DRESSER INDUSTRIES, INC.
LONG-TERM INCENTIVE AND RETENTION PLAN
Effective July 17, 1997
DRESSER INDUSTRIES, INC.
LONG-TERM INCENTIVE AND RETENTION PLAN
ARTICLE 1: PREAMBLE
Effective as of July 17, 1997, Dresser Industries, Inc.
establishes the Dresser Industries, Inc. Long-Term Incentive and
Retention Plan. This Plan is intended to be a bonus program, as
described in 29 CFR Section 2510.3-2(c), and, accordingly, is not a
plan described in the Employee Retirement Income Security Act of 1974.
This plan is also intended to qualify as a "performance-based" program
under Section 162(m) of the Internal Revenue Code. As such, the Plan
will be submitted for shareholder approval.
ARTICLE 2: DEFINITIONS
Words and phrases appearing in this Plan shall have the
respective meanings set forth in this Article, unless the context
clearly indicates to the contrary.
(a) AVERAGE PRICE. The price per share on a Trading Day
determined by adding the high and low prices for the Trading Day and
dividing their sum by two.
(b) CHANGE IN CONTROL.
(1) The sale of all or a majority of Dresser's assets;
(2) Dresser's liquidation or dissolution;
(3) The purchase by any persons or entities of beneficial
ownership of at least 30 percent of Dresser's common stock (or 30
percent of the combined voting power of Dresser's then outstanding
voting securities entitled to vote generally in the election of
directors); or
(4) The approval by Dresser's stockholders of a
reorganization, merger, or consolidation, the result of which is that
the persons or entities which were stockholders immediately before the
transaction do not own more than 50 percent of the combined voting
power of the surviving entity's then outstanding voting securities
entitled to vote generally in the election of directors.
(c) DISABILITY. Any physical or mental condition which renders
a Participant incapable of performing the work for which the
Participant was employed by Dresser or similar work for Dresser, as
certified in writing by a doctor of medicine and as approved by
Dresser.
(d) DRESSER. Dresser Industries, Inc., a Delaware corporation.
(e) PARTICIPANT. An individual to whom Restricted Stock is
awarded under this Plan. A management employee who terminates
employment shall cease to be a Participant, notwithstanding the
designation in Article 3.
(f) PERFORMANCE SHARE. A hypothetical share of Dresser common
stock, as described in the Plan.
(g) PERFORMANCE YEAR. The calendar year.
(h) PLAN. Dresser Industries, Inc. Long-Term Incentive and
Retention Plan.
(i) RESTRICTED STOCK. Dresser common stock, restricted in the
manner described in Article 6.
(j) SHARE PRICE TARGET. The target price of a share of Dresser
common stock, determined according to the following chart:
PERFORMANCE YEAR SHARE PRICE TARGET
1997 $39.00
1998 $45.00
1999 $53.00
2000 $61.00
The Share Price Target shall be adjusted, if necessary, to take into
account any stock splits.
(k) TRADING DAY. A day on which Dresser common stock is traded
on the New York Stock Exchange.
ARTICLE 3: ELIGIBILITY
Individuals designated by the Board of Directors of Dresser
Industries, Inc. as Participants shall participate in the Plan.
The grants described in the Plan are made subject to shareholder
approval of the Plan.
ARTICLE 4: PERFORMANCE SHARES
As soon as practicable after July 17, 1997, each Participant
shall receive a grant of 50,000 Performance Shares. Generally,
Performance Shares shall be converted to Restricted Stock in
accordance with Article 5, as long as the objective performance goals
of that Article are met. Unless specifically provided for by the
Executive Compensation Committee of the Board of Directors,
unconverted Performance Shares shall be forfeited upon the earlier of:
(a) Termination of the Participant's employment for any reason;
or
(b) January 1, 2001.
ARTICLE 5: PERFORMANCE GOALS
If the performance goal for a Performance Year or subsequent
Performance Years is/are met, a Participant's Performance Shares shall
be converted to Restricted Stock as soon as practicable following the
designated Performance Year in accordance with the following schedule:
PERFORMANCE YEAR PERFORMANCE SHARES CONVERTED
1997 5,000
1998 10,000
1999 15,000
2000 20,000
However, if a Share Price Target is met in advance of the
designated Performance Year, Performance Shares shall be earned at
that time, but will not be converted until immediately following the
DESIGNATED Performance Year.
A performance goal is met for a Performance Year, if the average price
per share of Dresser common stock exceeds the Share Price Target:
(a) At least 90 Trading Days (not necessarily consecutive)
within the Performance Year; or
(b) At least 20 Trading Days (not necessarily consecutive)
within a period of 30 consecutive Trading Days, which ends on or
before the last day of the Performance Year.
If the performance goal for the Performance Year is not met, 50
percent of the Performance Shares which would have been converted to
Restricted Stock shall be forfeited. The remainder of these
Performance Shares shall be added to the schedule of Performance
Shares for the next Performance Year. This carryover shall continue
on this basis each year until the plan concludes January 1, 2001.
ARTICLE 6: RESTRICTED STOCK
Stock certificates evidencing the award of Restricted Stock in
accordance with Article 5 shall be registered on Dresser's books in
the name of the Participant on the date Performance Shares are
converted to Restricted Stock. Each certificate evidencing Restricted
Stock shall bear an appropriate legend referring to the terms,
conditions and restrictions described in the Plan. Any attempt to
dispose of such shares of Restricted Stock in contravention of such
terms, conditions and restrictions shall be invalid.
All restrictions on a share of Restricted Stock shall lapse after
a period ending on the earliest of:
(a) The third anniversary of the date the share was issued;
(b) The Participant's termination of employment after attainment
of age 65;
(c) The Participant's Disability;
(d) A Change in Control; or
(e) Such earlier date as the Board of Directors may determine.
If a Participant's employment terminates before the end of this
period of restriction, the Participant shall forfeit the Restricted
Stock.
During the period of restriction, the Participant shall be
entitled to all other rights of a shareholder of Dresser common stock,
including the right to vote the shares of Restricted Stock and the
right to receive dividends on those shares. Subject to Article 10,
once the restriction period ends, the Participant shall be entitled to
physical custody of the stock, which, at such time, shall become fully
transferable.
ARTICLE 7: ADMINISTRATION
The Executive Compensation Committee of the Board of Directors of
Dresser Industries, Inc. shall have full discretionary authority to
interpret and apply the terms of this Plan document. This grant of
authority shall be broadly construed and shall include the authority
to find facts, to reach conclusions of law, to interpret and apply
ambiguous terms, and to supply missing terms reasonably necessary to
interpret the Plan.
ARTICLE 8: AMENDMENT OR TERMINATION
The Plan may be amended or terminated in whole or in part by
Dresser's Board of Directors in its sole discretion, provided that
such amendment or termination shall not cause the forfeiture of
Restricted Stock awarded to a Participant prior to the date of
amendment or termination. In addition, shareholder approval is
required for any material amendment of the Plan.
ARTICLE 9: RIGHT TO CONTINUED EMPLOYMENT
Nothing in this Plan shall confer on a Participant any right to
continue in Dresser's employment or in any way affect Dresser's right
to terminate the Participant's employment without prior notice at any
time for any or no reason.
ARTICLE 10: WITHHOLDING
Dresser shall meet the tax withholding obligations imposed by any
government with respect to grants of Restricted Stock, or the lapse of
restrictions on such stock. To meet this obligation, Dresser may
withhold from other cash payments due the Participant. If the amount
so withheld is not sufficient, Dresser will withhold from any
distribution of stock released to the Participant in accordance with
Article 6 a number of shares with a market value not less than the
withholding obligation and cancel (in whole or in part) the shares so
withheld in order to reimburse Dresser for the payment of withholding
taxes.
ARTICLE 11: FORCE AND EFFECT
The various provisions of this Plan are severable in their
entirety. Any determination of invalidity or unenforceability of any
one provision shall have no effect on the continuing force and effect
of the remaining provisions.
ARTICLE 12: PREVAILING LAWS
This Plan shall be construed and enforced in accordance with and
governed by the laws of the State of Texas, to the extent not governed
by the laws of the State of Delaware applicable to corporations and
the issuance of stock by Delaware corporations.
IN WITNESS WHEREOF, this Plan is executed as of the day and year
written below by Dresser's duly authorized officer, effective as of
July 17, 1997.
Dated:
DRESSER INDUSTRIES, INC.
By:
Title: