Document:

DRESSER 2003 INCENTIVE PLAN

 Exhibit 10.6 
  
 DRESSER, INC. 
 INCENTIVE PLAN 
  
 (Restatement dated February 17,
2003) 
  

	I.	PURPOSE 

  
 The purpose of this Incentive Plan (this “Plan”) of Dresser, Inc., a Delaware corporation (“Dresser” or the “Company”), is
to develop a “total compensation” strategy that will link all Dresser employees through a common set of Company and employee performance goals based on a common measure. This Plan is designed to enable the Company to work toward its goal
of being a high-growth/high-performance organization, where all employees contribute to earnings, and in turn, can earn incentive compensation as a result of achieving or exceeding established profitability targets. This is a restatement of the
Dresser, Inc. EBITDA Incentive Profit Sharing Plan. 
  

	II.	ELIGIBILITY 

  
 Any full-time and regularly scheduled part-time employee (i.e. those working 20 hours per week or more) (“Employee”) is immediately eligible for
participation in this Plan, except: 
  

	 	A.	U.S.-based employees who are covered by a collective bargaining agreement and whose union has not been offered and agreed to participate in this Plan on a “non-bargained”
basis; 

  

	 	B.	non-U.S.-based employees who are covered by a collective bargaining agreement or other statutory scheme and whose union has not been offered and agreed to participate in this Plan;

  

	 	C.	employees who are participating in another Company cash incentive program (i.e., a Sales Incentive Plan); and 

  

	 	D.	temporary employees and independent contractors. 

  

	III.	PARTICIPATION GRIDS 

  
 An incentive potential range (expressed as a percentage of eligible pay) (“Range”) will be established for each Grid Group set forth below
(“Grid Group”). Ranges are subject to change in accordance with the terms of this Plan. The Company will inform Employees of their specific Range and Grid Group at the time of their hire, promotion, or other eligibility event. 

 

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 Grid Group 1 – Production, Maintenance, Clerical, Technical, Professional, and all other
Employees not in a higher Grid below. 
  
 Grid Group 2
– Managers and Directors who are direct reports to Business Unit Staff Level positions who have managerial responsibility over major functional areas and have professionals as direct reports. 
  
 Grid Group 3 – Business Unit Vice Presidents, Business Unit
Directors who report to a Business Unit President, and Corporate Directors. 
  
 Grid Group 4 – Senior Business Unit Vice-Presidents. 
  
 Grid Group 5 – Senior Corporate Management, Corporate Vice Presidents & Business Unit Presidents 
  

	IV.	PERFORMANCE MEASURES 

  

	 	A.	COMPANY PROFITABILITY MEASURES: The profitability “benchmarks” that will be utilized are based on the concept and calculation method known as Earnings Before
Interest, Taxes, Depreciation and Amortization (“EBITDA”) and one or more related profitability measures (the “Profitability Measures”). An explanation of the Profitability Measures will be provided to Employees.

  
 Although, payments under this Plan are made on
a “sliding scale” of attainment, there are three benchmark levels of profitability attainment based on the Profitability Measures (“Levels”): 
  

	 	1)	Threshold – For an incentive payout to occur, a measuring unit and/or business unit must exceed the Threshold attainment level. 

  

	 	2)	Target – This attainment level generally is aligned with the measuring unit and/or business unit’s Business Plan level. 

  

	 	3)	Challenge – This attainment level yields the maximum payout under this Plan. 

  
 The actual Profitability Measures necessary to achieve Threshold and Challenge Level payments under this Plan, relative to
the applicable Business Plan, will be established annually for each Plan Year and communicated to Employees. 
  

	 	B.	PROFITABILITY ATTAINMENT WEIGHTING: Eighty percent (80%) of an Employee’s total payment under this Plan will be determined using predetermined Profitability Measures.

  

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	 	1)	Unless changed by the Committee, Employees participating in payout Grid Groups 1 and 2 will have 80% of any payment under this Plan calculated utilizing a predetermined weighting of
the Dresser, relevant business unit, and/or secondary measuring unit profitability. 

  

	 	2)	Unless changed by the Committee, Employees participating in payout Grid Groups 3, 4 and 5 will have 80% of any payment under this Plan calculated utilizing a predetermined weighting
of Dresser and relevant business unit profitability. 

  

	 	3)	Dresser Corporate Employees will have 100% of any payment under this Plan calculated based on Dresser profitability. 

  
 A secondary measuring unit can be Dresser, a business unit, an individual
production facility, a product line, or other appropriate working unit, as determined by the Company and approved by the Committee. 
  
 Unless changed by the Committee, Employees participating in Grid Groups 1 and 2 will have the Profitability Measures’ portion of a payment under this
Plan established and paid on a quarterly basis. Employees participating in payout Grid Groups 3, 4 and 5 will have the Profitability Measures’ portion of a payment under this Plan on an annual basis. 
  

	 	C.	INDIVIDUAL PERFORMANCE WEIGHTING: Twenty percent (20%) of the total incentive consists of an individual performance award (“Individual Performance Award”)
component. The measure for earning this Individual Performance Award is the employee’s overall rating as expressed in the employee’s Dresser Performance Appraisal (“Appraisal”), completed within the last 12 months. Appraisals are
expressed in terms of “Consistently Exceeded Expectations,” “Exceeded Expectations,” “Met Expectations,” “Met Most Expectations,” and “Did Not Meet Expectations” or other five-point scale determined
by the Company. 

  
 The following chart indicates
how the Individual Performance Award measure interacts with the Profitability Measures: 
  

							
	 Performance

	  	 Business Unit

	  	 	  	 Secondary Measuring Unit

	 Did Not Meet Expectations
	  	0% of BU award %	  	+	  	0% of MU award %
	 Met Most Expectations
	  	12.5% of BU award %	  	+	  	12.5% of MU EBITD award %
	 Met Expectations
	  	25% of BU award %	  	+	  	25% of MU award %
	 Exceeded Expectations
	  	37.5% of BU award %	  	+	  	37.5% of MU award %
	 Consistently Exceeded Expectations
	  	50% of BU award %	  	+	  	50% of MU award %

  
 For Employees covered
by a Collective Bargaining Agreement, the Individual Performance Award component may be excluded from any payment calculation, or, at the Committee’s sole discretion, may be 

  

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included but calculated based on some other criteria such as a relevant production “metric” or team performance criteria (i.e., plant yield,
on-time performance etc.). 
  

	V.	ADMINISTRATION 

  

	 	A.	Plan Year: The plan year of this Plan is January 1st to December 31st (the “Plan Year”). Results will be reported quarterly for purposes of
determining Grid Groups 1 and 2 payments (if necessary), and reported for the Company’s fiscal year beginning January 1st and ending December 31st for all other purposes (the “Measuring Period”).

  

	 	B.	Eligible Earnings: Payments under this Plan are made based on a percentage of earnings for the relevant pay period. For the purposes of this Plan, eligible earnings will
include: base/regular pay, overtime pay, shift premium or differential pay, group/team leader pay, funeral leave pay, jury duty pay, “paid time off”, vacation pay, and holiday pay. Other types of pay such as special award(s) pay, other
incentive or profit share pay, tuition reimbursement, shoe allowance, relocation expense related monies, etc. are specifically excluded in the calculation of incentive payments (“Eligible Earnings”). 

  

	 	C.	Measuring Units: Annual attainment of the established Profitability Measures will be based on Dresser, Inc., business unit and/or secondary measuring unit profitability in
relation to a pre-established and Company approved business plan (“Business Plan”). The relevant measuring units to be utilized will be established as soon as practicable for each Plan Year. 

  

	 	D.	Plan Accruals: Each Business Unit Accounting Department is responsible for accruing sufficient funds on a monthly basis to assure adequate reserves are properly recorded for
potential payments under this Plan. 

  

	 	E.	Plan Payouts/Distributions: Payments made to Employees under this Plan will be calculated and paid as soon as practicable after the end of each Measuring Period.

  
 Employees must be actively employed at the end
of the relevant Measuring Period in order to be considered eligible for a payment under this Plan. Terminated Employees or inactive Employees are not eligible for a payment under this Plan, except: 
  

	 	1)	 Employees who are terminated for reasons of retirement, death, or disability during the Measuring Period will receive a pro-rated payment based on their
Eligible Earnings paid prior to such termination. For Employees participating in a company defined benefit pension plan, the definition of retirement in the relevant 

  

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plan will apply, otherwise “retirement” for purposes of this Plan means the termination of an Employee whose age and service, when added, equal to
at least 65. In the event of termination by reason of death, an Employee’s payment under this Plan will be paid to the Employee’s beneficiary as designated and recorded for the relevant Company sponsored retirement or pension plan.

  

	 	2)	Employees who were terminated in a Reduction-In-Force due to business conditions or a Company divestiture prior to the end of the fiscal year will receive the Profitability
Measures component of the payment based upon Eligible Earnings for the Measuring Period not yet paid prior to such termination, but will not be eligible for the Individual Performance Award, except that employees who were terminated in a
Reduction-In-Force due to business conditions or a Company divestiture on or after October 31st but before the end
of the annual Measuring Period (i.e., December 31st) will be eligible for the Individual Performance Award for the
year in which their reduction occurred. 

  

	 	3)	Employees who are assigned to new positions dictating participation in different Grid Groups or different measuring units will receive pro-rated payment based on the Eligible
Earnings paid and their performance in each position/measuring unit. 

  

	 	4)	Employees moving out of Plan eligibility but who remain employed will be eligible for a pro-rated payment based on Eligible Earnings paid while eligible under this Plan.

  

	 	5)	A non-participant moving into Plan eligibility will be eligible for a payment based on their Eligible Earnings while eligible. 

  

	 	F.	Individual Performance: The measuring period for determining an employee’s Individual Performance Award is the 12-month period beginning on January 1st and ending December 31st of each year (i.e., Plan Year). The most recent Appraisal given to an employee during a Plan Year will be deemed to cover the Measuring Period. Employees earn the Individual Performance Award portion
of their incentive payment on an annual basis at the discretion of their immediate supervisor or appraising supervisor. An Employee’s most recent Appraisal with a designated performance rating must be on file with the Company’s Human
Resources Department for that Employee to qualify for an Individual Performance Award. 

  

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	V.	PLAN GOVERNANCE 

  

	 	A.	Plan Administrator: This Plan shall be administered by either the Board of Directors of the Company or a committee designated by the Board of Directors (the
“Committee”). This includes, but is not limited to, final approval of Profitability Measures, measuring units utilized in calculating payments under this Plan, and all other aspects of design and measurement of this Plan. The Profitability
Measures and attainment criteria may be changed annually or at points within a Plan Year at the Committee’s discretion. The Committee must approve any amendments to, and changes in measuring units, of this Plan. 

  

	 	1)	Dresser, Inc., through action by the Committee, reserves the right to unilaterally revise, discontinue, or terminate this Plan, or any payments related thereto, at any time and for
any reason. 

  

	 	2)	Business unit Presidents are responsible for proposing appropriate measuring units and or secondary measuring units within their business units for this Plan, all subject to
approval by the Committee. 

  

	 	B.	Plan Interpretation: Any need for interpretation of the terms of this Plan will be determined by the Committee (or its designee), and whose decision on the issue will be
final and binding upon this Plan and Employees. 

  

	 	C.	Governing Law: This Plan shall be governed by the laws of the State of Delaware, excluding its conflicts of law provisions. 

  

	VI.	CLAIMS & APPEALS 

  
 This Plan is meant to be a Non-qualified ERISA Plan subject to a claim and appeal process. 
  

	 	A.	In any case in which a claim for Plan benefits are withheld or denied, the Committee shall furnish written notice to the affected employee within ninety days after receipt of a
claim for such benefits (or within 180 days if additional information by the Committee necessitates an extension of the ninety-day period, and the affected employee is informed of such extension in writing within the original ninety-day period).

  

	 	B.	Employees who disagree with any action taken under this Plan may exercise their ERISA Appeals rights by writing the Committee at 15455 Dallas Parkway, Suite 1100, Addison, Texas
75001. 

  

	 	C.	 In the event a claim for Plan benefits is denied, the affected Employee must, within sixty days following receipt of the notice of such denial, submit a written
request for review by the Committee of its initial decision, with a 

  

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complete statement of the grounds for such request. Within sixty days following such request for review, the Committee shall, after providing a full and fair
review, render its final decision in writing to the affected Employee, stating specific reasons for such decision and making specific references to Plan provisions. 

  

	 	D.	If an Employee is not satisfied with the decision of the Committee pursuant to this Plan’s claims review procedure, such Employee may, within sixty days of receipt of the
written decision of the Committee, request that his claim be submitted to arbitration pursuant to the Dresser Dispute Resolution Program. Such arbitration shall be the sole and exclusive procedure available to an employee for review of a decision of
the Committee. 

  

	VII.	MISCELLANEOUS 

  

	 	A.	No Right to Company Employment: Nothing in this Plan or as a result of any payment under this Plan shall confer on any individual any right to continue in the employ of the
Company or interfere in any way with the right of the Company to terminate an individual’s employment at any time. 

  

	 	B.	Employee Taxes: The Company and any affiliate that is in existence or hereafter comes into existence shall not be liable to an Employee or other persons as to any tax
consequence to an Employee due to the issuance, exercise, settlement, cancellation or other transaction involving any payment under this Plan. 

  

 7AMENDED & RESTATED DRESSER, LTD. SHARE INCENTIVE PLAN

 Exhibit 10.7 
  
 AMENDED AND RESTATED 
 DRESSER, LTD. SHARE INCENTIVE PLAN 
  
 Section 1. Purpose of Plan. 
  
 The purpose of this amended and restated Share Incentive Plan (this “Plan”) of Dresser, Ltd., a Bermuda exempted company (the “Company”), is to enable the Company and its subsidiaries to attract,
retain and motivate their respective employees, including employee-directors (each an “Employee”), non-employee directors (each a “Non-employee Director”), and independent contractors and consultants (each a
“Consultant”) by providing for or increasing the proprietary interests of such employees, directors, and independent contractors and consultants in the Company. This Plan shall be the successor to and continuation of the Dresser, Inc. 2001
Stock Incentive Plan (the “Dresser, Inc. Plan”) with respect to those Participants (as defined below) who as of July 3, 2002 were participants of the Dresser, Inc. Plan. 
  
 Section 2. Persons Eligible Under Plan. 
  
 Any employee, director, independent contractor or consultant of the Company or any of its subsidiaries (including an entity
that becomes a subsidiary after the adoption of this Plan) (each, a “Participant”) shall be eligible to be considered for the grant of Awards (as defined in this Plan) under this Plan; provided, however, that Incentive Stock
Options (as defined herein) may only be granted to employees of the Company or any “parent corporation” or “subsidiary corporation” as such terms are defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as
amended (the “Code”), respectively. 
  
 Section 3.
Awards. 
  
 (a) On behalf of the Company, the Committee
(as defined in this Plan) is hereby authorized to enter into any type of arrangement with a Participant that is not inconsistent with the provisions of this Plan and that, by its terms, involves or might involve the issuance of the Company’s
Class B Common Shares, par value U.S. $0.01 per share (the “Common Shares”), or is otherwise based on the performance of such Common Shares. The entering into of any such arrangement is referred to herein as the “grant” of an
“Award” and the date of entering into such arrangement is referred to as the “Date of Grant.” 
  
 (b) Awards are not restricted to any specified form or structure and may include, without limitation, sales or bonuses of shares, restricted shares, share
options, reload share options, share purchase warrants, other rights to acquire shares, securities convertible into or redeemable for shares, appreciation rights, limited share appreciation rights, phantom shares, dividend equivalents, performance
units or performance shares, and an Award may consist of one such security or benefit, or two or more of them in tandem or in the alternative. 
  
 (c) Awards may be issued, and Common Shares may be issued pursuant to an Award, for any lawful consideration as determined by the Committee, including,
without limitation, services rendered by the recipient of such Award, provided that no Common Shares shall be issued for any consideration that is less than the par value of such Common Shares. 
  
 (d) Any Award shall be granted subject to the terms, conditions and
restrictions contained in an agreement between the Participant and the Company. Subject to the provisions of this Plan, the Committee, in its sole and absolute discretion, shall determine all of 

 
the terms and conditions of each Award granted under this Plan, which terms and conditions may include, among other things: 
  
 (i) a provision permitting the recipient of such Award,
including any recipient who is a director or officer of the Company, to pay the purchase price of the Common Shares or other property issuable pursuant to such Award, and such recipient’s tax withholding obligation, if any, with respect to such
issuance, in whole or in part, by any one or more of the following: 
  
 (A) the delivery of cash; 
  
 (B) the delivery of other property deemed acceptable by the Committee; 
  
 (C) the delivery of shares of the Company, to the extent permitted by Section 42A of the Companies Act 1981 of Bermuda (the
“Act”); 
  
 (D) a reduction in the
amount of Common Shares or other property otherwise issuable pursuant to such Award, to the extent permitted by Section 42A of the Act or otherwise in accordance with the applicable law; 
  
 (E) cancellation of indebtedness of the Company to the Participant; or 
  
 (F) to the extent permitted by applicable law, the delivery
of a promissory note of the Participant. (Common Shares so paid for will not be fully paid until such promissory note is paid in full, in cash or by delivery of other property in satisfaction thereof.) 
  
 (ii) a provision conditioning or accelerating the receipt of
benefits pursuant to such Award, either automatically or in the discretion of the Committee, upon the occurrence of specified events, including, without limitation, the achievement of performance goals, the exercise or settlement of a previous
Award, the satisfaction of an event or condition within the control of the recipient of the Award or within the control of others, a change in control of the Company (as defined by the Committee or as set forth in this Plan or in the agreement
evidencing the Award), an acquisition of a specified percentage of the voting power of the Company, the dissolution or liquidation of the Company, a sale of substantially all of the property and assets of the Company or an event of the type
described in Section 7 hereof; 
  
 (iii)
provisions specifying the exercise or settlement price for any Award, or specifying the method by which such price is determined and any provisions required in order for such Award to qualify (a) as an incentive stock option (an “Incentive
Stock Option”) under Section 422 of the Code or (b) for an exemption from Section 16 of the Securities Exchange Act of 1934, as amended; and provided further, that the exercise or settlement price for an Award to any person who
owns shares of the Company representing more than 10% of the total voting power of all classes of shares of the Company shall not be less than 110% of the Fair Market Value of the Common Shares on the date the Award is granted; 
  
 (iv) provisions relating to the exercisability and/or
vesting of Awards, lapse and non-lapse restriction upon Common Shares obtained or obtainable under 

  

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Awards and the termination, expiration, and/or forfeiture of Awards, including without limitation provisions permitting exercise of Awards before vesting,
subject to a repurchase right by the Company (as contemplated by paragraph (v) below), or other terms and conditions as the Committee may determine; 
  
 (v) a right to repurchase the Common Shares acquired upon exercise of an Award if the Participant’s employment or association with
the Company or any of its subsidiaries is terminated for any reason, or in other circumstances, at any the price as may be prescribed by the Committee, provided such price is not lower than that contained in the Award. Each certificate representing
Common Shares subject to such provisions shall bear a legend to the effect that such shares are subject to certain repurchase rights of the Company; provided, however, that the failure to include such a legend shall not affect the
exercisability of such repurchase right; or 
  
 (vi) a provision that upon a termination of employment or other relationship, the Participant will not be entitled to, or will only have limited rights to, exercise any Awards or rights therein, whether vested or unvested, at any time after
such termination. 
  
 (e) The agreement for any Award shall
provide that, upon acquisition of any Common Shares pursuant to any Award (whether upon exercise or conversion of options, warrants or other securities convertible into Common Shares or otherwise), any Participant who is an employee of the Company
or any of its subsidiaries shall become a party to the shareholder agreement, if any, between the Company and its shareholders as in effect at the time of such acquisition of Common Shares and may provide that any other Participant shall become a
party to such shareholder agreement. 
  
 (f) All
“Awards” (as defined in the Dresser, Inc. Plan) outstanding under the Dresser, Inc. Plan as of July 3, 2002 (the “Dresser, Inc. Plan Awards”) shall thereupon be converted into Awards under the Plan, in accordance with
Section 7 of the Dresser, Inc. Plan. The Committee shall take any action to make appropriate and proportionate adjustments to the Dresser, Inc. Plan Awards, as determined necessary or appropriate by the Committee, provided that no such adjustments
shall be made to the extent prohibited by the terms of the Dresser, Inc. Plan or this Plan. 
  
 Section 4. Shares Subject to Plan. 
  
 (a) At any time, the aggregate number of Common Shares issued and issuable pursuant to all Awards (including all Incentive Stock Options) granted under this Plan shall not exceed nine hundred thousand (900,000)
shares, subject to adjustment as provided in Section 7 hereof. 
  
 (b) Notwithstanding Section 4 (a) hereof, the aggregate number of Common Shares that may be issued pursuant to the exercise of Incentive Stock Options granted under this Plan shall not exceed eight hundred fifty thousand (850,000) shares,
subject to adjustment as provided in Section 7 hereof; provided, however, that adjustments pursuant to Section 7 hereof with respect to Incentive Stock Options issued or issuable under this Plan, shall be limited to those that will not
adversely affect the status of options as Incentive Stock Options, unless the Participant and the Company otherwise consent to such adjustment. 
  
 (c) For purposes of Section 4(a) of this Plan, the aggregate number of Common Shares issued and issuable pursuant to Awards granted under this Plan shall
at any time be deemed to be equal to the sum of the following: 
  
 (i) the number of Common Shares that were issued prior to such time pursuant to Awards granted under this Plan, other than Common Shares that were 

  

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subsequently reacquired by the Company pursuant to the terms and conditions of such Awards and with respect to which the holder thereof received no benefits
of ownership such as dividends; plus 
  
 (ii) the
maximum number of Common Shares that are or may be issuable at or after such time pursuant to outstanding Awards granted under this Plan prior to such time. 
  
 Section 5. Duration of Plan. 
  
 Any Awards granted under this Plan shall be granted within ten years from the Effective Date of this Plan (as provided in Section 9 hereof) (the
“Expiration Date”). Although Common Shares may be issued after the Expiration Date pursuant to Awards made prior to such date, no Common Shares shall be issued under this Plan after the tenth (10th) anniversary of the Expiration Date (the
“Termination Date”). 
  
 Section 6. Administration
of Plan. 
  
 (a) This Plan shall be administered by either
the Board of Directors of the Company (the “Board”) or a committee designated by the Board consisting of two or more directors. The body administering this Plan, whether the Board or a committee of the Board, is referred to herein as the
“Committee.” If the Company becomes subject to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), then the Committee shall consist of two or more directors each of whom is a “non-employee
director” within the meaning of Rule 16b-3 promulgated under the Exchange Act. The Board shall have the discretion to appoint, add, remove or replace members of the Committee, and shall have the sole authority to fill vacancies on the
Committee. The full Board may take any action that, pursuant to the terms of this Plan, is reserved for the Committee, and any such action taken by the full Board shall have the same force and effect as if the Committee had taken such action.

  
 (b) Subject to the provisions of this Plan and applicable law,
the Committee shall be authorized and empowered to do all things necessary or desirable in connection with the administration of this Plan, including, without limitation, the following (in each case subject to the specific terms of any Award):

  
 (i) adopt, amend and rescind rules and
regulations relating to this Plan; 
  
 (ii)
determine which persons qualify as Participants and to which of such Participants, if any, and when, Awards shall be granted hereunder; 
  
 (iii) grant Awards to Participants and determine the terms and conditions thereof, including the number of Common Shares issuable pursuant
thereto and the circumstances under which Awards become exercisable or vested or are forfeited or expire, which terms may but need not be conditioned upon the passage of time, continued employment, the satisfaction of performance criteria, the
occurrence of certain events (including events which the Committee determines constitute a change in control), or other factors; 
  
 (iv) accelerate the exercisability of an Award or extend the period during which an owner of an Award may exercise his or her rights under
such Award (but not beyond the Termination Date); 
  

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 (v) determine whether, and the extent to which, adjustments are required pursuant to
Section 7 hereof; 
  
 (vi) interpret and construe
this Plan and the terms and conditions of any Award granted this Plan; and 
  
 (vii) determine the terms and conditions of options issued to a Non-Employee Director. 
  
 (c) All decisions, determinations, and interpretations of the Committee shall be final and conclusive upon any Participant to whom the Award has been
granted and to any other person holding an Award. 
  
 (d) The
Committee may, in the terms of the Award or otherwise, temporarily suspend the exercisability of an Award and/or the issuance of Common Shares under an Award, and/or the sale or other disposition of Common Shares acquired pursuant to an Award, if
the Committee determines that securities law, applicable Bermuda law or other considerations so warrant. 
  
 Section 7. Adjustments. 
  
 If the outstanding Common Shares are increased, decreased or exchanged for or converted into cash, property or a different number or kind of securities,
or if cash, property or securities are distributed in respect of such outstanding securities, in either case as a result of a reorganization, merger, consolidation, amalgamation, recapitalization, restructuring, reclassification, dividend (other
than a regular, quarterly cash dividend), bonus issue or other distribution, share split, reverse share split, share subdivision, consolidation and division, or the like, then, unless the terms of such transaction or this Plan shall provide
otherwise, the Committee shall make appropriate and proportionate adjustments in (a) the number, exercise or settlement price and type of shares or other securities or cash or other property, as applicable, that may be acquired pursuant to Incentive
Stock Options and other Awards theretofore granted under this Plan; and (b) the maximum number and type of shares or other securities that may be issued pursuant to Incentive Stock Options and other Awards thereafter granted under this Plan;
provided, however, that no adjustment shall be made to the number of Common Shares that may be acquired pursuant to outstanding Incentive Stock Options or the maximum number of Common Shares with respect to which Incentive Stock
Options may be granted under this Plan to the extent such adjustment would result in such options being treated as other than Incentive Stock Options unless the Company and the Participant both consent to such adjustment; and provided
further, that absent the affirmative consent of the Committee, no such adjustment shall be made to the extent the Committee determines that such adjustment would result in the disallowance of a federal income tax deduction for compensation
attributable to such Option by causing such compensation to be other than performance-based compensation for purposes of Section 162(m) of the Code. Any adjustment pursuant to this Section 7 shall be final and binding on the Company and all
Participants. 
  
 Section 8. Amendment and Termination of
Plan. 
  
 The Committee may amend or terminate this Plan
or any agreement evidencing an Award under this Plan at any time and in any manner, subject to the following limitations: 
  
 (a) No such amendment or termination shall deprive the recipient of any Award theretofore granted under this Plan, without the consent of such recipient,
of any of his or her 

  

 5 

 
material rights thereunder or with respect thereto, provided that no such consent shall be required if the Committee determines in its sole discretion and
prior to the date of a Change in Control (as defined in Section 12 hereof) that such amendment or alteration is not reasonably likely to significantly diminish the benefits provided under such Award, or that any such diminution has been adequately
compensated; and 
  
 (b) If an amendment to this Plan would (i)
increase the maximum number of Common Shares that may be issued pursuant to (A) all Awards granted under this Plan or (B) all Incentive Stock Options granted under this Plan, (ii) change the class of persons eligible to receive Awards under this
Plan, or (iii) affect this Plan’s compliance with applicable provisions of the Code, as amended from time to time, the amendment shall be subject to approval by the Company’s shareholders to the extent required to comply with Section 422
of the Code and other applicable provisions of or rules under the Code, as amended from time to time. 
  
 Section 9. Effective Date of Plan. 
  
 This Plan shall be effective as of July 3, 2002, the date effective upon which it was approved by the Board; provided, however, that no
Common Shares may be issued under this Plan until it has been approved by the affirmative vote of the holders of a majority of the outstanding voting shares of the Company, which approval shall be obtained within twelve (12) months after the date
hereof. 
  
 Section 10. Definition of Fair Market Value.

  
 For purposes of this Plan, “Fair Market Value”
shall mean the fair market value of the applicable class of Common Shares; provided, that for any Award containing a similar definition, the definition contained in the Award shall control. If the applicable class of Common Shares is not publicly
traded, fair market value shall be determined by the Committee and may be computed by any method that the Committee in good faith believes will reflect the fair market value of the Common Shares on the date of such determination. If the applicable
class of Common Shares is publicly traded, fair market value shall be the closing sale price per share of the applicable class of Common Shares, if the applicable class of Common Shares is listed on a national securities exchange, or if the
applicable class of Common Shares is not then so listed, the closing bid price per share of the applicable class of Common Shares, on the day in question (or, if such day is not a trading day or if no sales of the applicable class of Common Shares
were made on such day, on the nearest preceding trading day on which sales of the applicable class of Common Shares were made), as reported in The Wall Street Journal, or, if trading in the applicable class of Common Shares is not then
reported in The Wall Street Journal, at such closing sale or bid price as may then appear in what the Committee in its judgment then deems to be the most nearly comparable listing or reporting service. 
  
 Section 11. Non-Employee Director Options. 
  
 (a) The Committee is authorized under this Plan to grant Non-Employee
Directors options (each a “Non-Employee Director Option”) to purchase up to an aggregate of fifty thousand (50,000) shares, subject to adjustment as provided in Section 7 hereof. 
  
 (b) Subject to the terms of any Award, each Non-Employee Director Option
granted under this Plan shall expire upon the first to occur of the following: 
  
 (i) Twenty-four (24) months after the date upon which the optionee shall cease to be a director of the Company; or 
  

 6 

 (ii) The tenth (10th) anniversary of the Date of Grant of such Non-Employee Director
Option. 
  
 (c) Each Non-Employee Director Option shall have an
exercise price equal to the greater of (i) the aggregate fair market value on the date of grant of such option of the applicable class of Common Shares subject thereto or (ii) the aggregate par value of the applicable class of such Common Shares on
such date. 
  
 (d) Subject to the terms of any Award, all
outstanding Non-Employee Director Options theretofore granted under this Plan shall become fully exercisable upon the first to occur of the following: 
  
 (i) the date of shareholder approval of a reorganization, amalgamation, merger or consolidation of the Company as a result of which the
outstanding securities of the class or classes then subject to this Plan are exchanged for or converted into cash, property and/or securities not issued by the Company or by a company whose common equity holders immediately after such transaction
consist only of persons who are holders of the common equity of the Company immediately before such transaction; 
  
 (ii) the first date upon which the directors of the Company who were nominated by the Board for election as directors shall cease to
constitute a majority of the authorized number of directors of the Company; 
  
 (iii) the dissolution or liquidation of the Company; or 
  
 (iv) the sale of all or substantially all of the property and assets of the Company. 
  
 (e) In lieu of any Non-Employee Director Option, the Committee may grant to
Non-Employee Directors offers to purchase Common Shares immediately, or may make grants of Common Shares, to such non-employee directors in exchange for their service on the Board of Directors of the Company. 
  
 Section 12. Change in Control. 
  
 (a) The Committee shall establish the terms and conditions applicable to each
option or other Award in the event of a Change in Control (as defined in Section 12(i) hereof). Such terms and conditions may differ among Participants and among different types of Awards, all as the Committee determines in its sole and absolute
discretion. 
  
 (b) In the case of any Common Shares to be
acquired upon the exercise of an unvested option, the terms and conditions applicable to any such shares in the event of a Change in Control shall correspond, in the manner determined by the Committee in its sole discretion, to the terms and
conditions that apply to the underlying option in the event of a Change in Control. 
  
 (c) Immediately following the consummation of the Change in Control, all outstanding options and other Awards shall terminate and cease to be outstanding, except to the extent assumed by the successor entity (or
parent thereof), or, in the case of a transaction in which the Company is not merged into another entity and does not become a subsidiary of another entity, the option remains outstanding following the Change in Control pursuant to affirmative
language to 

  

 7 

 
this effect in the Award (in which case the option will be so converted or remain outstanding, as applicable). 
  
 (d) The Committee may make such modifications to the provisions in this
Sections 12 as it deems appropriate in any agreement evidencing an Award. 
  
 (e) In addition to and not by way of limitation of the Committee’s discretion, the Committee shall have the discretion, exercisable either at the time an Award is granted or at any time while the Award remains
outstanding, to structure or change one or more Awards so that those Awards shall automatically accelerate and vest in full or in part (and any repurchase rights of the Company with respect to Common Shares shall immediately terminate in full or in
part) upon the occurrence of a Change in Control, whether or not those Awards are to be assumed in the Change in Control. 
  
 (f) In addition to and not by way of limitation of the Committee’s discretion, the Committee shall also have the discretion, exercisable either at
the time the Award is granted or any time while the Award remains outstanding, to structure or change such Award so that the shares subject to that Award will automatically vest on an accelerated basis (and any repurchase rights of the Company with
respect to Common Shares shall automatically lapse on an accelerated basis) by reason of a termination, other than for Cause within a designated period following the effective date of any Change in Control in which the Award is assumed. Any Award so
accelerated shall remain exercisable for the fully-vested Common Shares until the expiration or sooner termination of the Award’s term. 
  
 (g) The portion of any Incentive Stock Option accelerated in connection with a Change in Control shall remain exercisable as an Incentive Stock Option
only to the extent the applicable $100,000 limitation in Section 422(d) of the Code is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a nonqualified option. 

 
 (h) The grant of Awards under this Plan shall in no way affect the right
of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, amalgamate, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 
  
 (i) For purposes of this Plan, (subject to any definition contained in Awards
granted under this Plan), the term “Change in Control” shall mean (i) any merger or amalgamation of the Company with or into another person or entity as a result of which the holders of the Company’s then outstanding voting shares
immediately prior to such transaction own, immediately after such transaction, voting shares of the survivor of such merger or amalgamation (whether the Company or such other entity) or the parent entity of such survivor constituting less than fifty
percent (50%) of the voting power of such survivor, (ii) the sale of all or substantially all of the Company’s assets to any other person or entity (other than a subsidiary of the Company), (iii) any other transaction or series of related
transactions (other than as the result of the issuance of newly issued shares or other securities by the Company in circumstances to which clause (i) of this sentence does not apply) in which the holders of the Company’s outstanding voting
shares immediately prior to such transaction own, immediately after such transaction, voting shares of the Company constituting less than fifty percent (50%) of the voting power of the Company, (iv) the dissolution or liquidation of the Company, (v)
a contested election of directors, as a result of which or in connection with which the persons who 

  

 8 

 
were directors of the Company before such election or their nominees cease to constitute a majority of the Board, or (vi) any other event specified by the
Committee, regardless of whether at the time an Award is granted or thereafter. Notwithstanding the foregoing, “Change of Control” shall not include any transaction if as a result of such transaction either First Reserve Corporation
(including the investment limited partnerships it manages) or Odyssey Investment Partners, LLC, or both, either (y) together hold directly or indirectly a greater percentage of the outstanding voting securities of the Company than any other
shareholder, and retain direct or indirect control of more than 35% of the outstanding voting securities of the Company, or (z) has the ability to appoint more than 50% of the members of the Board of Directors of the Company. 
  
 Section 13. Compliance with Other Laws and Regulations.

  
 This Plan, the grant and exercise of Awards thereunder,
and the obligation of the Company to sell and deliver shares under such Awards, shall be subject to all applicable federal and state laws, rules and regulations of the United States and Bermuda Law and to such approvals by any governmental or
regulatory agency as may be required. The Company shall not be required to issue, or deliver any certificates for, Common Shares prior to the completion of any registration or qualification of the Shares under any federal or state law of the United
States and Bermuda Law or issuance of any ruling or regulation of any government body which the Company shall, in its sole discretion, determine to be necessary or advisable. 
  
 Section 14. No Right to Company Employment. 
  
 Nothing in this Plan or as a result of any Award granted pursuant to this Plan shall confer on any individual any right to
continue in the employ of the Company or interfere in any way with the right of the Company to terminate an individual’s employment at any time. The agreement evidencing an Award may contain such provisions as the Committee may approve with
respect to the effect of approved leaves of absence. 
  
 Section 15. Liability of Company. 
  
 The
Company and any affiliate that is in existence or hereafter comes into existence shall not be liable to a Participant or other persons as to: 
  
 (a) The non-issuance or sale of Common Shares as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority
deemed by the Company’s counsel to be necessary for the lawful issuance and sale of any Common Shares hereunder; and 
  
 (b) Any tax consequence to a Participant due to the issuance, exercise, settlement, cancellation or other transaction involving any Award granted
hereunder. 
  

 9 

 Section 16. Non-Transferability of Award. 
  
 Awards granted under this Plan may not be transferred in any manner otherwise
than by will or by the laws of descent or distribution and may be exercised during the lifetime of a Participant only by him or her. The terms of Awards granted pursuant to any Participant shall be binding upon the executors, administrators, heirs,
successors and assigns of such Participant. 
  
 Section 17.
Governing Law 
  
 This Plan and any Awards and
agreements hereunder shall be interpreted and construed in accordance with the laws of the state of New York, without giving effect to the choice of laws principles thereunder. 
  

 10 

 IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the foregoing by the Board, Dresser, Ltd. has
caused this plan to be duly executed in its name and behalf by its proper officers thereunto duly authorized as of the 27th day of August, 2004. 
  

			
		
	By:	 	 
	 	 	 Mark J. Scott
 Vice President of Human
Resources

  

 11

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