Eva Incentive Compensation Plan

COLUMBUS MCKINNON CORPORATION
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EVA(R) INCENTIVE COMPENSATION PLAN
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ARTICLE I


STATEMENT OF PURPOSE
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1.1 The purpose of the Plan is to provide a system of incentive
compensation, which will promote the maximization of EVA over the
long-term. In order to align associate incentives with shareholder and
lender interests, incentive compensation will reward the creation of
value. This Plan will tie incentive compensation to Economic Value
Added ("EVA") and, thereby, reward for creating value and penalize for
destroying value.


1.2 EVA is the performance measure of value creation for Columbus McKinnon
Corporation. EVA reflects the benefits and costs of capital employment.
Associates create value when they use capital in an endeavor that
generates a return that exceeds the cost of the capital employed.
Conversely value is destroyed when capital is used in an endeavor that
generates a return that is less than the cost of capital employed. By
imputing the cost of capital upon the operating profits generated by a
business group, EVA measures the total value created (or destroyed).
The Plan will reward increases in EVA and penalize decreases over time.


EVA = NET OPERATING PROFIT AFTER TAX - CAPITAL CHARGE


1.3 Each Plan Participant is placed in a classification. Each
classification has a prescribed target bonus. The bonus acquired in any
one year is the result of multiplying the Actual Bonus Percentage times
the Participant's total earnings as defined in the Plan and a positive
balance is distributed each year through the payroll system.


ARTICLE II


DEFINITION OF EVA AND THE COMPONENTS OF EVA
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Unless the context provides a different meaning, the following terms
shall have the following meanings:


2.1 OPERATING GROUP means a group of business divisions that are uniquely
identified for the purpose of calculating EVA and EVA based bonus
awards.


2.2 PARTICIPATING UNIT means a single division that is uniquely identified
for the purpose of calculating EVA and EVA based bonus awards.


2.3 CAPITAL means the investments made by shareholders (measured by
Shareholders' Equity) and lenders (measured by our debt obligations).
The total of invested Capital is used to acquire all of the assets
needed to run our business - Working Capital (including Accounts
Receivable and Inventory reduced by Trade Accounts Payable and Accrued
Liabilities), Property, Plant, and Equipment, and Goodwill. The amount
of Capital used by an operation is measured by the average monthly
value of the specific assets acquired by Capital that are needed to
support that operation.


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2.4 COST OF CAPITAL or "C" means the weighted average of: (i) the cost of
BORROWED capital, which is interest, net of tax, and, (ii) the cost of
EQUITY capital, which is equal to the return that investors expect from
a similar investment.


The Cost of Capital is reviewed annually and revised if it has changed
significantly. CM's current Cost of Capital is 11%.


2.5 CAPITAL CHARGE means the Cost of Capital times the value of the assets
provided by Capital actually employed by each Participating Unit,
Operating Group, or the Company as a whole. The Capital Charge is
computed as follows:


CAPITAL CHARGE = CAPITAL X COST OF CAPITAL ("C")


2.6 NOPAT stands for Net Operating Profit After Tax and represents the
after-tax economic operating profit of the business. NOPAT is
calculated by adjusting pre-tax profit from an accounting to an
economic basis.


2.7 EVA means Economic Value Added as described in Article I, EVA may be
positive or negative.


2.8 PARTICIPANT means an individual that has been selected to participate
in the Plan.


2.9 EXCOM means the Executive Committee of Columbus McKinnon Corporation.


ARTICLE III


DEFINITION AND COMPUTATION OF TARGET BONUS VALUE
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3.1 ACTUAL EVA means the EVA as calculated for the Company, each
Participating Group, and each Participating Unit for the fiscal year.


3.2 TARGET EVA means the level of EVA that is expected in order for the
Participating Unit to receive the Target Bonus.


The Target EVA for the first year is set at the average of the prior
year actual EVA and Budget EVA + Expected Improvement in EVA. After the
first year, the Target EVA is revised according to the following
formula:


TARGET EVA = (LAST YEAR ACTUAL EVA + LAST YEAR TARGET EVA) /2 +
EXPECTED IMPROVEMENT IN EVA


3.3 EXPECTED IMPROVEMENT IN EVA means the constant EVA improvement that is
added to move the target up each year. It is based upon overall
long-term shareholder expectation for the total Company growth in EVA
per year. The total Company expected improvement is allocated to
operative groups and units. The amount will be reviewed periodically by
EXCOM.


3.4 TARGET BONUS means the "Target Bonus Percentage" times a Participant's
Total Earnings as defined in Section 3.5


3.5 PARTICIPANT'S TOTAL EARNINGS means the total calendar year earnings for
a Participant, including 40l(k) (or equivalent) deferred wages and
excluding Company contributions to 401(k), certain non-cash amounts
included in payroll taxable earnings, EVA and other bonuses, adjustment
for the release of restrictions on CM Stock, reimbursement for
relocation expenses, Worker's Compensation or long-term disability
payments and any other exclusion as deemed appropriate by EXCOM.


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3.6 TARGET BONUS PERCENTAGE is determined by a Participant's Classification
as assigned.


3.7 DECLARED BONUS means the bonus earned by a Participant and is computed
as the Actual Bonus Multiple times a Participant's Target Bonus.


3.8 ACTUAL BONUS MULTIPLE is calculated by taking the difference between
the Actual EVA and the Target EVA divided by the Leverage Factor plus
1.0.


Actual Bonus Multiple = (ACTUAL EVA - TARGET EVA) + 1
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Leverage Factor


3.9 LEVERAGE FACTOR is the negative (positive) deviation from Target EVA
necessary before a zero (two times Target) bonus is earned. This factor
will be reviewed periodically by EXCOM.


3.10 RETIREMENT is defined in the terms of the Participant's Monthly
Retirement Benefit Pension Plan or any succeeding Plan.


3.11 PARTICIPANT'S CLASSIFICATION each Participating Unit manager will
establish a Participant's classification. All classifications are
subject to approval by EXCOM.


ARTICLE IV


BONUS DISTRIBUTION DATE
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4.1 Bonus distributions for the preceding fiscal year will be paid on or
before two and one half months following the close of the fiscal year.


ARTICLE V


PLAN PARTICIPATION, TRANSFERS AND TERMINATIONS
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5.1 PARTICIPANT: The EXCOM will have sole discretion in determining who
shall participate in the EVA Incentive Plan.


5.2 VESTING: A Participant who has earnings from working in the prior
calendar year and is in the employ of CM on May 1st of the following
year will be eligible for a bonus distribution. Those Participants who
have terminated prior to May 1st, either voluntarily or with or without
cause will NOT be eligible for a bonus distribution. Those Participants
who have died, retired or are receiving short-term disability benefits
as of May 1st will be eligible for a bonus distribution. Those
Participants who are earning Workers' Compensation benefits or
long-term disability benefits or are on an approved leave of absence or
laid-off and subject to recall as of May 1st, will be eligible for a
bonus distribution IF, they return to work within two years of the
commencement of their Workers' Compensation benefits, long-term
disability benefits or their approved leave or layoff, as the case may
be. Such bonus would be payable upon their return to work.


5.3 TRANSFERS: A Participant who transfers his employment from one
Participating Unit to another or transfers from one job title to
another with a different classification will be eligible to receive
future EVA Plan awards in accordance with the provisions of the EVA
Incentive Plan. The effective date of the transfer for EVA purposes
will be the first day of the following calendar year.


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5.4 NO GUARANTEE: Selection as a Participant or a Participant's
classification is no guarantee that payments under the Plan will be
paid or that selection as a Participant or a Participant ...