Cooper Industries 10-K 2008 FY Annual report

Exhibit 10.7

COOPER US, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

COOPER US, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

TABLE OF CONTENTS

Section	Page
ARTICLE I
DEFINITIONS
1.1 Definitions		2
1.2 Construction		4
ARTICLE II
ELIGIBILITY FOR PLAN PARTICIPATION
2.1 Active Participants		5
2.2 Former SEDB Participants		5
ARTICLE III
COMPANY CONTRIBUTIONS
3.1 Amount of Company Contributions		6
3.2 Eligibility for Company Contributions		6
3.3 Vesting		6
ARTICLE IV
ACCOUNTS AND DEEMED INTEREST
4.1 Establishment and Crediting of Accounts		7
4.2 Adjustment of Accounts		7
ARTICLE V
DISTRIBUTION
5.1 Distributions		8
5.2 Payment Options		8
5.3 Alternative Payment Forms		9
5.4 No Acceleration		9
5.5 Special Transition Elections		9
5.6 Section 409A Violation		10
5.7 Payment Upon Change in Control		10
5.8 Payment Upon Disability		10
5.9 Rules		10

i

Section	Page
ARTICLE VI
BENEFICIARIES		11
ARTICLE VII
ADMINISTRATIVE PROVISIONS
7.1 Administration		12
7.2 Powers and Authorities of the Plan Administrator		12
7.3 Indemnification		12
7.4 Claims Review		13
ARTICLE VIII
ADMINISTRATIVE PROVISIONS		14
ARTICLE IX
MISCELLANEOUS
9.1 Non-Alienation of Benefits		15
9.2 Payment of Benefits to Others		15
9.3 Plan Non-Contractual		15
9.4 Funding		16
9.5 Controlling Status		16
9.6 Claims of Other Person		16
9.7 Specified Employees		16
9.8 Section 409A		16
9.9 Severability		17
9.10 Governing Law		17

i

COOPER US, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

     WHEREAS,Cooper US, Inc. (the “Company”) desires to establish, effective January 1, 2007, the Cooper US, Inc. Supplemental Executive Retirement Plan (the “Plan”) to provide a select group of management employees and highly compensated employees of the Company and its affiliates with supplemental retirement benefits; and

     WHEREAS,Plan benefits that were accrued or vested after January 1, 2007, prior to the execution of this plan document have been administered in good faith compliance with the requirements of Section 409A; and

     WHEREAS,the Plan is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”) and shall be construed consistently with such intent;

     NOW, THEREFORE,effective January 1, 2007, the Plan is hereby established as hereinafter set forth.

ARTICLE I

DEFINITIONS

     1.1Definitions.As used herein, the following words shall have the meanings hereinafter set forth unless otherwise specifically provided.

     (1) The term “Account” shall mean the bookkeeping account establish in the name of each Participant under the Plan.

     (2) The term “Active Participant” shall mean each Participant who is eligible for a Company Contribution with respect to the current Plan Year.

     (3) The term “Affiliate” shall mean any member of a controlled group of corporations (as determined under Section 414(b) of the Code) of which the Company is a member and any member of a group of trades or business under common control (as determined under Section 414(c) of the Code) with the Company; any member of an affiliated service group (as determined under Section 414(m) of the Code) of which the Company is a member; and any other entity which is required to be aggregated with the Company pursuant to the provisions of Section 414(o) of the Code.

     (4) The term “Beneficiary” shall mean the person or persons who, in accordance with the provisions of Article V, is entitled to distribution hereunder in the event a Participant dies before his interest under the Plan has been distributed to him in full.

     (5) The term “Change in Control” shall mean a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company that constitutes a “change in control” under Section 409A.

     (6) The term“Code”shall mean the Internal Revenue Code of 1986, as amended from time to time. Reference to a section of the Code shall include such section and any comparable section or sections of any future legislation that amends, supplements, or supersedes such section.

     (7) The term “Committee” shall mean the Management Development and Compensation Committee of the Board of Directors of Cooper Industries, Ltd.

     (8) The term “Company” shall mean Cooper US, Inc., its corporate successors, and the surviving corporation resulting from any merger of Cooper US, Inc. with any other corporation or corporations.

     (9) The term “Compensation” shall mean base salary and any management incentive bonus of a Participant for a Plan Year that is paid in the

2

following year, calculated before any reduction for compensation voluntarily deferred or contributed by or on behalf of a Participant under all qualified and nonqualified plans of the Employer and including amounts deferred to plans of the Employer pursuant to provisions of Sections 125, 129, 132(f), 402(e)(3), or 402(h) of the Code.

     (10) The term “Disability” shall mean that the Participant (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of not less than three months under a welfare benefit plan covering employees of the Employer.

     (11) The term “Election Form” shall mean the form which may be electronic, telephonic or hard copy and on which a Participant elects the manner in which he shall receive distribution of his Account.

     (12) The term “Eligible Employee” shall mean any highly compensated or select management employee of the Company or an Affiliate who is approved in advance of each Plan Year by the Committee to participate in the Plan for such Plan Year.

     (13) The term “Employer” shall mean the Company as well as any Affiliates of the Company that is designated as a participating employer under the Plan by the Plan Administrator.

     (14) The term “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. Reference to a section of ERISA shall include such section and any comparable section or sections of any future legislation that amends, supplements, or supersedes such section.

     (15) The term “Former SEDB Participant” shall mean each Participant in the SEDB Plan who was actively employed by the Company on January 1, 2007 and whose account under the SEDB Plan was transferred to the Plan on March 31, 2007, and who shall thereafter be an Inactive Participant in the Plan, unless he is selected to be an Active Participant with respect to a Plan Year.

     (16) The term “Inactive Participant” shall mean any Former SEDB Participant and any former Active Participant, who has an Account under the Plan.

     (17) The term “Participant” shall mean any Active Participant as well as any Inactive Participant.

3

     (18) The term “Plan” shall mean the Cooper US, Inc. Supplemental Executive Retirement Plan as established effective January 1, 2007, with all amendments, supplements, and modifications hereafter made.

     (19) The term “Plan Administrator” shall mean the Company.

     (20) The term “Plan Year” shall mean the calendar year.

     (21) The term “Retirement” shall mean a Separation from Service by a Participant on or after the attainment of age 65.

     (22) The term “SEDB Plan” shall mean the Cooper US, Inc. Supplemental Excess Defined Benefit Plan.

     (23) The term“Section 409A”shall mean Section 409A of the Code, and the regulations and rulings promulgated thereunder.

     (24) The term“Separation from Service”shall mean the termination of employment of a Participant with the Company and all Affiliates for any reason other than death; provided, however, that a Company-approved leave of absence shall not be considered a termination of employment if the leave does not exceed six months or, if longer, so long as the Participant’s right to reemployment is provided either by statute or by contract. Notwithstanding the foregoing, whether or not a Participant has incurred a Separation from Service shall be determined in accordance with Section 409A.

     (25) The term “SERP Contribution Percentage” shall mean the percentage of Compensation that is selected by the Committee and credited under the Plan with respect to a Participant for a Plan Year.

     (26) The term“Specified Employee”shall mean a “specified employee” within the meaning of Section 409A and the Company’s Specified Employee identification policy, if any.

     (27) The term “Years of Service” shall mean a year of service as defined in the Cooper US, Inc. Retirement Savings and Stock Ownership Plan.

     1.2Construction.  Where necessary or appropriate to the meaning herein, the singular shall be deemed to include the plural and the masculine pronoun to include the feminine.

4

ARTICLE II

ELIGIBILITY FOR PLAN PARTICIPATION

     2.1Active Participants. Prior to the first day of such Plan Year, the Committee shall approve the selection of certain Company officers and certain division presidents as an Active Participant in the Plan with respect to such Plan Year as well as the Compensation Percentage of each such Active Participant for such Plan Year. Upon being so selected and prior to the first day of such Plan Year, each Active Participant shall complete and return all necessary Election Forms. All Election Forms of a Participant must be consistent and comply with the provisions of Article V.

     2.2Former SEDB Participants.Effective as of March 31, 2007, the account of each participant in the SEDB Plan who was actively employed by the Company on January 1, 2007, shall be transferred to the Plan and credited to an Account under the Plan in the name of such Participant and thereafter administered pursuant to the terms of the Plan. Upon such transfer each Former SEDB Plan Participant shall complete and file an Election Form with respect to the distribution of such Account. All Election Forms of a Participant must be consistent and comply with the provisions of Article V.

5

ARTICLE III

COMPANY CONTRIBUTIONS

     3.1Amount of Company Contributions.  Except as specifically provided otherwise in the Plan, within 30 days of payment of any bonus earned for a Plan Year under the Cooper US, Inc. Management Annual Incentive Plan, the Account of each Active Participant shall be credited with a Company Contribution for such Plan Year that is based upon his Compensation for such Plan Year multiplied by his Compensation Percentage for such Plan Year.

     3.2Eligibility for Company Contributions.Notwithstanding any other provision of the Plan, the Account of an Active Participant shall only be credited with a Company Contribution (i) for a Plan Year prior to the 2009 Plan Year, if such Active Participant is employed by the Company or an Affiliate on the date such Company Contribution is to be credited to the Participant’s Account, and (ii) for any Plan Year after the 2008 Plan Year, if such Active Participant is employed by the Company or an Affiliate on the date such Company Contribution is to be credited to the Participant’s Account or if such Participant incurred a Separation from Service during such Plan Year or in the immediately following Plan Year and prior to the contribution crediting date due to death, Disability, or Retirement or in the discretion of the Committee after attainment of age 55 with at least 5 years of Vesting Service.

     3.3Vesting.Company Contributions credited to the Accounts of Active Participants pursuant to the provisions of Section 3.1 and 3.2 shall be fully vested pursuant to the schedule set forth below.

Years of Vesting Service	Vested Percentage
0 to less than 5		0
5 or more		100	%

6

ARTICLE IV

ACCOUNTS AND DEEMED INTEREST

     4.1Establishment and Crediting of Accounts.  Each Participant shall have a bookkeeping Account established in his name that will reflect any Company Contributions of the Participant as well as any transferred account balances from the SEDB Plan on March 31, 2007, and interest credited thereon pursuant to Section 4.2.

     4.2Adjustment of Accounts.   Each Account shall be deemed to earn, and shall be credited daily with, a rate of interest equal to the average prime rate published by JPMorgan chase Bank for the immediately prior calendar quarter.

7

ARTICLE V

DISTRIBUTION

     5.1Distributions.Subject to the provisions of Section 5.2, 5.3, 5.5, 5.6, 5.7, and 5.8, on and after January 1, 2007, the Accounts of a Participant shall be distributed to a Participant or his Beneficiary in the form and time set forth on the Election Form filed with the Company or its designee by the Participant in accordance with procedures established by the Plan Administrator. The elections made on an Election Form shall continue in effect for future Plan Years unless subsequent elections pursuant to the provisions of Section 5.3 are made and become effective. Notwithstanding the foregoing provisions of this Section 5.1, in the event any Participant fails to file an Election Form indicating the time and form of the distribution of his Account, his Account shall be distributed in a lump sum payment on the first payroll date of the seventh month following his Separation from Service; provided however, that such distribution provisions shall be subject to the provisions of Section 5.6, 5.7 and 5.9.

     5.2Payment Options.Except as otherwise provided in this Article V and subject to the provisions of Section 9.7, the Account of a Participant shall be paid to such Participant under one of the following options elected by the Participant:

(a)	Single Sum Option – Payment in a single sum as of the first day of the calendar year quarter immediately after the Participant’s Commencement Date.
(b)	Installment Option – Payment in annual installments as of the first day of the calendar year quarter immediately after the Participant’s Commencement Date over a period of 3, 5, 7, or 10 years as specified by the Participant on his Election Form. To the extent permitted by Section 409A, installment payments shall be treated as a single payment.

For purposes hereof, a Participant’s Commencement Date shall be the .5, 3, 5, or 10 year anniversary of the Participant’s Separation from Service as indicated on the Participant’s Election Form. Notwithstanding the foregoing, subject to the requirements of Section 409A, if

8

the balance of a Participant’s Account on his Separation from Service is less than $25,000, such amount shall be paid to him in a single sum payment (in lieu of any other payment method that he may have elected) on the first day of the calendar year quarter immediately following the six-month anniversary of such Participant’s Separation from Service.

     5.3Alternative Payment Forms. Subject to the Company’s consent, a Participant who is employed by the Employer may elect to delay payment or to change the form of payment of his Account, if all the following conditions are met:

     (i) Such election will not take effect until at least twelve months after the date on which the election is made; and

     (ii) The payment with respect to which such election is made is deferred for a period of not less than five years from the date such payment would otherwise be made; and

     (iii) Any election for a “specified time (or pursuant to a fixed schedule)” within the meaning of Section 409A(a)(2)(A)(iv) of the Code, may not be made less than twelve months prior to the date of the first scheduled payment.

To the extent permitted under Section 409A, installment payments shall be treated as a single payment.

     5.4No Acceleration.Except as permitted under Section 409A, no acceleration of the time or form of payment of a Participant’s Account under the Plan shall be permitted.

     5.5Special Transition Elections.

          (a)Changes in Payment Elections.During 2007 and 2008, a Participant may make an election(s) to receive payment of his Account without complying with the requirements of Section 5.2 or 5.1; provided, however, that such election(s) shall only be effective:

(i) If made in 2007, it applies only to amounts that would not otherwise be payable in 2007 and does not cause an amount to be paid in 2007 that would not otherwise be payable in 2007; and

9

(ii) If made in 2008, it applies only to amounts that would not otherwise be payable in 2008 and that does not cause an amount to be paid in 2008 that would not otherwise be payable in 2008.

     5.6Section 409A Violation.If the Plan fails to meet the requirements of Section 409A with respect to a Participant, the Company shall distribute the amount required to be included in such Participant’s gross income as a result of such failure within 60 days of the Company’s determination of such compliance failure.

     5.7Payment Upon Change in Control.Notwithstanding any provision of the Plan to the contrary, to the extent permitted under Section 409A, the balance of the Account of a Participant under the Plan shall be paid to such Participant within 15 days following a Change in Control.

     5.8Payment Upon Disability.Notwithstanding any provision of the Plan to the contrary, to the extent permitted under Section 409A, the balance of the Account of a Participant who incurs a Disability shall be paid to such Participant as of the first day of the calendar year quarter following a decision by the Plan Administrator that the Participant has incurred a Disability.

     5.9Rules.Subject to the provisions of Section 409A, the Plan Administrator may from time to time adopt additional policies or rules governing the manner in which distributions are made from the Plan so that the Plan may be conveniently administered and comply with Section 409A.

10

ARTICLE VI

BENEFICIARIES

     In the event a Participant dies before his interest under the Plan has been distributed to him in full, any remaining interest shall be distributed in a single sum to his Beneficiary who shall be the person designated as his beneficiary on the beneficiary designation form provided by and filed with the Employer or its designee. If the Participant does not designate a Beneficiary, the Beneficiary shall be his surviving spouse. If the Participant does not designate a Beneficiary and has no surviving spouse, the Beneficiary shall be the Participant’s estate. The designation of a Beneficiary may be changed or revoked only by filing a new beneficiary designation form with the Plan Administrator or its designee. If a Beneficiary (the “Primary Beneficiary”) is receiving or is entitled to receive payments under the Plan and dies before receiving all of the payments due him, the balance to which he is entitled shall be paid to the Contingent Beneficiary, if any, named in the Participant’s current beneficiary designation form. If there is no Contingent Beneficiary, the balance shall be paid to the estate of the Primary Beneficiary. Any Beneficiary may disclaim all or any part of any benefit to which such Beneficiary shall be entitled hereunder by filing a written disclaimer with the Plan Administrator before payment of such benefit is to be made. Such a disclaimer shall be made in form satisfactory to the Plan Administrator and shall be irrevocable when filed. Any benefit disclaimed shall be payable from the Plan in the same manner as if the Beneficiary who filed the disclaimer had died on the date of such filing. Notwithstanding the foregoing, the six-month delay applicable to Participants under Article V shall not apply to any Beneficiary.

11

ARTICLE VII

ADMINISTRATIVE PROVISIONS

     7.1Administration.The Plan shall be administered by the Plan Administrator in a manner consistent with the requirements of Section 409A, as from time to time amended.

     7.2Powers and Authorities of the Plan Administrator.The Plan Administrator shall have full power and authority to interpret, construe and administer the Plan and its interpretations and construction hereof, and actions hereunder, including the timing, form, amount or recipient of any payment to be made hereunder, shall be binding and conclusive on all persons for all purposes. The Plan Administrator may delegate any of its powers, authorities, or responsibilities for the operation and administration of the Plan to any person or committee so designated in writing by it and may employ such attorneys, agents, and accountants as it may deem necessary or advisable to assist it in carrying out its duties hereunder. No member of the Committee shall be liable to any person for any action taken or omitted in connection with the interpretation and administration of the Plan unless attributable to his own willful misconduct or lack of good faith. Members of the Committee shall not participate in any action or determination regarding their own benefits, if any, payable under the Plan.

          7.3Indemnification.In addition to whatever rights of indemnification a member of the Plan Administrator or any other person or persons to whom any power, authority, or responsibility is delegated pursuant to Section 7.2, may be entitled under the articles of incorporation, regulations, or by-laws of the Company, under any provision of law, or under any other agreement, the Company shall satisfy any liability actually and reasonably incurred by any such member or such other person or persons, including expenses, attorneys’ fees, judgments, fines, and amounts paid in settlement, in connection with any threatened, pending, or completed action, suit, or proceeding which is related to the exercise or failure to exercise by such member

12

or such other person or persons of any of the powers, authority, responsibilities, or discretion provided under the Plan.

          7.4Claims Review.Any Eligible Employee or Participant, as the case may be, who is eligible for a benefit under the Plan, and does not receive the amount of benefit to which he believes he is entitled, may submit an application therefor to the Plan Administrator requesting such distribution or withdrawal. The Plan Administrator shall accept, reject or modify such request and shall notify the requesting party in writing, setting forth the response of the Plan Administrator and, in the case of a denial or modification, the Plan Administrator shall:

(a)	state the specific reason or reasons for the denial or modification;
(b)	provide specific reference to pertinent Plan provisions on which the denial or modification is based;
(c)	provide a description of any additional material or information necessary for the requesting party to perfect the claim and an explanation of why such material or information is necessary; and
(d)	explain the Plan’s claim review procedures as contained herein.

          In the event the request is denied or modified, if the requesting party desires to have such denial or modification reviewed, he must, within 60 days following receipt of the notice of such denial or modification, submit a written request for review by the Plan Administrator of the initial decision of the Plan Administrator. As soon as practicable, and in no event later than 120 days following such request for review, the Plan Administrator shall, after providing a full and fair hearing, render its final decision in writing to the requesting party stating specific reasons for such decision.

13

ARTICLE VIII

AMENDMENT AND TERMINATION

     The Company may amend, modify, suspend or terminate (individually or in the aggregate, a “Change”) the Plan for any purpose or extend the Plan to any Affiliate by action of the Plan Administrator, except that: (i) no Change shall adversely affect the benefit amount that any Participant is receiving or is eligible to receive under the Plan, unless an equivalent benefit is otherwise provided under another plan or program sponsored by the Company or any of its subsidiaries; and (ii) no distribution of a Account subject to the Plan shall occur unless the requirements of Section 409A have been met.

14

ARTICLE IX

MISCELLANEOUS

     9.1Non-Alienation of Benefits.No benefit under the Plan shall at any time be subject in any manner to alienation or encumbrance. If any Participant or Beneficiary shall attempt to, or shall, alienate or in any way encumber his benefits under the Plan, or any part thereof, or if by reason of his bankruptcy or other event happening at any time any such benefits would otherwise be received by anyone else or would not be enjoyed by him, his interest in all such benefits shall automatically terminate and the same shall be held or applied to or for the benefit of such person, his spouse, children, or other dependents as the Plan Administrator may select.

     9.2Payment of Benefits to Others.If any Participant or Beneficiary to whom a benefit is payable is unable to care for his affairs because of illness or accident, any payment due (unless prior claim therefor shall have been made by a duly qualified guardian or other legal representative) may be paid to the spouse, parent, brother, or sister, or any other individual deemed by the Plan Administrator to be maintaining or responsible for the maintenance of such person. Any payment made in accordance with the provisions of this Section 9.2 shall be a complete discharge of any liability of the Plan with respect to the benefit so paid.

     9.3Plan Non-Contractual.Nothing herein contained shall be construed as a commitment or agreement on the part of any person employed by an Employer to continue his employment with an Employer, and nothing herein contained shall be construed as a commitment on the part of an Employer to continue the employment or the annual rate of compensation of any such person for any period, and all Participants shall remain subject to discharge to the same extent as if the Plan had never been established.

15

     9.4Funding.In order to provide a source of payment for its obligations under the Plan, the Company may establish a grantor trust. Subject to the provisions of the trust agreement governing such grantor trust, the obligation of an Employer under the Plan to provide a Participant or a Beneficiary with a benefit constitutes the unsecured promise of such Employer to make payments as provided herein, and no person shall have any interest in, or a lien or prior claim upon, any property of an Employer.

     9.5Controlling Status.No Participant shall be eligible for a benefit under the Plan unless such Participant is a Participant on the date of his retirement, death, or other termination of employment.

     9.6Claims of Other Persons.The provisions of the Plan shall in no event be construed as giving any person, firm or corporation any legal or equitable right as against an Employer, its officers, employees, or directors, except any such rights as are specifically provided for in the Plan or are hereafter created in accordance with the terms and provisions of the Plan.

     9.7Specified Employees.Notwithstanding anything in the Plan to the contrary, in the event that a Participant is a Specified Employee at the time of his Separation from Service, to the extent his benefit under the Plan constitutes “nonqualified deferred compensation” within the meaning of Section 409A, no Plan benefit shall be paid or begin to be paid to him until the 30-day period commencing after the six-month period following his Separation from Service; provided, however, that if such 30-day period begins in one calendar year and ends in another, such Participant shall have no right to designate the calendar year of payment.

     9.8Section 409A.Notwithstanding any provision to the contrary in the Plan, nothing shall restrict the Company’s right to amend the Plan, without the consent of Participants and

16

without additional consideration to affected Participants, to the extent necessary to avoid taxation, penalties, and/or interest arising under Section 409A, even if such amendments reduce, restrict, or eliminate rights granted thereunder before such amendments. Although the Company shall use its best efforts to avoid the imposition of taxation, penalties, and/or interest under Section 409A, tax treatment of deferrals and other credits under the Plan is not warranted or guaranteed. If, at any time, it is determined that amounts deferred pursuant to the Plan are currently taxable to a Participant or his Beneficiary under Section 409A, the amounts credited to such Participant’s Account which become so taxable shall be distributed immediately to him; provided, however, that in no event shall amounts so payable under the Plan to a Participant exceed the value of his Account. Notwithstanding the foregoing, the Company, any Affiliate, or any delegate shall not be held liable for any taxes, penalties, interest or other monetary amount owed by any Participant, Beneficiary, or other person as a result of the deferral or payment of any amounts under the Plan or as a result of the administration of amounts subject to the Plan.

     9.9Severability.The invalidity or unenforceability of any particular provision of the Plan shall not affect any other provision hereof, and the Plan shall be construed in all respects as if such invalid or unenforceable provision were omitted herefrom.

     9.10Governing Law.The provisions of the Plan shall be governed and construed in accordance with the laws of the State of Texas.

     Executed at Houston, Texas this                    day of December 2008.

COOPER US, INC.
By:
	Title:

17