(TRUST AS BENEFICIARY)
DRESSER INDUSTRIES, INC.
EXECUTIVE LIFE INSURANCE AGREEMENT
THIS AGREEMENT is made as of this 18th day of December, 1997 between
Dresser Industries, Inc. ("DII") and __________________________________ Bank
N.A. (the "Trustee"), as trustee of the ________________________Trust (the
"Trust") dated ________________.
DII has established the Dresser Industries, Inc. Executive Life
Insurance Program (the "Program"), effective as of February 1, 1998; and
The Participant is an employee of DII and has been selected to
participate in the Program by the Employee Benefits Committee (or in the case
of Corporate Officers, the Executive Compensation Committee of the Board) of
DII (collectively, the "Committee"); (the "Participant") has
irrevocably assigned all rights and benefits under the Program to the
Trustee; and
The owner of life insurance policy number _________________ (the
"Insurance Contract") issued by ITT Hartford Life and Annuity Insurance
Company (the "Insurance Company") on the Participant's life shall be DII; and
DII is willing to assist in the payment of premiums under the Insurance
Contract as provided in this Agreement; and
DII is endorsing an interest in the death benefit proceeds of the
Insurance Contract to the Trustee;
In consideration of the mutual covenants and in this Agreement, DII and
the Trustee agree as follows:
1. INCORPORATION OF PROGRAM. The Participant agrees to participate in the
Program (as it may be amended from time to time) in accordance with its
provisions. The terms and conditions of the Program (as it may be amended
from time to time) are incorporated into this Agreement in their entirety.
The terms and conditions of the Insurance Contract are incorporated into
this Agreement
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in their entirety and the Program shall be subject to the terms of the
Insurance Contract in all respects.
2. PAYMENT OF PREMIUMS.
(a) BY DII. DII shall pay to the Insurance Company the total annual
premium rate required to maintain the Insurance Contract until the date
this Agreement terminates under Section 6. A portion of each such payment
may be reported as imputed income includable as compensation in the
Participant's gross income in accordance with federal, state, or local
income tax laws.
(b) BY THE PARTICIPANT. The Participant nor the Trustee shall not be
required to pay any of the annual premiums on the Insurance Contract.
3. INSURANCE CONTRACT BENEFICIARY DESIGNATION. The right to designate and
change the beneficiary of the Insurance Contract and to elect an optional
mode of settlement is reserved to the Trustee. The Trustee shall have the
right to designate and change the beneficiaries and contingent
beneficiaries and to elect an optional mode of settlement in writing
subject to the interest of DII under Section 4, and DII will make the
Insurance Contract available to the Trustee if required for endorsement,
assignment, or a change of beneficiary.
4. PAYMENT OF INSURANCE CONTRACT PROCEEDS IN EVENT OF DEATH. DII is required
to maintain a total life insurance benefit at least equal to the sum of:
(i) the Recovery Amount; and
(ii) 2 times the sum of base pay (annual rate as of January 1 of the
Program Year) and the annual incentive earned in the prior fiscal
year, without regard for the bonus reserve (the "Participant
Benefit").
If the Participant dies while the Insurance Contract and this Agreement are
in force, the proceeds of the Insurance Contract will be payable as
follows:
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(a) DII shall be entitled to the amount of the life insurance benefit
proceeds equal to the aggregate amount of premium paid by DII pursuant to
this Agreement, less any outstanding Insurance Contract loans received by
DII prior to the death of the Participant and any interest accrued thereon
(the "Recovery Amount").
(b) The beneficiary designated by the Trustee shall be entitled to the
Participant Benefit.
However, in no event shall the amount of (ii) above ever be reduced,
except for the occurrence of one of the following events, and then the amount
of (ii) above shall be one half of its amount the day prior to the occurrence
of the event:
- Participant becomes totally disabled as determined or approved by the
Committee,
- Participant voluntarily terminates employment after participating in
this Program for at least five (5) Program Years, during the ten (10)
Program Year period ending on his/her termination date, and terminates
after age fifty-five (55) with ten (10) years of Dresser Industries,
Inc. (or Dresser Joint Venture Company) service.
- Any other situation as determined or approved by the Committee.
5. DII'S EXERCISE OF RIGHTS AS OWNER. During the lifetime of the Participant
and prior to the termination of this Agreement, DII may exercise any of its
rights as Owner of the Insurance Contract without the consent of the
Trustee. If an Insurance Contract loan is made by DII, DII shall be
responsible for the interest thereon and shall pay such interest as it
becomes due. The Insurance Contract shall be held by DII until the
termination of this Agreement.
6. TERMINATION OF AGREEMENT. This Agreement shall terminate upon the first
to occur of the following:
(a) the termination date specified in written notice given by DII pursuant
to Section 7(c);
(b) the termination date specified in written notice given by the
Participant pursuant to Section 7(c);
(c) the date Participant terminates employment voluntarily;
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(d) the date of surrender of the Insurance Contract;
(e) the date of the termination of Participants employment "for cause"
(gross, willful or intentional misconduct which causes harm to DII);
(f) the date an employee does not maintain an eligible position within DII;
or
(g) the date of death of the Participant.
If this Agreement terminates under 6(b), (c) or (f) above, the Participant
may elect to have DII transfer the Insurance Contract to the Participant
simultaneous to the occurrence of payment to DII by the Participant of the
greater of the aggregate amount of the premium payments made by DII
pursuant to this Agreement or the Insurance Contract cash surrender value.
If this Agreement terminates under 6(a) or (d) above, DII will immediately
transfer ownership of the Insurance Contract to the Participant.
7. AMENDMENT AND ASSIGNMENT OF AGREEMENT.
(a) This Agreement shall not be modified or amended except in writing,
signed by the Program Administrator and the Trustee.
(b) This Agreement is binding upon DII, its successors, the Participant
(and the Participant's heirs, executors, administrators, and transferees),
the Trustee and any Insurance Contract beneficiary.
(c) This Agreement may be terminated by either the Trustee or DII by 30
days written notice to the other.
8. TAXES. DII makes no guarantees and assumes no obligation or responsibility
with respect to the Participant's or Trustee's federal, state, or local
income, estate, inheritance, or gift tax obligations, if any, under the
Program, this Executive Life Insurance Agreement, or any Agreement or
Insurance Contract entered into in connection with the Program. DII may
deduct from the amount of any
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benefits payable pursuant to this Executive Life Insurance Agreement any
tax required to be withheld by any federal, state or local government.
9. PROGRAM YEAR. For purposes of this agreement, each Program Year shall
begin on January 1 (except for the first Program Year which shall begin on
February 1) of each calendar year and end on December 31 of the same
calendar year.
10. PROGRAM ADMINISTRATOR. The Committee shall be responsible for the
interpretation, control and administration of the Program. The Committee
can delegate its responsibilities to the Vice President, Human Resources of
DII.
11. MISCELLANEOUS. Nothing contained in this Agreement shall be construed as
giving the Participant the right to be retained in the employment of DII,
or to limit the power of DII to assign the Participant to other duties or
responsibilities or to terminate the Program at any time.
12. CHANGE OF CONTROL. Upon Change of Control of DII, the Program shall
continue for a period of at least five (5) years from the date of such
event as if the Change of Control had not occurred. Further, if a
Participant's employment is terminated by reason of such event or is
Constructively Terminated (reduction in the authority, duties,
responsibilities of his position within five (5) years of the Change of
Control), the Participant's Benefit shall continue for the remainder of the
five (5) year period without reduction. If a Participant becomes eligible
for a reduced benefit under Section 4 any time during this five (5) year
period (or would have become eligible if the Participant's employment had
continued during this five (5) year period), then the Program shall
continue for the life of the Participant at the reduced level described in
Section 4. Change of Control is defined as:
(a) The sale of all or a majority of DII's assets;
(b) DII's liquidation or dissolution;
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(c) The purchase by any persons or entities of beneficial ownership of at
least 30% of DII's common stock (or 30% of the combined voting power of
DII's then outstanding voting securities entitled to vote generally in the
election of directors);or,
(d) The approval by DII'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.
13. STATE LAW. This Agreement shall be subject to and construed in accordance
with the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
By:
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WITNESS PARTICIPANT
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