Exhibit 10.2

 

AMENDMENT NO. 1 TO

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Amendment No. 1 (this “Amendment”) dated this 26th day of May, 2005 (the
”Amendment Date”) is entered into by and between Dresser, Inc. and any of its
subsidiaries and affiliates as may employ Employee from time to time,
(collectively, “Employer”) and John P. Ryan (“Employee”) in order to amend
certain provisions of the Executive Employment Agreement between Employer and
Employee dated January 29th, 2001 (the “Agreement”).

 

WITNESSETH:

 

WHEREAS, Employee and Employer desire to amend certain terms of the Agreement;

 

NOW, THEREFORE, for and in consideration of the mutual promises, covenants and
obligations contained herein, Employer and Employee agree as follows:

 

1. Section 1.2 of the Agreement is hereby deleted in its entirety and replaced
with the following:

 

1.2 Beginning as of December 20, 2004, Employee shall be employed as the
President and Chief Operating Officer of Dresser, Inc. Employee agrees to serve
in the assigned position or in such other executive capacities as may be
requested from time to time by Employer and to perform diligently and to the
best of Employee’s abilities the duties and services pertaining to such
positions as reasonably determined by Employer, as well as such additional or
different duties and services appropriate to such positions which Employee from
time to time may be reasonably directed to perform by Employer.

 

2. Section 2.1 of the Agreement is hereby deleted in its entirety and replaced
with the following:

 

2.1 Beginning as of January 1, 2005, Employee’s base salary during the Term
shall be not less than $400,000 per annum which shall be paid in accordance with
the Employer’s standard payroll practice for its executives. Employee’s base
salary may be increased from time to time. Such increased base salary shall
become the minimum base salary under this Agreement and may not be decreased
thereafter without the written consent of Employee.

 

3. Section 2.2 of the Agreement is hereby deleted in its entirety and replaced
with the following:

 

2.2 Beginning as of January 1, 2005, during the Term, Employee shall participate
in an annual incentive plan, as approved by Employer, with a target bonus equal
to 50% of Employee’s base salary (the “Target Annual Bonus”). Notwithstanding
the aforementioned, it is specifically understood and agreed that

 

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all determinations relating to Employee’s participation, including, without
limitation, those relating to the performance goals applicable to Employee shall
be made in the sole discretion of the person or committee to whom such authority
has been granted.

 

4. Section 3.2(ii) of the Agreement is hereby deleted in its entirety and
replaced with the following:

 

(ii) Employer Termination for Cause. Termination of Employee’s employment by
Employer for Employer Cause shall mean a termination of employment at the
election of Employer when there is “Employer Cause”. “Employer Cause” shall mean
any of the following: (a) Employee’s gross negligence or willful misconduct in
the performance of the duties and services required of Employee pursuant to this
Agreement, (b) Employee’s final conviction of or plea of guilty or nolo
contendere to a felony or Employee engaging in fraudulent or criminal activity
relating to the scope of Employee’s employment (whether or not prosecuted), (c)
a material violation of the Code of Business Conduct, provided that it has been
provided to Employee in writing prior to such alleged violation; (d) Employee’s
material breach of any material provision of this Agreement, provided that
Employee has received written notice from Employer and been afforded a
reasonable opportunity (not to exceed 30 days) to cure such breach, or (e) any
continuing or repeated failure to perform the duties as requested in writing by
the Board of Directors of Employer after Employee has been afforded a reasonable
opportunity (not to exceed 30 days) to cure such breach. Determination as to
whether or not Employer Cause exists for termination of Employee’s employment
will be made by not less than 75% of the members of the Board of Directors of
Employer at a meeting in which Employee shall have the right (i) to have
received not less than 10 days prior to the meeting written notice of the date,
time and place of the meeting and the charges (in reasonable detail) to be
considered, (ii) to appear at the meeting with counsel, and (iii) to answer any
charges made concerning the existence of Employer Cause. Any determination by
the Board of Directors of Employer of Employer Cause at such meeting shall not
be entitled to any deferential or evidentiary weight or presumption of
correctness, and at the election of Employee, shall be determined pursuant to
Section 6.6 in a de novo review, with Employer having the obligation to prove
Employer Cause by clear and convincing evidence. During the foregoing process,
Employer may, without Employer creating any default under this Agreement or
incurring any additional liability of any kind and at Employer’s sole
discretion, place Employee on paid administrative leave and relieve Employee of
all or any part of his responsibilities. Notwithstanding the foregoing, and
regardless of whether the process results in a finding that Employer Cause
existed for the termination, the year in which such termination shall be deemed
to have occurred, for purposes of determining Employee’s entitlement to payments
of unpaid individual bonuses or incentive compensation shall be the year in
which Employer first informs Employee that he is terminated

 

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for Employer Cause. “Employer Cause” shall not mean any of the following: (1)
Employee’s bad judgment; (2) Employee’s negligence; (3) any act or omission that
Employee believed in good faith was in or was not opposed to the interests of
Employer; or (4) any act or omission of which any non-employee member of the
Board of Directors of Employer who is not a party to such act or omission had
actual knowledge for at least six months.

 

5. Section 3.3(i) of the Agreement is hereby deleted in its entirety and
replaced with the following:

 

(i) Subject to and in accordance with the terms and conditions of the Amended
and Restated Investor Rights Agreement between Employer and certain of its
stockholders as it may be hereafter amended or restated (the “IRA”), the cash
value of Employee’s stock, options, or other equity interests in DEG for the
following categories: (1) stock or other equity interests which represent a
direct investment in DEG by the Employee; (2) vested options which were
previously granted to Employee and based on Employee’s continuity of employment;
(3) any restricted stock previously granted to Employee; and (4) any vested
performance-based options granted to the Employee. For purposes of
clarification, it is specifically understood and agreed that: (a) all options
previously granted under categories (2) and (4) above that are unvested at the
time of the Employee’s termination of employment shall be forfeited by the
Employee; and (b) all restricted stock previously granted to Employee under
category (3) above shall have all restrictions lapse on the date of Employee’s
termination. The valuation, timing of payment, and other related matters
regarding the payment of the aforesaid stock, other equity interests, or options
shall be as set forth in the IRA.

 

6. Section 3.4(i) of the Agreement is hereby deleted in its entirety and
replaced with the following:

 

(i) Employee Termination For Cause. “Employee Termination For Cause” shall mean
a termination of employment at the election of Employee when there is “Employee
Cause”. “Employee Cause” shall mean a termination of employment by Employee for
any reason or no reason within the ninety (90) calendar day period commencing
twelve (12) calendar months after a Change of Control (as defined in Section
6.10 below) of Employer; or a termination of employment by Employee because and
within six months of: (a) a material breach by Employer of any material
provision of this Agreement which remains uncorrected for thirty (30) days
following written notice of such breach by Employee to Employer; (b) a material
reduction in Employee’s rank or responsibility with Employer which remains
unrestored for thirty (30) days following written notice of such occurrence by
Employee to Employer. Determination as to whether or not Employee Cause exists
for termination of Employee’s employment will be made by the Board of Directors
of Employer at a meeting in which Employee shall have the right to present his
case for the

 

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existence of Employee Cause with, at his election, the assistance of counsel.
Any determination by the Board of Directors of Employer of Employee Cause at
such meeting shall not be entitled to any deferential or evidentiary weight or
presumption of correctness and at the election of Employee shall be determined
pursuant to Section 6.6 in a de novo review, with the Employee having the
obligation to prove Employee Cause by clear and convincing evidence. During the
foregoing process, Employer may, without Employer creating any default under
this Agreement or incurring any additional liability of any kind and at
Employer’s sole discretion, place Employee on paid administrative leave and
relieve Employee of all or any part of his responsibilities. Notwithstanding the
foregoing, and regardless of whether the process results in a finding that
Employee Cause existed for the termination, the year in which such termination
shall be deemed to have occurred, for purposes of determining Employee’s
entitlement to payments of unpaid individual bonuses or incentive compensation
shall be the year in which Employee first informs Employer that he is
terminating his employment for Employee Cause.

 

7. Section 3.5(i) of the Agreement is hereby deleted in its entirety and
replaced with the following:

 

(i) Subject to and in accordance with the terms and conditions of the IRA, the
cash value of Employee’s stock, options, or other equity interests in DEG for
the following categories: (1) stock or other equity interests which represent a
direct investment in DEG by the Employee; (2) options, both vested and unvested,
which were previously granted to Employee and based on Employee’s continuity of
employment; (3) any restricted stock previously granted to Employee; and (4) any
vested performance-based options granted to the Employee. For purposes of
clarification, it is specifically understood and agreed that: (a) all options
previously granted under categories (2) above that are unvested at the time of
the Employee’s termination of employment shall be immediately vested as of said
date; and (b) all restricted stock previously granted to Employee under category
(3) above shall have all restrictions lapse on the date of Employee’s
termination. In addition, Employee will be entitled to retain any
performance-based options previously granted to Employee for a period of one
year following termination. If the metrics required for vesting of such unvested
performance-based options are achieved by Employer during such one year period,
then the performance-based options shall vest and Employee shall be entitled to
exercise such options. If such metrics are not achieved by Employer upon the
first anniversary of the date of Employee’s termination of employment, such
options shall then be forfeited. The valuation, timing of payment, and other
related matters regarding the payment of the aforesaid stock, other equity
interests, or options shall be as set forth in the IRA.

 

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8. The following provisions are hereby added to the end of the existing Section
3.5(ii):

 

Notwithstanding the foregoing, if Employer terminates Employee in anticipation
of or within one year following a Change of Control (and excluding a termination
for Employer Cause), Employer shall pay to Employee a severance benefit
consisting of two times Employee’s base salary as in effect at the date of
Employee’s termination of employment and two times his Target Annual Bonus
(based upon Employee’s last base salary amount prior to termination) in a single
lump sum cash payment no later than thirty (30) days following Employee’s
termination of employment.

 

9. Section 3.5(v) of the Agreement is hereby deleted in its entirety and
replaced with the following:

 

(v) Employer shall maintain Employee’s medical, dental and life insurance
benefits for a period of two years from the date of Employee’s termination on
substantially the same basis as would have otherwise been provided had Employee
not been terminated. To the extent that such benefits are available under
Employer’s insurance and Employee had such coverage immediately prior to
termination, such continuation of benefits for Employee shall also cover
Employee’s dependents.

 

10. The following two Sections are hereby added after Section 6.9 of the
Agreement:

 

6.10 For purposes of this Agreement, the term “Change of Control” means any one
or more of the following events: (i) any person (as such term is used in Rule
13d-5 under the Securities Exchange Act of 1934 (the “Exchange Act”)) or group
(as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Exchange Act),
other than DEG or its affiliates, or a subsidiary or employee benefit plan (or
any related trust) of Employer, becomes, directly or indirectly, the beneficial
owner of (A) 50% or more of the common stock of either Employer or Dresser Ltd.,
a Bermuda corporation, (each, a “Principal DEG Entity”) or (B) securities of a
Principal DEG Entity entitled to vote generally in the election of directors of
such Principal DEG Entity (“Voting Securities”) representing 50% or more of the
combined voting power of all Voting Securities of such Principal DEG Entity;
(ii) if the persons who were shareholders of Dresser, Ltd. as of the Amendment
Date (“Existing Shareholders”) directly or indirectly own less than 33% of the
Voting Securities of a Principal DEG Entity and there is another beneficial
owner of a greater percentage of the Voting Securities of such Principal DEG
Entity than the Existing Shareholders as a group; (iii) if Dresser, Ltd. (or any
successor to all or substantially all of its assets) owns, directly or
indirectly, less than 66-2/3% of the Voting Securities of Employer (or any
successor to all or substantially all of its assets) and each other current or
future company then in the chain of ownership between Dresser, Ltd. and Employer
(including, without limitation, Dresser Holding, Ltd. (“DHL”), a wholly owned
subsidiary of Dresser, Ltd., and Dresser Holding, Inc. (“DHI”), a wholly owned
subsidiary of DHL, from the Amendment Date until they cease to be in such chain
of ownership), other than as a result of a

 

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merger or consolidation of Employer, DHL, or DHI (or their successors) with and
into Dresser, Ltd., DHL, or DHI (or their successors) or the downstream merger
or liquidation of Dresser, Ltd. as a result of tax restructuring as a result of
which (in the case of each of a merger, consolidation, downstream merger or
liquidation) the holding company structure is eliminated, and in each case which
do not otherwise constitute a Change of Control; (iv) individuals who, as of the
Amendment Date, constitute the Board of Directors of a Principal DEG Entity (the
“Incumbent Directors”) cease for any reason to constitute at least 75% of the
members of such Board; provided that any individual who becomes a director after
the Amendment Date whose election or nomination for election by Employer’s
shareholders was approved by at least 75% of the members of the Incumbent
Directors or who was elected by the shareholders at a time when the First
Reserve Funds and Odyssey Investment Partners directly or indirectly own more
than 75% of the Voting Securities of a Principal DEG Entity (other than an
election or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened “election contest” relating to the
election of the directors of a Principal DEG Entity (as such terms are used in
Rule 14a-11 under the Exchange Act), “tender offer” (as such term is used in
Section 14(d) of the Exchange Act) or a proposed Merger (as defined below))
shall be deemed to be a member of the Incumbent Board; (v) approval by the
stockholders of a Principal DEG Entity of either of the following: (A) a merger,
reorganization, consolidation or similar transaction (any of the foregoing, a
“Merger”) as a result of which the individuals and entities who were the
respective beneficial owners of the outstanding common stock and Voting
Securities of a Principal DEG Entity immediately before such Merger are not
expected to beneficially own, immediately after such Merger, directly or
indirectly, more than 60% of, respectively, the common stock and the combined
voting power of the Voting Securities of the corporation resulting from such
Merger in substantially the same proportions as immediately before such Merger,
or (B) a plan of liquidation of a Principal DEG Entity or a plan or agreement
for the sale or other disposition of all or substantially all of the assets of
Employer other than any such sale or other disposition to a Subsequent Employer;
or (vi) any other transaction, event, or circumstance, regardless of form
(collectively “Transaction”), which results in control over the strategic and
operational decisions of a Principal DEG Entity by a board of directors,
committee, or group other than the Board of Directors of Employer or some
subcomponent thereof (collectively, the “New Board”); provided however, that
such Transaction referenced in (vi) and not also referenced in (i), (ii), (iii),
(iv) or (v) shall not be deemed to result in a Change of Control if Employee
reports to and is a member of the New Board, and remains President and Chief
Operating Officer of Employer. Notwithstanding the foregoing, Employer may
request and Employee may in his sole discretion accept that any transaction or
series of transaction not be considered to be a Change of Control hereunder.

 

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6.11 Notwithstanding anything in any agreement between Employer and Employee to
the contrary, any unvested options held by Employee will terminate without value
upon termination of Employee’s employment for Employer Cause or resignation by
Employee without Employee Cause. However, all unvested options that are based on
Employee’s continutity of employment will immediately vest upon any termination
other than for Employer Cause or resignation by Employee without Employee Cause.
Vested options will expire if unexercised sixty days following the first
anniversary of termination. Section 4 of the IRA shall govern the respective
rights of the Employer and Employee with respect to the repurchase of any stock
or stock rights of Employee (including as provided in Sections 3.3(i) and
3.5(i)), except that the following provisions shall apply:

 

(a) notwithstanding language in Section 4.1 of the IRA, the term “Put Shares”
shall include vested Stock Rights (as defined in Section 3.5 of the IRA);

 

(b) Employer shall deliver the “Notice of Repurchase” described in Section 4.3
of the IRA, if at all, prior to the date which is 358 days following the
Termination Date;

 

(c) following (i) delivery of any Put Notice, or (ii) delivery of any Notice of
Repurchase, provided Employee has delivered the number of Repurchase Shares
specified in the Put Notice or Repurchase Notice, as the case may be, Employer
shall pay the “Repurchase Price” for such “Repurchase Shares” in cash in
immediately available funds prior to the date which is the later of (x) 90 days
following the Put Notice or Notice of Repurchase, as the case may be, or (y) the
first date that Employer may make such payment without violating any legal
restrictions or contractual restrictions imposed on Employer pursuant to its
financing arrangements.

 

11. Except as set forth herein, the Agreement remains in full force and effect.
Capitalized terms used herein without definition shall have the meaning assigned
such terms in the Agreement.

 

IN WITNESS WHEREOF, Employer and Employee have duly executed this Amendment in
multiple originals.

 

DRESSER, INC. By:   /s/    MARK J. SCOTT        

Name:

  Mark J. Scott

Title:

  Senior Vice President, Human Resources EMPLOYEE         /s/    JOHN P.
RYAN        

Name:

  John P. Ryan

 

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