COOPER INDUSTRIES, INC.
AMENDED AND RESTATED
STOCK INCENTIVE PLAN
(AMENDED AND RESTATED
I. PURPOSE OF THE PLAN
The Cooper Industries Stock Incentive Plan is intended to provide
Cooper Industries, Inc. (the "Company") and its affiliates a means by which such
companies can engender and sustain a sense of proprietorship and personal
commitment on the part of the executives, managers and other key employees in
the continued growth, development and financial success of the publicly-traded
parent, Cooper Industries, Ltd. ("CBE") and encourage them to remain with and
devote their best efforts to the business of the Company and its affiliates,
thereby advancing the interests of the Company, its affiliates and CBE
shareholders. Accordingly, the Company may award to certain employees shares of
the Common Stock of CBE, on the terms and conditions established herein.
2.1 "Award" means any form of Stock Option, Restricted Stock or
Performance Share granted under the Plan, whether singly or in combination, to a
Participant by the Committee pursuant to such terms, conditions, restrictions
and limitations, if any, as the Committee may establish by the Award Agreement
2.2 "Award Agreement" means a written agreement with respect to an
Award between the Company and a Participant establishing the terms, conditions,
restrictions and limitations applicable to an Award. To the extent an Award
Agreement is inconsistent with the terms of the Plan, the Plan shall govern the
rights of the Participant thereunder.
2.3 "Board" shall mean the Board of Directors of CBE.
2.4 A "Change in Control" shall be deemed to have occurred if the
event set forth in any one of the following paragraphs shall have occurred:
(1) any Person is or becomes the Beneficial Owner,
directly or indirectly, of CBE securities (not including in the
securities beneficially owned by such Person or any securities acquired
directly from CBE or its affiliates) representing 25% or more of the
combined voting power of CBE's then outstanding securities, excluding
any Person who becomes such a Beneficial Owner in connection with a
transaction described in clause (i) of paragraph (3) below; or
(2) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who on the date hereof constitute the Board and any new
director (other than a director whose initial assumption of office is
in connection with an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election of
directors of CBE) whose appointment or election by the Board or
nomination for election by CBE's stockholders was approved or
recommended by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors on the date hereof or
whose appointment, election or nomination for election was previously
so approved or recommended; or
(3) there is consummated a merger or consolidation of CBE
or any direct or indirect subsidiary of CBE with any other corporation,
other than (i) a merger or consolidation which results in the directors
of CBE immediately prior to such merger or consolidation continuing to
constitute at least a majority of the board of directors of CBE, the
surviving entity or any parent thereof, or (ii) a merger or
consolidation effected to implement a recapitalization of CBE (or
similar transaction) in which no Person is or becomes the Beneficial
Owner, directly or indirectly, of CBE securities (not including in the
securities Beneficially Owned by such Person any securities acquired
directly from CBE or its Affiliates) representing 25% or more of the
combined voting power of CBE's then outstanding securities; or
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(4) the stockholders of CBE approve a plan of complete
liquidation or dissolution of CBE or there is consummated an agreement
for the sale or disposition by CBE of all or substantially all of CBE's
assets, other than a sale or disposition by CBE of all or substantially
all of CBE's assets to an entity, at least 60% of the combined voting
power of the voting securities of which are owned by stockholders of
CBE in substantially the same proportions as their ownership of CBE
immediately prior to such sale.
For purposes of this Section 2.4, "Affiliate" shall have the meaning
set forth in Rule 12b-2 promulgated under Section 12 of the Exchange
Act; "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act; and "Person" shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof, except that such term shall not include (i)
CBE or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of CBE or any of its
subsidiaries, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, (iv) a corporation owned,
directly or indirectly, by the shareholders of CBE in substantially the
same proportions as their ownership of stock of CBE or (v) any
individual, entity or group whose ownership of securities of CBE is
reported on Schedule 13G pursuant to Rule 13d-1 promulgated under the
Exchange Act (but only for so long as such ownership is so reported).
2.5 "Change in Control Price" means the higher of (i) the Fair
Market Value on the date of determination of the Change in Control, or (ii) the
highest price per share actually paid for the Common Stock in connection with
the Change in Control of CBE.
2.6 "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
2.7 "Commission" shall mean the Securities and Exchange
2.8 "Committee" means the Management Development and Compensation
Committee of the Board, or such other committee designated by the Board to
administer the Plan, provided that the Committee shall consist of three or more
persons, each of whom is an "outside director" within the meaning of Section
162(m) of the Code and a "disinterested person" within the meaning of Rule 16b-3
under the Exchange Act.
2.9 "Common Stock" or "Shares" shall mean the Class A common
shares, par value $0.01 a share, of CBE and other such securities of CBE as the
Committee may from time to time determine.
2.10 "Dividend Equivalent" shall mean any right granted pursuant to
Section X hereof.
2.11 "Exchange Act" means the Securities Exchange Act of 1934, as
2.12 "Executive Officer" means an executive officer as defined in
Rule 3b-7 promulgated under the Exchange Act.
2.13 "Fair Market Value" of a share of Common Stock, as of any
date, means the average of the high and low sales prices of a share of Common
Stock as reported on the Stock Exchange composite tape on the applicable date,
provided that if no sales of Common Stock were made on the Stock Exchange on
that date, the average of the high and low prices as reported on the composite
tape for the preceding day on which sales of Common Stock were made.
2.14 "Incentive Stock Option" shall mean an option granted under
Section VII hereof that is intended to meet the requirements of Section 422 of
the Code or any successor provision thereto.
2.15 "Nonstatutory Stock Option" shall mean an option granted under
Section VII hereof that is not intended to be an Incentive Stock Option.
2.16 "Option" shall mean any right granted to a Participant under
the Plan allowing such Participant to purchase Shares at such prices and during
such Period or Periods as the Committee shall determine.
2.17 "Participant" means an officer or key employee of the Company
or its affiliates who is selected by the Committee to participate in the Plan.
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2.18 "Performance Goals" or "Targets" in respect to Awards of
Performance Shares are defined as the performance criterion or criteria
established by the Committee, pursuant to Section 9.3 hereof.
2.19 "Performance Period" shall mean that period established by the
Committee at the time any Performance Shares are granted, provided that a
Performance Period shall be a minimum of one year.
2.20 "Performance Share" shall mean any grant pursuant to Section
IX hereof of a unit valued by reference to a designated number of Shares, which
value may be paid to the Participant by delivery of such property as the
Committee shall determine, including cash, Shares or any combination thereof,
upon achievement of such Performance Goals during the Performance Period as the
Committee shall establish at the time of such grant or thereafter.
2.21 "Plan" shall mean the Cooper Industries, Inc. Amended and
Restated Stock Incentive Plan (dated
2.22 "Restricted Stock" shall mean any Shares issued pursuant to
Section VIII (or any restricted stock units granted pursuant to Section VIII
that are valued by reference to a designated number of Shares) and which are
subject to such terms, conditions and restrictions as the Committee deems
appropriate, including but not limited to restrictions on transferability, which
restrictions may lapse separately or in combination at such time or times, in
installments or otherwise, as the Committee may deem appropriate.
2.23 "Section 162(m)" means Section 162(m) of the Code and the
regulations promulgated thereunder.
2.24 "Stock Exchange" means the New York Stock Exchange, Inc.
("NYSE") or, if the Common Stock is no longer included on the NYSE, then such
other market price reporting system on which the Common Stock is traded or
2.25 "Voting Stock" means securities entitled to vote in an
election of Directors of CBE.
3.1 The Plan shall be administered by the Committee.
3.2 Subject to the provisions of the Plan, the Committee shall
have the authority in its sole discretion to administer the Plan and to exercise
all the powers and authorities either specifically granted to it under the Plan
or necessary or advisable in the administration of the Plan, including, without
limitation, the authority to select the Participants; to determine the type of
Awards to be made to Participants; to determine the Shares subject to any Award
and the terms, conditions and restrictions relating to any Award; to determine
whether, to what extent and under what circumstances any Award may be settled,
cancelled, forfeited, exchanged, or surrendered; to waive or modify any
condition applicable to an Award (other than a Performance Share Award to
Executive Officers if inconsistent with Section 162(m)); to make adjustments in
the performance goals of an Award (i) in recognition of unusual or nonrecurring
events affecting CBE or the financial statements of CBE (with respect to Awards
made to Executive Officers, to the extent in accordance with Section 162(m), if
applicable) or (ii) in response to changes in applicable laws, regulations, or
accounting principles; to interpret the Plan; to establish, amend or rescind any
administrative policies; to determine the terms and provisions of any agreements
entered into hereunder; and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee may correct any
defect, supply any omission or reconcile any inconsistency in the Plan or in any
Award in the manner and to the extent it shall deem desirable to carry it into
effect. The determinations of the Committee in the administration of the Plan,
as described herein, shall be final and conclusive: provided, however, that no
action shall be taken which will prevent Awards granted under the Plan from
meeting the requirements for exemption from Section 16(b) of the Exchange Act,
or subsequent comparable statute, as set forth in Rule 16b-3 under the Exchange
Act or any subsequent comparable rule; and, provided further, that no action
shall be taken which will prevent Awards hereunder that are intended to provide
"performance-based compensation," within the meaning of Section 162(m), from
3.3 In order to enable Participants who are foreign nationals or
employed outside the
the Committee may adopt such amendments, subplans and the like as are necessary
or advisable, in the opinion of the Committee, to effectuate the purposes of the
3.4 Notwithstanding the powers and authorities of the Committee
set forth in this Section III, the
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Committee shall not permit the repricing of Stock Options by any method,
including by cancellation and reissuance.
Any key employee of the Company or any of its subsidiaries or
affiliates is eligible to receive one or more Awards under the Plan.
V. SHARES SUBJECT TO THE PLAN
5.1 There shall be available for Awards granted wholly or partly
in Common Stock (including rights or options which may be exercised for or
settled in Common Stock) during the term of this Plan an aggregate of 17,000,000
shares of Common Stock, subject to the adjustments provided for in Section XIV
hereof. The 17,000,000 Shares available for Awards consist of 12,000,000 Shares
previously approved by the Company and CBE shareholders and 5,000,000 Shares
being submitted for approval by shareholders at the 2004 annual meeting. Of the
12,000,000 Shares previously approved by shareholders, no Shares remain
available for future grants following the Board's approval of equity
compensation awards granted in February 2004. Of the 5,000,000 Shares being
submitted for shareholder approval at the 2004 annual meeting, no more than
2,500,000 Shares are available for Restricted Stock and Performance Shares.
5.2 Shares of Common Stock available for issuance under the Plan
may be authorized and unissued Shares, outstanding CBE Class A common shares
held by the Company, or CBE Class B common shares convertible into Class A
common shares for issuance under the Plan, as the Company and CBE may from time
to time determine. The Board of Directors and the appropriate officers of CBE
shall from time to time take whatever actions are necessary to file required
documents with governmental authorities and the Stock Exchange to make shares of
Common Stock available for issuance pursuant to Awards. Common Stock related to
Awards that are forfeited or otherwise terminated, or expire unexercised, or are
settled in a manner such that all or some of the Shares covered by an Award are
not issued to a Participant (other than an exchange for cash or other property
of comparable value) shall immediately become available for Awards hereunder. If
an Award is exchanged for cash or other property of comparable value, the Common
Stock related to the Award will be deducted from the Shares available for Awards
hereunder. Any Shares issued by CBE in respect of the assumption or substitution
of outstanding awards from a corporation or other business entity acquired by
CBE shall not reduce the number of Shares available for Awards under this Plan.
The Committee may from time to time adopt and observe such procedures concerning
the counting of shares against the Plan maximum as it may deem appropriate under
Rule 16b-3 issued pursuant to the Exchange Act.
5.3 The number of shares of Common Stock subject to Awards granted
under the Plan to any individual who is an Executive Officer shall not exceed
the limits set forth below:
- Stock Options - a total of 1,500,000 Shares in a continuous five
(5) year period; and
- Restricted Stock and Performance Shares - the greater of 125,000
Shares per calendar year or a total of 500,000 Shares in a
continuous four (4) year period.
Determinations under the preceding sentence shall be made in a manner
that is consistent with Section 162(m).
Awards under the Plan may consist of: Stock Options (either Incentive
Stock Options within the meaning of Section 422 of the Code or Nonstatutory
Stock Options), Restricted Stock, or Performance Shares. Awards of Performance
Shares and Restricted Stock may provide the Participant with dividends or
Dividend Equivalents and voting rights prior to vesting (whether based on a
period of time or based on attainment of specified performance conditions). The
terms, conditions and restrictions of each Award shall be set forth in an Award
VII. STOCK OPTIONS
7.1 GRANTS. Awards may be granted in the form of Stock Options.
Stock Options may be Incentive Stock Options within the meaning of Section 422
of the Code or Nonqualified Stock Options or a combination of both, or any
particular type of tax-advantaged option authorized by the Code from time to
time, and approved by the
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7.2 TERMS AND CONDITIONS OF OPTIONS. A Stock Option shall be
exercisable in whole or in such installments and at such times and upon such
terms as may be determined by the Committee: provided, however, that no Stock
Option shall be exercisable more than 10 years after the date of grant thereof.
The option exercise price shall be established by the Committee, but such price
shall not be less than the Fair Market Value on the date of the Stock Option's
grant, subject to adjustment as provided in Section XIV hereof.
7.3 RESTRICTIONS RELATING TO INCENTIVE STOCK OPTIONS. Stock
Options issued in the form of Incentive Stock Options shall, in addition to
being subject to all applicable terms, conditions, restrictions and limitations
established by the Committee, comply with Section 422 of the Code. Incentive
Stock Options shall be granted only to key employees of the Company and its
subsidiaries within the meaning of Section 424 of the Code.
7.4 PAYMENT. Upon exercise, a Participant may pay the option
exercise price of a Stock Option in cash or Shares, or a combination of cash and
Shares, or such other consideration as the Committee may deem appropriate. The
Committee shall establish appropriate methods for accepting Common Stock and may
impose such conditions as it deems appropriate on the use of Common Stock to
exercise a Stock Option.
7.5 ADDITIONAL TERMS AND CONDITIONS. The Committee may, by way of
the Award Agreement or otherwise, establish such other terms, conditions or
restrictions, if any, on any Stock Option Award, provided they are not
inconsistent with the Plan. The Committee may condition the vesting of Stock
Options on the achievement of financial performance criteria established by the
Committee at the time of grant.
VIII. RESTRICTED STOCK AWARDS
8.1 GRANTS. Awards may be granted in the form of Restricted Stock
("Restricted Stock Awards"). Restricted Stock Awards shall be awarded in such
numbers and at such times as the Committee shall determine.
8.2 AWARD RESTRICTIONS. Restricted Stock Awards shall be subject
to such terms, conditions or restrictions as the Committee deems appropriate,
including, but not limited to, restrictions on transferability, requirements of
continued employment, individual performance or the financial performance of
CBE. The period of vesting and the forfeiture restrictions shall be established
by the Committee at the time of grant, provided that the period of vesting shall
be at least one year from the date of grant, except as provided in Section
8.3 RIGHTS AS SHAREHOLDERS. The Committee may, in its discretion,
grant to the Participant to whom such Restricted Stock has been awarded, all or
any of the rights of a shareholder with respect to such shares of Restricted
Stock, including the right to receive dividends or Dividend Equivalents.
8.4 EVIDENCE OF AWARD. Any Restricted Stock Award granted under
the Plan may be evidenced in such manner as the Committee deems appropriate,
including, without limitation, book entry registration or issuance of a stock
certificate or certificates.
IX. PERFORMANCE SHARE AWARDS
9.1 GRANTS. Awards may be granted in the form of Performance
9.2 PERFORMANCE SHARES. The Committee may grant an Award of
Performance Shares to Participants as of the first day of each Performance
Period. Performance Goals will be established by the Committee not later than 90
days after the commencement of the Performance Period relating to the specific
Award. At the end of the Performance Period, the Performance Shares shall be
converted into Common Stock (or cash or a combination of Common Stock and cash,
as determined by the Award Agreement) and distributed to Participants based upon
such entitlement. Award payment in respect of Performance Shares made in cash
rather than the issuance of Common Stock shall not, by reason of such payment in
cash, result in additional Shares being available for reissuance pursuant to
Section V hereof.
9.3 PERFORMANCE CRITERIA. Notwithstanding anything to the contrary
contained in this Section IX, Performance Share Awards shall be made to
Executive Officers only in compliance with Section 162(m).
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Performance criteria used to establish Performance Goals for Performance Share
Awards granted to Executive Officers must include one or any combination of the
following: (i) CBE's return on equity, assets, capital or investment; (ii)
pre-tax or after-tax profit levels expressed in earnings per share of CBE or any
subsidiary or business segment of CBE; (iii) cash flow or similar measure; (iv)
total shareholder return; (v) change in the market price of the Common Stock; or
(vi) market share. The Performance Goals established by the Committee for each
Performance Share Award will specify achievement targets with respect to each
applicable performance criterion (including a threshold level of performance
below which no amount will become payable with respect to such Award). To the
extent applicable, any such Performance Goals shall be determined in accordance
with generally accepted accounting principles. Each Award will specify the
amount payable, or the formula for determining the amount payable, upon
achievement of the various applicable Performance Targets. The Performance Goals
established by the Committee may be (but need not be) different for each
Performance Period and different Performance Goals may be applicable for Awards
to different Executive Officers in the same Performance Period. Payment shall be
made with respect to a Performance Share Award to an Executive Officer only
after the attainment of the applicable Performance Goals has been certified in
writing by the Committee.
9.4 ADJUSTMENTS. The Committee shall be authorized to make
adjustments in the method of calculating attainment of Performance Goals in
recognition of: (i) extraordinary or non-recurring items; (ii) changes in tax
laws; (iii) changes in generally accepted accounting principles or changes in
accounting policies; (iv) charges related to restructured or discontinued
operations; (v) restatement of prior period financial results; and (vi) any
other unusual, non-recurring gain or loss that is separately identified and
quantified in CBE's financial statements. Notwithstanding the foregoing, the
Committee may, at its sole discretion, modify the performance results upon which
Awards are based under the Plan, to offset any unintended result(s) arising from
events not anticipated when the Performance Goals were established, provided,
that such adjustment is permitted by Section 162(m).
9.5 ADDITIONAL TERMS AND CONDITIONS. The Committee may, by way of
the Award Agreement or otherwise, determine the manner of payment of Awards of
Performance Shares and other terms, conditions or restrictions, if any, on any
Award of Performance Shares, provided they are consistent with the Plan.
Upon issuance of Performance Shares earned under the Plan, the Company
also shall pay to the Participant an amount equal to the aggregate amount of
dividends that the Participant would have received had the Participant been the
owner of record of such earned Performance Shares during the Performance Period.
Upon the grant of restricted stock units, the Committee may, in its discretion,
provide for the accrual or payment of dividends that the Participant would have
received had the Participant been the owner of record of the underlying Shares
during the vesting period.
XI. DEFERRALS AND SETTLEMENTS
The Committee may require or permit Participants to elect to defer the
issuance of Shares or the settlement of Awards in cash as set out in any Award
Agreement or under such administrative policies as it may establish under the
Plan. It also may provide that deferred settlements include the payment or
crediting of interest on the deferral amounts, or the payment or crediting of
Dividend Equivalents where the deferral amounts are denominated in Shares.
XII. TERMINATION OF EMPLOYMENT
Upon the termination of employment by a Participant, any unexercised,
deferred or unpaid Awards shall be treated as provided in the specific Award
Agreement evidencing the Award, except that the Committee may, in its
discretion, accelerate the vesting or exercisability of an Award, eliminate or
make less restrictive any restrictions contained in an Award, waive any
restriction or other provision of this Plan or an Award or otherwise amend or
modify the Award in any manner that is either: (i) not adverse to such
Participant; or (ii) consented to by such Participant.
XIII. TRANSFERABILITY AND EXERCISABILITY
Awards granted under the Plan shall not be transferable or assignable
other than: (i) by will or the laws of descent and distribution; (ii) by gift or
other transfer of an Award (other than an Incentive Stock Option unless
permitted by the Code) to any trust or estate in which the original Award
recipient or such recipient's spouse or other immediate relative has a
substantial beneficial interest, or to a spouse or other immediate relative,
provided that any
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such transfer is permitted subject to Rule 16b-3 issued pursuant to the Exchange
Act as in effect when such transfer occurs and the Board does not rescind this
provision prior to such transfer; or (iii) pursuant to a qualified domestic
relations order (as defined by the Code). However, any Award so transferred
shall continue to be subject to all the terms and conditions contained in the
14.1 The existence of outstanding Awards shall not affect in any
manner the right or power of CBE or its shareholders to make or authorize: (i)
any adjustments, recapitalizations, reorganizations or other changes in the
capital stock of CBE or its business; (ii) any merger or consolidation of CBE;
(iii) any issuance of bonds, debentures, preferred or prior preference stock
(whether or not such issue is prior to, on a parity with or junior to the Common
Stock); (iv) the dissolution or liquidation of CBE, or any sale or transfer of
all or any part of its assets or business; or (v) any other corporate act or
proceeding of any kind, whether or not of a character similar to that of the
acts or proceedings enumerated above.
14.2 In the event of any Change in Capitalization, an equitable
substitution or proportionate adjustment may be made in (i) the aggregate number
and/or kind of Shares or other property reserved for issuance under the Plan and
(ii) the number, kind and/or exercise price of Shares or other property subject
to outstanding Awards granted under the Plan, including but not limited to, the
substitution of new options for previously issued Stock Options, in each case as
may be determined by the Committee in its sole discretion. Such other equitable
substitutions or adjustments may be made as determined by the Committee in its
sole discretion. "Change in Capitalization" means any increase, reduction,
change or exchange of Shares for a different number or kind of shares or other
securities or property by reason of a reclassification, recapitalization,
merger, consolidation, reorganization, issuance of warrants or rights, stock
dividend, stock split or reverse stock split, combination or exchange of shares,
repurchase of shares, change in corporate structure or otherwise; or any other
corporate action, such as declaration of a special dividend, that affects the
capitalization of CBE.
XV. WITHHOLDING TAXES
The Company shall have the right to deduct from any payment to be made
pursuant to the Plan the amount of any taxes required by law to be withheld
therefrom, or to require a Participant to pay to the Company such amount
required to be withheld prior to the issuance or delivery of any shares of
Common Stock or the payment of cash under the Plan. The Committee may, in its
discretion, permit a Participant to elect to satisfy such withholding obligation
by (i) having the Company retain the number of shares of Common Stock, or (ii)
tendering the number of shares of Common Stock, in either case, whose Fair
Market Value equals the amount required to be withheld. Any fraction of a share
of Common Stock required to satisfy such obligation shall be disregarded and the
amount due shall instead be paid in cash, to or by the Participant, as the case
XVI. REGULATORY APPROVALS AND LISTINGS
Notwithstanding anything contained in this Plan to the contrary, the
Company shall have no obligation to issue or deliver certificates evidencing
Shares under this Plan prior to: (i) the obtaining of any approval from any
governmental agency which the Company shall, in its sole discretion, determine
to be necessary or advisable; (ii) the listing of such Shares on the Stock
Exchange; and (iii) the completion of any registration or other qualification of
the Shares under any state or federal law or ruling of any governmental body
which the Company shall, in its sole discretion, determine to be necessary or
XVII. NO RIGHT TO CONTINUED EMPLOYMENT OR GRANTS
No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving a Participant the right to be
retained in the employ of the Company or its subsidiaries or affiliates.
Further, the Company and its subsidiaries and affiliates expressly reserve the
right at any time to terminate the employment of any Participant free from any
liability, or any claim under the Plan, except as provided herein or in any
Award Agreement entered into hereunder.
XVIII. CHANGE IN CONTROL
18.1 Vesting and Deferral.
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(i) Vesting. Immediately upon a Change in Control, all
outstanding Awards shall vest automatically, all forfeiture
restrictions shall lapse and all Performance Share Awards shall be
deemed earned at the commendable Performance Goal level.
(ii) Deferral. In connection with a Change in Control, the
Committee may permit Participants to change a prior deferral election
with respect to amounts deferred pursuant to Article XI of the Plan,
under such administrative policies as the Committee may establish under
the Plan, which policies shall not be inconsistent with the provisions
of Article XI of the Plan. Accounts denominated in cash immediately
prior to a Change in Control shall continue to be denominated in cash
following a Change in Control. Accounts denominated in Shares
immediately prior to a Change in Control shall, following such Change
in Control, be denominated in (a) such form of consideration as the
Participant would have received had the Participant been the owner of
record of such Shares at the time of such Change in Control, in the
case of a Change in Control With Consideration and (b) Shares, in the
case of a Change in Control Without Consideration.
(iii) Definitions. "Change in Control With Consideration"
shall mean a Change in Control in which Shares are exchanged or
surrendered for shares, cash or other property. "Change in Control
Without Consideration" shall mean a Change in Control pursuant to which
Shares are not exchanged or surrendered for shares, cash or other
18.2 Payment and Rollover.
(i) Payment of Deferral Accounts. In the absence of a
timely deferral election (or redeferral election, as the case may be)
by a Participant, the Company shall, within 10 days after the
occurrence of a Change in Control, (a) issue, or cause to be issued,
for any Shares credited to a Participant's deferral account, (1) such
form of consideration as the Participant would have received had the
Participant been the owner of record of such Shares at the time of such
Change in Control, in the case of a Change in Control With
Consideration and (2) Shares, in the case of a Change in Control
Without Consideration and (b) make, or cause to be made, a cash lump
sum payment to the Participant for any deferred cash Awards and any
accrued interest and Dividend Equivalents.
(ii) Payment of Restricted Stock Awards and Performance
Share Awards. With respect to outstanding Restricted Stock Awards and
Performance Share Awards deemed earned pursuant to Section 18.1 of the
Plan, the Company shall, within 10 days after the occurrence of a
Change in Control, (a) issue or cause to be issued, for any Shares
covered by such Awards, (i) such form of consideration as the
Participant would have received had the Participant been the owner of
record of such Shares at the time of such Change in Control, in the
case of a Change in Control With Consideration and (ii) Shares, in the
case of a Change in Control Without Consideration and (b) make, or
cause to be made, a lump sum cash payment to the Participant for any
accrued interest and Dividend Equivalents.
(iii) Stock Option Rollover or Cash-Out. With respect to
outstanding Stock Options which have vested pursuant to Section 18.1 of
the Plan, unless the Committee has determined to make an equitable
adjustment or substitution of such Stock Options pursuant to Section
14.2 of the Plan as a result of the Change in Control, upon a Change in
Control the Company shall cancel such Stock Options and, within 10 days
thereafter, the Company shall make or cause to be made a cash payment
to each holder thereof in an amount equal to the excess, if any, of the
Change in Control Price over the option exercise price, multiplied by
the number of Shares subject to such Stock Option.
18.3 It is recognized that under certain circumstances: (a)
payments or benefits provided to a Participant might give rise to an "excess
parachute payment" within the meaning of Section 280G of the Code; and (b) it
might be beneficial to a Participant to disclaim some portion of the payment or
benefit in order to avoid such "excess parachute payment" and thereby avoid the
imposition of an excise tax resulting therefrom; and (c) under such
circumstances it would not be to the disadvantage of the Company or CBE to
permit the Participant to disclaim any such payment or benefit in order to avoid
the "excess parachute payment" and the excise tax resulting therefrom.
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Accordingly, the Participant may, at the Participant's option,
exercisable at any time or from time to time, disclaim any entitlement to any
portion of the payment or benefits arising under this Plan which would
constitute "excess parachute payments," and it shall be the Participant's choice
as to which payments or benefits shall be so surrendered, if and to the extent
that the Participant exercises such option, so as to avoid "excess parachute
18.4 The granting of Awards under the Plan shall in no way affect
the right of the Company or CBE to adjust, reclassify, reorganize or otherwise
change its capital or business structures or to merge, consolidate, dissolve,
liquidate, sell or transfer all or any portion of its business or assets.
XIX. AMENDMENT, MODIFICATION, SUSPENSION
The Board may amend, modify, suspend or terminate (individually or in
the aggregate, a "Change") this Plan for any purpose except that: (i) no Change
that would impair the rights of any Participant under any Award previously
granted to such Participant shall be made without such Participant's consent,
(ii) no Change shall be effective prior to approval by CBE's shareholders to the
extent such approval is required: (a) pursuant to Rule 16b-3 in order to
preserve the applicability of any exemption provided by such rule to any Award
then outstanding (unless the holder of such Award consents); (b) pursuant to
Section 162(m) of the Code; or (c) otherwise required by applicable legal
requirements including applicable requirements of the Stock Exchange on which
CBE is listed and (iii) following a Change in Control, the terms and conditions
of deferrals under the Plan may not be changed to the detriment of any
Participant without such Participant's written consent.
XX. GOVERNING LAW
The validity, construction and effect of the Plan and any actions taken
or relating to the Plan shall be determined in accordance with the laws of the
State of Ohio and applicable Federal law.
XXI. RIGHTS AS SHAREHOLDER
Except as otherwise provided in the Award Agreement, a Participant
shall have no rights as a shareholder until he or she becomes the holder of
XXII. OTHER BENEFIT AND COMPENSATION PROGRAMS
Unless otherwise specifically provided to the contrary in the relevant
plan, program or practice, settlements of Awards received by Participants under
the Plan shall not be deemed a part of a Participant's regular, recurring
compensation for purposes of calculating payments or benefits from any Company
or CBE benefit plan, program or practice or any severance pay law of any
country. Further, the Company and CBE may adopt other compensation programs,
plans or arrangements as it deems appropriate or necessary.
XXIII. UNFUNDED PLAN
Unless otherwise determined by the Committee, the Plan shall be
unfunded and shall not create (or be construed to create) a trust or a separate
fund or funds. The Plan shall not establish any fiduciary relationship between
the Company and any Participant or other person. To the extent any person holds
any rights by virtue of an Award granted under the Plan, such rights (unless
otherwise determined by the Committee) shall be no greater than the rights of an
unsecured general creditor of the Company.
XXIV. USE OF PROCEEDS
The cash proceeds received by the Company from the issuance of Shares
pursuant to Awards under the Plan shall constitute general funds of the Company.
XXV. SUCCESSORS AND ASSIGNS
The Plan shall be binding on all successors and assigns of a
Participant, including, without limitation, the estate of such Participant and
the executor, administrator or trustee of such estate, or any receiver or
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bankruptcy or representative of the Participant's creditors.
XXVI. EFFECTIVE DATE
This Plan shall be effective as of the date it is approved by the Board
of Directors of CBE. Notwithstanding the foregoing, the authorization of an
additional 5,000,000 Shares available for Awards under the Plan and the
extension of the Plan's term to November 7, 2010 is expressly conditioned upon
approval by CBE's shareholders at the 2004 annual meeting. If the shareholders
of CBE shall fail to approve the authorization of such additional Shares and
extension of the Plan's term, any grants of Awards hereunder shall be null and
void to the extent the Awards are made from such additional Shares. Subject to
earlier termination pursuant to Section XIX, the term of the Plan shall be
extended from November 7, 2005 to November 7, 2010. After termination of the
Plan, no future Awards may be granted but previously granted Awards shall remain
outstanding in accordance with their applicable terms and conditions and the
terms and conditions of the Plan.
The Plan as applicable to certain employees is designed and intended to
comply with Rule 16b-3 promulgated under the Exchange Act and with Section
162(m) of the Code, and all provisions hereof shall be construed in a manner to
so comply with respect to such employees.
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