COOPER INDUSTRIES, INC.

                              AMENDED AND RESTATED

                              STOCK INCENTIVE PLAN

                    (AMENDED AND RESTATED FEBRUARY 11, 2004)

 

                             I. PURPOSE OF THE PLAN

 

         The Cooper Industries Stock Incentive Plan is intended to provide

Cooper Industries, Inc. (the "Company") and its affiliates a means by which such

companies can engender and sustain a sense of proprietorship and personal

commitment on the part of the executives, managers and other key employees in

the continued growth, development and financial success of the publicly-traded

parent, Cooper Industries, Ltd. ("CBE") and encourage them to remain with and

devote their best efforts to the business of the Company and its affiliates,

thereby advancing the interests of the Company, its affiliates and CBE

shareholders. Accordingly, the Company may award to certain employees shares of

the Common Stock of CBE, on the terms and conditions established herein.

 

                                 II. DEFINITIONS

 

         2.1      "Award" means any form of Stock Option, Restricted Stock or

Performance Share granted under the Plan, whether singly or in combination, to a

Participant by the Committee pursuant to such terms, conditions, restrictions

and limitations, if any, as the Committee may establish by the Award Agreement

or otherwise.

 

         2.2      "Award Agreement" means a written agreement with respect to an

Award between the Company and a Participant establishing the terms, conditions,

restrictions and limitations applicable to an Award. To the extent an Award

Agreement is inconsistent with the terms of the Plan, the Plan shall govern the

rights of the Participant thereunder.

 

         2.3      "Board" shall mean the Board of Directors of CBE.

 

         2.4      A "Change in Control" shall be deemed to have occurred if the

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

 

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

         directly or indirectly, of CBE securities (not including in the

         securities beneficially owned by such Person or any securities acquired

         directly from CBE or its affiliates) representing 25% or more of the

         combined voting power of CBE's then outstanding securities, excluding

         any Person who becomes such a Beneficial Owner in connection with a

         transaction described in clause (i) of paragraph (3) below; or

 

                  (2)      the following individuals cease for any reason to

         constitute a majority of the number of directors then serving:

         individuals who on the date hereof constitute the Board and any new

         director (other than a director whose initial assumption of office is

         in connection with an actual or threatened election contest, including

         but not limited to a consent solicitation, relating to the election of

         directors of CBE) whose appointment or election by the Board or

         nomination for election by CBE's stockholders was approved or

         recommended by a vote of at least two-thirds (2/3) of the directors

         then still in office who either were directors on the date hereof or

         whose appointment, election or nomination for election was previously

         so approved or recommended; or

 

                  (3)      there is consummated a merger or consolidation of CBE

         or any direct or indirect subsidiary of CBE with any other corporation,

         other than (i) a merger or consolidation which results in the directors

         of CBE immediately prior to such merger or consolidation continuing to

         constitute at least a majority of the board of directors of CBE, the

         surviving entity or any parent thereof, or (ii) a merger or

         consolidation effected to implement a recapitalization of CBE (or

         similar transaction) in which no Person is or becomes the Beneficial

         Owner, directly or indirectly, of CBE securities (not including in the

         securities Beneficially Owned by such Person any securities acquired

         directly from CBE or its Affiliates) representing 25% or more of the

         combined voting power of CBE's then outstanding securities; or

 

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                  (4)      the stockholders of CBE approve a plan of complete

         liquidation or dissolution of CBE or there is consummated an agreement

         for the sale or disposition by CBE of all or substantially all of CBE's

         assets, other than a sale or disposition by CBE of all or substantially

         all of CBE's assets to an entity, at least 60% of the combined voting

         power of the voting securities of which are owned by stockholders of

         CBE in substantially the same proportions as their ownership of CBE

         immediately prior to such sale.

 

         For purposes of this Section 2.4, "Affiliate" shall have the meaning

         set forth in Rule 12b-2 promulgated under Section 12 of the Exchange

         Act; "Beneficial Owner" shall have the meaning set forth in Rule 13d-3

         under the Exchange Act; and "Person" shall have the meaning given in

         Section 3(a)(9) of the Exchange Act, as modified and used in Sections

         13(d) and 14(d) thereof, except that such term shall not include (i)

         CBE or any of its subsidiaries, (ii) a trustee or other fiduciary

         holding securities under an employee benefit plan of CBE or any of its

         subsidiaries, (iii) an underwriter temporarily holding securities

         pursuant to an offering of such securities, (iv) a corporation owned,

         directly or indirectly, by the shareholders of CBE in substantially the

         same proportions as their ownership of stock of CBE or (v) any

         individual, entity or group whose ownership of securities of CBE is

         reported on Schedule 13G pursuant to Rule 13d-1 promulgated under the

         Exchange Act (but only for so long as such ownership is so reported).

 

         2.5      "Change in Control Price" means the higher of (i) the Fair

Market Value on the date of determination of the Change in Control, or (ii) the

highest price per share actually paid for the Common Stock in connection with

the Change in Control of CBE.

 

         2.6      "Code" means the Internal Revenue Code of 1986, as amended

from time to time.

 

         2.7      "Commission" shall mean the Securities and Exchange

Commission.

 

         2.8      "Committee" means the Management Development and Compensation

Committee of the Board, or such other committee designated by the Board to

administer the Plan, provided that the Committee shall consist of three or more

persons, each of whom is an "outside director" within the meaning of Section

162(m) of the Code and a "disinterested person" within the meaning of Rule 16b-3

under the Exchange Act.

 

         2.9      "Common Stock" or "Shares" shall mean the Class A common

shares, par value $0.01 a share, of CBE and other such securities of CBE as the

Committee may from time to time determine.

 

         2.10     "Dividend Equivalent" shall mean any right granted pursuant to

Section X hereof.

 

         2.11     "Exchange Act" means the Securities Exchange Act of 1934, as

amended.

 

         2.12     "Executive Officer" means an executive officer as defined in

Rule 3b-7 promulgated under the Exchange Act.

 

         2.13     "Fair Market Value" of a share of Common Stock, as of any

date, means the average of the high and low sales prices of a share of Common

Stock as reported on the Stock Exchange composite tape on the applicable date,

provided that if no sales of Common Stock were made on the Stock Exchange on

that date, the average of the high and low prices as reported on the composite

tape for the preceding day on which sales of Common Stock were made.

 

         2.14     "Incentive Stock Option" shall mean an option granted under

Section VII hereof that is intended to meet the requirements of Section 422 of

the Code or any successor provision thereto.

 

         2.15     "Nonstatutory Stock Option" shall mean an option granted under

Section VII hereof that is not intended to be an Incentive Stock Option.

 

         2.16     "Option" shall mean any right granted to a Participant under

the Plan allowing such Participant to purchase Shares at such prices and during

such Period or Periods as the Committee shall determine.

 

         2.17     "Participant" means an officer or key employee of the Company

or its affiliates who is selected by the Committee to participate in the Plan.

 

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         2.18     "Performance Goals" or "Targets" in respect to Awards of

Performance Shares are defined as the performance criterion or criteria

established by the Committee, pursuant to Section 9.3 hereof.

 

         2.19     "Performance Period" shall mean that period established by the

Committee at the time any Performance Shares are granted, provided that a

Performance Period shall be a minimum of one year.

 

         2.20     "Performance Share" shall mean any grant pursuant to Section

IX hereof of a unit valued by reference to a designated number of Shares, which

value may be paid to the Participant by delivery of such property as the

Committee shall determine, including cash, Shares or any combination thereof,

upon achievement of such Performance Goals during the Performance Period as the

Committee shall establish at the time of such grant or thereafter.

 

         2.21     "Plan" shall mean the Cooper Industries, Inc. Amended and

Restated Stock Incentive Plan (dated November 7, 1995, as amended and restated

February 11, 2004).

 

         2.22     "Restricted Stock" shall mean any Shares issued pursuant to

Section VIII (or any restricted stock units granted pursuant to Section VIII

that are valued by reference to a designated number of Shares) and which are

subject to such terms, conditions and restrictions as the Committee deems

appropriate, including but not limited to restrictions on transferability, which

restrictions may lapse separately or in combination at such time or times, in

installments or otherwise, as the Committee may deem appropriate.

 

         2.23     "Section 162(m)" means Section 162(m) of the Code and the

regulations promulgated thereunder.

 

         2.24     "Stock Exchange" means the New York Stock Exchange, Inc.

("NYSE") or, if the Common Stock is no longer included on the NYSE, then such

other market price reporting system on which the Common Stock is traded or

quoted.

 

         2.25     "Voting Stock" means securities entitled to vote in an

election of Directors of CBE.

 

                               III. ADMINISTRATION

 

         3.1      The Plan shall be administered by the Committee.

 

         3.2      Subject to the provisions of the Plan, the Committee shall

have the authority in its sole discretion to administer the Plan and to exercise

all the powers and authorities either specifically granted to it under the Plan

or necessary or advisable in the administration of the Plan, including, without

limitation, the authority to select the Participants; to determine the type of

Awards to be made to Participants; to determine the Shares subject to any Award

and the terms, conditions and restrictions relating to any Award; to determine

whether, to what extent and under what circumstances any Award may be settled,

cancelled, forfeited, exchanged, or surrendered; to waive or modify any

condition applicable to an Award (other than a Performance Share Award to

Executive Officers if inconsistent with Section 162(m)); to make adjustments in

the performance goals of an Award (i) in recognition of unusual or nonrecurring

events affecting CBE or the financial statements of CBE (with respect to Awards

made to Executive Officers, to the extent in accordance with Section 162(m), if

applicable) or (ii) in response to changes in applicable laws, regulations, or

accounting principles; to interpret the Plan; to establish, amend or rescind any

administrative policies; to determine the terms and provisions of any agreements

entered into hereunder; and to make all other determinations necessary or

advisable for the administration of the Plan. The Committee may correct any

defect, supply any omission or reconcile any inconsistency in the Plan or in any

Award in the manner and to the extent it shall deem desirable to carry it into

effect. The determinations of the Committee in the administration of the Plan,

as described herein, shall be final and conclusive: provided, however, that no

action shall be taken which will prevent Awards granted under the Plan from

meeting the requirements for exemption from Section 16(b) of the Exchange Act,

or subsequent comparable statute, as set forth in Rule 16b-3 under the Exchange

Act or any subsequent comparable rule; and, provided further, that no action

shall be taken which will prevent Awards hereunder that are intended to provide

"performance-based compensation," within the meaning of Section 162(m), from

doing so.

 

         3.3      In order to enable Participants who are foreign nationals or

employed outside the United States, or both, to receive Awards under the Plan,

the Committee may adopt such amendments, subplans and the like as are necessary

or advisable, in the opinion of the Committee, to effectuate the purposes of the

Plan.

 

         3.4      Notwithstanding the powers and authorities of the Committee

set forth in this Section III, the

 

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Committee shall not permit the repricing of Stock Options by any method,

including by cancellation and reissuance.

 

                                 IV. ELIGIBILITY

 

         Any key employee of the Company or any of its subsidiaries or

affiliates is eligible to receive one or more Awards under the Plan.

 

                          V. SHARES SUBJECT TO THE PLAN

 

         5.1      There shall be available for Awards granted wholly or partly

in Common Stock (including rights or options which may be exercised for or

settled in Common Stock) during the term of this Plan an aggregate of 17,000,000

shares of Common Stock, subject to the adjustments provided for in Section XIV

hereof. The 17,000,000 Shares available for Awards consist of 12,000,000 Shares

previously approved by the Company and CBE shareholders and 5,000,000 Shares

being submitted for approval by shareholders at the 2004 annual meeting. Of the

12,000,000 Shares previously approved by shareholders, no Shares remain

available for future grants following the Board's approval of equity

compensation awards granted in February 2004. Of the 5,000,000 Shares being

submitted for shareholder approval at the 2004 annual meeting, no more than

2,500,000 Shares are available for Restricted Stock and Performance Shares.

 

         5.2      Shares of Common Stock available for issuance under the Plan

may be authorized and unissued Shares, outstanding CBE Class A common shares

held by the Company, or CBE Class B common shares convertible into Class A

common shares for issuance under the Plan, as the Company and CBE may from time

to time determine. The Board of Directors and the appropriate officers of CBE

shall from time to time take whatever actions are necessary to file required

documents with governmental authorities and the Stock Exchange to make shares of

Common Stock available for issuance pursuant to Awards. Common Stock related to

Awards that are forfeited or otherwise terminated, or expire unexercised, or are

settled in a manner such that all or some of the Shares covered by an Award are

not issued to a Participant (other than an exchange for cash or other property

of comparable value) shall immediately become available for Awards hereunder. If

an Award is exchanged for cash or other property of comparable value, the Common

Stock related to the Award will be deducted from the Shares available for Awards

hereunder. Any Shares issued by CBE in respect of the assumption or substitution

of outstanding awards from a corporation or other business entity acquired by

CBE shall not reduce the number of Shares available for Awards under this Plan.

The Committee may from time to time adopt and observe such procedures concerning

the counting of shares against the Plan maximum as it may deem appropriate under

Rule 16b-3 issued pursuant to the Exchange Act.

 

         5.3      The number of shares of Common Stock subject to Awards granted

under the Plan to any individual who is an Executive Officer shall not exceed

the limits set forth below:

 

         -    Stock Options - a total of 1,500,000 Shares in a continuous five

              (5) year period; and

 

         -    Restricted Stock and Performance Shares - the greater of 125,000

              Shares per calendar year or a total of 500,000 Shares in a

              continuous four (4) year period.

 

         Determinations under the preceding sentence shall be made in a manner

that is consistent with Section 162(m).

 

                                   VI. AWARDS

 

         Awards under the Plan may consist of: Stock Options (either Incentive

Stock Options within the meaning of Section 422 of the Code or Nonstatutory

Stock Options), Restricted Stock, or Performance Shares. Awards of Performance

Shares and Restricted Stock may provide the Participant with dividends or

Dividend Equivalents and voting rights prior to vesting (whether based on a

period of time or based on attainment of specified performance conditions). The

terms, conditions and restrictions of each Award shall be set forth in an Award

Agreement.

 

                               VII. STOCK OPTIONS

 

         7.1      GRANTS. Awards may be granted in the form of Stock Options.

Stock Options may be Incentive Stock Options within the meaning of Section 422

of the Code or Nonqualified Stock Options or a combination of both, or any

particular type of tax-advantaged option authorized by the Code from time to

time, and approved by the

 

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Committee.

 

         7.2      TERMS AND CONDITIONS OF OPTIONS. A Stock Option shall be

exercisable in whole or in such installments and at such times and upon such

terms as may be determined by the Committee: provided, however, that no Stock

Option shall be exercisable more than 10 years after the date of grant thereof.

The option exercise price shall be established by the Committee, but such price

shall not be less than the Fair Market Value on the date of the Stock Option's

grant, subject to adjustment as provided in Section XIV hereof.

 

         7.3      RESTRICTIONS RELATING TO INCENTIVE STOCK OPTIONS. Stock

Options issued in the form of Incentive Stock Options shall, in addition to

being subject to all applicable terms, conditions, restrictions and limitations

established by the Committee, comply with Section 422 of the Code. Incentive

Stock Options shall be granted only to key employees of the Company and its

subsidiaries within the meaning of Section 424 of the Code.

 

         7.4      PAYMENT. Upon exercise, a Participant may pay the option

exercise price of a Stock Option in cash or Shares, or a combination of cash and

Shares, or such other consideration as the Committee may deem appropriate. The

Committee shall establish appropriate methods for accepting Common Stock and may

impose such conditions as it deems appropriate on the use of Common Stock to

exercise a Stock Option.

 

         7.5      ADDITIONAL TERMS AND CONDITIONS. The Committee may, by way of

the Award Agreement or otherwise, establish such other terms, conditions or

restrictions, if any, on any Stock Option Award, provided they are not

inconsistent with the Plan. The Committee may condition the vesting of Stock

Options on the achievement of financial performance criteria established by the

Committee at the time of grant.

 

                          VIII. RESTRICTED STOCK AWARDS

 

         8.1      GRANTS. Awards may be granted in the form of Restricted Stock

("Restricted Stock Awards"). Restricted Stock Awards shall be awarded in such

numbers and at such times as the Committee shall determine.

 

         8.2      AWARD RESTRICTIONS. Restricted Stock Awards shall be subject

to such terms, conditions or restrictions as the Committee deems appropriate,

including, but not limited to, restrictions on transferability, requirements of

continued employment, individual performance or the financial performance of

CBE. The period of vesting and the forfeiture restrictions shall be established

by the Committee at the time of grant, provided that the period of vesting shall

be at least one year from the date of grant, except as provided in Section

XVIII.

 

         8.3      RIGHTS AS SHAREHOLDERS. The Committee may, in its discretion,

grant to the Participant to whom such Restricted Stock has been awarded, all or

any of the rights of a shareholder with respect to such shares of Restricted

Stock, including the right to receive dividends or Dividend Equivalents.

 

         8.4      EVIDENCE OF AWARD. Any Restricted Stock Award granted under

the Plan may be evidenced in such manner as the Committee deems appropriate,

including, without limitation, book entry registration or issuance of a stock

certificate or certificates.

 

                          IX. PERFORMANCE SHARE AWARDS

 

         9.1      GRANTS. Awards may be granted in the form of Performance

Shares.

 

         9.2      PERFORMANCE SHARES. The Committee may grant an Award of

Performance Shares to Participants as of the first day of each Performance

Period. Performance Goals will be established by the Committee not later than 90

days after the commencement of the Performance Period relating to the specific

Award. At the end of the Performance Period, the Performance Shares shall be

converted into Common Stock (or cash or a combination of Common Stock and cash,

as determined by the Award Agreement) and distributed to Participants based upon

such entitlement. Award payment in respect of Performance Shares made in cash

rather than the issuance of Common Stock shall not, by reason of such payment in

cash, result in additional Shares being available for reissuance pursuant to

Section V hereof.

 

         9.3      PERFORMANCE CRITERIA. Notwithstanding anything to the contrary

contained in this Section IX, Performance Share Awards shall be made to

Executive Officers only in compliance with Section 162(m).

 

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Performance criteria used to establish Performance Goals for Performance Share

Awards granted to Executive Officers must include one or any combination of the

following: (i) CBE's return on equity, assets, capital or investment; (ii)

pre-tax or after-tax profit levels expressed in earnings per share of CBE or any

subsidiary or business segment of CBE; (iii) cash flow or similar measure; (iv)

total shareholder return; (v) change in the market price of the Common Stock; or

(vi) market share. The Performance Goals established by the Committee for each

Performance Share Award will specify achievement targets with respect to each

applicable performance criterion (including a threshold level of performance

below which no amount will become payable with respect to such Award). To the

extent applicable, any such Performance Goals shall be determined in accordance

with generally accepted accounting principles. Each Award will specify the

amount payable, or the formula for determining the amount payable, upon

achievement of the various applicable Performance Targets. The Performance Goals

established by the Committee may be (but need not be) different for each

Performance Period and different Performance Goals may be applicable for Awards

to different Executive Officers in the same Performance Period. Payment shall be

made with respect to a Performance Share Award to an Executive Officer only

after the attainment of the applicable Performance Goals has been certified in

writing by the Committee.

 

         9.4      ADJUSTMENTS. The Committee shall be authorized to make

adjustments in the method of calculating attainment of Performance Goals in

recognition of: (i) extraordinary or non-recurring items; (ii) changes in tax

laws; (iii) changes in generally accepted accounting principles or changes in

accounting policies; (iv) charges related to restructured or discontinued

operations; (v) restatement of prior period financial results; and (vi) any

other unusual, non-recurring gain or loss that is separately identified and

quantified in CBE's financial statements. Notwithstanding the foregoing, the

Committee may, at its sole discretion, modify the performance results upon which

Awards are based under the Plan, to offset any unintended result(s) arising from

events not anticipated when the Performance Goals were established, provided,

that such adjustment is permitted by Section 162(m).

 

         9.5      ADDITIONAL TERMS AND CONDITIONS. The Committee may, by way of

the Award Agreement or otherwise, determine the manner of payment of Awards of

Performance Shares and other terms, conditions or restrictions, if any, on any

Award of Performance Shares, provided they are consistent with the Plan.

 

                                  X. DIVIDENDS

 

         Upon issuance of Performance Shares earned under the Plan, the Company

also shall pay to the Participant an amount equal to the aggregate amount of

dividends that the Participant would have received had the Participant been the

owner of record of such earned Performance Shares during the Performance Period.

Upon the grant of restricted stock units, the Committee may, in its discretion,

provide for the accrual or payment of dividends that the Participant would have

received had the Participant been the owner of record of the underlying Shares

during the vesting period.

 

                          XI. DEFERRALS AND SETTLEMENTS

 

         The Committee may require or permit Participants to elect to defer the

issuance of Shares or the settlement of Awards in cash as set out in any Award

Agreement or under such administrative policies as it may establish under the

Plan. It also may provide that deferred settlements include the payment or

crediting of interest on the deferral amounts, or the payment or crediting of

Dividend Equivalents where the deferral amounts are denominated in Shares.

 

                         XII. TERMINATION OF EMPLOYMENT

 

         Upon the termination of employment by a Participant, any unexercised,

deferred or unpaid Awards shall be treated as provided in the specific Award

Agreement evidencing the Award, except that the Committee may, in its

discretion, accelerate the vesting or exercisability of an Award, eliminate or

make less restrictive any restrictions contained in an Award, waive any

restriction or other provision of this Plan or an Award or otherwise amend or

modify the Award in any manner that is either: (i) not adverse to such

Participant; or (ii) consented to by such Participant.

 

                    XIII. TRANSFERABILITY AND EXERCISABILITY

 

         Awards granted under the Plan shall not be transferable or assignable

other than: (i) by will or the laws of descent and distribution; (ii) by gift or

other transfer of an Award (other than an Incentive Stock Option unless

permitted by the Code) to any trust or estate in which the original Award

recipient or such recipient's spouse or other immediate relative has a

substantial beneficial interest, or to a spouse or other immediate relative,

provided that any

 

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such transfer is permitted subject to Rule 16b-3 issued pursuant to the Exchange

Act as in effect when such transfer occurs and the Board does not rescind this

provision prior to such transfer; or (iii) pursuant to a qualified domestic

relations order (as defined by the Code). However, any Award so transferred

shall continue to be subject to all the terms and conditions contained in the

Award Agreement.

 

                                XIV. ADJUSTMENTS

 

         14.1     The existence of outstanding Awards shall not affect in any

manner the right or power of CBE or its shareholders to make or authorize: (i)

any adjustments, recapitalizations, reorganizations or other changes in the

capital stock of CBE or its business; (ii) any merger or consolidation of CBE;

(iii) any issuance of bonds, debentures, preferred or prior preference stock

(whether or not such issue is prior to, on a parity with or junior to the Common

Stock); (iv) the dissolution or liquidation of CBE, or any sale or transfer of

all or any part of its assets or business; or (v) any other corporate act or

proceeding of any kind, whether or not of a character similar to that of the

acts or proceedings enumerated above.

 

         14.2     In the event of any Change in Capitalization, an equitable

substitution or proportionate adjustment may be made in (i) the aggregate number

and/or kind of Shares or other property reserved for issuance under the Plan and

(ii) the number, kind and/or exercise price of Shares or other property subject

to outstanding Awards granted under the Plan, including but not limited to, the

substitution of new options for previously issued Stock Options, in each case as

may be determined by the Committee in its sole discretion. Such other equitable

substitutions or adjustments may be made as determined by the Committee in its

sole discretion. "Change in Capitalization" means any increase, reduction,

change or exchange of Shares for a different number or kind of shares or other

securities or property by reason of a reclassification, recapitalization,

merger, consolidation, reorganization, issuance of warrants or rights, stock

dividend, stock split or reverse stock split, combination or exchange of shares,

repurchase of shares, change in corporate structure or otherwise; or any other

corporate action, such as declaration of a special dividend, that affects the

capitalization of CBE.

 

                              XV. WITHHOLDING TAXES

 

         The Company shall have the right to deduct from any payment to be made

pursuant to the Plan the amount of any taxes required by law to be withheld

therefrom, or to require a Participant to pay to the Company such amount

required to be withheld prior to the issuance or delivery of any shares of

Common Stock or the payment of cash under the Plan. The Committee may, in its

discretion, permit a Participant to elect to satisfy such withholding obligation

by (i) having the Company retain the number of shares of Common Stock, or (ii)

tendering the number of shares of Common Stock, in either case, whose Fair

Market Value equals the amount required to be withheld. Any fraction of a share

of Common Stock required to satisfy such obligation shall be disregarded and the

amount due shall instead be paid in cash, to or by the Participant, as the case

may be.

 

                     XVI. REGULATORY APPROVALS AND LISTINGS

 

         Notwithstanding anything contained in this Plan to the contrary, the

Company shall have no obligation to issue or deliver certificates evidencing

Shares under this Plan prior to: (i) the obtaining of any approval from any

governmental agency which the Company shall, in its sole discretion, determine

to be necessary or advisable; (ii) the listing of such Shares on the Stock

Exchange; and (iii) the completion of any registration or other qualification of

the Shares under any state or federal law or ruling of any governmental body

which the Company shall, in its sole discretion, determine to be necessary or

advisable.

 

                XVII. NO RIGHT TO CONTINUED EMPLOYMENT OR GRANTS

 

         No person shall have any claim or right to be granted an Award, and the

grant of an Award shall not be construed as giving a Participant the right to be

retained in the employ of the Company or its subsidiaries or affiliates.

Further, the Company and its subsidiaries and affiliates expressly reserve the

right at any time to terminate the employment of any Participant free from any

liability, or any claim under the Plan, except as provided herein or in any

Award Agreement entered into hereunder.

 

                            XVIII. CHANGE IN CONTROL

 

         18.1     Vesting and Deferral.

 

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                  (i)      Vesting. Immediately upon a Change in Control, all

         outstanding Awards shall vest automatically, all forfeiture

         restrictions shall lapse and all Performance Share Awards shall be

         deemed earned at the commendable Performance Goal level.

 

                  (ii)     Deferral. In connection with a Change in Control, the

         Committee may permit Participants to change a prior deferral election

         with respect to amounts deferred pursuant to Article XI of the Plan,

         under such administrative policies as the Committee may establish under

         the Plan, which policies shall not be inconsistent with the provisions

         of Article XI of the Plan. Accounts denominated in cash immediately

         prior to a Change in Control shall continue to be denominated in cash

         following a Change in Control. Accounts denominated in Shares

         immediately prior to a Change in Control shall, following such Change

         in Control, be denominated in (a) such form of consideration as the

         Participant would have received had the Participant been the owner of

         record of such Shares at the time of such Change in Control, in the

         case of a Change in Control With Consideration and (b) Shares, in the

         case of a Change in Control Without Consideration.

 

                  (iii)    Definitions. "Change in Control With Consideration"

         shall mean a Change in Control in which Shares are exchanged or

         surrendered for shares, cash or other property. "Change in Control

         Without Consideration" shall mean a Change in Control pursuant to which

         Shares are not exchanged or surrendered for shares, cash or other

         property.

 

                  18.2     Payment and Rollover.

 

                  (i)      Payment of Deferral Accounts. In the absence of a

         timely deferral election (or redeferral election, as the case may be)

         by a Participant, the Company shall, within 10 days after the

         occurrence of a Change in Control, (a) issue, or cause to be issued,

         for any Shares credited to a Participant's deferral account, (1) such

         form of consideration as the Participant would have received had the

         Participant been the owner of record of such Shares at the time of such

         Change in Control, in the case of a Change in Control With

         Consideration and (2) Shares, in the case of a Change in Control

         Without Consideration and (b) make, or cause to be made, a cash lump

         sum payment to the Participant for any deferred cash Awards and any

         accrued interest and Dividend Equivalents.

 

                  (ii)     Payment of Restricted Stock Awards and Performance

         Share Awards. With respect to outstanding Restricted Stock Awards and

         Performance Share Awards deemed earned pursuant to Section 18.1 of the

         Plan, the Company shall, within 10 days after the occurrence of a

         Change in Control, (a) issue or cause to be issued, for any Shares

         covered by such Awards, (i) such form of consideration as the

         Participant would have received had the Participant been the owner of

         record of such Shares at the time of such Change in Control, in the

         case of a Change in Control With Consideration and (ii) Shares, in the

         case of a Change in Control Without Consideration and (b) make, or

         cause to be made, a lump sum cash payment to the Participant for any

         accrued interest and Dividend Equivalents.

 

                  (iii)    Stock Option Rollover or Cash-Out. With respect to

         outstanding Stock Options which have vested pursuant to Section 18.1 of

         the Plan, unless the Committee has determined to make an equitable

         adjustment or substitution of such Stock Options pursuant to Section

         14.2 of the Plan as a result of the Change in Control, upon a Change in

         Control the Company shall cancel such Stock Options and, within 10 days

         thereafter, the Company shall make or cause to be made a cash payment

         to each holder thereof in an amount equal to the excess, if any, of the

         Change in Control Price over the option exercise price, multiplied by

         the number of Shares subject to such Stock Option.

 

         18.3     It is recognized that under certain circumstances: (a)

payments or benefits provided to a Participant might give rise to an "excess

parachute payment" within the meaning of Section 280G of the Code; and (b) it

might be beneficial to a Participant to disclaim some portion of the payment or

benefit in order to avoid such "excess parachute payment" and thereby avoid the

imposition of an excise tax resulting therefrom; and (c) under such

circumstances it would not be to the disadvantage of the Company or CBE to

permit the Participant to disclaim any such payment or benefit in order to avoid

the "excess parachute payment" and the excise tax resulting therefrom.

 

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         Accordingly, the Participant may, at the Participant's option,

exercisable at any time or from time to time, disclaim any entitlement to any

portion of the payment or benefits arising under this Plan which would

constitute "excess parachute payments," and it shall be the Participant's choice

as to which payments or benefits shall be so surrendered, if and to the extent

that the Participant exercises such option, so as to avoid "excess parachute

payments."

 

         18.4     The granting of Awards under the Plan shall in no way affect

the right of the Company or CBE to adjust, reclassify, reorganize or otherwise

change its capital or business structures or to merge, consolidate, dissolve,

liquidate, sell or transfer all or any portion of its business or assets.

 

                    XIX. AMENDMENT, MODIFICATION, SUSPENSION

                                 OR TERMINATION

 

         The Board may amend, modify, suspend or terminate (individually or in

the aggregate, a "Change") this Plan for any purpose except that: (i) no Change

that would impair the rights of any Participant under any Award previously

granted to such Participant shall be made without such Participant's consent,

(ii) no Change shall be effective prior to approval by CBE's shareholders to the

extent such approval is required: (a) pursuant to Rule 16b-3 in order to

preserve the applicability of any exemption provided by such rule to any Award

then outstanding (unless the holder of such Award consents); (b) pursuant to

Section 162(m) of the Code; or (c) otherwise required by applicable legal

requirements including applicable requirements of the Stock Exchange on which

CBE is listed and (iii) following a Change in Control, the terms and conditions

of deferrals under the Plan may not be changed to the detriment of any

Participant without such Participant's written consent.

 

                                XX. GOVERNING LAW

 

         The validity, construction and effect of the Plan and any actions taken

or relating to the Plan shall be determined in accordance with the laws of the

State of Ohio and applicable Federal law.

 

                           XXI. RIGHTS AS SHAREHOLDER

 

         Except as otherwise provided in the Award Agreement, a Participant

shall have no rights as a shareholder until he or she becomes the holder of

record.

 

                  XXII. OTHER BENEFIT AND COMPENSATION PROGRAMS

 

         Unless otherwise specifically provided to the contrary in the relevant

plan, program or practice, settlements of Awards received by Participants under

the Plan shall not be deemed a part of a Participant's regular, recurring

compensation for purposes of calculating payments or benefits from any Company

or CBE benefit plan, program or practice or any severance pay law of any

country. Further, the Company and CBE may adopt other compensation programs,

plans or arrangements as it deems appropriate or necessary.

 

                              XXIII. UNFUNDED PLAN

 

         Unless otherwise determined by the Committee, the Plan shall be

unfunded and shall not create (or be construed to create) a trust or a separate

fund or funds. The Plan shall not establish any fiduciary relationship between

the Company and any Participant or other person. To the extent any person holds

any rights by virtue of an Award granted under the Plan, such rights (unless

otherwise determined by the Committee) shall be no greater than the rights of an

unsecured general creditor of the Company.

 

                              XXIV. USE OF PROCEEDS

 

         The cash proceeds received by the Company from the issuance of Shares

pursuant to Awards under the Plan shall constitute general funds of the Company.

 

                           XXV. SUCCESSORS AND ASSIGNS

 

         The Plan shall be binding on all successors and assigns of a

Participant, including, without limitation, the estate of such Participant and

the executor, administrator or trustee of such estate, or any receiver or

trustee in

 

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<PAGE>

 

bankruptcy or representative of the Participant's creditors.

 

                              XXVI. EFFECTIVE DATE

 

         This Plan shall be effective as of the date it is approved by the Board

of Directors of CBE. Notwithstanding the foregoing, the authorization of an

additional 5,000,000 Shares available for Awards under the Plan and the

extension of the Plan's term to November 7, 2010 is expressly conditioned upon

approval by CBE's shareholders at the 2004 annual meeting. If the shareholders

of CBE shall fail to approve the authorization of such additional Shares and

extension of the Plan's term, any grants of Awards hereunder shall be null and

void to the extent the Awards are made from such additional Shares. Subject to

earlier termination pursuant to Section XIX, the term of the Plan shall be

extended from November 7, 2005 to November 7, 2010. After termination of the

Plan, no future Awards may be granted but previously granted Awards shall remain

outstanding in accordance with their applicable terms and conditions and the

terms and conditions of the Plan.

 

                              XXVII. INTERPRETATION

 

         The Plan as applicable to certain employees is designed and intended to

comply with Rule 16b-3 promulgated under the Exchange Act and with Section

162(m) of the Code, and all provisions hereof shall be construed in a manner to

so comply with respect to such employees.

 

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