BAKER HUGHES
INCORPORATED
PERFORMANCE UNIT AWARD
AGREEMENT
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March 31, 2009
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Number of
Performance Units Awarded:
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___________
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AWARD OF PERFORMANCE
UNITS
The Compensation
Committee (the “ Committee ”) of the Board of
Directors of Baker Hughes Incorporated, a Delaware corporation (the
“ Company ”), pursuant to the Baker Hughes
Incorporated 2002 Director & Officer Long-Term Incentive Plan
(the “ Plan ”), hereby awards to you, the
above-named awardee, effective as of the Date of Award set forth
above, that number of Performance Units set forth above (each, a
“ Performance Unit ”, and collectively, the
“ Performance Units ”), on the terms and
conditions set forth in this Performance Unit Award Agreement (this
“ Agreement ”).
Each Performance
Unit provides you an opportunity to earn a cash payment based upon
the achievement of certain performance goals established by the
Committee (the “Performance Goals”) for the
three-year period beginning January 1, 2009, and ending
December 31, 2011 (the “ Performance Period
”). The Performance Goals and the formulas for determining
the amounts payable under this Agreement were established by the
Compensation Committee on March 25, 2009. The performance
metrics utilized in the Performance Goals are: revenue growth,
operating margin and return on net capital employed. There are
three levels of performance applicable under the Performance Goals:
Entry Level, Expected Value, and Over Achievement. The Committee
may not increase the amount payable under this
Agreement.
If the Performance
Goals are not achieved at Entry Level of performance and a Change
in Control of the Company has not occurred on or before the last
day of the Performance Period, then the award pursuant to this
Agreement shall lapse and be forfeited as of December 31,
2011.
The
Committee’s determination of whether the Performance Goals
applicable to this Agreement are achieved shall be binding upon all
persons.
Any amount payable
to you pursuant to this Agreement will be paid to you by the
Employer on March 9, 2012 (the “Scheduled Payment
Date” ), unless otherwise provided under the Terms and
Conditions. Such payment will be made to you in exchange for the
Performance Units and thereafter you shall have no further rights
with respect to such Performance Units or the Agreement.
If a Change in
Control of the Company occurs or your employment with the Company
and Affiliates terminates on or before the last day of the
Performance Period, your rights to the
Performance
Units and a payment under this Agreement will be determined as
provided in the attached Terms and Conditions of Award Agreements
(dated March 31, 2009) (the “ Terms and
Conditions ”).
The Performance
Units that are awarded hereby to you shall be subject to the
prohibitions and restrictions set forth herein with respect to the
sale or other disposition of such Performance Units and the
obligation to forfeit and surrender such Performance
Units.
The Performance
Units and your rights under this Agreement may not be sold,
assigned, pledged, exchanged, hypothecated or otherwise
transferred, encumbered or disposed of (other than by will or the
applicable laws of descent and distribution). Any such attempted
sale, assignment, pledge, exchange, hypothecation, transfer,
encumbrance or disposition in violation of this Agreement shall be
void and the Company Group shall not be bound thereby.
Capitalized terms
that are not defined herein shall have the meaning ascribed to such
terms in the Plan or the Terms and Conditions.
In accepting the
award of Performance Units set forth in this Agreement you accept
and agree to be bound by all the terms and conditions of the Plan,
this Agreement and the Terms and Conditions.
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BAKER HUGHES
INCORPORATED
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Chad C.
Deaton
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Chairman,
President and Chief Executive Officer
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2
BAKER HUGHES
INCORPORATED
TERMS AND CONDITIONS
OF
PERFORMANCE UNIT AWARD AGREEMENTS
(March 31, 2009)
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1.
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CHANGE IN CONTROL/TERMINATION OF
EMPLOYMENT. The following provisions will apply
in the event a Change in Control of the Company occurs, or your
employment with the Company and all Affiliates (collectively, the
“ Company Group ”) terminates, before the last
day of the Performance Period (as that term is defined in the
Performance Unit Agreement awarded to you (the “
Agreement ”)).
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1.1
Termination Generally . If your employment with the Company
Group terminates on or before the last day of the Performance
Period for any reason other than one of the reasons described in
Sections 1.2 through 1.5 below, all of your rights in the
Agreement, including all rights to the Performance Units granted to
you, will lapse and be completely forfeited on the date your
employment terminates.
(i)
Termination Without Cause or for Good Reason in Connection With
a Change in Control on or Before the Last Day of the Performance
Period . If (1) a Change in Control of the Company occurs
on or before the last day of the Performance Period and (2)
(a) the Company Group terminates your employment without Cause
on or before the last day of the Performance Period prior to a
Change in Control of the Company and such termination is at the
request or direction of a Person who has entered into an agreement
with the Company the consummation of which would constitute a
Change in Control of the Company or is otherwise in connection with
or in anticipation of a Change in Control of the Company or
(b) you terminate your employment with the Company Group for
Good Reason on or before the last day of the Performance Period
prior to a Change in Control of the Company and such termination or
the circumstance or event which constitutes Good Reason occurs at
the request or direction of a Person who has entered into an
agreement with the Company the consummation of which would
constitute a Change in Control of the Company or is otherwise in
connection with or in anticipation of a Change in Control of the
Company, then the Company will pay to you in cash an amount
determined under the following formula in lieu of any other amounts
under the Agreement:
(1) multiplied by (2) multiplied by
(3) divided by (4)
where
(1) is $100, (2) is the number of Performance Units that
were awarded to you under the Agreement, (3) is the number of
days from (and including) the first day of the Performance Period
to (and including) the day before the date your employment
relationship with the Company Group terminates as described in this
Section 1.2(i), and (4) is the number of days during the
Performance Period. Any amount payable to you pursuant to this
Section 1.2(i) will be paid by the Company to you ten (10)
business days after the later of (1) the date of
the
1
Change of
Control of the Company or (2) the date of your Separation From
Service if you are not a Specified Employee or on the date that is
six months following your Separation From Service if you are a
Specified Employee. Such payment will be made to you in exchange
for the Performance Units and thereafter you shall have no further
rights with respect to such Performance Units or the Agreement and
the Company Group will have no further obligations to you pursuant
to the Performance Units or the Agreement. For purposes of these
Terms and Conditions, “Separation From Service”
has the meaning ascribed to that term in Section 409A and
“Specified Employee” means a person who is, as
of the date of the person’s Separation From Service, a
“specified employee” within the meaning of
Section 409A, taking into account the elections made and
procedures established in resolutions adopted by the Administrative
Committee of Baker Hughes. For purposes of these Terms and
Conditions, “Section 409A” means section
409A of the Internal Revenue Code of 1986, as amended and the
Department of Treasury
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