicated by written Notice
of  Termination  to the other party in  accordance  with  Section 7 hereof.  For
purposes of this Agreement,  a "Notice of Termination"  shall mean a notice that
indicates the specific  termination  provision in this Agreement relied upon and
that sets  forth in  reasonable  detail the facts and  circumstances  claimed to
provide a basis for  termination  of your  employment  under  the  provision  so
indicated.

               (v) Date of Termination,  Etc. "Date of  Termination"  shall mean
(A) if your  employment is terminated  for  Disability,  30 days after Notice of
Termination is given (provided that you shall not have returned to the full-time
performance of your duties during the 30-day period), and (B) if your employment
is terminated  pursuant to  Subsections  3(ii) or 3(iii) hereof or for any other
reason (other than Disability),  the date specified in the Notice of Termination
(which,  in the case of a termination  pursuant to Subsection 3(ii) hereof shall
not be  less  than  30  days,  and in the  case  of a  termination  pursuant  to
Subsection  3(iii)  hereof  shall  not be less  than 15 nor  more  than 60 days,
respectively,  from the date that the Notice of Termination is given);  provided
that if within 15 days after any Notice of Termination  is given,  or, if later,
prior to the Date of Termination (as determined without regard to this proviso),
the party  receiving the Notice of  Termination  notifies the other party that a
dispute exists concerning the termination,  the Date of Termination shall be the
date on which the  dispute  is  finally  determined,  either  by mutual  written
agreement  of  the  parties,  by a  binding  arbitration  award,  or by a  final
judgment,  order or decree of a court of  competent  jurisdiction  (which is not
appealable  or with  respect  to which the time for appeal  has  expired  and no
appeal has been perfected);  provided further that the Date of Termination shall
be extended by a notice of dispute only if the notice is given in good faith and
the  party  giving  the  notice  pursues  the  resolution  of the  dispute  with
reasonable   diligence.   Notwithstanding  the  pendency  of  the  dispute,  the
Corporation  will continue to pay you your full  compensation in effect when the
Notice of Termination  giving rise to the dispute was given (including,  but not
limited to, base salary) and continue you as a participant in all  compensation,
benefit  and  insurance  plans in which you were  participating  when the notice
giving rise to the dispute was given,  until the dispute is finally  resolved in
accordance  with this  Subsection.  Amounts  paid under this  Subsection  are in
addition to all other  amounts due under this  Agreement and shall not be offset
against or reduce any other amounts due under this Agreement.

         4.  Compensation  Upon  Termination or During  Disability.  Following a
change in control  of the  Corporation,  as  defined  by Section 2 hereof,  upon
termination  of your  employment or during a period of  Disability  you shall be
entitled to the following benefits:

               (i)  During any period  that you fail to perform  your  full-time
duties with the  Corporation as a result of incapacity due to physical or mental
illness, you shall continue to receive your base salary at the rate in effect at
the  commencement of the period,  together with all amounts payable to you under
any compensation plan of the Corporation during the period, until this Agreement
is terminated  pursuant to Subsection 3(i) hereof.  Thereafter,  or in the event
your  employment  shall be  terminated  by you other than for Good  Reason or by
reason of your death,  your benefits shall be determined under the Corporation's
retirement,  insurance  and  other  compensation  programs  then  in  effect  in
accordance with the terms of those programs.

               (ii) If your  employment  shall be terminated by the  Corporation
for  Cause,  Disability  or death,  or by you other  than for Good  Reason,  the
Corporation  shall pay you your full base salary through the Date of Termination
at the rate in effect at the time Notice of Termination is given, plus all other
amounts to which you are  entitled  under any  retirement,  insurance  and other
compensation  programs of the  Corporation at the time the payments are due, and
the Corporation shall have no further obligations to you under this Agreement.

               (iii) If your employment by the  Corporation  shall be terminated
(a) by the Corporation  other than for Cause,  Disability or death or (b) by you
for Good Reason, then you shall be entitled to the benefits provided below:

                    (A) The  Corporation  shall pay you your  full  base  salary
         through  the  Date of  Termination  at the rate in  effect  at the time
         Notice of Termination is given, plus all other amounts to which you are
         entitled under any compensation  plan of the  Corporation,  at the time
         those payments are due, except as otherwise provided below.

                    (B) In  lieu  of any  further  salary  payments  to you  for
         periods  subsequent to the Date of Termination,  the Corporation  shall
         pay as severance pay to you a lump sum severance payment (together with
         the payment  provided in paragraph (C) of this Subsection  4(iii),  the
         "Severance  Payments")  equal to three times the sum of (a) your annual
         base  salary  in  effect  immediately  prior to the  occurrence  of the
         circumstance  giving  rise to the Notice of  Termination,  and (b) your
         Maximum  Participant Award under the AIP for the year in which the Date
         of Termination  occurs.  "Maximum  Participant Award" means the maximum
         award that could be payable to you under the terms of the AIP, assuming
         that  you  remained  a  participant  until  the end of the year and all
         performance  goals for that year that  would  entitle  you to a maximum
         payment were met or exceeded.

                    (C) In lieu of  shares of  common  stock of the  Corporation
         (the "Shares") issuable upon exercise of outstanding  options,  if any,
         granted to you under the  Corporation's  stock option plans ("Options")
         and that are not  cancelled or  cancelable as a result of the Change in
         Control by your exercise of the associated  Limited Stock  Appreciation
         Rights,  which  Options (and any stock  appreciation  rights)  shall be
         cancelled upon the making of the payment  referred to below,  you shall
         receive an amount in cash equal to the product of (i) the excess of the
         higher of the  closing  price of the Shares as reported on the New York
         Stock Exchange  ("NYSE") on or nearest to the Date of Termination  (or,
         if not  listed on the NYSE,  on a  nationally  recognized  exchange  or
         quotation system on which trading volume in the Shares is highest), and
         the highest per share price for the Shares  actually paid in connection
         with any  change  in  control  of the  Corporation,  over the per share
         exercise  price of each Option  held by you  (whether or not then fully
         exercisable)   plus  the  amount,  if  any,  of  any  applicable  stock
         appreciation  rights,  times (ii) the  number of the Shares  covered by
         each such Option.

                    (D) The Corporation shall also pay to you all legal fees and
         expenses incurred by you as a result of the termination  (including all
         legal fees and  expenses,  if any,  incurred in contesting or disputing
         the termination or in seeking to obtain or enforce any right or benefit
         provided  by this  Agreement  or in  connection  with any tax  audit or
         proceeding to the extent  attributable  to the  application  of Section
         4999 of the  Internal  Revenue  Code (the  "Code")  to any  payment  or
         benefit provided hereunder).

                    (E) The  payments  provided  for in  paragraphs  (B) and (C)
         above, shall be made not later than the fifth day following the Date of
         Termination,  provided,  however,  that if the amounts of the  payments
         cannot be finally  determined  on or before that day,  the  Corporation
         shall pay to you on that day an estimate,  as  determined in good faith
         by the Corporation, of the minimum amount of the payments and shall pay
         the remainder of the payments  (together  with interest at a rate equal
         to 120% of the rate provided in Section 1274(d) of the Code) as soon as
         the amount  thereof  can be  determined  but in no event later than the
         thirtieth  day  after  the Date of  Termination.  If the  amount of the
         estimated payments exceeds the amount  subsequently  determined to have
         been due, the excess shall  constitute a loan by the Corporation to you
         payable on the fifth day after demand by the Corporation (together with
         interest  at a rate  equal  to 120% of the  rate  provided  in  Section
         1274(d) of the Code). The payments  provided for in paragraph (E) above
         shall be made from time to time,  in each  instance  not later than the
         fifth day following a written request for payment by you.

               (iv)  If  your   employment   shall  be  terminated  (A)  by  the
Corporation  other  than for Cause,  Disability  or death or (B) by you for Good
Reason, then for a 36-month period after such termination, the Corporation shall
arrange to provide to you life, disability, accident, medical, dental and health
insurance  benefits  substantially  similar  to  those  that  you are  receiving
immediately prior to the Notice of Termination. Benefits otherwise receivable by
you pursuant to this Subsection 4(iv) shall be reduced to the extent  comparable
benefits are actually  received by you from another employer during the 36-month
period following your  termination,  and any such benefits  actually received by
you shall be reported to the Corporation.

               (v) You shall  not be  required  to  mitigate  the  amount of any
payment provided for in Section 4 or 5 by seeking other employment or otherwise,
nor shall the amount of any payment or benefit provided for in Section 4 or 5 be
reduced by any compensation earned by you as the result of employment by another
employer,  by retirement  benefits,  by offset  against any amount claimed to be
owed by you to the Corporation,  or otherwise except as specifically provided in
Section 4 or 5.

               (vi) In addition to all other  amounts  payable to you under this
Section 4, you shall be entitled to receive  all  benefits  payable to you under
The Black & Decker  Executive  Salary  Continuance  Plan,  the SERP, The Black &
Decker  Supplemental  Retirement  Savings Plan, the  Corporation's  stock option
plans,  the PEP or any other plan or agreement  sponsored by the  Corporation or
any of its subsidiaries relating to retirement or other benefits.

         5. Gross-Up Payment.

               (i) Upon the  occurrence  of a change  in  control,  your Date of
Termination or any other event (a "Trigger Event") that unconditionally entitles
you to receive the payments  provided under  paragraphs  4(iii)(B) and (C) above
(the "Contract Payments") or any other portion of the Total Payments (as defined
below) that will be subject to the tax imposed by Section  4999 of the Code (the
"Excise  Tax"),  the  Corporation  shall  pay to you at the  time  specified  in
Subsection 5(ii) below, an additional amount (the "Gross-Up  Payment") such that
the net  amount  retained  by you,  after  deduction  of any  Excise  Tax on the
Contract  Payments  and such other Total  Payments and any federal and state and
local income tax and Excise Tax upon the payment provided for by this Section 5,
shall be equal to the  Contract  Payments  and such other  Total  Payments.  For
purposes  of  determining  whether  any of the  payments  will be subject to the
Excise Tax and the amount of such Excise Tax, (i) any other payments or benefits
received or to be received by you in connection  with a change in control of the
Corporation or your  termination of employment  (whether payable pursuant to the
terms of this  Agreement or any other plan,  arrangement  or agreement  with the
Corporation,  its  successors,  any person whose  actions  result in a change in
control of the Corporation or any corporation  affiliated (or which, as a result
of  the  completion  of a  transaction  causing  a  change  in  control  of  the
Corporation,  will become affiliated) with the Corporation within the meaning of
Section  1504 of the Code)  (together  with the  Contract  Payments,  the "Total
Payments")  shall be  treated as  "parachute  payments"  within  the  meaning of
Section  280G(b)(2) of the Code, and all "excess parachute  payments" within the
meaning of  Section  280G(b)(1)  shall be treated as subject to the Excise  Tax,
unless in the opinion of tax counsel  selected by the Corporation and acceptable
to you the  Total  Payments  (in whole or in part) do not  constitute  parachute
payments,  or such excess  parachute  payments  (in whole or in part)  represent
reasonable  compensation  for services  actually  rendered within the meaning of
Section  280G(b)(4)(B)  of  the  Code  either  to  the  extent  such  reasonable
compensation  is in excess of the base  amount  within  the  meaning  of Section
280G(b)(3)  of the Code,  or to the extent the Total  Payments are otherwise not
subject to the Excise Tax,  (ii) the amount of the Total  Payments that shall be
treated  as  subject  to the  Excise Tax shall be equal to the lesser of (A) the
total  amount  of the Total  Payments  or (B) the  amount  of  excess  parachute
payments  within the meaning of Section  280G(b)(1)  (after applying clause (i),
above),  and (iii) the value of any non-cash benefits or any deferred payment or
benefit  shall be as  determined by the  Corporation's  independent  auditors in
accordance  with the principles of Sections  280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment,  you shall be deemed
to pay federal  income  taxes at the  highest  marginal  rate of federal  income
taxation in the calendar  year in which the  Gross-Up  Payment is to be made and
state and local  income  taxes at the highest  marginal  rate of taxation in the
state and  locality  of your  residence  on the date of the  respective  Trigger
Event,  net of the  maximum  reduction  in federal  income  taxes which could be
obtained  from  deduction of such state and local  taxes.  In the event that the
Excise Tax is  subsequently  determined  to be less than the  amount  taken into
account  hereunder  at the time of the  Trigger  Event,  you shall  repay to the
Corporation  at the time that the  amount  of such  reduction  in Excise  Tax is
finally  determined  the portion of the Gross-Up  Payment  attributable  to such
reduction (plus the portion of the Gross-Up  Payment  attributable to the Excise
Tax and federal and state and local income tax imposed on the  Gross-Up  Payment
being  repaid by you if such  repayment  results  in a  reduction  in Excise Tax
and/or a federal and state and local income tax deduction)  plus interest on the
amount of such repayment at the rate provided in Section 1274(d) of the Code. In
the event  that the  Excise Tax is  determined  to exceed the amount  taken into
account  hereunder at the time of the  respective  Trigger  Event  (including by
reason of any payment resulting from a subsequent Trigger Event or the existence
or amount of which cannot be  determined  at the time of the Gross-Up  Payment),
the  Corporation  shall make an additional  Gross-Up  Payment in respect of such
excess (plus any interest  payable with respect to such excess) at the time that
the amount of such excess is finally determined.

               (ii) The payments provided for in Subsection 5(i) above, shall be
made not later  than the fifth  day  following  the  respective  Trigger  Event,
provided,  however,  that if the  amounts  of such  payments  cannot be  finally
determined on or before such day, the  Corporation  shall pay to you on such day
an estimate,  as  determined  in good faith by the  Corporation,  of the minimum
amount of such payments and shall pay the  remainder of such payments  (together
with interest at a rate equal to 120% of the rate provided in Section 1274(d) of
the Code) as soon as the amount  thereof can be determined but in no event later
than the thirtieth day after the Trigger Event.  In the event that the amount of
the estimated payments exceeds the amount  subsequently  determined to have been
due, such excess shall  constitute a loan by the  Corporation  to you payable on
the fifth day after demand by the Corporation  (together with interest at a rate
equal to 120% of the rate provided in Section 1274(d) of the Code).

         6. Successors; Binding Agreement.

               (i)  The  Corporation  will  require  any  successor  to  all  or
substantially  all of the business or assets of the Corporation  (whether direct
or indirect, by purchase, merger, share exchange, consolidation or otherwise) to
assume  expressly and agree to perform this  Agreement in the same manner and to
the same  extent  that the  Corporation  would be  required to perform it if the
succession  had not taken  place.  Failure  of the  Corporation  to  obtain  the
assumption and agreement prior to the effectiveness of the succession shall be a
breach  of this  Agreement  and  shall  entitle  you to  compensation  from  the
Corporation in the same amount and on the same terms as you would be entitled to
hereunder if you terminate your employment for Good Reason following a change in
control  of the  Corporation,  except  that for  purposes  of  implementing  the
foregoing,  the date on which the succession  becomes  effective shall be deemed
the Date of Termination. As used in this Agreement, "Corporation" shall mean the
Corporation as hereinbefore  defined and any successor to its business or assets
as  described  above  that  assumes  and  agrees to perform  this  Agreement  by
operation of law or otherwise.

               (ii)  This  Agreement  shall  inure  to  the  benefit  of  and be
enforceable   by   your   personal   or   legal   representatives,    executors,
administrators,  heirs, distributees,  and legatees. If you should die while any
amount would still be payable to you hereunder if you had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to your legatee or other designee or, if there is no
such designee, to your estate.

               (iii) If you are  employed by a  subsidiary  of the  Corporation,
wherever in this Agreement  reference is made to the  "Corporation,"  unless the
context otherwise requires, the reference shall also include the subsidiary. The
Corporation  shall cause the subsidiary to carry out the terms of this Agreement
insofar  as they  relate  to the  employment  relationship  between  you and the
subsidiary,  and the Corporation  shall indemnify you and save you harmless from
and against all liability and damage that you may suffer as a consequence of the
subsidiary's failure to perform and carry out such terms.  Wherever reference is
made to any benefit  program of the  Corporation,  the reference  shall include,
where  appropriate,  the corresponding  benefit program of the subsidiary if you
were a participant in the benefit program on the date a change in control of the
Corporation has occurred.

         7.  Notice.  For the purpose of this  Agreement,  notices and all other
communications  provided for in the  Agreement  shall be in writing and shall be
deemed  to have been  duly  given  when  delivered  or  mailed by United  States
registered mail, return receipt  requested,  postage prepaid,  addressed,  if to
you, at your then current residence  address,  or if to the Corporation,  at its
principal  office,  attention of the Board of Directors,  and with a copy to the
Secretary of the Corporation,  or to such other address as either party may have
furnished to the other in writing in accordance herewith,  except that notice of
a change of address shall be effective only upon receipt.

         8.  Miscellaneous.  No  provision  of this  Agreement  may be modified,
waived or discharged  unless the waiver,  modification or discharge is agreed to
in writing  and signed by you and an  officer  of the  Corporation  specifically
designated by the Board.  No waiver by either party at any time of any breach by
the other party of, or  compliance  with,  any  condition  or  provision of this
Agreement to be performed by the other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or subsequent
time. This Agreement constitutes the entire agreement between the parties hereto
in respect of the matters set forth herein, and all prior negotiations, writings
and  understandings  relating  to the  subject  matter  of  this  Agreement  are
superseded  and  cancelled  by this  Agreement.  The  validity,  interpretation,
construction  and performance of this Agreement shall be governed by the laws of
the State of Maryland,  without  regard to its  principles of conflicts of laws.
All  references to sections of the Exchange Act or the Code shall be deemed also
to refer to any successor provisions to such sections. Any payments provided for
hereunder  shall  be  paid  net of any  applicable  withholding  required  under
federal, state or local law. The obligations of the Corporation under Sections 4
and 5 hereof shall survive the expiration of the term of this Agreement.

         9.  Validity.  The invalidity or  unenforceability  of any provision of
this  Agreement  shall not affect the  validity or  enforceability  of any other
provision of this Agreement, which shall remain in full force and effect.

         10.   Counterparts.   This   Agreement   may  be  executed  in  several
counterparts,  each of which shall be deemed to be an original  but all of which
together will constitute one and the same instrument.

         11.  Arbitration.  Any  dispute  or  controversy  arising  under  or in
connection  with this Agreement  shall be settled  exclusively by arbitration in
the State of Maryland,  in accordance with the Commercial  Arbitration  Rules of
the American Arbitration  Association then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however, that
you shall be  entitled  to seek  specific  performance  of your right to be paid
until the Date of Termination  during the pendency of any dispute or controversy
arising under or in connection with this Agreement.

         If you agree to the terms of this letter, please sign and return to the
Corporation  the enclosed copy which will then  constitute our agreement on this
subject.

                                         Sincerely,

                                         THE BLACK & DECKER CORPORATION



                                         By  /s/ NOLAN D. ARCHIBALD
                                             ----------------------------
                                             Nolan D. Archibald, Chairman



Agreed to as of the 12th day of December, 2002



/s/ PAUL A. GUSTAFSON
---------------------
    Paul A. Gustafson