Document:

exv10w2

 

Exhibit 10.2

COOPER INDUSTRIES

AMENDED AND RESTATED

STOCK INCENTIVE PLAN

(Amended and Restated February 12, 2008)

I. Purpose of the Plan

     The Cooper Industries Stock Incentive Plan is intended to provide Cooper US, 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.

II. Definitions

     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 or otherwise.

     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

     (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 Commission.

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     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 amended.

     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 closing sales
price of a share of Common Stock as reported on the Stock Exchange on the applicable date, or if no
sales of Common Stock were made on the Stock Exchange on that date, the closing sales price as
reported on the Stock Exchange 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.

     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.

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     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, or as a reward to recognize
significant personal contributions to Company initiatives under the Cooper Star Program as approved
by the Committee.

     2.21 “Plan” shall mean the Cooper Industries Amended and Restated Stock Incentive Plan (dated
November 7, 1995, as amended and restated February 9, 2005).

     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 quoted.

     2.25 “Voting Stock” means securities entitled to vote in an election of Directors of CBE.

III. Administration

     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

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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 doing so.

     3.3 In order to enable Participants who are foreign nationals or employed outside the United
States, or both, to receive Awards under the Plan, 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 Plan.

     3.4 Notwithstanding the powers and authorities of the Committee set forth in this Section III:

	 	•	 	the Committee shall not permit the repricing of Stock Options by any method, including
by cancellation and reissuance, and
	 
	 	•	 	the Committee may only accelerate the vesting or exercisability of an Award: (i) upon
termination of employment by a Participant subject to the limitations set forth in Section
XII or (ii) upon the death, disability or retirement of a Participant or a Change in
Control.

IV. Eligibility

     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 since its inception in 1996 an aggregate of 41,000,000 shares of Common Stock, subject to the
adjustments provided for in Section XIV hereof. The 41,000,000 Shares available for Awards consist
of 34,000,000 Shares (adjusted to reflect the two-for-one stock split completed in March 2007)
previously approved by the Company and CBE shareholders and
7,000,000 Shares being submitted for approval by shareholders at the 2008 Annual Meeting. Of
the 7,000,000 Shares being submitted for shareholder approval at the 2008 Annual Meeting, no more
than 2,100,000 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

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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, 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 3,000,000 Shares in a continuous five (5) year
period.
	 
	 	•	 	Restricted Stock and Performance Shares — the greater of 250,000 Shares per
calendar year or a total of 1,000,000 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).

VI. Awards

     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 Agreement.

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 Committee.

     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,

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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 three
years from the date of grant, except as provided in Section XVIII.

     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 Shares.

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     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. The Committee
may also grant Performance Shares as a reward to employees to recognize significant personal
contributions to Company initiatives under the Cooper Star Program. 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). 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

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and other terms,
conditions or restrictions, if any, on any Award of Performance Shares, provided they are
consistent with the Plan.

X. Dividends

     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 provided the aggregate number of
Shares relating to such accelerated Awards does not exceed 350,000 Shares plus 5% of any
additional Shares authorized under the Plan after the date of the 2008 Annual Shareholders’
Meeting,
	 
	 	•	 	eliminate or make less restrictive any restrictions contained in an Award, or
	 
	 	•	 	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 such transfer is permitted
subject to Rule 16b-3 issued pursuant to the Exchange Act as in effect when such

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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 Award Agreement.

XIV. Adjustments

     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 If there is a change in the number of outstanding Shares of Common Stock by reason of any
stock dividend, stock split or reverse stock split, recapitalization, reclassification,
reorganization, merger, consolidation, combination or exchange of Shares, or similar corporate
change, an equitable substitution or proportionate adjustment shall be made to: (i) the aggregate
number of Shares available for issuance under the Plan; (ii) the number of Shares subject to
outstanding Awards granted under the Plan; (iii) the Option exercise price per Share; (iv) the
number of deferred Shares credited to a Participant’s account pursuant to Section XI; and (v) the
limit on the number of shares subject to Awards pursuant to Section 5.3 hereof.

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 may be.

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 advisable.

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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.

     (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 property.

          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

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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.

     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 payments.”

     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.

12

 

XIX. Amendment, Modification, Suspension

or Termination

     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 record.

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.

13

 

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 trustee in 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 7,000,000 Shares available for
Awards under the Plan and the extension of the Plan’s term to November 7, 2015 is expressly
conditioned upon approval by CBE’s shareholders at the 2008 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 is extended from November 7, 2010 to November 7, 2015. 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.

XXVII. Interpretation

     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.

14exv10w3

 

Exhibit 10.3

AMENDED AND RESTATED

COOPER INDUSTRIES, LTD.

DIRECTORS’ STOCK PLAN

(Dated February 12, 2008)

	1.	 	Purpose and Authorized Shares.

1.1 The purpose of this Directors’ Stock Plan (the “Plan”) is to align more closely the
interests of the nonemployee directors of Cooper Industries, Ltd. (the “Company”) with the
interests of the Company’s shareholders and to attract, motivate and retain experienced and
knowledgeable directors. Accordingly, the Company will distribute shares, restricted stock
units exchangeable for shares, or options to purchase shares, of Common Stock of the Company
to nonemployee directors on the terms and conditions set forth in this Plan.

1.2 The total number of shares of Common Stock available for issuance under this Plan is
800,000 shares in the aggregate (adjusted to reflect the two-for-one stock split completed
in March 2007) previously approved by the shareholders of the Company, subject to adjustment
pursuant to Section 12. Shares available for issuance under this Plan may be authorized and
unissued shares or shares held by any of the Company’s subsidiaries, as the Company may
determine from time to time. Any shares that have been subject to an option which for any
reason expires or is terminated unexercised, and any shares that have been subject to
restricted stock units that do not vest, shall again be available for grants of options or
for exchange of restricted stock units.

	2.	 	Definitions. As used in the Plan:

	 	2.1	 	“Board” means the Board of Directors of the Company.
	 
	 	2.2	 	For all purposes of the Plan, a “Change in Control” shall have occurred if any
of the following events shall occur:

     (a) any Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities beneficially owned by such Person
any securities acquired directly from the Company or its Affiliates) representing 25% or
more of the combined voting power of the Company’s then outstanding securities, excluding
any Person who becomes such a Beneficial Owner in connection with a transaction described in
clause (i) of paragraph (c) below; or

     (b) 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 the Company) whose
appointment or election by the Board or nomination for election by the Company’s
shareholders 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

     (c) there is consummated a merger or consolidation of the Company or any direct or
indirect subsidiary of the Company with any other corporation, other than (i) a merger or
consolidation which results in the directors of the Company immediately prior to such merger
or consolidation continuing to constitute at least a majority of the Board of Directors of
the Company, the surviving entity or any parent thereof, or (ii) a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction) in which no
Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the
Company (not including in the securities Beneficially Owned by such Person any securities
acquired directly from the Company or its Affiliates) representing 25% or more of the
combined voting power of the Company’s then outstanding securities; or

     (d) the shareholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or disposition
by the Company of all or substantially all of the Company’s assets, other than a sale or
disposition by the Company of all or substantially all of the Company’s assets to an entity,
at least 60% of the combined voting power of the voting securities of which are owned by
shareholders of the Company in substantially the same proportions as their ownership of the
Company immediately prior to such sale.

     (e) For purposes of this Section 2.2, “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) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company 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 the Company in substantially the same proportions as
their ownership of stock of the Company, or (v) any individual, entity or group whose
ownership of securities of the Company 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).

	 	2.3	 	“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 the
Company.
	 
	 	2.4	 	“Common Stock” means the Class A common shares, par value $0.01 a share, of the
Company.
	 
	 	2.5	 	“Deferral Election” shall have the meaning set forth in Section 5 hereof.

2

 

	 	2.6	 	“Deferred Shares” shall have the meaning set forth in Section 5 hereof.
	 
	 	2.7	 	“Deferred Share Account” shall have the meaning set forth in Section 5 hereof.
	 
	 	2.8	 	“Dividend Equivalents” shall have the meaning set forth in Section 7 hereof.
	 
	 	2.9	 	“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time.
	 
	 	2.10	 	“Fair Market Value” of a share of Common Stock, as of any date, means the
closing sales price of a share of Common Stock as reported on the Stock Exchange on the
applicable date, or if no sales of Common Stock were made on the Stock Exchange on that
date, the closing sale price as reported on the Stock Exchange for the preceding day on
which sales of Common Stock were made.
	 
	 	2.11	 	“Grant Date” shall mean the day on which the Annual Meeting of Shareholders
commences.
	 
	 	2.12	 	“Participant” means a member of the Board who is not an officer or employee of
the Company or any of its subsidiaries.
	 
	 	2.13	 	“Restricted Stock Award” shall have the meaning set forth in Section 4 hereof.
	 
	 	2.14	 	“Restricted Stock Unit” shall have the meaning set forth in Section 6 hereof.
	 
	 	2.15	 	“Stock Award” shall have the meaning set forth in Section 4 hereof.
	 
	 	2.16	 	“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 quoted.
	 
	 	2.17	 	“Voting Stock” means securities entitled to vote in an election of directors of
the Company.

	3.	 	Administration.

3.1 This Plan shall be, to the maximum extent possible, self-effectuating. This Plan shall
be construed, interpreted and, to the extent required, administered by the Board or a
committee appointed by the Board to act on its behalf under this Plan. Notwithstanding the
foregoing, no Director shall participate in any decision relating solely to his or her
benefits. Subject to the foregoing, the Board may resolve any questions and make all other
determinations and adjustments required by this Plan, maintain all the necessary records for
the administration of the Plan, and provide forms and procedures to facilitate the
implementation of this Plan.

3.2 Any determination of the Board or committee made in good faith shall be conclusive. In
performing its duties, the Board or the committee shall be entitled to rely on

3

 

public
records and on information, opinions, reports or statements prepared or presented by
officers or employees of the Company or other experts believed to be reliable and competent.
The Board or the committee may delegate ministerial, bookkeeping and other nondiscretionary
functions to individuals who are officers or employees of the Company.

	4.	 	Award of Stock and Restricted Stock Units. Each Participant shall receive annually
on the Grant Date an award of Common Stock (a “Stock Award”) and Restricted Stock Units (a
“Restricted Stock Award”) with an aggregate Fair Market Value of $175,000, delivered in the
following proportion: the number of shares of Common Stock representing the Stock Award shall
have a Fair Market Value of $58,333 and the number of shares representing the Restricted Stock
Award shall have a Fair Market Value of $116,667. If the Stock Award is not subject to a
Deferral Election, cash shall be distributed to the Participant in lieu of fractional shares.
The Stock Award and Restricted Stock Award is for services to be provided by the Participant
as a Director from the Grant Date until the next Annual Meeting of the Shareholders. Any
Participant who is newly elected or appointed to the Board after the Grant Date shall receive,
on the first business day of the first quarter following his or her election or appointment as
a director, a pro rata award for the year he or she is elected or appointed. For example, if
the Company has five regular Board meetings during the year, the pro rata award to a newly
elected or appointed Participant would be as follows:

(a) if elected or appointed at or before the first regular Board meeting following
the Grant Date, the aggregate Fair Market Value of the Stock Award and Restricted
Stock Award would be $140,000; or

(b) if elected or appointed at or before the second regular Board meeting following
the Grant Date, the aggregate Fair Market Value of the Stock Award and Restricted
Stock Award would be $105,000; or

(c) if elected or appointed at or before the third regular Board meeting following
the Grant Date, the aggregate Fair Market Value of the Stock Award and Restricted
Stock Award would be $70,000; or

(d) if elected or appointed at or before the fourth regular Board meeting following
the Grant Date, the aggregate Fair Market Value of the Stock Award and Restricted
Stock Award would be $35,000.

	 	 	A Participant shall not be required to make any payment for any shares or Restricted Stock
Units delivered under this Section 4, other than services rendered as a Director. Upon
delivery of shares of Common Stock, the recipient shall have the entire beneficial ownership
interest in, and all rights and privileges of an owner as to those shares, including the
right to vote the shares and to receive dividends thereon.

	5.	 	Deferral Election.

5.1 Prior to the Grant Date, each Participant may make an election to defer the receipt (a
“Deferral Election”) of all or any percentage of the Stock Award otherwise payable to

4

 

such
Participant pursuant to Section 4 hereof. In such event, the Company shall credit to an
account (a “Deferred Share Account”) maintained on behalf of such Participant, as of the
date on which the shares would otherwise be transferred hereunder, the shares of Common
Stock deferred (“Deferred Shares”). Any Deferral Election shall be in writing, shall
specify the percentage of shares to be deferred, and shall be irrevocable for the Stock
Award for which the Deferral Election is made. Notwithstanding the foregoing, any
Participant who is newly elected or appointed to the Board after the Grant Date may make the
election under this Section 5 on the date of his or her election or appointment to the Board
with respect to the percentage of the new Participant’s pro-rata Stock Award that is to be
deferred.

5.2 Deferred Shares will be distributed in whole shares of Common Stock and cash in lieu of
fractional shares. At the time of the Deferral Election, the Participant shall elect to
receive the Deferred Shares in either a lump sum or in no more than 10 substantially equal
annual installments. The lump sum will be paid on either (i) the March 1 following the
calendar year that the Participant ceased to serve on the Board or (ii) a date designated by
the Participant on the Deferral Election. Installment payments shall commence on the
March 1 following the calendar year that the Participant ceased to serve on the Board and
shall continue on each March 1 until all Deferred Shares are distributed. All Deferral
Elections are subject to Section 13 of this Plan.

5.3 In the event of the Participant’s death before distribution of all of his or her
Deferred Shares, the balance of the Deferred Shares shall be distributed in a lump sum to
the beneficiary or beneficiaries designated in writing by the Participant, or if no
designation has been made, to the estate of the Participant.

	6.	 	Restricted Stock Units.

6.1 Each Restricted Stock Unit represents the right to receive one share of Common Stock
upon the Participant ceasing to serve on the Board for any reason (“Restricted Stock Unit”).
A Participant cannot exchange his or her Restricted Stock Units for shares of Common Stock
prior to such Participant ceasing to serve on the Board. The Company shall maintain on
behalf of each Participant an account listing the Restricted Stock Units granted to such
Participant. Restricted Stock Units shall vest on a pro rata basis upon each regular Board
meeting during the year following the Grant Date for such Restricted Stock Units. When a
Participant ceases his or her service on the Board for any reason including, without
limitation, death or retirement in accordance with the Board’s retirement policy, such
Participant shall forfeit any unvested Restricted Stock Units.

6.2 Shares issued in exchange for Restricted Stock Units will be distributed in whole shares
and cash in lieu of fractional shares. Prior to the Grant Date, each director shall elect
to receive the shares issuable upon the exchange of his or her Restricted Stock Units in
either a lump sum or in no more than 10 substantially equal annual installments. Each such
election shall be in writing and shall be irrevocable for the Restricted Stock Award for
which the election is made. The lump sum will be paid on the March 1 following the
calendar year that the Participant ceases to serve on the Board. Installment payments shall
commence on the March 1 following the calendar year that the Participant ceases to serve

5

 

on
the Board and shall continue on each March 1 until all shares issuable upon the exchange for
such Participant’s Restricted Stock Units are distributed. All Restricted Stock Units are
subject to Section 13 of this Plan.

6.3 In the event of the Participant’s death before distribution of all of the shares
issuable upon exchange of the Participant’s vested Restricted Stock Units, the balance of
such shares shall be distributed in a lump sum to the beneficiary or beneficiaries
designated in writing by the Participant, or if no designation has been made, to the estate
of the Participant.

	7.	 	Dividend Equivalents. Deferred Shares and Restricted Stock Units shall be credited
with an amount equal to the dividends that would have been paid on an equal number of
outstanding shares of Common Stock (“Dividend Equivalents”). Dividend Equivalents shall be
credited (i) as of the payment date of such dividends, and (ii) only with respect to Deferred
Shares and Restricted Stock Units credited to such Participant prior to the record date of the
dividend. When credited, Dividend Equivalents shall be converted into an additional number of
Deferred Shares or Restricted Stock Units, as applicable, as of the payment date of the
dividend, based on the Fair Market Value on such payment date. Such Deferred Shares or
Restricted Stock Units shall thereafter be treated in the same manner as any other Deferred
Shares or Restricted Stock Units, respectively, under the Plan.
	 
	8.	 	Rights as a Shareholder. Except as otherwise expressly provided herein with respect
to Dividend Equivalents, a Participant shall have no rights as a shareholder of the Company
with respect to any Deferred Shares or Restricted Stock Units until he or she becomes the
holder of record of such shares.
	 
	9.	 	Vesting. A Participant shall be 100% vested in his or her Deferred Share Account at
all times. A Participant shall be vested in his or her Restricted Stock Units as provided in
Section 6.1 hereof.
	 
	10.	 	Award of Stock Options. The Board may also approve granting Participants awards in
the form of a nonqualified option to purchase shares of Common Stock upon the terms and
conditions set forth in this Plan.
	 
	11.	 	Terms and Conditions of Options.

11.1 The option exercise price shall be the Fair Market Value on the Grant
Date.

11.2 The option shall become fully exercisable on the third anniversary of the Grant
Date. If, prior to the third anniversary of the Grant Date, the Participant ceases
to be a Director of the Company for any reason other than death or retirement in
accordance with the Board’s retirement policy, the option rights shall terminate
immediately. If the Participant dies while serving as a Director of the Company or
retires in accordance with the Board’s retirement policy, all outstanding options
shall become fully exercisable immediately.

11.3 The duration of stock options shall be 10 years from the Grant Date.

6

 

11.4 Options may be exercised in whole or in part by delivering to the Company at its
principal executive office (directed to the attention of the Secretary or Assistant
Secretary) a written notice, signed by the Participant or by the Participant’s executor,
administrator or a person entitled by will or the laws of descent and distribution to
exercise the option, as the case may be, of the election to exercise the option and stating
the number of shares in respect of which it is then being exercised. The option shall be
deemed exercised as of the date the Company receives such notice. Payment of the exercise
price shall be made in cash or with shares of Common Stock or a combination of both
delivered at the time that an option, or any part thereof, is exercised.

No shares shall be issued pursuant to the exercise of an option until full payment
therefor is received. Common Stock used as payment shall have been owned by the
Participant not less than six months preceding the date the option is exercised and shall
be valued at its Fair Market Value.

11.5 An option may be exercised only by the Participant or, in the case of the
Participant’s death, by the executor or administrator of the Participant’s estate or by the
person who acquired the right to exercise such option by bequest or inheritance. After the
Participant ceases to be a member of the Board, vested options may be exercised for the
remaining term of the option or for a period of five years, whichever is less.

11.6 An option shall not be transferable by the Participant other than by will or by the
laws of descent and distribution.

	12.	 	Changes in Common Stock. In the event of any change in the number of outstanding
shares by reason of any stock dividend, stock split, recapitalization, merger, consolidation,
exchange of shares or other similar corporate change, the following shall be adjusted
appropriately to reflect such change: (i) the number of shares available for issuance under
the Plan; (ii) the number of shares and Restricted Stock Units awarded pursuant to Section 4;
(iii) the number of shares credited to a Deferred Share Account pursuant to Section 5; (iv)
the number of Restricted Stock Units credited to a Participant’s account pursuant to Section
6; (v) the number of shares granted in each option pursuant to Section 10; (vi) the number of
shares subject to outstanding options; and (vii) the option exercise price per share.
	 
	13.	 	Change in Control. In the event of a Change in Control, all outstanding options
shall vest automatically, all outstanding options shall be canceled and the Company shall make
a payment in cash to each Participant with an outstanding option, within 10 days after the
effective date of the Change in Control, in an amount equal to the excess of the Change in
Control Price over the option exercise price times the number of shares subject to the
outstanding options. Upon a Change in Control, all Deferred Shares, to the extent credited
prior to the Change in Control, shall be issued immediately, or if the Common Stock is no
longer trading on the Stock Exchange, shall be paid immediately in cash. Upon a Change in
Control, all Restricted Stock Units shall be converted into unrestricted shares of
Common Stock and issued immediately, or if the Common Stock is no longer trading on the
Stock Exchange, shall be paid immediately in cash. For purposes of this Section 13, 

7

 

	 	 	the
cash equivalent value of a Deferred Share or a Restricted Stock Unit shall be the Change in
Control Price. Notwithstanding the foregoing, (i) at the Company’s option, the Company may
issue shares in lieu of making a cash payment with respect to outstanding stock options if
the payment of cash would have the adverse effect of preventing a pooling of interest
transaction that was approved by the Board of Directors, or (ii) in the event of a corporate
merger, consolidation, exchange of shares or other similar corporate change, the Board of
Directors shall be authorized to issue or assume stock options by means of a substitution of
new options for previously issued options or an assumption of previously issued options.
	 
	14.	 	Amendment and Termination. The Board may, from time to time, amend or terminate the
Plan; provided, however, that no amendment or termination shall adversely affect the rights of
any Participant without his or her consent with respect to outstanding options, and no
amendment shall be effective prior to approval by the Company’s shareholders to the extent
such approval is then required pursuant to applicable stock exchange rules or SEC regulations,
including Rule 16b-3 under the Exchange Act in order to preserve the exemptions provided by
Rule 16b-3. In addition, the provisions of this Plan that determine the amount, price or
timing of awards shall not be amended more than once every six months (other than as may be
necessary to conform to any applicable changes in the Internal Revenue Code of 1986, as
amended or the rules thereunder), unless such amendment is consistent with Rule 16b-3.
	 
	15.	 	Effective Date. This Plan, as amended and restated as of February 12, 2008, shall be
effective as of such date and shall continue until April 30, 2016. After termination of the
Plan, no future awards may be granted but previously outstanding awards shall remain
outstanding in accordance with their applicable terms and conditions and the terms and
conditions of the Plan.
	 
	16.	 	Interpretation. It is the intent of the Company that this Plan satisfy and be
interpreted in a manner that satisfies the applicable requirements of Rule 16b-3 under the
Exchange Act so that Participants will be entitled to the benefits of Rule 16b-3 or other
exemptive rules under Section 16 of the Exchange Act and will not be subjected to avoidable
liability thereunder. Any contrary interpretation shall be avoided.
	 
	17.	 	Government and Other Regulations. The obligations of the Company to deliver shares
under the Plan shall be subject to all applicable laws, rules and regulations and such
approvals by any government agency as may be required, including, without limitation,
compliance with the Securities Act of 1933, as amended.
	 
	18.	 	No Right to Continue as a Director. Nothing contained in this Plan shall be deemed
to confer upon any Participant any right to continue as a Director of the Company.
	 
	19.	 	Governing Law. To the extent that Federal laws do not otherwise control, the Plan
and all determinations made and actions taken pursuant thereto, shall be governed by the laws
of the State of Texas.

8

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