SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
OF DRESSER INDUSTRIES, INC.
RESTATEMENT EFFECTIVE JANUARY 1, 1998
TABLE OF CONTENTS
Page
ARTICLE 1 - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 - PURPOSE OF PLAN. . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 3 - ELIGIBILITY. . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 4 - BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 5 - VESTING AND FORFEITURE . . . . . . . . . . . . . . . . . . 6
ARTICLE 6 - ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 7 - CLAIMS AND APPEAL PROCEDURES . . . . . . . . . . . . . . . 7
ARTICLE 8 - AMENDMENT AND TERMINATION. . . . . . . . . . . . . . . . . 9
ARTICLE 9 - MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . .10
APPENDIX A - SPECIAL PROVISIONS
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SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
OF DRESSER INDUSTRIES, INC.
Dresser Industries, Inc. hereby amends by restatement the Supplemental
Executive Retirement Plan of Dresser Industries, Inc., effective January 1,
1998, upon the following terms and conditions:
ARTICLE I
DEFINITIONS
The words and phrases defined hereinafter shall have the following meaning:
SECTION 1.1. ACTUARIAL EQUIVALENT. An amount of equal value determined on
the basis of the 1983 Group Mortality Table (blended - 50% male and 50% female)
and using whichever of the following sets of interest rate factors (as more
completely set forth in the Pension Plan) yields the greatest lump sum amount:
1) "Old" PBGC immediate rate, or 2) "New" PBGC graded rate.
SECTION 1.2. BENEFITS COMMITTEE. The Employee Benefits Committee of
Dresser Industries, Inc.
SECTION 1.3. BOARD. The Board of Directors of Dresser Industries, Inc.
SECTION 1.4. FOR CAUSE. Means gross, willful or intentional misconduct
which causes harm to the Company.
SECTION 1.5. CHANGE OF CONTROL. Means:
(1) The sale of all or a majority of Dresser's assets;
(2) Dresser's liquidation or dissolution;
(3) The purchase of beneficial ownership of at least 30% of Dresser's
common stock by any persons or entities acting in concert (or 30% of the
combined voting power of Dresser's then outstanding voting securities entitled
to vote generally in the election of directors); or
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(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% of the combined voting power of the surviving entity's then outstanding
voting securities entitled to vote generally in the election of directors.
SECTION 1.6. COMPANY. Dresser Industries, Inc., or an entity partially
or wholly owned by Dresser Industries, Inc. if so designated by the Compensation
Committee.
SECTION 1.7. COMPENSATION COMMITTEE. The Executive Compensation
Committee of the Board of Dresser Industries, Inc.
SECTION 1.8. DB PLANS. The Pension Plan as defined in Section 1.14 and
the Related Plans as defined in Section 1.16, and corresponding non-qualified DB
plan accruals in the Dresser Industries, Inc. ERISA Excess Benefit and Excess
Compensation Plans.
SECTION 1.9. DC PLAN. The Dresser Industries, Inc. Retirement Savings
Plan-A and corresponding non-qualified DC plan balances in the Dresser
Industries, Inc. ERISA Excess Benefit and Excess Compensation Plans.
SECTION 1.10. EARNED BONUS. The amount of bonus awarded to an Executive
pursuant to the Company's annual bonus program/s regardless of whether that
bonus is paid, "carried over" or deferred.
SECTION 1.11. EXECUTIVE. An individual designated by the Benefits
Committee who is employed by the Company and has attained the position of
Corporate Vice President or any higher position, Division President, or
equivalent title as approved by the Benefits Committee. The term "Executive"
also shall include any individual found by the Compensation Committee to have
been employed by the Company or an entity partially or wholly owned by the
Company in an equivalent position and declared eligible for this Plan.
SECTION 1.12. ERISA. The Employee Retirement Income Security Act of 1974,
as amended.
SECTION 1.13. FINAL AVERAGE SALARY. The average of the five highest
consecutive bonus payments made during the ten most recent calendar years
including the year during which the
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Employee's retirement, death, or disability occurs, plus the Employee's
annualized base rate of pay in effect immediately prior to the date of
determination.
SECTION 1.14. PENSION PLAN. The Dresser Industries, Inc. Consolidated
Salaried Retirement Plan, as frozen May 31, 1995.
SECTION 1.15. PLAN. The "Supplemental Executive Retirement Plan of
Dresser Industries, Inc.", as set forth herein.
SECTION 1.16. RELATED PLAN. Any Company sponsored qualified or non-
qualified defined benefit or defined contribution pension plan (which may or may
not be terminated) for nonunion salaried employees, other than the Pension Plan
or the DC Plan.
SECTION 1.17. YEARS OF SERVICE. For the purposes of this Plan, Years of
Service shall begin on the date of first employment by Dresser Industries, Inc.
and shall end upon severance from service, or such other dates as determined by
the Benefits Committee.
ARTICLE II
PURPOSE OF PLAN
SECTION 2.1. PURPOSE. The purpose of the Plan is to provide a consistent
benefit structure for eligible Executives which assures that eligible Executives
do not suffer a diminution of retirement benefits as a consequence of having
diverse and divergent participation in related Company, joint venture or
predecessor employer retirement plans. This is an unfunded plan described in
sections 201(2), 301(a)(3), and 401(a)(1) of ERISA.
ARTICLE III
ELIGIBILITY
SECTION 3.1. GENERAL ELIGIBILITY. An Executive shall be covered by this
Plan if he/she is an Executive and meets the requirements of Section 3.2 below.
SECTION 3.2. ELIGIBILITY FOR BENEFIT. An Executive or former Executive
(or his spouse or beneficiary) shall be eligible for a benefit determined under
Section 4.1, under the following circumstances:
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(a) The Executive dies while employed, or becomes disabled under
circumstances that would entitle him to Disability Benefits under the qualified
Pension Plan (or similar disability provisions of a qualified Related Plan or
the qualified DC Plan that are applicable to him/her); or
(b) The Executive or former Executive voluntarily terminates and the
Executive has earned five (5) years of service as an Executive during the ten
(10) year period ending on his/her termination date, and terminates after Age
Fifty Five (55) with ten (10) years of service; or
(c) The Executive or former Executive is involuntarily terminated and has
earned five (5) years of service as an Executive during the ten (10) year period
ending on his/her termination date; or
(d) If the Executive's eligibility has been established and approved by
the Compensation Committee.
SECTION 3.3. SPOUSES AND BENEFICIARIES. The extent of a surviving
spouse's or beneficiary's eligibility to receive benefits after an Executive's
death is determined by the eligibility of the Executive for Plan coverage under
Section 3.1 and Section 3.2(a). Where eligibility is established, the surviving
spouse or beneficiary shall be entitled to the Executive's entire benefit
consistent with the terms of this Plan. Priority, as between a spouse or named
beneficiary, shall be as established under the qualified DC Plan.
ARTICLE IV
BENEFITS
SECTION 4.1. AMOUNT OF BENEFITS. Determined as of the Executive's
termination date, the amount of the benefit payable under this Section 4.1, if
any, shall be determined as follows:
STEP (1) DETERMINATION OF TARGET RETIREMENT INCOME AMOUNT. At age 65, an
Executive shall be entitled to receive 2% of his/her Final Average Salary,
multiplied by the Executive's Years of Service (up to a maximum of Thirty (30)
Years of Service).
If termination occurs prior to age 65, a reduction of .2% from the above formula
will be assumed for each month necessary after termination that is necessary to
attain age 65.
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STEP (2) DETERMINATION OF RETIREMENT INCOME AMOUNT. Determined as of the
Executive's termination date, with respect to the Executive, determine the sum
of:
(a) the Executive's monthly pension computed under the Pension Plan, any
Related Plan, and/or any predecessor DB plan, or joint venture employer DB
plans,
(b) the Actuarial Equivalent of the Executive's employer contribution
accounts under the DC Plan, any similar DC plan, and/or any predecessor DC plan,
or joint venture employer DC plans, (except that, should an executive not
contribute at a rate which yields the maximum employer contribution, a minimum
employee contribution rate which yields the maximum employer contribution will
be assumed and hypothetically calculated),
(c) the Actuarial Equivalent of the Executive's "pension equivalent
annuity credits" (for both DB and DC Plan components, as determined and recorded
under the Dresser Industries, Inc. Deferred Compensation Plan); and
To the extent that balances or amounts reflected in (a), (b), and/or (c) above
are distributed prior to the Executive's termination date, the Company will
recognize these amounts for offset purposes and will assume an appropriate rate
of return from the date of distribution until the calculation of the benefit
provided by this Plan.
STEP (3) DETERMINATION OF THE BENEFIT (IF ANY) PAYABLE UNDER THIS SECTION
4.1. If the amount determined in Step (1) exceeds the amount determined in Step
(2), the annual difference will be paid under this Plan. The Actuarial
Equivalent of such annual benefit shall be converted to, and paid in, a lump sum
in accordance with 4.3 below. If the amount determined in Step (1) does not
exceed the amount determined in Step (2), no benefit is payable under this Plan.
Notwithstanding the provisions of this Section, for Executives participating in
the Plan on December 31, 1997, it is explicitly understood that, if the
Executive's projected benefit due under the Plan prior to this Restatement
provides a target retirement income under its Step (1) of Section 4.1 which
exceeds the maximum benefit provided in Step (1) of Section 4.1 of this
Restatement, then the greater of the two actual target retirement incomes will
be paid to the Executive.
SECTION 4.2. FUNDING OF BENEFITS UPON CHANGE OF CONTROL. Upon a Change
of Control, the Company shall, as soon as possible, but in no event longer than
ninety (90) days following such Change of Control, make an irrevocable
contribution of additional cash to the Trust in an amount sufficient to pay each
Executive's and Executive's beneficiary 120% of the value of accrued benefits
which may become payable thereafter pursuant to the terms of the Plan as in
effect on the date of the Change of Control. Upon a Change of Control, all
funded amounts will be immediately vested irrespective of the terms of Section
5.1 below.
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SECTION 4.3. FORM OF BENEFIT. Benefits under this Plan shall be payable
in a lump sum to the Executive, or to the Executive's DC Plan Beneficiary in the
event of the Executive's death as soon as practicable following the Executive's
termination. With the approval of the Benefits Committee, the Executive may
elect that Plan benefits be paid in a different form authorized under the DC
Plan.
SECTION 4.4. TIME OF BENEFIT PAYMENTS. Benefits due under this Plan
shall be determined by the Benefits Committee at the time of the Executive's
termination of employment. Except in the case of a lump-sum payment, such
benefits shall be paid by the Company monthly in advance. In the case of a
lump-sum payment, such payment shall be made as closely as practicable to the
time such payment would be made if it were paid from the Pension Plan. Such
payments shall be made by the Company out of its general assets and shall not be
funded in any manner, expect as provided in Section 4.2 above.
ARTICLE V
VESTING AND FORFEITURE
SECTION 5.1. VESTING. An Executive shall vest in benefits under this
Plan at the time such person terminates and is eligible under Section 3.2. No
Executive (nor the beneficiary of such person) whose employment is terminated
For Cause, as determined by the Compensation Committee, shall vest in any
benefits under this Plan, even if such termination is deemed a retirement under
provisions of the Pension Plan, a Related Plan or the DC Plan.
SECTION 5.2. FORFEITURE. The Compensation Committee may declare
forfeited any or all future benefits of an Executive (and/or his/her
beneficiary) if the Compensation Committee in its sole discretion determines
that such person has taken or allowed any action that is a violation of the
Dresser Code of Conduct, has engaged in serious and willful misconduct in
connection with his/her employment, or competes with or assists others to
compete with the Company, without written consent of the Company.
ARTICLE VI
ADMINISTRATION
SECTION 6.1. DUTIES OF BENEFITS COMMITTEE. This Plan shall be
administered by the Benefits Committee in accordance with its terms and
purposes. The Benefits Committee shall
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have the sole discretionary duty and authority to interpret the provisions of
this Plan (and any private letter agreement affecting an Executive's benefits
under the Plan) and determine the amount and manner of payments of the
benefits due to or on behalf of each Executive from this Plan and shall cause
them to be paid accordingly.
SECTION 6.2. FINALITY OF DECISIONS. The decisions made and the actions
taken by the Benefits Committee in the administration of this Plan shall be
final and conclusive on all persons, and the members of the Benefits Committee
shall not be subject to individual liability with respect to this Plan.
ARTICLE VII
CLAIMS AND APPEAL PROCEDURES
SECTION 7.1. PURPOSE. The purpose of the claims and appeal provisions
set forth in Sections 7.1 through 7.11 is to secure the speedy, inexpensive
resolution of all disputes over Plan benefits and rights granted by the Plan.
These provisions shall be liberally construed so as to avoid litigation and its
attendant expenses.
SECTION 7.2. CLAIMS PROCEDURE. Each Executive who claims entitlement to
any right or benefit under the Plan ("claimant") may submit a claim with respect
to that benefit or right under the procedure set forth in the Dresser
Industries, Inc. Retirement Savings Plan-A.
SECTION 7.3 APPEAL PROCEDURE. When a claim has been or is deemed
denied, the claimant (hereinafter referred to as appellant) shall have the right
within 60 days after receipt of written notice thereof or the date the claim is
deemed denied to file an appeal with the Benefits Committee and to go through
the appeal procedure herein set forth. All appeals shall be in writing, and
shall set forth the reasons why the appellant believes the decision denying
his/her claim is erroneous. The Benefits Committee shall render a decision on
the appeal in writing not later than 60 days after receipt of the written
appeal.
The decision of the Benefits Committee shall be final and shall be binding
upon the appellant, his/her beneficiaries, heirs, and assigns and all other
persons claiming by, through or under him.
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A failure to file a claim and an appeal in the manner and within the time
limits set forth herein shall be deemed a failure by the aggrieved party to
exhaust his/her administrative remedies and shall constitute a waiver of the
rights or benefits sought to be established under the Plan.
SECTION 7.4. EXHAUSTION OF ADMINISTRATIVE REMEDIES. No legal action to
recover Plan benefits or to enforce or to clarify rights under the Plan shall be
commenced under section 502(a)(1)(B) of ERISA, or under any other provisions of
law, whether or not statutory, unless and until the claimant first shall have
exhausted the claims and appeal procedures available to him hereunder in
Sections 7.1-7.3. A claimant must raise all issues and present all theories
relating to the Executive's claim to the Benefits Committee at one time.
Otherwise, the claimant shall be deemed to have abandoned forever all issues and
theories not raised and presented to the Benefits Committee.
SECTION 7.5. LIMITATION ON ACTIONS. Any suit brought to contest a
decision of the Benefits Committee shall be filed in a court of competent
jurisdiction within 1 year from receipt of written notice of the Benefits
Committee's final decision or from the date the appeal is deemed denied, and any
suit not filed within this 1-year limitation period shall be dismissed by the
court. Service of legal process shall be made upon the Plan by service upon the
Benefits Committee.
SECTION 7.6. FEDERAL PREEMPTION. All state law causes of action that
arise out of or relate to this Plan or to entitlement to rights or benefits
under the Plan shall be deemed to have been preempted by section 514 of ERISA.
SECTION 7.7. NO RIGHT TO JURY TRIAL; EVIDENCE. In any suit contesting a
decision of the Benefits Committee, all issues of fact shall be tried by the
court and not by a jury. No evidence may be introduced in court which was not
previously presented to the Benefits Committee and no evidence may be introduced
to modify or contradict the terms of the Plan document.
SECTION 7.8. SCOPE OF REVIEW. The Benefits Committee shall have full
discretionary authority to interpret and apply the terms of this Plan document
and other relevant documents and relevant provisions of law, and deference shall
be afforded the Benefits Committee's decisions. 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 resolution of claims and appeals. No
finding of fact by the Benefits Committee shall be set aside by a court unless
the party contesting the finding shall prove by clear and convincing evidence
that the finding is arbitrary and capricious. No conclusion of law
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reached by the Benefits Committee shall be reversed by a court unless the
party contesting the conclusion shall demonstrate that the Benefits Committee
is guilty of manifest disregard of law.
SECTION 7.9. LIMITATION ON DAMAGES. In any suit over Plan benefits or
rights, recovery shall be limited to the amount of benefits found due, without
interest, or to specific enforcement of rights established under the Plan, and
shall not include any other damages whether denominated incidental, special,
consequential, collateral, compensatory, exemplary, punitive or whatever.
SECTION 7.10. PARTICIPANT PLAN DATA. The Benefits Committee may issue, or
cause to be issued, from time to time statements to Executives, retirees or
beneficiaries indicating eligibility, service or other data regarding their Plan
benefits. If any such person wishes to challenge the accuracy of such data, the
person shall do so in the manner and within the time limits set forth above in
Sections 7.1-7.9.
SECTION 7.11. FINAL DETERMINATION OF RIGHTS AND BENEFITS. After
termination of the Plan, the Benefits Committee may direct a final determination
of the rights and benefits of some or all Executives having an interest in the
Plan. The determination with respect to any person may be mailed to that person
at the Executive's last known address and that person may be given 90 days
within which to challenge the determination through the claims and appeal
procedures set forth in Sections 7.1-7.10. The mailing of a copy of a
determination to a person at his/her last known address shall be deemed
constructive receipt by that person of a copy of the determination. Any
determination not challenged through the claims and appeals procedures shall
govern an Executive's rights under the Plan, and the rights of any person
claiming by, through or under him.
ARTICLE VIII
AMENDMENT AND TERMINATION
SECTION 8.1. AMENDMENT AND TERMINATION. The Company intends to maintain
this Plan as long as it is appropriate. However, the Company reserves the right
to amend and/or terminate it at any time without the consent of any Executive,
(a) by the Board of Directors of the Company, or (b) in the case of amendments
which do not materially modify the provisions hereof, the Benefits Committee;
provided, however, that no such amendment or termination shall reduce any
benefits accrued under the terms of this Program prior to the date of
termination or amendment.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1. NO EMPLOYMENT RIGHTS. Nothing contained in this Plan shall
be construed as a contract of employment between the Company or any subsidiary
or joint venture company and any employee, or as a right of any employee to be
continued in the employment of the Company, or as a limitation of the right of
the Company to discharge any of its employees with or without cause.
SECTION 9.2. ENTIRE AGREEMENT; SUCCESSORS. This Plan, including any
subsequently adopted amendments, shall constitute the entire agreement or
contract between the Company and any Executive regarding this Program. There
are no covenants, promises, agreements, conditions or understandings, either
oral or written, between an Executive and the Company relating to the subject
matter hereof, other than those set forth herein. This Plan and any amendments
hereof shall be binding on the Company and the Executives and their respective
heirs, administrators, trustees, successors and assigns, including but not
limited to, any successors of the Company by merger, consolidation or otherwise
by operation of law, and on all designated beneficiaries of the Executive.
SECTION 9.3. GOVERNING LAW. The laws of the State of Texas shall govern
this Plan.
SECTION 9.4. NONASSIGNABILITY. To the extent permitted by law, the right
of any Executive or any beneficiary in any benefit hereunder shall not be
subject to attachment or any other legal process for the debts of such Executive
or beneficiary; nor shall any such benefit be subject to anticipation,
alienation, sale, transfer, assignment or encumbrance.
Dated:
---------------------------------
DRESSER INDUSTRIES, INC.
By:
------------------------------------
Title:
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APPENDIX A
SPECIAL PROVISIONS
On November 19, 1997, the Board of Directors of Dresser Industries, Inc.
approved a pension benefit enhancement for Ben Stuart which is to be provided
through this Plan. Therefore, for benefit calculation purposes under the
provisions of this Plan, Ben Stuart will be deemed to have retired at age 65
regardless of his actual age on the date of his retirement.