Document:

exv10w2

Exhibit 10.2

DEED OF INDEMNIFICATION

     DEED OF INDEMNIFICATION (this “Deed”) by and among Cooper Industries plc, an Irish public
limited company (the “Company”), Cooper Industries, Ltd., a Bermuda company (“Cooper Ltd.”) and
                                         (the “Indemnitee”).

     WHEREAS, Cooper Ltd. has effected a scheme of arrangement under Bermuda law (the “Scheme of
Arrangement”) pursuant to which the holders of Class A common shares of Cooper Ltd. (other than
subsidiaries of Cooper Ltd. that held Class A common shares) became shareholders of the Company,
and Cooper Ltd. became a wholly owned subsidiary of the Company;

     WHEREAS, it is essential to the Company to retain and attract as executives and
representatives the most capable persons available;

     WHEREAS, Indemnitee is an executive or representative of the Company, but is not a director or
secretary of the Company;

     WHEREAS, the articles of association of the Company provide that the indemnification provided
therein shall not be exclusive;

     WHEREAS, in recognition of the Indemnitee’s need for protection against personal liability in
order to enhance Indemnitee’s continued service to the Company in an effective manner, the Company
wishes to provide in this Deed for the indemnification of and the advancing of expenses to
Indemnitee to the full extent permitted by law and as set forth in this Deed, and, to the extent
insurance is maintained, for the continued coverage of Indemnitee under the Company’s directors’
and officers’ liability insurance policies;

     NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing to serve the
Company directly or, at its request, with another enterprise, and intending to be legally bound
hereby, this DEED PROVIDES as follows:

     1. Certain Definitions:

     (a) Change in Control: shall be deemed to have occurred if (i) any “person” (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than a
trustee or other fiduciary holding securities under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the shareholders of the Company in substantially the
same proportions as their ownership of shares of the Company, is or becomes the “beneficial owner”
(as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company
representing 15% or more of the total voting power represented by the Company’s then outstanding
Voting Securities without the prior approval of the Company’s Board of Directors, or (ii) during
any period of two consecutive years, individuals who at the beginning of such period constitute the
Board

 

 

of Directors of the Company and any new director whose election by such Board of Directors or
nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the shareholders of the Company approve a merger,
consolidation or scheme of arrangement of the Company with any other corporation, other than a
merger, consolidation or scheme of arrangement which would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of
the total voting power represented by the Voting Securities of the Company or such surviving entity
outstanding immediately after such merger, consolidation or scheme of arrangement, or (iv) the
shareholders of the Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all the Company’s assets. For
purposes of determining whether clause (ii) above has been complied with, the directors of Cooper
Ltd. on the effective date of the Scheme of Arrangement shall be included in the determination of
who the directors of the Company were during the relevant two year period until the second
anniversary of the effective date of the Scheme of Arrangement.

     (b) Claim: any threatened, pending or completed action, suit or proceeding, or any inquiry or
investigation, whether conducted by the Company or any other party, that Indemnitee in good faith
believes might lead to the institution of any such action, suit or proceeding, whether civil,
criminal, administrative, investigative or other.

     (c) Expenses: include attorneys’ (and other legal advisors’) fees and all other costs,
expenses and obligations paid or incurred in connection with investigating, defending, being a
witness in or participating in (including on appeal) or preparing to defend, be a witness in or
participate in, any Claim relating to any Indemnifiable Event (including all interest, assessments
and other charges paid or payable in connection with or in respect of any of the foregoing).

     (d) Judgments: include judgments, fines, penalties and amounts paid in settlement that are
paid or payable in connection with any Claim relating to any Indemnifiable Event (including all
interest, assessments and other charges paid or payable in connection with or in respect of any of
the foregoing).

     (e) Indemnifiable Event: any event or occurrence related to the fact that Indemnitee is or
was an executive or representative of the Company, or is or was serving at the request of the
Company in accordance with the Company’s “Code of Ethics and Business Conduct,” as a director,
secretary, trustee, executive, employee, agent or representative of another corporation, domestic
or foreign, nonprofit or for profit, partnership, joint venture, employee benefit plan, trust or
other enterprise, or prior to the Transaction Time (as defined in the Scheme of Arrangement) was a
director, secretary, executive or representative of Cooper Ltd., or prior to the Transaction Time
was serving at the request of Cooper Ltd. in accordance with Cooper Ltd.’s “Code of Ethics and
Business Conduct,” as a director, secretary, trustee, executive, employee, agent or representative
of another corporation, domestic or foreign, nonprofit or for profit, partnership, joint venture,
employee benefit plan, trust or other enterprise, or by reason of anything done or not done by
Indemnitee in any such capacity, except for any actions by Indemnitee determined by a court to
constitute fraud or dishonesty in the performance of his or her duties to the Company or, prior to
the Transaction Time,

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to Cooper Ltd.

     (f) Reviewing Party: any appropriate person or body consisting of a member or members of the
Company’s Board of Directors or any other person or body appointed by such Board (including the
special, independent counsel referred to in Section 3) who is not a party to the particular Claim
for which Indemnitee is seeking indemnification.

     (g) Voting Securities: any securities of the Company that vote generally in the election of
directors.

     2. Scope of Indemnification

     (a) Indemnification of Judgments and Expenses. In the event Indemnitee was, is or becomes a
party to or witness or other participant in, or is threatened to be made a party to or witness or
other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the
Company shall indemnify Indemnitee to the fullest extent permitted by law against any and all
Expenses and Judgments arising from or relating to such Claim. Except as otherwise provided in
Section 2(b), such indemnification shall be made as soon as practicable, but in any event not later
than thirty (30) days, after written demand therefor is presented to the Company by or on behalf of
the Indemnitee.

     (b) Indemnification and Advance Payment of Expenses. Any and all Expenses indemnifiable
under Sections 2(a) and 2(c) shall, if so requested by the Indemnitee, be paid by the Company
promptly as they are incurred by Indemnitee (any such payment of expenses by the Company is
hereinafter referred to as an “Expense Advance”). Indemnitee shall be obligated, and hereby
agrees, to repay the amount of Expenses so paid only to the extent that Indemnitee shall have been
adjudged by the High Court of Ireland or the court in which such action or suit was brought to be
liable for fraud or dishonesty in the performance of his or her duty to the Company or, prior to
the Transaction Time, to Cooper Ltd. Indemnitee hereby further agrees to reasonably cooperate with
the Company and Cooper Ltd. concerning any Claim.

     (c) Indemnification for Additional Expenses. The Company shall indemnify Indemnitee to the
fullest extent permitted by law against any and all expenses (including attorneys’ and other legal
advisors’ fees) that are incurred by Indemnitee in connection with any claim asserted against or
action brought by Indemnitee for (i) indemnification of Expenses or Judgments or advance payment of
Expenses by Cooper Ltd. or the Company, whether under this Deed or under any other agreement, the
Company’s articles of association, Cooper Ltd.’s Bye-laws, statute or rule of law now or hereafter
in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors’ and
officers’ liability insurance policy or policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such indemnification, advance Expense payment
or insurance recovery, as the case may be.

     (d) Partial Indemnity. If Indemnitee is entitled under any provision of this Deed to
indemnification by the Company for some or a portion of the Judgments and Expenses arising from or
relating to a Claim but not, however, for all of the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.

     (e) Indemnification of Successful Defense Expenses. Notwithstanding any other

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provision of this Deed, to the extent that Indemnitee has been successful on the merits or
otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or
in defense of any issue or matter therein, including dismissal without prejudice, Indemnitee shall
be indemnified to the extent permitted by applicable law by the Company and by Cooper Ltd. against
all Expenses incurred in connection therewith.

     3. Reviewing Party Determinations.

     (a) General Rules. The Reviewing Party, in its discretion, may review the rights of
Indemnitee to indemnity payments under this Deed. Notwithstanding the provisions of Section 2, the
obligations of the Company under Section 2(a) shall be subject to the condition that the Reviewing
Party shall not have determined (in a written opinion, in any case in which the special,
independent counsel referred to in Section 4 hereof is involved) that Indemnitee would not be
permitted to be indemnified under applicable law; provided, however, that if Indemnitee has
commenced, or thereafter commences, legal proceedings in a court of competent jurisdiction to
secure a determination that Indemnitee should be indemnified under applicable law, any
determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified
under applicable law shall not be binding until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been exhausted or lapsed) and any such
determination by the Reviewing Party shall be modified, to the extent necessary, to conform to such
final judicial determination.

     (b) Selection of Reviewing Party. If there has not been a Change in Control, the Reviewing
Party shall be selected by the Board of Directors of the Company as soon as practicable after
notice of a claim for indemnification. If there has been such a Change in Control, the Reviewing
Party shall be the special, independent counsel referred to in Section 4 hereof.

     (c) Judicial Review. If there has been no determination by the Reviewing Party or if the
Reviewing Party determines that Indemnitee substantially would not be permitted to be indemnified
in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in
any court having subject matter jurisdiction thereof seeking an initial determination by the court
or challenging any such determination by the Reviewing Party or any aspect thereof, and the Company
and Cooper Ltd. hereby consent to service of process and to appear in any such proceeding. Any
determination by the Reviewing Party otherwise shall be conclusive and binding on the Company,
Cooper Ltd. and Indemnitee.

     (d) Burden of Proof. In connection with any determination by the Reviewing Party pursuant to
Section 3(a), or by a court of competent jurisdiction pursuant to Section 3(c) or otherwise, as to
whether Indemnitee is entitled to be indemnified hereunder, the burden of proof shall be on the
Company and/or Cooper Ltd., as applicable, to establish by clear and convincing evidence that
Indemnitee is not so entitled.

     4. Change in Control. The Company and Cooper Ltd. agree that if there is a Change in Control
of the Company then with respect to all matters thereafter arising concerning the rights of
Indemnitee to indemnity payments under this Deed or under any other agreement, the Company’s
articles of association, Cooper Ltd.’s Bye-laws, statute or rule of law now or hereafter in effect

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relating to Claims for Indemnifiable Events, the Company and Cooper Ltd. shall seek legal
advice only from special, independent counsel selected by Indemnitee and approved by the Company
(which approval shall not be unreasonably withheld), and who has not otherwise performed services
for the Company, Cooper Ltd. or Indemnitee within the last five years (other than in connection
with such matters). Such counsel, among other things, shall render its written opinion to the
Company, Cooper Ltd. and Indemnitee as to whether and to what extent the Indemnitee would be
permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of
the special, independent counsel referred to above and to indemnify fully such counsel against any
and all expenses (including attorneys’ and other legal advisors’ fees), claims, liabilities and
damages arising out of or relating to this Deed or its engagement pursuant hereto.

     5. No Presumption. For purposes of this Deed, the termination of any claim, action, suit or
proceeding, by judgment, order, settlement (whether with or without court approval) or conviction,
or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee failed to meet any particular standard of conduct or have any particular belief or that
a court has determined that indemnification is not permitted by applicable law. In addition,
neither the failure of the Reviewing Party to have made a determination as to whether Indemnitee
has met any particular standard of conduct or had any particular belief, nor an actual
determination by the Reviewing Party that Indemnitee has not met such standard of conduct or did
not have such belief, prior to the commencement of legal proceedings by Indemnitee to secure a
judicial determination that Indemnitee should be indemnified under applicable law shall be a
defense to Indemnitee’s claim or create a presumption that Indemnitee has not met any particular
standard of conduct or did not have any particular belief.

     6. Non-exclusivity. The rights of the Indemnitee hereunder shall be in addition to any other
rights Indemnitee may now or hereafter have to indemnification by the Company or Cooper Ltd. More
specifically, the Parties intend that Indemnitee shall be entitled to indemnification to the
maximum extent permitted by any or all of the following:

     (a) The fullest benefits provided by the Company’s articles of association and Cooper
Ltd.’s Bye-laws in effect on the date hereof, a copy of the relevant portions of which are
attached hereto as Exhibit I;

     (b) The fullest benefits provided by the articles of association or their equivalent of
the Company and the Bye-laws or their equivalent of Cooper Ltd. in effect at the time the
Indemnifiable Event occurs or at the time Expenses are incurred by Indemnitee;

     (c) The fullest benefits allowable under Irish or Bermuda law, as applicable, in effect
at the date hereof or as the same may be amended to the extent that such benefits are
increased thereby;

     (d) The fullest benefits allowable under the law of the jurisdiction under which the
Company exists at the time the Indemnifiable Event occurs or at the time Expenses are
incurred by the Indemnitee; and

     (e) Such other benefits as are or may be otherwise available to Indemnitee pursuant to
this Deed, any other agreement or otherwise.

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     The parties intend that a combination of two or more of the benefits referred to in (a)
through (e) shall be available to Indemnitee to the extent that the document or law providing for
such benefits does not require that the benefits provided therein be exclusive of other benefits.
The Company and Cooper Ltd. hereby undertake to use their best efforts to assist Indemnitee, in all
proper and legal ways, to obtain all such benefits to which Indemnitee is entitled.

     7. Liability Insurance. The rights of the Indemnitee hereunder shall also be in addition to
any other rights Indemnitee may now or hereafter have under policies of insurance maintained by the
Company or otherwise. To the extent the Company maintains an insurance policy or policies
providing directors’ and officers’ liability insurance, Indemnitee shall be covered by such policy
or policies, in accordance with its or their terms, to the maximum extent of the coverage available
for any Company executive or representative. The Company shall seek to maintain insurance coverage
in the amount of the present policy limits and with the present scope of coverage for so long as
Indemnitee’s services are covered hereunder, provided and to the extent that such insurance is
available on a basis acceptable to the Company. In the event that such insurance becomes
unavailable in the amount of the present policy limits or in the present scope of coverage at
premium costs and on other terms acceptable to the Company, then the Company may forego maintenance
of all or a portion of such insurance coverage. However, in the event of any reduction in (or
cancellation of) such insurance coverage (whether voluntary or involuntary), the Company shall, and
hereby agrees to, stand as a self-insurer with respect to the coverage, or portion thereof, not
retained, and shall, to the extent permitted by applicable law, indemnify the Indemnitee against
any loss arising out of the reduction in or cancellation of such insurance coverage.

     8. Escrow Fund. As collateral security for its obligations hereunder (including specifically
its indemnity obligations (other than Judgments) and other obligations pursuant to Sections 2, 6
and 7) and under similar agreements with other executives and representatives, in the event of a
Change in Control, the Company shall dedicate and maintain, for a period of five years following
the Change of Control, an escrow account in the aggregate of TEN MILLION DOLLARS (US$10,000,000) by
depositing assets or bank letters of credit in escrow or reserving lines of credit that may be
drawn down by an escrow agent in said amount (the “Escrow Reserve”). The Company shall promptly
following establishment of the Escrow Reserve provide Indemnitee with a true and complete copy of
the agreement relating to the establishment and operation of the Escrow Reserve, together with such
additional documentation or information with respect to the Escrow Reserve as Indemnitee may from
time to time reasonably request. The Company shall promptly following establishment of the Escrow
Reserve deliver an executed copy of this Deed to the escrow agent for the Escrow Reserve to
evidence to that agent that Indemnitee is a beneficiary of that Escrow Reserve and shall deliver to
Indemnitee the escrow agent’s signed receipt evidencing that delivery.

     9. Period of Limitations. No legal action shall be brought and no cause of action shall be
asserted by or on behalf of the Company, Cooper Ltd. or any of their respective affiliates against
Indemnitee, Indemnitee’s spouse, heirs, executors or personal or legal representatives after the
expiration of two years from the date of accrual of such cause of action, and any claim or cause of
action of the Company, Cooper Ltd. or any of their respective affiliates shall be extinguished and

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deemed released unless asserted by the timely filing of legal action within such two-year
period; provided, however, that if any shorter period of limitations is otherwise applicable to any
such cause of action such shorter period shall govern.

     10. Amendments, Etc. No supplement, modification or amendment of this Deed shall be binding
unless executed in writing by each of the parties hereto. No waiver of any of the provisions of
this Deed shall be deemed or shall constitute a waiver of any other provisions thereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.

     11. Subrogation. In the event of payment under this Deed, the Company shall be subrogated to
the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all
papers required and shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to bring suit to enforce
such rights.

     12. No Duplication of Payments. The Company shall not be liable under this Deed to make any
payment in connection with any Claim made against Indemnitee to the extent Indemnitee has otherwise
actually received payment (under any insurance policy, the Company’s articles of association,
Cooper Ltd.’s Bye-laws or otherwise) of the amounts otherwise indemnifiable hereunder.

     13. Binding Effect, Etc. This Deed shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors, assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of
the business and/or assets of the Company or Cooper Ltd., as applicable, spouses, heirs, and
personal and legal representatives. This Deed shall continue in effect regardless of whether
Indemnitee continues to serve as an executive or representative of the Company or of any other
enterprise at the Company’s request.

     14. Severability. The provisions of this Deed shall be severable in the event that any of
the provisions hereof (including any provision within a single section, paragraph or sentence) are
held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and the
remaining provisions shall remain enforceable to the fullest extent permitted by law.

     15. Governing Law. This Deed shall be governed by and construed and enforced in accordance
with the laws of Ireland applicable to contracts made and to be performed in Ireland
without giving effect to the principles of conflicts of laws. For purposes of this Deed, the
Indemnitee, Company and Cooper Ltd. submit to the non-exclusive jurisdiction of state and federal
courts sitting in the city of Houston, Texas.

     16. Prior
Agreements. This Deed shall supersede any prior indemnification
agreements and/or
arrangements between Cooper Ltd. and the Indemnitee.

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     IN WITNESS of which this document has been executed and delivered as a deed this ___day of
                    , 20___.

	 	 	 	 	 
	 
	 	 	 	 
	GIVEN UNDER THE COMMON SEAL OF 

COOPER INDUSTRIES PLC	 	 
	by
	 	 	 	 
	 

	 	 	 	 

Director

	 
	 	 	 	 
	 

	 	 	 	 

Director / Secretary

	 
	 	 	 	 
	EXECUTED AND DELIVERED AS A DEED	 	 
	by
 	 	 
	 
	 	 
	
the duly authorized representative 

of COOPER INDUSTRIES, LTD.	 	 

Name

	 
	 	 	 	 
	 

	 	 	 	 

Title

	 
	 	 	 	 
	SIGNED, SEALED AND DELIVERED	 	 
	by 	 	 
	 
	 	 
	 

	 	 	 	 

	INDEMNITEE	 	Name:
	 
	 	 	 	 
	 

	 	 	 	 

Title:

	 	 	 	 	 
	 
	 	 	 	 
	Witness: 
	 	 	 	 
	 

	 

	 	 
	 
	 	 	 	 
	Address: 
	 	 	 	 
	 

	 

	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 
	 
	Occupation:
	 	 	 
	 

	 	 

	 	 

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Exhibit I

Extract of Indemnification provision from the Company’s Articles of Association and

Cooper Ltd.’s Bye-laws

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Exhibit 10.3

AMENDED AND RESTATED

COOPER INDUSTRIES PLC

DIRECTORS’ STOCK PLAN

(As Amended and Restated as of September 8, 2009)

	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 plc (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, or restricted
stock units exchangeable for 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 10. Shares available for issuance under this Plan may be authorized
and unissued shares, treasury 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
restricted stock units that do not vest shall again be available for exchange of restricted
stock units.

	2.	 	Definitions. As used in the Plan:

	 	2.1	 	“Affiliate” shall mean all employers, present and future, with whom the Company
is considered a single employer under Sections 414(b) and 414(c) of the Code.
	 
	 	2.2	 	“Board” means the Board of Directors of the Company
	 
	 	2.3	 	“Change in Control” shall mean a change in the ownership or effective control
of the Company, or in the ownership of a substantial portion of the assets of the
Company, within the meaning of section 409A of the Code.
	 
	 	2.4	 	“Code” shall mean the Internal Revenue Code of 1986, as amended.
	 
	 	2.5	 	“Common Stock” means the ordinary shares, par value $0.01 a share, of the
Company.
	 
	 	2.6	 	“Deferral Election” shall have the meaning set forth in Section 5 hereof.
	 
	 	2.7	 	“Deferred Shares” shall have the meaning set forth in Section 5 hereof.
	 
	 	2.8	 	“Deferred Share Account” shall have the meaning set forth in Section 5 hereof.
	 
	 	2.9	 	“Dividend Equivalents” shall have the meaning set forth in Section 7 hereof.

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	 	2.10	 	“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time.
	 
	 	2.11	 	“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, provided that 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, and provided
further that, in the event of a Change in Control, Fair Market Value shall not be
less than the highest price per share actually paid for the Common Stock in connection
with the Change in Control of the Company.
	 
	 	2.12	 	“Grant Date” shall mean the day on which the Annual Meeting of Shareholders
commences.
	 
	 	2.13	 	“Participant” means a member of the Board who is not an officer or employee of
the Company or any of its Affiliates.
	 
	 	2.14	 	“Restricted Stock Award” shall have the meaning set forth in Section 4 hereof.
	 
	 	2.15	 	“Restricted Stock Unit” shall have the meaning set forth in Section 6 hereof.
	 
	 	2.16	 	“Section 409A” shall mean Section 409A of the Code and the regulations and
rulings promulgated thereunder.
	 
	 	2.17	 	“Separation from Service” shall mean a Participant’s termination of service as
a director, and the termination of all employment (if any) of a Participant with the
Company and all Affiliates for any reason other than death. Whether a Participant has
incurred a Separation from Service shall be determined in accordance with Section 409A.
	 
	 	2.18	 	“Stock Award” shall have the meaning set forth in Section 4 hereof.
	 
	 	2.19	 	“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.

	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 Participant 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.

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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 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.

4.1 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 are 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.

4.2. Any shares issued for a Stock Award or Restricted Stock Award granted pursuant to the
Plan will be paid up in consideration of the receipt by the Company prior to, or
simultaneously with, the issue of the shares of cash at least equal to the nominal value of

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such shares and, when shares are issued under the Plan without the payment of cash
consideration by the Participant or permitted successors and assigns, then such shares shall
be paid up by the Company or one of its subsidiaries.

	5.	 	Deferral Election.

5.1 On or prior to the December 31st preceding the Grant Date, each Participant
may make an election to defer the receipt (a “Deferral Election”) of all or any percentage
of the shares of Common Stock otherwise payable to such Participant pursuant to Section 4
hereof. Any Deferral Election shall be in writing on a Company-approved form, shall specify
the percentage of shares to be deferred, and shall be irrevocable for the Stock Award or
Restricted Stock Award for which the Deferral Election is made, subject to Sections 5.3 and
5.4. 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, within thirty
(30) days of election or appointment to the Board, with respect to the percentage of the
pro-rata Stock Award or Restricted Stock Award that is to be deferred; provided that
the Participant has not previously been eligible to participate in the Plan or in any other
nonqualified account balance plan of the Company or of any Affiliate that is required to be
aggregated with the Plan under Section 409A. Any Deferral Election made by a Participant
shall remain in effect for future Grant Dates unless changed by the Participant prior to the
expiration of time for making such Deferral Election. Notwithstanding any other provision
of this Plan, no Deferral Election may be made with respect to any Stock Award with a Grant
Date after January 2, 2009.

5.2 At the time of making a Deferral Election, a Participant shall elect the time and form
of payment. The date for the payment, or commencement of payment, shall be a specified
calendar year. Subject to any limitations imposed by the Committee and/or Section 409A, the
specified calendar year may be during the Participant’s service as a director; the earlier
or later of the calendar year in which a Participant incurs a Separation from Service or
attains a specified age; or the earliest of the Participant’s death, Separation from
Service, a specified calendar year, or a Change in Control. The form of the payment shall
be either a lump sum or a series of substantially equal annual installments over a period
not to exceed ten (10) years.

5.3 A Participant may change an initial election in order to delay payment or to change the
form of payment if the following conditions are met: (i) such election shall not take
effect until at least twelve (12) months after the date on which the election is made; (ii)
the payment with respect to which such election is made is deferred for a period of not less
than five (5) years from the date such payment would otherwise be made; and (iii) any
election for a “specified time (or pursuant to a fixed schedule),” within the meaning of
Section 409A, may not be made less than twelve (12) months prior to the date of the first
scheduled payment. To the extent permitted under Section 409A, payments previously elected
as installments shall be treated as a single payment.

5.4 On or before December 31, 2008, a Participant may make an election to change the time
and form of payment of that portion of his Deferred Share Account credited for shares that
were deferred for calendar years 2005, 2006, 2007, and 2008; provided that:

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     (i) The requirements for transition relief under Section 409A are met, including the
requirements that no shares subject to the election shall otherwise be payable in 2008 and
that the election shall not cause any shares to be paid in 2008 that would not otherwise be
payable in such year; and

     (ii) The special election shall be subject to Section 5.2 of this Plan.

5.5 The Company shall credit to an account (a “Deferred Share Account”) maintained on behalf
of a Participant, as of the date on which the shares would otherwise be transferred
hereunder, notional shares for the shares of Common Stock deferred (“Deferred Shares”).
Deferred Shares 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 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 as of the payment date of the dividend, based on the
Fair Market Value on such payment date. Such Deferred Shares shall thereafter be treated in
the same manner as any other Deferred Shares under the Plan.

5.6 Deferred Shares will be distributed in whole shares of Common Stock and cash in lieu of
fractional shares. Unless otherwise provided in the Participant’s Deferral Election,
payments shall be made or begin on March 1 of the calendar year specified by the Participant
in his Deferral Election, and if installments are elected and effective, the second
installment and any other subsequent installments shall be paid on each subsequent March 1
for the period certain. If the Deferred Shares are payable in installments, the amount of
each installment shall be equal to a fraction of the amount of the Deferred Shares remaining
to be paid with respect to the applicable Deferral Election, the numerator of which is one
and the denominator of which is the number of installments remaining to be paid.

5.7 Except as provided in Section 11 and as permitted under Section 409A, no acceleration of
the time or form of payment of a Deferred Share Account, or any portion thereof, shall be
permitted. In the event of the death of a Participant, the undistributed balance of his
Deferred Share Account shall be distributed upon his death to his beneficiary in one lump
sum within ninety (90) days of his death, provided that, if such ninety-day period begins in
one taxable year and ends in another taxable year, neither Participant’s estate nor any
beneficiary of Participant’s Deferred Share Account may choose in which taxable year such
lump sum will be paid. The beneficiary or beneficiaries shall be designated in writing by
the Participant in the form and manner specified by the Committee; if no designation has
been made, the estate of the Participant shall be his beneficiary.

	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 and credit to the account any Restricted

5

 

Stock Units granted to such Participant. Restricted Stock Units shall remain unvested while
a Participant continues to serve on the Board. When a Participant ceases his or her service
on the Board for any reason, all unvested Restricted Stock Units shall immediately vest as
of the date of the Participant’s Separation from Service.

6.2 Shares issued in exchange for Restricted Stock Units will be distributed in whole shares
and cash in lieu of fractional shares pursuant to the terms of the Deferral Election made by
a Participant. In the absence of such an election, all shares issuable upon the exchange of
Restricted Stock Units shall be paid to a Participant in a lump sum on the March
1st following the calendar year in which the Participant has a Separation from
Service.

	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 credited to a Deferred Share Account pursuant to Section
5; and (iii) the number of Restricted Stock Units credited to a Participant’s account pursuant
to Section 6.
	 
	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 Fair
Market Value 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 11, the cash
equivalent value of a Deferred Share or a Restricted Stock Unit shall be the Fair Market
Value.
	 
	14.	 	Amendment and Termination. The Board may, from time to time, amend or terminate the
Plan; provided, however, that (i) no amendment or termination shall adversely affect the

7

 

	 	 	rights of any Participant without his or her consent with respect to outstanding options,
Stock Awards, or Restricted Stock Awards, (ii) no amendment or termination shall, without
the Participant’s consent, permit a distribution of shares or cash under this Plan in a
manner that is inconsistent with the requirements of Section 409A, and (iii) 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 shall continue in effect 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.	 	Withholding.  To the extent required by applicable federal, state, local, or foreign
law, a Participant shall make arrangements satisfactory to the Company for the payment of any
withholding tax obligations that arise in connection with the Plan. The Company shall not be
required to issue any Common Stock under the Plan until such obligations are satisfied. A
Participant may satisfy any 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.
	 
	17.	 	Interpretation. It is the intent of the Company that this Plan satisfy and be
interpreted in a manner that satisfies the applicable requirements of (i) Section 409A and
(ii) 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.
	 
	 	 	Notwithstanding any other provision of the Plan, although the Board and any designee of the
Board shall use their best efforts to avoid the imposition of taxation, penalties, and
interest under Section 409A, the tax treatment of Participant deferrals under the Plan shall
not be, and is not, warranted or guaranteed. If the Plan fails to meet the requirements of
Section 409A with respect to a Participant, the Company shall distribute the amount required
to be included in such Participant’s gross income as a result of such failure. Neither the
Company, the Board, nor any of their designees shall be held liable for any taxes,
penalties, or other monetary amounts owed by a Participant, Beneficiary, or other person as
a result of any deferral or payment under the Plan.
	 
	18.	 	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.

8

 

	19.	 	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.
	 
	20.	 	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.

9

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