DRESSER-RANDGROUP INC. GRANTNOTICE FOR 2008 STOCK INCENTIVE PLAN PERFORMANCERESTRICTED STOCK UNITS

 

*

The portion of the Target Award that vests on a Vesting Date shall be calculated by straight-line interpolation for results achieved between Threshold and Target, or for results achieved between Target and Maximum.  For example, if the Company’s Relative TSR for an applicable period is at 37.5% (halfway between the 25th Percentile and the 50th Percentile), the portion of the Target Award that would vest for that period would be 25% (halfway between 16.67% and 33.33%).

 

·

“Company’s Relative TSR” means the ranking of the TSR of the Company’s Common Shares for the applicable performance period, on a percentile basis, compared to the TSRs of the common shares of the Peer Group for such performance period.

 

·

“TSR” for each performance period means the percentage change in the Average Stock Price of a Common Share (or for each member of the Peer Group, a share of the class of common stock most widely traded) from January 1, 2010 through the last day of the applicable year (or, in the event of Retirement in 2010, death or Disability, the date of such Retirement, death or Disability).  For this purpose, any dividends paid between January 1, 2010 and the last day of the applicable year (or, in the event of Retirement in 2010, death or Disability, the date of such Retirement, death or Disability) with respect to a Common Shares (or for each member of the Peer Group, a share of the class of common stock most widely traded) shall reflect cumulate rate of return utilizing price appreciation plus reinvestment of dividends and the to the Average Stock Price as of the last day of the applicable year (or, in the event of Retirement in 2010, death or Disability, the date of such Retirement, death or Disability) so that they are reflected as an increase in such Average Stock Price.  In addition, TSR shall be appropriately adjusted to reflect stock splits, stock dividends, and similar events with respect to the Common Shares (or, as applicable, the class of common stock taken into account in determining the TSR of a member of the Peer Group).

 

·

“Peer Group” means the companies listed on Exhibit A.  If a member of the Peer Group is acquired or is otherwise a party to a corporate transaction and no longer exists as a separate entity, or if its common stock is delisted, the TSR of the Peer Group will be determined for remaining performance periods retroactively to January 1, 2010, without such former Peer Group member.

 

·

“Average Stock Price” means the average closing price of the Common Shares (or for each member of the Peer Group, the class of common stock most widely traded) for the 30 calendar days immediately preceding January 1, 2010 or, as applicable, the last day of the applicable calendar year (or, in the event of Retirement in 2010, death or Disability or Retirement, the date of such Retirement, death or Disability).

 

(i)

if the Grantee’s separation from service is due to death or Disability before December 31, 2012, the Award shall vest with respect to with respect to any uncompleted calendar years in the same manner as specified above, but using the Company’s Relative TSR through the date of death of Disability rather than through the end of the applicable calendar year(s);

 

(ii)

subject to Section 9, if the Grantee's separation from service is due to the Grantee's Retirement (as defined in Section 18.G below) (x) during calendar year 2010, a pro-rate portion of the Target Award for 2010 shall vest, or (y) during calendar year 2011 or 2012, the Award shall continue to vest in the same manner as specified above (i.e., based on actual performance); and

 

(iii)

if the Grantee’s separation from service is for any reason other than Retirement, death or Disability, any then-unvested portion of the Award held by the Grantee shall be forfeited and canceled as of the date of such separation from service.

3.

SETTLEMENT OF PERFORMANCE RESTRICTED STOCK UNITS

 

A.

By accepting the Performance RSU, the Grantee acknowledges and agrees that (i) the Company is engaged in a highly competitive business; (ii) the Company has expended considerable time and resources to develop goodwill with its customers, vendors, and others, and to create, protect, and exploit its Confidential Information (as defined in Section 18.B below); (iii) the Company must continue to prevent the dilution of its goodwill and unauthorized use or disclosure of its Confidential Information to avoid irreparable harm to its legitimate business interests; (iv) the Grantee's participation in or direction of the Company's day-to-day operations and strategic planning are an integral part of the Company's continued success and goodwill; (v) in the period between the Grantee's notice to the Committee of the Grantee's Retirement and the date of the Grantee's Retirement (the "Transition Period"), the Grantee will participate in identifying a successor, transitioning his or her responsibilities to and training a successor, and engaging in other transition activities (the "Transition Process"); (vi) given the Grantee's position and responsibilities, including during the Transition Period, he or she necessarily will be relying on and/or creating Confidential Information that belongs to the Company and enhances the Company's goodwill; during the Transition Process will be transmitting Confidential Information to his or her successor; and in carrying out his or her responsibilities, including during the Transition Process, the Grantee in turn will be relying on the Company's goodwill and the disclosure by the Company to him or her of Confidential Information; (vii) the Grantee will have access to Confidential Information, including concerning the Transition Process, that could be used by any competitor of the Company in a manner that would irreparably harm the Company's competitive position in the marketplace and dilute its goodwill; (viii) the Grantee's engaging in any of the Restricted Activities during the Restriction Period would result in the inevitable disclosure or use of Confidential Information for the Competitor's benefit or to the detriment of the Company; (ix) the Grantee will return to the Company upon Retirement all the Confidential Information, in whatever form or media and all copies thereof, in his or her possession, custody, or control; (x) by giving advance notice of his or her Retirement, the Grantee represents that he or she will not engage in the Restricted Activities; (xi) the Company is relying on such representation in providing the Grantee continuing access to Confidential Information and authorizing him or her to engage in the Transition Process and other activities that will create new and additional Confidential Information during the Transition Period; and (xi) absent the Grantee's agreement to this Section 8, the Company would not authorize the Grantee to participate in the Transition Process and engage in other activities that provide access to or create new and additional Confidential Information in an unfettered fashion; and would not provide for the continued vesting of the Performance RSU upon Retirement as provided for in Section 2.

 

B.

The Company, by granting the Performance RSU, and the Grantee, by accepting the Performance RSU, thus acknowledge and agree that during the remaining term of the Grantee's employment with the Company, including the Transition Period, the Grantee (i) will receive Confidential Information that is unique, proprietary, and valuable to the Company; (ii) will rely on and/or create Confidential Information that is unique, proprietary, and valuable to the Company; and (iii) will benefit, including without limitation by way of increased earnings and earning capacity, from the goodwill the Company has generated and from the Confidential Information.

 

C.

Accordingly, in consideration of the promises of the Company set out in Section 8.B, the Performance RSU, and the continued vesting of the Performance RSU upon Retirement as provided for in Section 2, the Grantee agrees that:

 

1.

He or she will not engage in any of the Restricted Activities (as defined in Section 18.E below) during the Restriction Period (as defined in Section 18.F below);

 

2.

If he or she engages in, or threatens to engage in, any of the Restricted Activities during the Restriction Period or otherwise violates his or her obligations under this Section 8, then (x) the Performance RSUs held by the Grantee that have not been settled shall immediately be forfeited and canceled (regardless of whether then vested or unvested) and (y) with respect to any Performance RSUs that have been settled, the Grantee shall immediately pay to the Company the fair market value of the Shares associated with the settlement of the Performance RSUs at the time of vesting;

 

3.

If he or she engages in, or threatens to engage in, any of the Restricted Activities during the Restriction Period or otherwise violates his or her obligations under this Section 8, the Company would not have an adequate remedy at law and would be irreparably harmed and, accordingly, that the Company shall be entitled to equitable relief, including preliminary and permanent injunctions and specific performance, in the event the Grantee engages or threatens to engage in any of the Restricted Activities during the Restriction Period or otherwise violates his or her obligations under this Section 8, without the necessity of posting any bond or proving special damages or irreparable injury; and

 

4.

Neither Section 8.C.2 nor Section 8.C.3 constitute the Company's exclusive remedy for a breach or threatened breach of the Grantee's obligations under this Section 8, but shall be in addition to all other remedies available to the Company at law or equity.

 

D.

By accepting the Performance RSU, the Grantee acknowledges and agrees that (i) the restrictions contained in this Section 8 are ancillary to an otherwise enforceable agreement, including without limitation the mutual promises and undertakings set out in Section 8.A and B, the Performance RSU, and the continued vesting of the Performance RSU upon Retirement as provided for in Section 2; (ii) the Company's promises and undertakings set out in these Standard Terms and Conditions, and in particular Section 8.B, the Grant Notice, and the Plan, and the Grantee's position and responsibilities with the Company and his or her promises and undertakings set out in Section 8.A, give rise to the Company's interest in restricting the Grantee's post-Retirement activities; (iii) such restrictions are designed to enforce the Grantee's promises and undertakings set out in Section 8.A and his or her common-law obligations and duties owed to the Company; (iv) the restrictions are reasonable and necessary, are valid and enforceable, and do not impose a greater restraint than necessary to protect the Company's goodwill, Confidential Information, and other legitimate business interests; (v) he or she will immediately notify the Company in writing should he or she believe or be advised that the provisions of this Section 8 are not, or likely are not, valid and enforceable; (vi) he or she will not challenge the enforceability of this Section 8; (vii) absent the Grantee's agreement to this Section 8, the Company would not authorize the Grantee to participate in the Transition Process and engage in other activities that provide access to or create new and additional Confidential Information in an unfettered fashion and would not provide for the continued vesting of the Performance RSU upon Retirement as provided for in Section 2.

 

E.

The provisions of Section 2 providing for the continued vesting of the Performance RSU upon Retirement and this Section 8 are mutually dependent and not severable, and the Grantee acknowledges and agrees that the Company would not provide for the continued vesting of the Performance RSU upon Retirement as provided for in Section 2 but for the Grantee's promises set out in and the enforceability of this Section 8.  Accordingly, if Section 8 or any part of it is ever declared to be illegal, invalid, or otherwise unenforceable in any respect by a court of competent jurisdiction, then the Grantee agrees that (x) the Performance RSUs held by the Grantee that have not been settled shall immediately be forfeited and canceled (regardless of whether then vested or unvested) and (y) with respect to any Performance RSUs that have been settled, the Grantee shall immediately pay to the Company the fair market value of the Shares associated with the settlement of the Performance RSUs at the time of vesting; provided that if the scope of the restrictions in this Section 8 as to time, geography, or scope of activities are deemed by court of competent jurisdiction to exceed the limitations permitted by applicable law, the Grantee and the Company agree that the restrictions so deemed shall be, and are, automatically reformed to the maximum limitation permitted by such law.

 

A.

"Competitor" shall mean any person or entity that carries on business activities in competition with the activities of the Company, including but not limited to (i) suppliers of rotating equipment, services and solutions for applications in the oil, gas, petrochemical and process industries including for oil and gas production; high-pressure gas injection, gas lift and other applications for enhanced oil recovery; natural gas production and processing; gas liquefaction; gas gathering, transmission and storage; hydrogen, wet and coker gas, synthesis gas, carbon dioxide and other applications for the refining, fertilizer and petrochemical markets; (ii) several applications for the armed forces; (iii) applications for general industrial markets such as paper, steel, sugar, and distributed and independent power generation; (iv) competing environmental solutions such as compressed air energy storage, combined heat and power, air separation, bio fuels, and wave or wind energy; or (v) servicing the Company's installed base of equipment, and the installed base of the Company's class of equipment of other suppliers through the provision of parts, repairs, overhauls, operation and maintenance, upgrades, revamps, applied technology solutions, coatings, field services, technical support and other extended services.  The term "Competitor" specifically includes but is not limited to the centrifugal turbo and reciprocating compressor, steam and gas turbine, rotating machinery, related aftermarket parts and services (including repairs, revamps, re-rates, upgrades, applied technology, overhauls, remanufacturing, installation and start-up) and other competing businesses of (x) GE Oil & Gas/Nuovo Pignone, Siemens (including TurboCare), Solar Turbines, Inc., Rolls-Royce Group plc, Elliott Company, General Electric, Alstom, Mitsubishi Heavy Industries, Hitachi, MAN Turbo, Hickham USA, Sulzer Turbo Services, Wood Group, Burckhardt Compression, Neuman & Esser Group, Ariel Corp., Thomassen Mitsui & Co., Ltd., Ebara, Shin Nippon Machinery Co. Ltd., Caterpillar Inc., Solar, Hoerbiger, or, if those corporate names are not formally correct, the businesses commonly referred to by those names; and (y) the successors to, assigns of, and affiliates of the persons or entities described in clause (x).

 

B.

"Confidential Information" shall mean, without limitation, all documents or information, in whatever form or medium, or consisting of knowledge or "know-how" whether or not recorded in any medium, concerning or evidencing sales; costs; pricing; strategies; forecasts and long range plans; financial and tax information; personnel information (including without limitation compensation, other terms of employment, or performance other than as concerns solely the Grantee); business, marketing and operational projections, plans, and opportunities; and customer, vendor, and supplier information; but excluding any such information that is or becomes generally available to the public other than as a result of any unauthorized disclosure or breach of duty by the Grantee.

 

C.

"Disability" shall have the meaning specified in Section 409A(a)(2)(C) of the Code and the related Treasury Regulations.

 

D.

"Noncompetition Area" shall mean the following geographic areas to the extent the Grantee's duties and responsibilities for the Company take or took place anywhere in or are or were directed at any part of: (i) any foreign country in which the Company has provided, sold, or installed its services, products, or systems or has definitive plans to provide, sell, or install its services, products, or systems during the Grantee's employment by the Company; and (ii) any state or territory of the United States of America.

 

E.

"Restricted Activities" means:

 

1.

The Grantee, whether on his or her own behalf or on behalf of any other individual, partnership, firm, corporation, or business organization, either directly or indirectly soliciting, inducing, persuading, or enticing, or assisting another to solicit, induce, persuade, or entice, any person who is then employed by or otherwise engaged to perform services for the Company, or any person who at the time of the Grantee's conduct had been employed by the Company within the previous 12 months, to leave that employment or cease performing those services;

 

2.

The Grantee, whether on his or her own behalf or on behalf of any other individual, partnership, firm, corporation, or business organization, either directly or indirectly soliciting, inducing, persuading, or enticing, or assisting another to solicit, induce, persuade, or entice, any person or entity who is then a customer, supplier, or vendor of the Company to cease being a customer, supplier, or vendor of the Company or to divert all or any part of such person's or entity's business from the Company; and

 

3.

The Grantee, whether on his or her own behalf or on behalf of any other individual, partnership, firm, corporation, or business organization, either directly or indirectly soliciting, inducing, persuading, or enticing, or assisting another to solicit, induce, persuade, or entice, any person or entity who is a potential customer, supplier, or vendor of the Company, or at the time of the Grantee's conduct was a potential customer, supplier, or vendor of the Company within the previous 12 months, not to become  a customer, supplier, or vendor of the Company or to divert all or any part of such person's or entity's business from the Company; and

 

4.

The Grantee's association directly or indirectly, as an employee, officer, director, agent, partner, stockholder, owner, member, representative, financial contributor, or consultant, with any Competitor.

 

F.

"Restriction Period" shall mean the period of the Grantee's employment by the Company and continuing through the date that is three years after the Grantee's Retirement.

 

G.

"Retirement" shall mean the Grantee's voluntary separation from service after the Grantee has attained age sixty-two and completed at least ten years of continuous service with the Company as of the date of separation or has attained age sixty-five and completed at least five years of continuous service with the Company as of the date of separation and in either event with the express intent not to engage in any of the Restricted Activities after separation, provided that the Grantee has provided the Committee at least one year's advance notice of such retirement.