exv10w9






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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