Employment Agreement

Management Continuity Agreement                        

 

 

EX-10.1 2 exhibit1.htm EX-10.1

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made as of the      day of March, 2006 by and between Cooper US, Inc., a Delaware corporation (hereinafter called the “Company”), and Name (hereinafter called “Executive”).

WHEREAS, the Company desires to employ or to continue to employ Executive on terms which will encourage the attention and dedication of Executive to the Company as one of its key executives;

WHEREAS, the Company recognizes that the Executive’s contribution to the Company’s growth and success has been and continues to be substantial;

WHEREAS, the Company wishes to encourage the Executive to remain with and devote full time and attention to the business affairs of the Company and wishes to provide income protection to the Executive for a period of time consistent with the terms and conditions hereunder;

NOW, THEREFORE, in consideration of the premises and the respective covenants of the parties set forth in this Agreement and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties agree as follows:

1. Definitions

(a) As used herein, the term the “Company” or “Cooper” shall mean Cooper US, Inc., its parent, affiliates, subsidiaries, divisions, agents, assigns, pension plans, compensation plans, other benefit plans, employee benefit plan fiduciaries, predecessors-in-interest, successors-in-interest, and any officer, director, employee, agent, or other representative of any of the foregoing.

(b) As used herein “Executive” shall mean [Executive’s name], his successors-in-interest, predecessors-in-interest, assigns, administrators, and executors.

2. Employment by the Company. The Company offers and Executive accepts employment consistent with Executive’s current terms and conditions except as specifically modified herein and hereinafter set forth, and such modified terms and conditions shall supersede any conflicting oral or written employment agreement(s) entered into by and between the Company and Executive prior to the date of this Agreement. Unless the Executive is terminated for Cause (as defined below in Section 9) or Executive resigns his employment for “Good Reason” (as defined below in Section 9), Executive shall remain an employee of the Company for a period of six (6) months from the date of this Agreement (the “Term”). Upon expiration of the Term, Executive will become an “at will” employee of the Company. Once an “at will” employee, Executive will provide at least thirty (30) days notice if he decides to terminate his employment. Likewise, the Company will provide at least thirty (30) days notice of its intention to terminate Executive’s employment.

3. Duties, Obligations and Responsibilities of Executive. Executive shall be employed as Title, reporting to such persons as may be designated by the Company at the Company’s discretion. Executive shall assume such responsibilities and perform such duties in connection with Executive’s position as shall from time to time be assigned to Executive. Executive shall devote his best efforts to faithfully discharging the duties, obligations and responsibilities as an employee of the Company as those duties, obligations and responsibilities are defined by the Company or as may be subsequently modified by the Company. Executive shall perform such duties to the best of Executive’s ability, experience, and talents, all to the reasonable satisfaction of the Company. Such duties shall be rendered at such place or places as the Company shall specify. Executive shall have such authority and power (and only such authority and power) as are inherent in the undertakings applicable to Executive’s position and necessary to carry out the duties required of Executive hereunder. Executive shall devote Executive’s entire working time, attention, and energies to the business of the Company and shall accept compensation from no other corporation, firm, partnership, or organization in return for services performed by Executive. Executive may engage in civic or community service activities, so long as such activities do not interfere with Executive’s ability to comply with this Agreement and are not otherwise in conflict with the policies or interests of the Company.

4. Base Salary. As an employee of the Company, Executive shall receive a base salary (“Base Salary”) at the same level in effect as of the date of this agreement. Base Salary payments to Executive shall be made semi-monthly or on such other schedule as salaried employees of the Company are paid. Future increase in the Executive’s Base Salary will be determined under the Company’s normal salary administration policy.

5. Annual Bonus. As an Executive of the Company, Executive will be eligible to participate in an annual bonus plan. Annual bonus awards are made at the discretion of the Company’s Corporate Management based upon the financial results and an executive’s individual performance. Annually, the Executive will be advised of the terms, conditions, and performance goals in order for Executive to be eligible to receive the bonus payment.

6. Stock Incentive Plan. As an Executive of the Company, Executive shall be eligible to participate in the Cooper Industries, Inc. Amended and Restated Stock Incentive Plan (the “Plan”) in accordance with the terms of the Plan administered by the Management Development and Compensation Committee.

7. Employee Benefits and Business Expenses. Executive shall be eligible to participate in the same welfare benefit plans, including medical insurance, retirement plans or programs maintained or sponsored by the Company for salaried employees for which Executive is eligible pursuant to the terms and conditions of such plan or program; for vacation as provided to other similarly situated salaried employees and shall have the same schedule of holidays as do the employees at the Company location to which Executive is assigned; and the Company shall reimburse Executive for reasonable travel, entertainment and other business expenses incurred by Executive in accordance with the Company’s policies.

8. Conflicting Interest. Executive agrees that he will not accept any other employment nor engage in any outside business activities, or become involved in an enterprise of a commercial nature while the Executive remains an employee of the Company.

9. Termination of Employment

(a) At any time during the Term, the Company may terminate Executive’s employment for “Cause”. In the event Executive’s employment is terminated for “Cause”, the Company shall be under no further obligation to provide Executive with Base Salary or bonus payments and Executive will no longer be eligible to participate in pension and welfare plans sponsored by the Company, except as may be required by law. For the purpose of this Agreement, “Cause” includes, but is not limited to: (i) an act or acts of personal dishonesty by the Executive and intended to result in the personal enrichment of the Executive; (ii) wanton and willful misconduct or gross negligence by the Executive in the performance of his duties and obligations under this Agreement; (iii) neglect of his assigned duties, provided the Company gives Executive written notice of the basis for its determination of neglect and thirty (30) days after such notice to remedy the situation and such neglect is not remedied; (iv) a criminal act including, but not limited to, the arrest or indictment for an alleged criminal act; (v) a breach of any provision of this Agreement; or (vi) other conduct determined by the Company in good faith to be Cause.

(b) During the Term, Executive shall have the right to terminate his employment with the Company for Good Reason (as defined below) by written notice to the Company. In the event of such termination, or in the event the Company terminates Executive’s employment without Cause, the Company shall pay to Executive in a lump sum within forty-five (45) days thereafter any unpaid Base Salary, prorated target bonus and earned, unused vacation to be provided to Executive hereunder during the Term of this Agreement. The Company shall also pay to Executive additional separation allowance benefits for which Executive is eligible under the Company’s Separation Allowance Policy and Procedure in effect at the time of Executive’s termination which shall be determined by Executive’s years of continuous service at the Company and Executive’s age at the time of Executive’s termination of employment in exchange for an executed valid and enforceable waiver in a form determined by the Company. For purposes of this Agreement, “Good Reason” means the occurrence of any of the following: (i) the Company materially and adversely changes Executive’s responsibilities in a manner which constitutes a demotion when compared with Executive’s responsibilities preceding such change or which results in Executive having a position of significantly less scope or responsibility, or (ii) the Company materially breaches this Agreement provided written notice of Executive’s termination is provided to the Company within thirty (30) days of the first occurrence of the facts giving rise to the Good Reason. This provision provides the exclusive remedy to Executive for any termination by Executive for Good Reason or by the Company without Cause during the Term.

(c) Upon expiration of the Term (i) the Executive may resign at any time, and (ii) the Company may terminate or modify the Executive’s employment, including salary and bonus opportunity and amounts, in its discretion, with or without Cause, and without any liability on the part of the Company. The Executive and the Company will each provide the other with at least thirty (30) days written notice of a decision to terminate Executive’s employment.

(d) If after Executive’s termination, either by the Company without Cause or by the Executive with Good Reason, the Company has a good faith reason to believe that, while employed by the Company, the Executive breached any provision of this Agreement, any and all monies due and owing to Executive including, but not limited to, severance payments, bonus payments, and earned but unused vacation shall immediately cease unless and until it is determined that Executive did not breach any provision of this Agreement while still employed by the Company.

10. Covenant Not to Compete. Executive acknowledges that the restrictions on his activities contained in this Section 10 are in consideration of the Company’s agreement to employ Executive for the Term, to grant Executive eligibility to participate in the Plan, and the Company’s promise to disclose confidential and proprietary information to Executive not yet disclosed to Executive.

So long as Executive is employed by the Company, Executive shall not assist in any way, serve in any capacity with, or own, directly or indirectly, any interest in, a competitor of the Company for which Executive is employed (except that Executive may hold an interest in a publicly traded competitor not exceeding one (1) percent of the competitor’s outstanding stock). This restriction on competition shall include those customers, markets, products and/or services for which the Executive held responsibility during Executive’s employment and shall extend for one (1) year after the termination of Executive’s employment with the Company and shall apply to competition conducted in the specific geographic areas(s) or territories in which the Executive engaged in business on behalf of the Company.

As used herein, “competitor” of the Company shall include the organizations named on the attached Exhibit A, including any and all parent corporations, subsidiaries, joint ventures, and successors.

The Company’s obligation to continue making severance payments under this Agreement and to permit exercise of stock options or equity awards under the Plan is conditioned upon the Executive’s compliance with this paragraph as written. If any provision in this paragraph is found to be unenforceable, or if the Executive challenges the enforceability of any such provision, Executive shall not be entitled to continuing severance payments, exercise of stock options or receipt of Company stock issued under the Plan. In the event this restriction is deemed unreasonable by any court, the Company and Executive agree that the court may reduce such restriction to one it deems reasonable to protect the Company.

11. Non-Solicitation of Employees. So long as Executive is employed by the Company and for one (1) year after Executive leaves the Company, Executive shall not, on behalf of himself or any other person, firm, company business or other legal entity, directly or indirectly, solicit, influence or attempt to influence any management, sales, technical design or engineering employee, representative or advisor of the Company to terminate his or her employment relationship with the Company and/or to work in any manner for Executive, or any entity affiliated with Executive. In the event any court deems this restriction unreasonable, the Company and Executive agree that the court may reduce such restriction to one it deems reasonable to protect the Company.

12. Non-Solicitation of Customers. So long as Executive is employed by the Company and for one (1) year after Executive leaves the Company, Executive shall not, on behalf of himself, or any other person, firm, company, business, or other legal entity, solicit, contact, call upon, initiate communications with or attempt to initiate communications with any customer of the Company for the purpose of selling or providing products similar to or competitive with those manufactured by the Company entity employing Executive. In the event any court deems this restriction unreasonable, the Company and Executive agree that the court may reduce such restriction to one it deems reasonable to protect the Company.

13. Confidential and Proprietary Information (Secrecy Agreement). The Company agrees to provide Executive with access to confidential and proprietary information, and may have already provided additional confidential and proprietary information, necessary to perform Executive’s duties for the Company. Upon the termination of Executive’s employment with the Company for whatever reason, with or without Cause, Executive agrees to immediately return to the Company any of the Company’s proprietary or confidential information or trade secrets in Executive’s possession or which were provided to Executive during his employment with the Company. This includes all copies of such information, whether in paper, electronic, or other forms.

Executive agrees during Executive’s employment and thereafter that he shall not at any time directly or indirectly, use or disclose to any business person or enterprise in any manner whatsoever, without the prior written consent of the CEO, any confidential or secret information of any kind relating to the Company or of others as to which Executive knows or should know that the Company has confidential information obligations.

For the purposes of this Agreement, proprietary or confidential information or trade secrets (including trade secrets as defined by applicable state law) is defined to include any information in any form whatsoever that has been developed or used by the Company during Executive’s employment with the Company, that cannot be obtained readily by third parties from outside sources, and which was made known to Executive or acquired by Executive during his employment with the Company. Proprietary or confidential information or trade secrets include without limitation the following: marketing data, including analyses and projections, strategies, business plans, product plans and competitive activity data; all financial and profit information not required by law to be published; purchasing or costs data; sales data including customer lists, booking reports, current sales information, pricing, billing, and other information; products, services, present and future developments, manufacturing process or techniques and manufacturing equipment; personnel compensation and personnel; product specifications and designs, and manufacturing process; information related to the cost, quantity and type of raw materials and components utilized in products manufactured by the Company; information related to new product development and prototypes; the Company’s contracts, bids or proposals; the names of and other information concerning the Company’s customers that is generally not known to the public, including information related to customer orders and preferences; proprietary computer programs and software developed and/or used by the Company; information related to the Company’s patents, trademarks, and copyrights, including information related to potential patent, trademark, or copyright disputes or negotiations regarding same with competitors; and information pertaining to the Company or made available to Executive by the Company and identified or treated as confidential or secret.

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14. Assignment of Discoveries, Improvements and Inventions.

(a) Executive agrees that, with respect to any and all ideas, concepts, techniques, discoveries, improvements and inventions or works of authorship (all hereinafter called “Developments”), which Executive may conceive or make during the term of Executive’s employment, either solely or jointly with others, whether or not such Developments are patentable, subject to copyright protection or susceptible to any other form of protection which related to the present or future business of the Company, or which are in the scope of Executive’s duties for the Company or relate to work performed by Executive for the Company, Executive will assign and does hereby assign and transfer, all of Executive’s entire right, title and interest in and to such Developments to the Company or its designated affiliates, including its successors and assigns, except those inventions specifically excluded by statute as more fully explained in Section (b) below.

(b) Executive further agrees upon the request of the Company to execute and deliver as documents and do all acts necessary to secure to the Company, its successors and assigns, or its designated affiliates or other nominees, the entire right, title and interest in and to those ideas, concepts, techniques, discoveries, improvements and inventions referred to in paragraph (a), including applications for and Letters Patent of the United States and foreign countries, provided the cost of preparing such papers, assignments and applications for Letters Patent, and the prosecution and maintenance thereof and all proceedings and litigation relating thereto, is borne by the Company or its nominee.

15. Copyrights. Executive acknowledges that all works prepared solely or jointly with others which related in any manner to the research, development or other business activities of the Company shall for the purposes of U.S. copyright law be deemed “works made for hire” and all rights therein, including copyrights or any other rights, shall be the sole property of the Company and that such writings shall be held in confidence by Executive until written authorization to publish is obtained from a duly designated representative of the Company. In the event that these works are held not to be “works made for hire,” the Executive agrees to assign all right, title and interest in the works to the Company.

16. Non-Disparagement. Executive agrees that Executive shall not for any reason whatsoever and whether directly or indirectly, either alone or jointly with any person, firm or corporation at any time, in any way, make disparaging statements about the Company or any of its related entities, their products, services or employees to any person, entity, vendor, contractor,

subcontractor, competitor, customer or potential customer of the Company.

17. Employee Transfer. Executive agrees that if Executive shall accept transfer to any of the Company’s affiliates, the term the “Company” as used herein, shall be deemed to include each such affiliate, and this Agreement shall remain in full force and effect unless and until superseded by a new Agreement.

18. Prior Inventions. Executive agrees and represents that listed below are descriptions of all inventions, whether patented or not, which Executive has made or conceived prior to being employed by the Company, and to which this Agreement is not applicable. Executive represents that the absence of any inventions in the listing below (including stating “none”) shall indicate that Executive owns or claims no such invention at the time of signing this Agreement.

Reserved inventions made or conceived by Executive prior to employment and excluded from this Agreement, and brief descriptions thereof are:

If none, please state “none”.

19. Injunctive Relief. Executive agrees that in the event of any violation of this Agreement by Executive, the Company shall be entitled, in addition to any other rights or remedies which it might have, to maintain an action for damages and permanent injunctive relief, and in addition the Company shall be entitled to preliminary injunctive relief, it being agreed and understood that the substantive and irreparable damages which the Company might sustain upon any such violation could be impossible to ascertain in advance. Executive further agrees that nothing in this Agreement shall be construed as a limitation upon the remedies the Company might have for any wrongs of Executive.

Executive acknowledges that any violation of his or her obligations described herein may result in disciplinary action, including dismissal from the Company, as well as and any other appropriate relief for the Company including money damages and equitable relief as described in the preceding paragraph, together with associated attorney fees.

20. Amendments. This Agreement or any provisions hereof may be changed, waived, discharged, or terminated only by a written amendment signed by both the Company and Executive.

21. Severability and Reformation. Any portion of the Agreement which a Court of competent jurisdiction shall determine to be void or unenforceable as against public policy, or for any other reason, shall be deemed to be severable from the Agreement and shall have no affect on the other covenants or provisions in the Agreement. Executive further agrees that the Court shall be empowered upon the request of the Company to reform and construe any provision which would otherwise be void or unenforceable in a manner that it will be valid and enforceable to the maximum extent permitted by law. Provided that, the Company’s obligation to continue making severance payments under this Agreement is conditioned upon the Executive’s compliance with paragraph 10 of this agreement as written.

22. Waiver. The failure of either party to enforce any provision of this Agreement shall not in any way be construed as a waiver of any such provision as to future breaches or violations thereof, nor prevent such party thereafter from enforcing each and every other provision of this Agreement. The rights granted the parties hereunder are cumulative and the waiver of any single remedy shall not constitute a waiver of such parties’ rights to assert all other legal remedies available to it pursuant to this Agreement.

23. Arbitration. Any claim or dispute arising in connection with the Agreement which is not settled by the parties within sixty (60) days of notice thereof first being given by either party to the other shall be finally settled by arbitration (under the Employment Dispute Resolution Rules of the American Arbitration Association), and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction over it. There shall be one arbitrator, who shall be compensated at his normal hourly or per diem rate for all time spent in connection with the arbitration proceedings and pending final award appropriate compensation and expenses shall be advanced equally by the parties. The arbitrator shall actively manage the arbitration to make it fair, expeditious, economical and less burdensome and adversarial than litigation, and the award rendered shall not include punitive damages and shall state its reasoning. The arbitrator’s fees and expenses shall be shared equally by each party. This provision is intended to conform to Texas law and said law may be substituted for any term of this provision that does not conform to that law.

24. Entire Agreement. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations, or warranties, whether oral or written, by any officer, employee, or representative of any party hereto.

25. Anti-Assignment. This Agreement is personal in nature and cannot be assigned or transferred except as provided in Section 26 below.

26. Successors. This Agreement shall not be terminated by the voluntary or involuntary dissolution by the Company or by any merger or consolidation where the Company is not the surviving corporation or upon any transfer of all or substantially all of the Company’s assets, or any other change in control. In the event of such merger or transfer of assets, or other change in control, the provisions of this Agreement shall be binding upon and inure to the benefit of the surviving corporation or corporation to which such assets shall be transferred.

27. Governing Law and Venue. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the state of Texas including all matters of construction, validity and performance. The parties further agree that any lawsuit under this Agreement must be brought in state or federal court in Harris County, Texas.

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IN WITNESS THEREOF, the parties have executed this Agreement as of the day and year first written above.

EXECUTIVE

By:
Name:
Title:

COOPER US, INC.

By:
Name: David R. Sheil
Title: Sr. VP, Human Resources & Chief Administrative Officer

 

 

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MANAGEMENT CONTINUITY AGREEMENT

 

 

                  THIS AGREEMENT, dated as of ________________, is made by and

between Cooper Industries, Inc., an Ohio corporation (the "Company"), and

_________________ (the "Executive").

 

                  WHEREAS, the Company is a significant subsidiary of Cooper

Industries, Ltd., a Bermuda corporation ("Cooper") and Executive is employed by

the Company in a key management position; and

 

                  WHEREAS, the Executive is an officer of Cooper; and

 

                  WHEREAS, Cooper considers it essential to the best interests

of its shareholders to foster the continued employment of key management

personnel of the Company; and

 

                  WHEREAS, the Board recognizes that, as is the case with many

publicly held corporations, the possibility of a Change in Control exists and

that such possibility, and the uncertainty and questions which it may raise

among management, may result in the departure or distraction of management

personnel to the detriment of Cooper and its shareholders; and

 

                  WHEREAS, the Board has determined that appropriate steps

should be taken to reinforce and encourage the continued attention and

dedication of members of the Company's management, including the Executive, to

their assigned duties without distraction in the face of potentially disturbing

circumstances arising from the possibility of a Change in Control; and

 

                  WHEREAS, Cooper will derive substantial direct and indirect

benefit from this Agreement as the Company's parent and desires to guaranty the

company's obligations hereunder in order to induce the Executive to enter into

this Agreement;

 

                  NOW, THEREFORE, in consideration of the premises and the

mutual covenants herein contained, Cooper, the Company and the Executive hereby

agree as follows:

 

                  1. Defined Terms. The definitions of capitalized terms used in

this Agreement are provided in Section 17 hereof.

 

                  2. Term of Agreement. The Term of this Agreement shall

commence on the date hereof and shall continue in effect through December 31,

2003; provided, however, that commencing on January 1, 2004 and each January 1

thereafter, the Term shall automatically be extended for one additional year

unless, not later than September 30 of the preceding year, the Company or the

Executive shall have given notice not to extend the Term; and further provided,

however, that if a Change in Control shall have occurred during the Term, the

Term shall expire no earlier than twenty-four (24) months beyond the month in

which such Change in Control occurred. Notwithstanding any other provision

hereof, (a) the Term shall expire upon any termination of the Executive's

employment prior to a Potential Change in Control and (b) the Term shall expire

(and for purposes of the application of the provisions of the Agreement, shall

be deemed to have expired) on the date (or scheduled date, as the case may be)

of the Executive's Retirement.

 

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                  3. Company's Covenants Summarized. In order to induce the

Executive to remain in the employ of the Company and in consideration of the

Executive's covenants set forth in Section 4 hereof, the Company agrees, under

the conditions described herein, to pay the Executive the Severance Payments and

the other payments and benefits described herein. Except as provided in Section

9.1 hereof, no Severance Payments shall be payable under this Agreement unless

there has been (or, under the terms of the second sentence of Section 6.1

hereof, there shall be deemed to have been) a termination of the Executive's

employment with the Company following a Change in Control and during the Term.

This Agreement shall not be construed as creating an express or implied contract

of employment and, except as otherwise agreed in writing between the Executive

and the Company, the Executive shall not have any right to be retained in the

employ of the Company.

 

                  4. The Executive's Covenants. The Executive agrees that,

subject to the terms and conditions of this Agreement, in the event of a

Potential Change in Control during the Term, the Executive intends to remain in

the employ of the Company until there occurs a Change in Control.

 

                  5. Compensation Other Than Severance Payments.

 

                  5.1 Following a Change in Control and during the Term, during

any period that the Executive fails to perform the Executive's full-time duties

with the Company as a result of incapacity due to physical or mental illness,

the Company shall pay the Executive's full salary to the Executive at the rate

in effect at the commencement of any such period, together with all compensation

and benefits payable to the Executive under the terms of any compensation or

benefit plan, program or arrangement maintained by the Company during such

period, until the Executive's employment is terminated by the Company for

Disability.

 

                  5.2 If the Executive's employment shall be terminated for any

reason following a Change in Control and during the Term, the Company shall pay

the Executive's full salary to the Executive through the Date of Termination at

the rate in effect immediately prior to the Date of Termination (without giving

effect to any reduction in base salary, which reduction constitutes an event of

Good Reason) or, if higher, the rate in effect immediately prior to the Change

in Control, together with all compensation and benefits payable to the Executive

through the Date of Termination under the terms of the Company's compensation

and benefit plans, programs or arrangements as in effect immediately prior to

the Date of Termination (without giving effect to any reduction in compensation

or benefits, which reduction constitutes an event of Good Reason) or, if more

favorable to the Executive, as in effect immediately prior to the Change in

Control.

 

                  5.3 If the Executive's employment shall be terminated for any

reason following a Change in Control and during the Term, the Company shall pay

to the Executive the Executive's normal post-termination compensation and

benefits as such payments become due. Such post-termination compensation and

benefits shall be determined under, and paid in accordance with, the Company's

retirement, insurance and other compensation or benefit plans, programs and

arrangements as in effect immediately prior to the Date of Termination (without

giving effect to any adverse change in such plans, programs and arrangements,

which adverse change constitutes an event of Good Reason) or, if more favorable

to the Executive, as in effect immediately prior to the Change in Control.

 

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                  6. Severance Payments.

 

                  6.1 Subject to Section 6.2 hereof, if (i) the Executive's

employment is terminated following a Change in Control and during the Term,

other than (A) by the Company for Cause, (B) by reason of death, Disability or

Retirement, or (C) by the Executive without Good Reason, then the Company shall

pay the Executive the amounts, and provide the Executive the benefits, described

in this Section 6.1 ("Severance Payments") and Section 6.2, in addition to any

payments and benefits to which the Executive is entitled under Section 5 hereof.

For purposes of this Agreement, the Executive's employment shall be deemed to

have been terminated following a Change in Control by the Company without Cause

or by the Executive with Good Reason, if (i) the Executive's employment is

terminated by the Company without Cause after the occurrence of a Potential

Change in Control and prior to a Change in Control (whether or not a Change in

Control ever occurs) and such termination was at the request or direction of a

Person who has entered into an agreement with the Company the consummation of

which would constitute a Change in Control or (ii) the Executive terminates his

employment for Good Reason after the occurrence of a Potential Change in Control

and prior to a Change in Control (whether or not a Change in Control ever

occurs) and the circumstance or event which constitutes Good Reason occurs at

the request or direction of such Person.

 

                  (A) In lieu of any further salary payments to the Executive

for periods subsequent to the Date of Termination and in lieu of any severance

benefit otherwise payable to the Executive, the Company shall pay to the

Executive a lump sum severance payment, in cash, equal to _____________ [three

in the case of the Chief Executive Officer, Chief Operating Officer and Senior

and Executive Vice Presidents and two in the case of other key executives] (or,

if less, the number of full and partial years between the Date of Termination

and the Executive's scheduled date of Retirement) times the sum of (i) the

Executive's base salary as in effect immediately prior to the Date of

Termination (without giving effect to any reduction in base salary, which

reduction constitutes an event of Good Reason) or, if higher, in effect

immediately prior to the Change in Control, and (ii) the higher of (A) the

average annual bonus earned by the Executive pursuant to the annual bonus or

incentive plan maintained by the Company in respect of the three fiscal years

ending immediately prior to the fiscal year in which occurs the Date of

Termination (without giving effect to any reduction in bonus caused by an

adverse change in the Executive's bonus plan participation, which adverse

constitutes an event of Good Reason) or, if higher, immediately prior to the

fiscal year in which occurs the Change in Control or (B) the Executive's target

annual bonus for the fiscal year in which occurs the Date of Termination

(without giving effect to any reduction in bonus caused by an adverse change in

the Executive's bonus plan participation, which adverse change constitutes an

event of Good Reason) or, if higher, the fiscal year in which occurs the Change

in Control.

 

                  (B) For the ______________ [thirty-six in the case of the

Chief Executive Officer, Chief Operating Officer and Senior and Executive Vice

Presidents and twenty-four in the case of other key executives] month period

(or, if less, the number of months between the Date of Termination and the

Executive's scheduled date of Retirement) immediately following the Date of

Termination, the Company shall arrange to provide the Executive and his

dependents with life, disability, accident and health insurance benefits

substantially similar to those provided to the Executive and his dependents

immediately prior to the Date of Termination (without giving effect to any

reduction in benefits, which reduction constitutes an event of Good Reason) or,

if more favorable to the Executive, those provided to the Executive and his

dependents immediately prior to the Change in Control, at no greater cost to the

Executive than the cost to the Executive immediately prior to such date;

provided, however, that, unless the Executive consents to a different method

(after taking into account the effect of such method on

 

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the calculation of "parachute payments" pursuant to Section 6.2 hereof), such

health insurance benefits shall be provided through a third-party insurer.

Benefits otherwise receivable by the Executive pursuant to this Section 6.1 (B)

shall be reduced to the extent benefits of the same type are received by or made

available to the Executive during the ______________ [thirty-six in the case of

the Chief Executive Officer, Chief Operating Officer and Senior and Executive

Vice Presidents and twenty-four in the case of other key executives] (or, if

less, the number of months between the Date of Termination and the Executive's

scheduled date of Retirement) month period following the Executive's termination

of employment (and any such benefits received by or made available to the

Executive shall be reported to the Company by the Executive); provided, however,

that the Company shall reimburse the Executive for the excess, if any, of the

cost of such benefits to the Executive over such cost immediately prior to the

Date of Termination or, if more favorable to the Executive, the date on which

the Change in Control occurs. If the Severance Payments shall be decreased

pursuant to Section 6.2 hereof, and the Section 6.1(B) benefits which remain

payable after the application of Section 6.2 hereof are thereafter reduced

pursuant to the immediately preceding sentence, the Company shall, no later than

five (5) business days following such reduction, pay to the Executive the least

of (a) the amount of the decrease made in the Severance Payments pursuant to

Section 6.2 hereof, (b) the amount of the subsequent reduction in these Section

6.1(B) benefits, or (c) the maximum amount which can be paid to the Executive

without being, or causing any other payment to be, nondeductible by reason of

section 280G of the Code.

 

                  In the event the Executive receives health insurance benefits

during the _______________ [thirty-six in the case of the Chief Executive

Officer, Chief Operating Officer and Senior and Executive Vice Presidents and

twenty-four in the case of other key executives]-month period following the Date

of Termination pursuant to the foregoing provisions of this Section 6.1(B), the

Executive and his or her dependents shall continue to be eligible for health

insurance benefits for up to an additional sixty (60) months, provided however,

that no benefits will be provided (i) if health insurance benefits are available

to the Executive through another employer during such period, or (ii) after the

insured individual reaches age 65. Such health insurance benefits shall be

substantially similar to, and have no greater cost to the Executive than those

in effect for the [NUMBER]-month period following the Date of Termination.

 

                  (C) Notwithstanding any provision of any annual incentive plan

to the contrary, the Company shall pay to the Executive a lump sum amount, in

cash, equal to the product of (i) the target bonus to which the Executive would

have been entitled under the Company's annual incentive plan in respect of the

year in which the Date of Termination occurs and (ii) a fraction, the numerator

of which shall be the number of months (including fractions thereof) from the

first day of the fiscal year during which the Date of Termination occurs to the

Date of Termination, and the denominator of which shall be twelve (12);

provided, however, that if the Date of Termination occurs during the same year

as the Change in Control, the payment under this Section 6.1(C) shall be offset

by any payments received under the Company's annual incentive plan in connection

with such Change in Control.

 

                  (D) In addition to the retirement benefits to which the

Executive is entitled under each Pension Plan or any successor plan thereto, the

Company shall pay the Executive a lump sum amount, in cash, equal to the sum of

(i) the pay related credits the Executive would have accrued under the Salaried

Employees' Retirement Plan of Cooper Industries, Inc. and the Cooper Industries,

Inc., Supplemental Excess Defined Benefit Plan; and (ii) the Company-Matching

Contributions the Executive would have accrued under the Cooper Industries,

Inc., Savings and Stock Ownership Plan and the Cooper Industries, Inc.,

Supplemental Excess Defined Contribution Plan (the plans referred to in

subsections (i) and (ii) hereof, "The Plans"),

 

                                        4

<PAGE>

 in each case, during the ______________ [thirty-six in the case of the Chief

Executive Officer, Chief Operating Officer and Senior and Executive Vice

Presidents and twenty-four in the case of other key executives] month (or, if

less, the number of months between the Date of Termination and the Executive's

scheduled date of Retirement) period immediately following the Executive's Date

of Termination based upon: (1) the terms and provisions of The Plans as in

effect immediately prior to the Change in Control; (2) the lump sum payment set

forth in Section 6.1(A) hereof, which lump sum shall be deemed to have been

earned ratably over such period; and (3) the assumption that the Executive was

making the maximum allowable pre-tax contributions under The Plans during such

period.

 

                  (E) The Company shall provide the Executive with outplacement

services suitable to the Executive's position for a period of one year or, if

earlier, until the first acceptance by the Executive of an offer of employment.

 

                  (F) Cooper shall continue to maintain officers'

indemnification insurance for the Executive for a period of five years following

the Date of Termination, the terms and conditions of which shall be no less

favorable than the terms and conditions of the officers' indemnification

insurance maintained by Cooper for the Executive immediately prior to the date

on which the Change in Control occurs.

 

                  6.2 (A) Whether or not the Executive becomes entitled to the

Severance Payments, if any payment or benefit received or to be received by the

Executive in connection with a Change in Control or the termination of the

Executive's employment (whether pursuant to the terms of this Agreement or any

other plan, arrangement or agreement with the Company, any Person whose actions

result in a Change in Control or any Person affiliated with the Company or such

Person) (all such payments and benefits, including the Severance Payments, being

hereinafter called "Total Payments") will be subject (in whole or part) to the

Excise Tax, then, subject to the provisions of subsection (B) of this Section

6.2, the Company shall pay to the Executive an additional amount (the "Gross-Up

Payment") such that the net amount retained by the Executive, after deduction of

any Excise Tax on the Total Payments and any federal, state and local income and

employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the

Total Payments. For purposes of determining the amount of the Gross-Up Payment,

the Executive shall be deemed to pay federal income taxes at the highest

marginal rate of federal income taxation in the calendar year in which the

Gross-Up Payment is to be made and state and local income taxes at the highest

marginal rate of taxation in the state and locality of the Executive's residence

on the Date of Termination (or if there is no Date of Termination, then the date

on which the Gross-Up Payment is calculated for purposes of this Section 6.2),

net of the maximum reduction in federal income tax which could be obtained from

deduction of such state and local taxes.

 

                  (B) In the event that the amount of the Total Payments does

not exceed 110% of the largest amount that would result in no portion of the

Total Payments being subject to the Excise Tax (the "Safe Harbor"), then

subsection (A) of this Section 6.2 shall not apply and the noncash Severance

Payments shall first be reduced (if necessary, to zero), and the cash Severance

Benefits shall thereafter be reduced (if necessary, to zero) so that the amount

of the Total Payments is equal to the Safe Harbor; provided, however, that the

Executive may elect to have the cash Severance Payments reduced (or eliminated)

prior to any reduction of the noncash Severance Payments.

 

                                        5

<PAGE>

 

                  (C) For purposes of determining whether any of the Total

Payments will be subject to the Excise Tax and the amount of such Excise Tax,

(i) all of the Total Payments shall be treated as "parachute payments" within

the meaning of section 280G(b)(2) of the Code, unless in the opinion of tax

counsel ("Tax Counsel") reasonably acceptable to the Executive and selected by

the accounting firm which was, immediately prior to the Change in Control,

Cooper's independent auditor (the "Auditor"), such other payments or benefits

(in whole or in part) do not constitute parachute payments, including by reason

of section 280G(b)(4)(A) of the Code, (ii) all "excess parachute payments"

within the meaning of section 280G(b)(l) of the Code shall be treated as subject

to the Excise Tax unless, in the opinion of Tax Counsel, such excess parachute

payments (in whole or in part) represent reasonable compensation for services

actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in

excess of the Base Amount allocable to such reasonable compensation, or are

otherwise not subject to the Excise Tax, and (iii) the value of any noncash

benefits or any deferred payment or benefit shall be determined by the Auditor

in accordance with the principles of sections 280G(d)(3) and (4) of the Code.

Prior to the payment date set forth in Section 6.3 hereof, the Company shall

provide the Executive with its calculation of the amounts referred to in this

Section 6.2(C) and such supporting materials as are reasonably necessary for the

Executive to evaluate the Company's calculations. If the Executive disputes the

Company's calculations (in whole or in part), the reasonable opinion of Tax

Counsel with respect to the matter in dispute shall prevail.

 

                  (D) In the event that (i) amounts are paid to the Executive

pursuant to subsection (A) of this Section 6.2, (ii) the Excise Tax is finally

determined to be less than the amount taken into account hereunder in

calculating the Gross-Up Payment, and (iii) after giving effect to such

redetermination, the Severance Payments are to be reduced pursuant to subsection

(B) of this Section 6.2, the Executive shall repay to the Company, within five

(5) business days following the time that the amount of such reduction in Excise

Tax is finally determined, the portion of the Gross-Up Payment attributable to

such reduction (plus that portion of the Gross-Up Payment attributable to the

Excise Tax and federal, state and local income and employment taxes imposed on

the Gross-Up Payment being repaid by the Executive), to the extent that such

repayment results in (i) no portion of the Total Payments being subject to the

Excise Tax and (ii) a dollar-for-dollar reduction in the Executive's taxable

income and wages for purposes of federal, state and local income and employment

taxes) plus interest on the amount of such repayment at the rate provided in

section 1274(b)(2)(B) of the Code. In the event that (x) the Excise Tax is

determined to exceed the amount taken into account hereunder at the time of the

termination of the Executive's employment (including by reason of any payment

the existence or amount of which cannot be determined at the time of the

Gross-Up Payment) and (y) after giving effect to such redetermination, the

Severance Payments should not have been reduced pursuant to subsection (B) of

this Section 6.2, the Company shall make an additional Gross-Up Payment in

respect of such excess and in respect of any portion of the Excise Tax with

respect to which the Company had not previously made a Gross-Up Payment (plus

any interest, penalties or additions payable by the Executive with respect to

such excess and such portion) within five (5) business days following the time

that the amount of such excess is finally determined.

 

                  6.3 The payments provided in subsections (A), (C) and (D) of

Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the

fifth day following the Date of Termination; provided, however, that if the

amounts of such payments, and the limitations on such payments set forth in

Section 6.2 hereof, cannot be finally determined on or before such day, the

Company shall pay to the Executive on such day an estimate, as determined in

good

 

                                        6

<PAGE>

 

faith by the Executive or, in the case of payments under Section 6.2 hereof, in

accordance with Section 6.2 hereof, of the minimum amount of such payments to

which the Executive is clearly entitled and shall pay the remainder of such

payments (together with interest on the unpaid remainder [or on all such

payments to the extent the Company fails to make such payments when due] at the

rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount

thereof can be determined but in no event later than the thirtieth (30th) day

after the Date of Termination. In the event that the amount of the estimated

payments exceeds the amount subsequently determined to have been due, such

excess shall constitute a loan by the Company to the Executive, payable on the

fifth (5th) business day after demand by the Company (together with interest at

the rate provided in section 1274(b)(2)(B) of the Code). At the time that

payments are made under this Agreement, the Company shall provide the Executive

with a written statement setting forth the manner in which such payments were

calculated and the basis for such calculations including, without limitation,

any opinions or other advice the Company has received from Tax Counsel, the

Auditor or other advisors or consultants (and any such opinions or advice which

are in writing shall be attached to the statement).

 

                  6.4 The Company also shall pay to the Executive all legal fees

and expenses incurred by the Executive in disputing in good faith any issue

hereunder relating to the termination of the Executive's employment, in seeking

in good faith to obtain or enforce any benefit or right provided by this

Agreement or in connection with any tax audit or proceeding to the extent

attributable to the application of section 4999 of the Code to any payment or

benefit provided hereunder. Such payments shall be made within five (5) business

days after delivery of the Executive's written request(s) for payment

accompanied with such evidence of fees and expenses incurred as the Company

reasonably may require.

 

                  7. Termination Procedures and Compensation During Dispute.

 

                  7.1 Notice of Termination. After a Change in Control and

during the Term, any purported termination of the Executive's employment (other

than by reason of death) shall be communicated by written Notice of Termination

from either Cooper or the Company to the Executive (or in the case of a

termination for Good Reason, from the Executive to the Company) in accordance

with Section 10 hereof. For purposes of this Agreement, a "Notice of

Termination" shall mean a notice which shall indicate the specific termination

provision in this Agreement relied upon and shall set forth in reasonable detail

the facts and circumstances claimed to provide a basis for termination of the

Executive's employment under the provision so indicated. Further, a Notice of

Termination for Cause is required to include a copy of a resolution duly adopted

by the affirmative vote of not less than three-quarters (3/4) of the entire

membership of the Board at a meeting of the Board which was called and held for

the purpose of considering such termination (after reasonable notice to the

Executive and an opportunity for the Executive, together with the Executive's

counsel, to be heard before the Board) finding that, in the good faith opinion

of the Board, the Executive was guilty of conduct set forth in clause (i) or

(ii) of the definition of Cause herein, and specifying the particulars thereof

in detail.

 

                  7.2 Date of Termination. "Date of Termination," with respect

to any purported termination of the Executive's employment after a Change in

Control and during the Term, shall mean (i) if the Executive's employment is

terminated for Disability, thirty (30) days after Notice of Termination is given

(provided that the Executive shall not have returned to the full-time

performance of the Executive's duties during such thirty (30) day period), and

(ii) if the

 

                                        7

<PAGE>

 

Executive's employment is terminated for any other reason, the date specified in

the Notice of Termination (which, in the case of a termination by Cooper or the

Company, shall not be less than thirty (30) days (except in the case of a

termination for Cause) and, in the case of a termination by the Executive, shall

not be less than fifteen (15) days nor more than sixty (60) days, respectively,

from the date such Notice of Termination is given).

 

                  7.3 Dispute Concerning Termination. If within fifteen (15)

days after any Notice of Termination is given, or, if later, prior to the Date

of Termination (as determined without regard to this Section 7.3), the party

receiving such Notice of Termination notifies the other party that a dispute

exists concerning the termination, the Date of Termination shall be extended

until the earlier of (i) the date on which the Term ends or (ii) the date on

which the dispute is finally resolved, either by mutual written agreement of the

parties or by a final judgment, order or decree of an arbitrator or a court of

competent jurisdiction (which is not appealable or with respect to which the

time for appeal therefrom has expired and no appeal has been perfected);

provided, that the Date of Termination shall be extended by a notice of dispute

given by the Executive only if such notice is given in good faith and the

Executive pursues the resolution of such dispute with reasonable diligence.

 

                  7.4 Compensation During Dispute. If a purported termination

occurs following a Change in Control and during the Term and the Date of

Termination is extended in accordance with Section 7.3 hereof, the Company shall

continue to pay the Executive the full compensation in effect when the notice

giving rise to the dispute was given (including, but not limited to, salary) and

continue the Executive as a participant in all compensation, benefit and

insurance plans in which the Executive was participating when the notice giving

rise to the dispute was given, until the Date of Termination, as determined in

accordance with Section 7.3 hereof. Amounts paid under this Section 7.4 are in

addition to all other amounts due under this Agreement (other than those due

under Section 5.2 hereof) and shall not be offset against or reduce any other

amounts due under this Agreement.

 

                  8. No Mitigation. The Company agrees that, if the Executive's

employment with the Company terminates during the Term, the Executive is not

required to seek other employment or to attempt in any way to reduce any amounts

payable to the Executive by the Company pursuant to Section 6 hereof or Section

7.4 hereof. Further, the amount of any payment or benefit provided for in this

Agreement (other than Section 6.1(B) hereof) shall not be reduced by any

compensation earned by the Executive as the result of employment by another

employer, by retirement benefits, by offset against any amount claimed to be

owed by the Executive to the Company, or otherwise.

 

                  9. Successors; Binding Agreement.

 

                  9.1 In addition to any obligations imposed by law upon any

successor to Cooper or the Company, Cooper or the Company will require any

successor (whether direct or indirect, by purchase, merger, consolidation or

otherwise) to all or substantially all of the business and/or assets of Cooper

or the Company as the case may be, to expressly assume and agree to perform this

Agreement in the same manner and to the same extent that Cooper or the Company

would be required to perform it if no such succession had taken place. Failure

of Cooper or the Company to obtain such assumption and agreement prior to the

effectiveness of any such succession shall be a breach of this Agreement and

shall entitle the Executive to compensation from the Company

 

                                        8

<PAGE>

 

in the same amount and on the same terms as the Executive would be entitled to

hereunder if the Executive were to terminate the Executive's employment for Good

Reason after a Change in Control, except that, for purposes of implementing the

foregoing, the date on which any such succession becomes effective shall be

deemed the Date of Termination.

 

                  9.2 This Agreement shall inure to the benefit of and be

enforceable by the Executive's personal or legal representatives, executors,

administrators, successors, heirs, distributees, devisees and legatees. If the

Executive shall die while any amount would still be payable to the Executive

hereunder (other than amounts which, by their terms, terminate upon the death of

the Executive) if the Executive had continued to live, all such amounts, unless

otherwise provided herein, shall be paid in accordance with the terms of this

Agreement to the executors, personal representatives or administrators of the

Executive's estate.

 

                  10. Notices. For the purpose of this Agreement, notices and

all other communications provided for in the Agreement shall be in writing and

shall be deemed to have been duly given when delivered or mailed by United

States registered mail, return receipt requested, postage prepaid, addressed, if

to the Executive, to the address inserted below the Executive's signature on the

final page hereof and, if to Cooper or the Company, to the addresses set forth

below, or to such other address as either party may have furnished to the other

in writing in accordance herewith, except that notice of change of address shall

be effective only upon actual receipt:

 

                           To the Company:

 

                           Cooper Industries, Inc.

                           P.O. Box 4446

                           Houston, Texas 77210-4446

                           Attention:  Senior Vice President, Human Resources

 

                           To Cooper:

 

                           Cooper Industries, Ltd.

                           P.O. Box 4446

                           Houston, Texas 77210-4446

                           Attention:  General Counsel

 

                  11. Miscellaneous. No provision of this Agreement may be

modified, waived or discharged unless such waiver, modification or discharge is

agreed to in writing and signed by the Executive and authorized officers of

Cooper and the Company. No waiver by any party hereto at any time of any breach

by another party hereto of, or of any lack of compliance with, any condition or

provision of this Agreement to be performed by any party shall be deemed a

waiver of similar or dissimilar provisions or conditions at the same or at any

prior or subsequent time. This Agreement supersedes any other agreements or

representations, oral or otherwise, express or implied, with respect to the

subject matter hereof which have been made by either party; provided, however,

that this Agreement shall supersede any agreement setting forth the terms and

conditions of the Executive's employment with the Company only in the event that

the Executive's employment with the Company is terminated on or following a

Change in Control by the Company other than for Cause or by the Executive for

Good Reason. The validity,

 

                                        9

<PAGE>

 

interpretation, construction and performance of this Agreement shall be governed

by the laws of the State of Ohio. All references to sections of the Exchange Act

or the Code shall be deemed also to refer to any successor provisions to such

sections. Any payments provided for hereunder shall be reduced to the extent

necessary so that the Company may satisfy any applicable withholding required

under federal, state or local law and any additional withholding to which the

Executive has agreed. The obligations of Cooper, the Company and the Executive

under this Agreement which by their nature may require either partial or total

performance after the expiration of the Term (including, without limitation,

those under Sections 6 and 7 hereof) shall survive such expiration.

 

                  12. Validity. The invalidity or unenforceability of any

provision of this Agreement shall not affect the validity or enforceability of

any other provision of this Agreement, which shall remain in full force and

effect.

 

                  13. Counterparts. This Agreement may be executed in several

counterparts, each of which shall be deemed to be an original but all of which

together will constitute one and the same instrument.

 

                  14. Settlement of Disputes; Arbitration.

 

                  14.1 All claims by the Executive for benefits under this

Agreement shall be directed to and determined by the Board and shall be in

writing. Any denial by the Board of a claim for benefits under this Agreement

shall be delivered to the Executive in writing and shall set forth the specific

reasons for the denial and the specific provisions of this Agreement relied

upon. The Board shall afford a reasonable opportunity to the Executive for a

review of the decision denying a claim and shall further allow the Executive to

appeal to the Board a decision of the Board within sixty (60) days after

notification by the Board that the Executive's claim has been denied.

 

                  14.2 Any further dispute or controversy arising under or in

connection with this Agreement shall be settled exclusively by arbitration in

Houston, Texas in accordance with the rules of the American Arbitration

Association then in effect; provided, however, that the evidentiary standards

set forth in this Agreement shall apply. Judgment may be entered on the

arbitrator's award in any court having jurisdiction. Notwithstanding any

provision of this Agreement to the contrary, the Executive shall be entitled to

seek specific performance of the Executive's right to be paid until the Date of

Termination during the pendency of any dispute or controversy arising under or

in connection with this Agreement.

 

                  15. Termination of Prior Management Continuity Agreement. This

Agreement supercedes any Management Continuity Agreement previously executed by

the Company and the Executive and any such previous agreement is terminated

effective as of the date hereof.

 

                  16. Guarantee by Cooper. Cooper, as direct obligor and not

merely as a surety, absolutely and unconditionally guarantees the punctual

payment, performance and observance of each and every covenant, agreement, duty

or any other obligation of the Company under or arising out of this Agreement

(collectively, the "Guaranteed Obligations"). This is an irrevocable and

continuing guarantee of payment and performance and not merely a guarantee of

collection and shall remain in full force and effect until the Guaranteed

Obligations have been

 

                                       10

<PAGE>

 

satisfied, paid and performed in full. Cooper waives any right to require that

an Executive proceed against any other person or entity or asset liable on or

securing the Guaranteed Obligations or pursue or exhaust any other remedy

whatsoever. To the fullest extent permitted by applicable law, Cooper further

waives any legal or equitable defense to the enforceability of its obligations

hereunder, and agrees that its obligations shall be absolute and unconditional

and shall not be affected or discharged by any circumstance, act or event

whatsoever (including without limitation the insolvency, voluntary or

involuntary bankruptcy, liquidation, dissolution, winding up, merger,

consolidation or reorganization of the Company), except payment and performance

in full of the Guaranteed Obligations.

 

                  17. Definitions. For purposes of this Agreement, the following

terms shall have the meanings indicated below:

 

                  (A) "Affiliate" shall have the meaning set forth in Rule 12b-2

promulgated under Section 12 of the Exchange Act.

 

                  (B) "Auditor" shall have the meaning set forth in Section 6.2

hereof.

 

                  (C) "Base Amount" shall have the meaning set forth in section

280G(b)(3) of the Code.

 

                  (D) "Beneficial Owner" shall have the meaning set forth in

Rule 13d3 under the Exchange Act.

 

                  (E) "Board" shall mean the Board of Directors of Cooper

Industries, Ltd.

 

                  (F) "Cause" for termination by the Company of the Executive's

employment shall mean (i) the willful and continued failure by the Executive to

substantially perform the Executive's duties with the Company (other than any

such failure resulting from the Executive's incapacity due to physical or mental

illness or any such actual or anticipated failure after the issuance of a Notice

of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof)

after a written demand for substantial performance is delivered to the Executive

by the Board, which demand specifically identifies the manner in which the Board

believes that the Executive has not substantially performed the Executive's

duties, or (ii) the willful engaging by the Executive in conduct which is

demonstrably and materially injurious to the Company or its subsidiaries,

monetarily or otherwise. For purposes of clauses (i) and (ii) of this

definition, (x) no act, or failure to act, on the Executive's part shall be

deemed "willful" unless done, or omitted to be done, by the Executive not in

good faith and without reasonable belief that the Executive's act, or failure to

act, was in the best interest of the Company and (y) in the event of a dispute

concerning the application of this provision, no claim by the Company that Cause

exists shall be given effect unless the Company establishes to the Board by

clear and convincing evidence that Cause exists.

 

                  (G) 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:

 

                           (I) any Person is or becomes the Beneficial Owner,

                  directly or indirectly, of securities of Cooper (not including

                  in the securities beneficially

 

                                       11

<PAGE>

 

                  owned by such Person any securities acquired directly from

                  Cooper or its Affiliates) representing 25% or more of the

                  combined voting power of Cooper's then outstanding securities

                  (other than Cooper's Class B Common Shares), excluding any

                  Person who becomes such a Beneficial Owner in connection with

                  a transaction described in clause (i) of paragraph (III)

                  below; or

 

                           (II) the following individuals cease for any reason

                  to constitute a majority of the number of directors then

                  serving on the Board: 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 Cooper) whose appointment or election

                  by the Board or nomination for election by Cooper'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

 

                           (III) there is consummated a merger or consolidation

                  of Cooper or any direct or indirect subsidiary of Cooper with

                  any other corporation, other than (i) a merger or

                  consolidation which results in the directors of Cooper

                  immediately prior to such merger or consolidation continuing

                  to constitute at least a majority of the board of directors of

                  Cooper, the surviving entity or any parent thereof, or (ii) a

                  merger or consolidation effected to implement a

                  recapitalization of Cooper (or similar transaction) in which

                  no Person is or becomes the Beneficial Owner, directly or

                  indirectly, of securities of Cooper (not including in the

                  securities Beneficially Owned by such Person any securities

                  acquired directly from the Cooper or its Affiliates)

                  representing 25% or more of the combined voting power of

                  Cooper's then outstanding securities (other than Cooper's

                  Class B Common shares); or

 

                           (IV) the shareholders of Cooper approve a plan of

                  complete liquidation or dissolution of Cooper or there is

                  consummated an agreement for the sale or disposition by Cooper

                  of all or substantially all of Cooper's assets, other than a

                  sale or disposition by Cooper of all or substantially all of

                  Cooper's assets to an entity, at least 60% of the combined

                  voting power of the voting securities of which are owned by

                  shareholders of Cooper in substantially the same proportions

                  as their ownership of Cooper immediately prior to such sale.

 

                  (H) "Code" shall mean the Internal Revenue Code of 1986, as

amended from time to time.

 

                  (I) "Company" shall mean Cooper Industries, Inc. and, shall

include any successor to its business and/or assets which assumes and agrees to

perform this Agreement by operation of law or otherwise.

 

                  (J) "Cooper" shall mean Cooper Industries, Ltd., a Bermuda

corporation and, except in determining under Section 17(G) hereof whether any

change in Control has occurred,

 

                                       12

<PAGE>

 

shall include any successor to its business and/or assets which assumes and

agrees to perform this Agreement by operation of law or otherwise.

 

                  (K) "Date of Termination" shall have the meaning set forth in

Section 7.2 hereof.

 

                  (L) "Disability" shall be deemed the reason for the

termination by the Company of the Executive's employment, if, as a result of the

Executive's incapacity due to physical or mental illness, the Executive shall

have been absent from the full-time performance of the Executive's duties with

the Company for a period of six (6) consecutive months, the Company shall have

given the Executive a Notice of Termination for Disability, and, within thirty

(30) days after such Notice of Termination is given, the Executive shall not

have returned to the full-time performance of the Executive's duties.

 

                  (M) "Exchange Act" shall mean the Securities Exchange Act of

1934, as amended from time to time.

 

                  (N) "Excise Tax" shall mean any excise tax imposed under

section 4999 of the Code.

 

                  (O) "Executive" shall mean the individual named in the first

paragraph of this Agreement.

 

                  (P) "Good Reason" for termination by the Executive of the

Executive's employment shall mean the occurrence (without the Executive's

express written consent) after any Change in Control, or prior to a Change in

Control under the circumstances described in clauses (ii) and (iii) of the

second sentence of Section 6.1 hereof (treating all references in paragraphs (I)

through (VII) below to a "Change in Control" as references to a "Potential

Change in Control"), of any one of the following acts by Cooper or the Company,

or failures by the Company to act, unless, in the case of any act or failure to

act described in paragraph (I), (V), (VI) or (VII) below, such act or failure to

act is corrected prior to the Date of Termination specified in the Notice of

Termination given in respect thereof:

 

                           (I) the assignment to the Executive of any duties

                  inconsistent with the Executive's status as a senior executive

                  officer of the Company or a substantial adverse alteration in

                  the nature or status of the Executive's responsibilities or

                  reporting relationship from those in effect immediately prior

                  to the Change in Control;

 

                           (II) a reduction by the Company in the Executive's

                  annual base salary as in effect on the date hereof or as the

                  same may be increased from time to time;

 

                           (III) the relocation of the Executive's principal

                  place of employment to a location which increases the

                  Executive's one-way commuting distance by more than 50 miles

                  or the Company's requiring the Executive to be based anywhere

                  other than the Executive's principal place of employment

                  immediately prior to the Change in Control (or permitted

                  relocation thereof) except for required travel on the

                  Company's business to an extent substantially

 

                                       13

<PAGE>

 

                  consistent with the Executive's business travel obligations

                  immediately prior to the Change in Control;

 

                           (IV) the failure by the Company to pay to the

                  Executive any portion of the Executive's current compensation,

                  or to pay to the Executive any portion of an installment of

                  deferred compensation under any deferred compensation program

                  of the Company, within seven (7) days of the date such

                  compensation is due, unless paid by Cooper pursuant to Section

                  16 of this Agreement;

 

                           (V) the failure by the Company to continue in effect

                  any compensation plan in which the Executive participates

                  immediately prior to the Change in Control which is material

                  to the Executive's total compensation, including but not

                  limited to the Stock Incentive Plan, the Amended and Restated

                  Management Annual Incentive Plan and the Management Incentive

                  Compensation Deferral Plan or any substitute plans adopted

                  prior to the Change in Control, unless an equitable

                  arrangement (embodied in an ongoing substitute or alternative

                  plan) has been made with respect to such plan, or the failure

                  by the Company to continue the Executive's participation

                  therein (or in such substitute or alternative plan) on a basis

                  not materially less favorable, both in terms of the amount or

                  timing of payment of benefits provided and the level of the

                  Executive's participation relative to other participants, as

                  existed immediately prior to the Change in Control;

 

                           (VI) the failure by the Company to continue to

                  provide the Executive with benefits substantially similar to

                  those enjoyed by the Executive under any of the Company's

                  pension, savings, life insurance, medical, health and

                  accident, or disability plans in which the Executive was

                  participating immediately prior to the Change in Control, the

                  taking of any other action by the Company which would directly

                  or indirectly materially reduce any of such benefits or

                  deprive the Executive of any material fringe benefit enjoyed

                  by the Executive at the time of the Change in Control, or the

                  failure by the Company to provide the Executive with the

                  number of paid vacation days to which the Executive is

                  entitled on the basis of years of service with the Company in

                  accordance with the Company's normal vacation policy in effect

                  at the time of the Change in Control;

 

                           (VII) any purported termination of the Executive's

                  employment which is not effected pursuant to a Notice of

                  Termination satisfying the requirements of Section 7.1 hereof;

                  for purposes of this Agreement, no such purported termination

                  shall be effective. The Executive's right to terminate the

                  Executive's employment for Good Reason shall not be affected

                  by the Executive's incapacity due to physical or mental

                  illness. The Executive's continued employment shall not

                  constitute consent to, or a waiver of rights with respect to,

                  any act or failure to act constituting Good Reason hereunder;

                  or

 

                           (VIII) any failure of Cooper or the Company to obtain

                  assumption of this Agreements, as set forth in Section 9.1

                  hereof.

 

                                       14

<PAGE>

 

                  For purposes of any determination regarding the existence of

                  Good Reason, any claim by the Executive that Good Reason

                  exists shall be presumed to be correct unless the Company

                  establishes to the Board by clear and convincing evidence that

                  Good Reason does not exist.

 

                  (Q) "Gross-Up Payment" shall have the meaning set forth in

Section 6.2 hereof.

 

                  (R) "Notice of Termination" shall have the meaning set forth

in Section 7.1 hereof.

 

                  (S) "Pension Plan" shall mean any tax-qualified, supplemental

or excess benefit pension plan maintained by the Company and any other plan or

agreement entered into between the Executive and the Company which is designed

to provide the Executive with supplemental retirement benefits.

 

 

                  (T) "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) Cooper 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 Affiliates, (iii) an underwriter temporarily

holding securities pursuant to an offering of such securities, or (iv) a

corporation owned, directly or indirectly, by the shareholders of the Cooper in

substantially the same proportions as their ownership of Cooper stock or (v) any

individual, entity or group whose ownership of Cooper securities 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).

 

                  (U) "Potential Change in Control" shall be deemed to have

occurred if the event set forth in any one of the following paragraphs shall

have occurred:

 

                           (I) Cooper enters into an agreement, the consummation

                  of which would result in the occurrence of a Change in

                  Control;

 

                           (II) Cooper or any Person publicly announces an

                  intention to take or to consider taking actions which, if

                  consummated, would constitute a Change in Control;

 

                           (III) any Person becomes the Beneficial Owner,

                  directly or indirectly, of securities of Cooper representing

                  15% or more of either the then outstanding Class A Common

                  Shares of Cooper or the combined voting power of Cooper's then

                  outstanding securities other than Cooper's Class B Common

                  Shares (not including in the securities beneficially owned by

                  such Person any securities acquired directly from Cooper or

                  its Affiliates); or

 

                           (I) the Board adopts a resolution to the effect that,

                  for purposes of this Agreement, a Potential Change in Control

                  has occurred.

 

                  (V) "Retirement" shall mean the termination of the Executive's

employment in accordance with the Company's mandatory retirement policy as in

effect immediately prior to the Change in Control.

 

                                       15

<PAGE>

 

                  (W) "Severance Payments" shall have the meaning set forth in

Section 6.1 hereof.

 

                  (X) "Tax Counsel" shall have the meaning set forth in Section

6.2 hereof.

 

                  (Y) "Term" shall mean the period of time described in Section

2 hereof (including any extension, continuation or termination described

therein).

 

                  (Z) "Total Payments" shall mean those payments so described in

Section 6.2 hereof.

 

 

COOPER INDUSTRIES, LTD                       COOPER INDUSTRIES, INC.

 

 

 

By:                                          By:

   --------------------------------             --------------------------------

Name:  H. John Riley, Jr.                    Name:  David R. Sheil

Title: Chairman, President and               Title: Senior Vice President,

       Chief Executive Officer                      Human Resources

 

 

 

 

 

                                             -----------------------------------

                                             EXECUTIVE

 

                                             Address:

 

                                       16

 

</TEXT>

</DOCUMENT>