Exhibit 10.9
BAKER HUGHES INCORPORATED
TERMS AND CONDITIONS
OF
AWARD AGREEMENTS
(January 24, 2007)

1.   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”)).    
  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.       1.2 Potential or Actual Change in Control.

      (i) Termination Without Cause or for Good Reason in Connection With a
Potential Change in Control on or Before the Last Day of the Performance Period.
If (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 (whether or not a Change in Control ever occurs) 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 (whether or not a Change in Control ever occurs) 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 (whether or not a Change in Control ever occurs) 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 Employer (whether or not a Change in Control ever occurs), 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

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      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 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 rules and regulations issued thereunder.         (ii) Employment Not
Terminated Before a Change in Control on or Before the Last Day of the
Performance Period. If a Change in Control of the Company occurs on or before
the last day of the Performance Period and your employment with the Company
Group does not terminate before the date the Change in Control of the Company
occurs, 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 the Change in Control of the Company occurs, and (4) is the
number of days during the Performance Period. Any amount payable to you pursuant
to this Section 1.2(ii) will be paid by the Company to you (a) ten (10) business
days after the date the Change in Control of the Company occurs if the Change in
Control of the Company qualifies as a change in the ownership or effective
control of the corporation, or in the ownership of a substantial portion of the
assets of the corporation, within the meaning of Section 409A, or (b) on
March 12, 2010, if the Change in Control of the Company does not so qualify.
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.

    1.3 Disability. Notwithstanding any other provision of the Agreement or
these Terms and Conditions to the contrary, if you become permanently disabled
before the last day of the Performance Period and while in the active employ of
one or more members of the Company Group, then the Employer will pay to you in
cash an amount determined under the following formula in lieu of any other
amounts under the Agreement:

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(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 you become
permanently disabled, and (4) is the number of days during the Performance
Period. Any amount payable to you pursuant to this Section 1.3 will be paid by
the Company to you ten (10) business days after the date you become permanently
disabled. 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 this
Section 1.3, you will be “permanently disabled” if you (a) are unable to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, or (b) are,
by reason of any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a
period of not less than three (3) months under an accident and health plan
covering employees of the Company Group.       1.4 Death. Notwithstanding any
other provision of the Agreement or these Terms and Conditions to the contrary,
if you die before the last day of the Performance Period and while in the active
employ of one or more members of the Company Group, then the Employer will pay
to your estate 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 date of your death,
and (4) is the number of days during the Performance Period. Any amount payable
to your estate pursuant to this Section 1.4 will be paid to your estate by the
Employer ten (10) business days after the date of your death. Such payment will
be made in exchange for the Performance Units and thereafter your estate and
heirs, executors, administrators shall have no further rights with respect to
such Performance Units or the Agreement and the Company Group will have no
further obligations pursuant to the Performance Units or the Agreement.      
1.5 Retirement. Notwithstanding any other provision of the Agreement or these
Terms and Conditions to the contrary, if your employment with the Company Group
terminates as a result of your Retirement before the last day of the Performance
Period, then the number of Performance Units issued to you under the Agreement
shall automatically be reduced (without further action by you and/or the
Company) on the date your employment relationship with the Company Group
terminates to that number of Performance Units determined under the following
formula (the “Retirement Adjusted Performance Units”):

(1) multiplied by (2) divided by (3)

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    where (1) is the number of Performance Units that were originally awarded to
you under the Agreement, (2) 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 due to
Retirement, and (3) is the number of days during the Performance Period. The
excess of the Performance Units that were originally awarded to you under the
Agreement over the Retirement Adjusted Performance Units shall be immediately
forfeited on the date of the termination of your employment relationship with
the Company Group due to Retirement. Any amount payable to you pursuant to this
Section 1.5 will be paid on March 12, 2010. For purposes of this Section 1.5,
the term “Retirement” means the voluntary termination of your employment
relationship with the Company Group on or after the date on which the sum of
your age and years of service with the Company Group equals 65.   2.  
PROHIBITED ACTIVITY. Notwithstanding any other provision of these Terms and
Conditions or the Agreement, if you engage in a “Prohibited Activity,” as
described below, while employed by one or more members of the Company Group,
during the Performance Period or within two years after the date your employment
with the Company Group terminates, then your right to receive payment under the
Agreement, to the extent still outstanding at that time, shall be completely
forfeited. A “Prohibited Activity” shall be deemed to have occurred, as
determined by the Committee in its sole and absolute discretion, if you divulge
any non-public, confidential or proprietary information of the Company or of its
past, present or future affiliates (collectively, the “Baker Hughes Group”), but
excluding information that (a) becomes generally available to the public other
than as a result of your public use, disclosure, or fault, or (b) becomes
available to you on a non-confidential basis after your employment termination
date from a source other than a member of the Baker Hughes Group prior to the
public use or disclosure by you, provided that such source is not bound by a
confidentiality agreement or otherwise prohibited from transmitting the
information by a contractual, legal or fiduciary obligation.   3.   TAX
WITHHOLDING. To the extent that the receipt of the Performance Units or any
payment pursuant to the Agreement results in income, wages or other compensation
to you for any income, employment or other tax purposes with respect to which
the Company has a withholding obligation, you shall deliver to the Company at
the time of such receipt or payment, as the case may be, such amount of money as
the Company may require to meet its obligation under applicable tax laws or
regulations, and, if you fail to do so, the Company is authorized to withhold
from any payment under the Agreement or from any cash or stock remuneration or
other payment then or thereafter payable to you any tax required to be withheld
by reason of such taxable income, wages or compensation.   4.  
NONTRANSFERABILITY. The Agreement is not transferable by you otherwise than by
will or by the laws of descent and distribution.   5.   CAPITAL ADJUSTMENTS AND
REORGANIZATIONS. The existence of the Performance Units shall not affect in any
way the right or power of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in its capital structure or its
business, engage in any merger or consolidation, issue any debt or equity

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    securities, dissolve or liquidate, or sell, lease, exchange or otherwise
dispose of all or any part of its assets or business, or engage in any other
corporate act or proceeding.   6.   PERFORMANCE UNITS DO NOT AWARD ANY RIGHTS OF
A SHAREHOLDER. You shall not have the voting rights or any of the other rights,
powers or privileges of a holder of the stock of the Company with respect to the
Performance Units that are awarded hereby.   7.   EMPLOYMENT RELATIONSHIP. For
purposes of the Agreement, you shall be considered to be in the employment of
the Company Group as long as you have an employment relationship with the
Company Group. The Committee shall determine any questions as to whether and
when there has been a termination of such employment relationship, and the cause
of such termination, under the Plan and the Committee’s determination shall be
final and binding on all persons.   8.   NOT AN EMPLOYMENT AGREEMENT. The
Agreement is not an employment agreement, and no provision of the Agreement
shall be construed or interpreted to create an employment relationship between
you and the Company or any Affiliate or guarantee the right to remain employed
by the Company or any Affiliate for any specified term.   9.   LIMIT OF
LIABILITY. Under no circumstances will the Company or an Affiliate be liable for
any indirect, incidental, consequential or special damages (including lost
profits) of any form incurred by any person, whether or not foreseeable and
regardless of the form of the act in which such a claim may be brought, with
respect to the Plan.   10.   EMPLOYER LIABLE FOR PAYMENT. Except as specified in
Section 1.2, the legal entity that is a member of the Company Group and that is
classified by the Company Group as your employer (the “Employer”) is liable for
the payment of any amounts that become due under the Agreement.   11.  
MISCELLANEOUS. The Agreement is awarded pursuant to and is subject to all of the
provisions of the Plan, including amendments to the Plan, if any. In the event
of a conflict between these Terms and Conditions and the Plan provisions, the
Plan provisions will control. The term “you” and “your” refer to the Awardee
named in the Agreement. Capitalized terms that are not defined herein shall have
the meanings ascribed to such terms in the Plan or the Agreement   12.   409A
AMENDMENT. Effective January 24, 2007, the Compensation Committee of the Board
of Directors of the Company adopted this amendment to the Terms and Conditions
of Award Agreements (January 24, 2007) applicable to Performance Unit Awards
granted in 2007.

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