Document:

exv10w1

 

Exhibit 10.1

BAKER HUGHES INCORPORATED

SUPPLEMENTAL RETIREMENT PLAN

(As Amended and Restated

Effective January 1, 2005)

 

 

BAKER HUGHES INCORPORATED

SUPPLEMENTAL RETIREMENT PLAN

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE I DEFINITIONS AND CONSTRUCTION	 	 	1	 
	1.01

	 	Definitions
	 	 	1	 
	1.02

	 	Number and Gender
	 	 	6	 
	1.03

	 	Headings
	 	 	6	 
	 
	 	 	 	 	 	 
	ARTICLE II PARTICIPATION	 	 	6	 
	 
	 	 	 	 	 	 
	2.01

	 	Eligibility
	 	 	6	 
	2.02

	 	Commencement of Participation
	 	 	6	 
	2.03

	 	Cessation of Participation Upon Plan Administrator Determination
	 	 	7	 
	2.04

	 	Suspension of Participation Due to Certain Distributions
	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE III PARTICIPANT DEFERRALS	 	 	7	 
	 
	 	 	 	 	 	 
	3.01

	 	Amount of Participant Deferrals
	 	 	7	 
	3.02

	 	Participant Deferral Elections
	 	 	8	 
	3.03

	 	Period of Effectiveness of Participant Deferral Elections
	 	 	8	 
	3.04

	 	Changes to Participant Deferral Election
	 	 	8	 
	3.05

	 	Cancellation of Participant Deferral Election
	 	 	8	 
	3.06

	 	Time and Form of Payment Specified in Participant Deferral Election
	 	 	9	 
	3.07

	 	Irrevocable Change of Election of Time and/or Form of Payment for
Grandfathered Amounts
	 	 	9	 
	3.08

	 	Change of Time and Form of Payment for Amounts Other Than Grandfathered
Amounts
	 	 	9	 
	3.09

	 	Suspension of Participant Deferrals
Due to Withdrawal for Unforeseeable Financial Emergency
	 	 	10	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	ARTICLE IV COMPANY DEFERRALS	 	 	10	 
	 
	 	 	 	 	 	 
	4.01

	 	Company Matching Deferrals
	 	 	10	 
	4.02

	 	Company Base Thrift Deferrals
	 	 	11	 
	4.03

	 	Company Pension Deferrals
	 	 	11	 
	4.04

	 	Company Discretionary Deferrals
	 	 	11	 
	4.05

	 	Time and Form of Payment Elections for Company Deferrals
	 	 	11	 
	 
	 	 	 	 	 	 
	ARTICLE V VALUATION OF ACCOUNTS	 	 	11	 
	 
	 	 	 	 	 	 
	ARTICLE VI DEEMED INVESTMENT OF FUNDS	 	 	12	 
	 
	 	 	 	 	 	 
	ARTICLE VII DETERMINATION OF VESTED INTEREST AND FORFEITURES	 	 	13	 

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TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page
	7.01

	 	Vested Interest
	 	 	13	 
	7.02

	 	Forfeitures
	 	 	13	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	ARTICLE VIII ACCELERATED DISTRIBUTIONS	 	 	13	 
	8.01

	 	Restrictions on In-Service Distributions and Loans
	 	 	13	 
	8.02

	 	Emergency Benefit
	 	 	13	 
	 
	 	 	 	 	 	 
	ARTICLE IX PAYMENT OF BENEFITS	 	 	14	 
	 
	 	 	 	 	 	 
	9.01

	 	Amount of Benefit
	 	 	14	 
	9.02

	 	Time of Payment of Grandfathered Amounts
	 	 	14	 
	9.03

	 	Time of Payment of Amounts Other Than Grandfathered Amounts
	 	 	14	 
	9.04

	 	Alternative Forms of Benefit Payments
	 	 	15	 
	9.05

	 	Accelerated Pay-Out of Certain Grandfathered Amounts
	 	 	15	 
	9.06

	 	Designation of Beneficiaries
	 	 	16	 
	9.07

	 	Payment of Benefits
	 	 	16	 
	9.08

	 	Unclaimed Benefits
	 	 	16	 
	9.09

	 	Plan Administrator Determination of Pay-Out of Certain Benefits
	 	 	16	 
	9.10

	 	Statutory Benefits
	 	 	17	 
	9.11

	 	Payment to Alternate Payee Under Domestic Relations Order
	 	 	17	 
	 
	 	 	 	 	 	 
	ARTICLE X ADMINISTRATION OF THE PLAN	 	 	17	 
	 
	 	 	 	 	 	 
	10.01

	 	Plan Administrator
	 	 	17	 
	10.02

	 	Resignation and Removal
	 	 	17	 
	10.03

	 	Records and Procedures
	 	 	18	 
	10.04

	 	Self-Interest of Plan Administrator
	 	 	18	 
	10.05

	 	Compensation and Bonding
	 	 	18	 
	10.06

	 	Plan Administrator Powers and Duties
	 	 	18	 
	10.07

	 	Reliance on Documents, Instruments, etc
	 	 	19	 
	10.08

	 	Claims Review Procedures; Claims Appeals Procedures
	 	 	19	 
	10.09

	 	Company to Supply Information
	 	 	21	 
	10.10

	 	Indemnity
	 	 	21	 
	 
	 	 	 	 	 	 
	ARTICLE XI ADMINISTRATION OF FUNDS	 	 	21	 
	 
	 	 	 	 	 	 
	11.01

	 	Payment of Expenses
	 	 	21	 
	11.02

	 	Trust Fund Property
	 	 	21	 
	 
	ARTICLE XII ADOPTION OF PLAN BY OTHER EMPLOYERS	 	 	22	 
	 
	 	 	 	 	 	 
	12.01

	 	Adoption Procedure
	 	 	22	 
	12.02

	 	No Joint Venture Implied
	 	 	22	 

 -ii-

 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE XIII NATURE OF THE PLAN AND ESTABLISHMENT OF THE TRUST	 	 	23	 
	 
	 	 	 	 	 	 
	13.01

	 	Nature of the Plan
	 	 	23	 
	13.02

	 	Establishment of the Trust
	 	 	23	 
	 
	 	 	 	 	 	 
	ARTICLE XIV MISCELLANEOUS	 	 	24	 
	 
	 	 	 	 	 	 
	14.01

	 	Plan Not Contract of Employment
	 	 	24	 
	14.02

	 	Alienation of Interest Forbidden
	 	 	24	 
	14.03

	 	Withholding
	 	 	24	 
	14.04

	 	Amendment and Termination
	 	 	24	 
	14.05

	 	Severability
	 	 	24	 
	14.06

	 	Arbitration
	 	 	25	 
	14.07

	 	2005 and 2006 Section 409A Transition Procedures
	 	 	25	 
	14.08

	 	Compliance With Section 409A
	 	 	25	 
	14.09

	 	Governing Law
	 	 	25	 

 -iii-

 

 

BAKER HUGHES INCORPORATED

SUPPLEMENTAL RETIREMENT PLAN

(As Amended and Restated

Effective January 1, 2005)

ARTICLE I

DEFINITIONS AND CONSTRUCTION

     1.01 Definitions. The words and phrases defined in this Article shall have the meaning set
out in the definition unless the context in which the word or phrase appears reasonably requires a
broader, narrower or different meaning.

     “Account(s)” means all ledger accounts pertaining to a Participant or former
Participant which are maintained by the Plan Administrator or Plan recordkeeper to reflect
the Company’s obligation to the Participant or former Participant under the Plan. The Plan
Administrator or Plan recordkeeper shall establish the following subaccounts and any
additional subaccounts that the Plan Administrator considers necessary to reflect the entire
interest of the Participant or former Participant under the Plan. Each of the subaccounts
listed below and any additional subaccounts established by the Plan Administrator shall
reflect credits and debits made to such subaccounts for earnings, losses, distributions and
forfeitures

     (a) Participant Deferral Account – the Participant’s or former Participant’s
deferrals, if any, made pursuant to Section 3.01.

     (b) Company Matching Deferral Account – the credits made on behalf of a
Participant or former Participant pursuant to Section 4.01.

     (c) Company Base Thrift Deferral Account – the credits made on behalf of a
Participant or former Participant, if any, made pursuant to Section 4.02.

     (d) Company Pension Deferral Account – the credits made on behalf of a
Participant or former Participant, if any, made pursuant to Section 4.03.

     (e) Company Discretionary Deferral Account – the credits made on behalf of a
Participant or former Participant, if any, made pursuant to Section 4.04.

     The Plan Administrator or Plan recordkeeper shall also maintain records that reflect a
Participant’s or former Participant’s Grandfathered Amounts.

     “Affiliate” means any entity which is a member of the same controlled group of
corporations within the meaning of section 414(b) of the Code or which is a trade or
business (whether or not incorporated) which is under common control (within the

1

 

meaning of section 414(c) of the Code), which is a member of an affiliated service
group (within the meaning of section 414(m) of the Code) with Baker Hughes.

     “Annual Incentive Plan” means Baker Hughes Incorporated 1995 Employee Annual Incentive
Compensation Plan, as amended from time to time, any guidelines issued pursuant to such
plan, and any other incentive compensation plans adopted by the Company from time to time
which are in replacement of or in addition to such plan.

     “Baker Hughes” means Baker Hughes Incorporated, a Delaware corporation.

     “Base Compensation” means a Participant’s base salary or wages measured on an annual
basis (as defined in section 3401(a) of the Code for purposes of federal income tax
withholding) from the Company, modified by including any portion thereof that such
Participant could have received in cash in lieu of (a) Participant Deferrals pursuant to
Section 3.01 or (b) elective contributions made on his behalf by the Company pursuant to a
qualified cash or deferred arrangement described in section 401(k) of the Code and any
elective contributions under a cafeteria plan described in section 125, and modified further
by excluding any bonus; incentive compensation; commissions; expense reimbursements or other
expense allowances; fringe benefits (cash and noncash); moving expenses; deferred
compensation (other than (a) Participant Deferrals pursuant to Section 3.01 or (b) elective
contributions to the Company’s qualified cash or deferred arrangement described in section
401(k) of the Code); welfare benefits as defined in the Employee Retirement Income Security
Act of 1974, as amended; overtime pay; special performance compensation amounts and
severance compensation. Solely for purposes of Section 3.01(b) of the Plan, notwithstanding
any other provisions of the Plan, for the 2005 Plan Year, the term “Base Compensation” shall
include the Participant’s Bonus payable during the Plan Year other than the portion of such
Bonus that is deferred pursuant to Section 3.01(a) of the Plan.

     “Beneficial Owner”or “Beneficial Ownership” shall have the meaning ascribed to the
term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

     “Board” means the Board of Directors of Baker Hughes.

     “Bonus” means each incentive bonus, if any, paid in cash by the Company to or for the
benefit of an Employee for services rendered or labor performed while an Employee. Annual
bonuses are generally paid with respect to a completed fiscal year by the Company to its
employees pursuant to the Annual Incentive Plan. An Employee’s Bonus shall be determined by
including any portion thereof that such Employee could have received in cash in lieu of (a)
any Participant Deferrals pursuant to Section 3.01 or (b) elective contributions made on his
behalf by the Company pursuant to a qualified cash or deferred arrangement (as defined in
section 401(k) of the Code) or pursuant to a plan maintained under section 125 of the Code.

     “Code”means the Internal Revenue Code of 1986, as amended from time to time.

     “Committee” means the Administrative Committee or the Investment Committee that may be
appointed by the Board as a Plan Administrator.

2

 

     “Company” means Baker Hughes or an Employer.

     “Company Base Thrift Deferrals” means credits to a Participant’s Account pursuant to
Section 4.02.

     “Company Deferrals” means, collectively or individually, any of the deferrals made by
the Company pursuant to Sections 4.01, 4.02, 4.03 and 4.04.

     “Company Discretionary Deferrals” means credits, if any, to a Participant’s Account
pursuant to Section 4.04.

     “Company Matching Deferrals” means credits to a Participant’s Account pursuant to
Section 4.01.

     “Company Pension Deferrals” means credits to a Participant’s Account pursuant to
Section 4.03.

     “Deferral Period” means the period of deferral selected by a Participant pursuant to
Section 3.06 or Section 4.05.

     “Domestic Relations Order” has the meaning ascribed to that term in section 414(p) of
the Code.

     “Eligible Employee” means any individual who, on the date he commences participation in
the Plan, is employed by the Company on the active payroll and who is also an executive
salary grade system employee (under the Company’s then current payroll system categories),
or any comparable executive designations in any system that replaces the executive salary
grade system. Once an individual commences participation in the Plan, he may continue
participation even if his payroll system status changes to a level that is below the
executive salary grade system, provided that the individual continues to remain a member of
a select group of management or a highly compensated employee, as determined by the Plan
Administrator.

     “Employer” means any Affiliate that adopts the Plan pursuant to the provisions of
Article XII.

     “Entry Date” means the first day of each Plan Year.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time,
or any successor act.

     “Funds” means the investment funds designated from time to time for the deemed
investment of Accounts pursuant to Article VI.

     “Grandfathered
Amounts” means amounts credited under the Plan that were earned and
vested as of December 31, 2004, within the meaning of Section
409A and earnings and losses thereon.

3

 

     “Ineligible Pension Plan Compensation” means with respect to each Participant and each
payroll period, the amount of the Participant’s compensation not taken into account under
the Pension Plan benefit formula solely because (a) such Participant deferred such
compensation as a Participant Deferral pursuant to Section 3.01 and/or (b) such compensation
exceeded the maximum dollar limitation of section 401(a)(17) of the Code.

     “Ineligible Thrift Plan Compensation” means with respect to each Participant and each
payroll period, the amount of such Participant’s compensation for such payroll period that
is not considered “Compensation” under the Thrift Plan for such payroll period solely
because (a) such Participant deferred such compensation as a Participant Deferral pursuant
to Section 3.01 and/or (b) such compensation exceeded the maximum dollar limitation of
section 401(a)(17) of the Code.

     “Participant” means each Eligible Employee who has met the eligibility requirements for
participation in the Plan specified in Section 2.01.

     “Participant Deferral” means any deferral made by a Participant pursuant to Section
3.01.

     “Pay” means the sum of a Participant’s Base Compensation and Bonus.

     “Pension Plan” means the Baker Hughes Incorporated Pension Plan, as amended from time
to time.

     “Person” shall have the meaning ascribed to the term in Section 3(a)(9) of the Exchange
Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section
13(d) thereof, except that the term shall not include (a) the Company or any of its
Affiliates, (b) a trustee or other fiduciary holding Company securities under an employee
benefit plan of the Company or any of its Affiliates, (c) an underwriter temporarily holding
securities pursuant to an offering of those securities or (d) a corporation owned, directly
or indirectly, by the stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company.

     “Plan” means the Baker Hughes Incorporated Supplemental Retirement Plan, as amended
from time to time.

     “Plan
Administrator” means Baker Hughes, acting through its delegates. Such delegates
shall include the Administrative Committee, the Investment Committee and any individual Plan
Administrator appointed by the Board with respect to the employee benefit plans of Baker
Hughes and its Affiliates, each of which shall have the duties and responsibilities assigned
to it from time to time by the Board. As used in the Plan, the term “Plan Administrator”
shall refer to the applicable delegate of Baker Hughes as determined pursuant to the actions
of the Board.

     “Plan Year” means the twelve-consecutive month period commencing January 1 of each
year.

4

 

     “Retirement” means the Employee’s voluntary termination of his employment when the
Employee has attained at least 55 years of age and has at least ten (10) years of service
with the Company and the Affiliates.

     “Retirement Date” means a Participant’s or former Participant’s “Retirement Date” as
defined under the Thrift Plan.

     “Section 409A” means section 409A of the Code and the Department of Treasury rules and
regulations issued thereunder.

     “Separation from Service” has the meaning ascribed to that term in Section 409A.

     “Specified Employee” means as of any date, a person who was an employee of the Company
or any Affiliate on the preceding December 31.

     “Termination of Employment” means, with respect to each Participant or former
Participant, the termination of such Participant’s or former Participant’s employment with
the Company and all Affiliates for any reason whatsoever.

     “Thrift Plan” means the Baker Hughes Incorporated Thrift Plan, as amended from time to
time.

     “Trust” means the trust, if any, established under the Trust Agreement.

     “Trust
Agreement” means the agreement, if any, entered into between the Company and the
Trustee pursuant to Article XIII, as amended from time to time.

     “Trust Fund” means the funds and properties, if any, held pursuant to the provisions of
the Trust Agreement, together with all income, profits, and increments thereto.

     “Trustee” means the trustee or trustees qualified and acting under the Trust Agreement
at any time.

     “Unforeseeable Financial Emergency” means a severe financial hardship of the
Participant resulting from an illness or accident of the Participant or of the Participant’s
spouse or dependent (as defined in section 152(a) of the Code), loss of the Participant’s
property due to casualty (including the need to rebuild a home following damage to a home
not otherwise covered by insurance), or other similar extraordinary and unforeseeable
circumstance arising as a result of events beyond the control of the Participant. The
circumstances that will constitute an Unforeseeable Financial Emergency will depend upon the
facts of each case, but, in any case, payment may not be made to the extent that the
emergency is or may be relieved through reimbursement or compensation by insurance or
otherwise or by liquidation of the Participant’s assets, to the extent the liquidation of
such assets will not itself cause severe financial hardship. Such foreseeable needs for
funds as the desire to send a Participant’s child to college or to purchase a home will not
be considered to be unforeseeable emergencies. Whether an

5

 

Unforeseeable Financial Emergency exists and the amount reasonably needed to satisfy
the emergency will be determined by the Committee.

     “Vested Interest” means the portion of a Participant’s or former Participant’s Accounts
which, pursuant to the Plan, is nonforfeitable.

     1.02 Number and Gender. Wherever appropriate herein, words used in the singular shall be
considered to include the plural and words used in the plural shall be considered to include the
singular. The masculine gender, where appearing in the Plan, shall be deemed to include the
feminine gender.

     1.03 Headings. The headings of Articles and Sections herein are included solely for
convenience, and if there is any conflict between such headings and the text of the Plan, the text
shall control.

ARTICLE II

PARTICIPATION

     2.01 Eligibility.

     (a) Each Eligible Employee shall be eligible to become a Participant for a Plan Year
by electing to make Participant Deferrals pursuant to Section 3.01(a).

     (b) Each Eligible Employee who is a participant in the Thrift Plan during a Plan Year
shall be eligible to become a Participant for such Plan Year by electing to make Participant
Deferrals pursuant to Section 3.01(b).

     (c) Each Eligible Employee who is a participant in the Thrift Plan during a Plan Year
shall be a Participant for such Plan Year with respect to Company Deferrals pursuant to
Section 4.02.

     (d) Each Eligible Employee who is a participant in the Pension Plan during a Plan Year
shall be a Participant of the Plan for such Plan Year with respect to Company Deferrals
pursuant to Section 4.03.

     (e) Notwithstanding any other provision of the Plan, in the case of a person who is not
a Participant on the date of the adoption of this Agreement, such person shall not be
eligible to participate in the Plan until the Plan Administrator selects him or her for
participation in the Plan.

     2.02 Commencement of Participation. Prior to each Entry Date, the Plan Administrator shall
notify those Eligible Employees who are determined by the Plan Administrator to be eligible to
participate in the Plan as of such Entry Date. Any such Eligible Employee may elect to make
Participant Deferrals beginning on such Entry Date by effecting, prior to such Entry Date and
within the time period prescribed by the Plan Administrator, the Participant Deferral election in
the form prescribed by the Plan Administrator. Notwithstanding any provision herein to the
contrary, an Eligible Employee who first becomes an Eligible Employee on other than the first day
of a Plan Year may elect to make Participant Deferrals

6

 

commencing on the date the Plan Administrator selects him for participation in the Plan by
effecting, prior to or within 30 days after the date he first becomes eligible to participate and
within the time period prescribed by the Plan Administrator, the Participant Deferral election in
the form prescribed by the Plan Administrator.

     2.03 Cessation of Participation Upon Plan Administrator Determination. Notwithstanding any
provision herein to the contrary, an Eligible Employee who has become a Participant of the Plan
shall cease to be entitled to make Participant Deferrals hereunder or receive credits under Article
IV effective as of any date designated by the Plan Administrator. Any such Plan Administrator
action shall be communicated to the affected individual prior to the effective date of such action.
Any such Eligible Employee may again become entitled to make Participant Deferrals hereunder and to
receive credits under Article IV beginning on any subsequent Entry Date selected by the Plan
Administrator in its sole discretion.

     2.04 Suspension of Participation Due to Certain Distributions. To the extent and for the
period of time specified in Section 3.09, a Participant’s participation in the Plan shall be
suspended upon his making a withdrawal under Section 8.02.

ARTICLE III

PARTICIPANT DEFERRALS

     3.01 Amount of Participant Deferrals.

     (a) A Participant meeting the eligibility requirements of Section 2.01(a) may, prior to
the applicable Plan Year:

     (i) elect to defer an integral percentage of from 1% to 60% of his Base
Compensation for the Plan Year; and/or

     (ii) elect to defer an integral percentage of from 1% to 100% of his Bonus
earned during the Plan Year.

     Notwithstanding the foregoing, with respect to an Eligible Employee who first becomes a
Participant on a date other than an Entry Date, any such Participant Deferrals pursuant
to Section 3.01(a)(i) shall apply only for the portion of such Plan Year commencing with the
date he first becomes a Participant and ending on the last day of such Plan Year. An
Eligible Employee who first becomes a Participant during a Plan Year may not elect to defer
any portion of his Bonus earned during such Plan Year.

     (b) If a Participant’s “Before-Tax Contributions” under the Thrift Plan are reduced as
a result of the limitations contained in sections 401(a)(17) and 402(g) of the Code and a
Participant meets the eligibility requirements of Section 2.01(b), the Participant may elect
for a Plan Year to defer an integral percentage of from 0% to 50% of the difference between
his Base Compensation and the amount the Participant elected to defer in Section 3.01(a)(i).
Notwithstanding the foregoing, any such Participant Deferrals pursuant to this Section
3.01(b) shall be determined based upon the Participant’s elections with respect to
“Before-Tax Contributions” under the Thrift Plan

7

 

in effect on December 31 immediately prior to such Plan Year (or on the first day the
Participant became a “Participant” of the Thrift Plan during such Plan Year, if later). If
a Participant reduces his “Before-Tax Contributions” under the Thrift Plan during a Plan
Year, any attendant decrease in his Participant Deferrals under Section 3.01(b) will not be
recognized under the Plan to the extent that the decrease exceeds the amount of the
limitation applicable to the Participant for the Plan Year under section 402(g) of the Code.

     3.02 Participant Deferral Elections. Pay for a Plan Year that is not deferred pursuant to an
election under Sections 3.01(a) and (b) shall be received by such Participant in cash. A
Participant’s election to defer an amount of his Pay pursuant to this Section shall be made by
effecting, in the form prescribed by the Plan Administrator, a Participant Deferral election
pursuant to which the Participant authorizes the Company to reduce his Pay in the elected amount
and the Company, in consideration thereof, agrees to credit an equal amount to his Participant
Deferral Account maintained under the Plan. The reduction in a Participant’s Pay pursuant to his
Participant Deferral election shall be effected by Pay reductions each payroll period as determined
by the Plan Administrator following the effective date of such election. Participant Deferrals
made by a Participant shall be credited to his Participant Deferral Account as of a date determined
in accordance with procedures established from time to time by the Plan Administrator; provided,
however, that such Participant Deferrals shall be credited to his Participant Deferral Account no
later than 30 days after the date upon which the Pay deferred would have been received by such
Participant in cash had he not elected to defer such amount pursuant to Section 3.01.

     3.03 Period of Effectiveness of Participant Deferral Elections. A Participant Deferral
election pursuant to Sections 3.01(a) and (b) shall become effective as of the Entry Date (or later
initial eligibility date, if applicable) which is on or after the date the election is effected by
the Participant. With respect to an Eligible Employee who first becomes a Participant on other than
an Entry Date, any such Participant Deferrals pursuant to Sections 3.01(a)(i) or 3.01(b) shall
apply only to Base Compensation earned during such Plan Year commencing after his deferral election
for such Plan Year. A Participant Deferral election pursuant to Section 3.01(a)(ii) shall become
effective as of the first day of the Plan Year following the date the election is effected by the
Participant. A Participant Deferral election shall remain in force and effect for the entire (or
partial, if applicable) Plan Year to which such election relates. A Participant Deferral election
shall be made for each Plan Year, or partial Plan Year, in which the Participant is eligible to
participate. Plan provisions to the contrary notwithstanding, a Participant Deferral election shall
be suspended during any period of unpaid leave of absence from the Company.

     3.04 Changes to Participant Deferral Election. A Participant who makes a Participant Deferral
election may change his election for future Participant Deferrals as of the Entry Date of any
subsequent Plan Year, by effecting such change in the annual election prior to the Entry Date of
such Plan Year, in the form and within the time period prescribed by the Plan Administrator. Any
such change shall be effective as of the Entry Date of such Plan Year.

     3.05 Cancellation of Participant Deferral Election. A Participant who has made a Participant
Deferral election may cancel his election for future Participant Deferrals, as of the Entry Date of
any subsequent Plan Year, by effecting such cancellation in the annual election

8

 

prior to the Entry Date of such Plan Year, in the form and within the time period prescribed
by the Plan Administrator. Any such change shall be effective as of the Entry Date of such Plan
Year. A Participant who so cancels his Participant Deferral election may again make a new
Participant Deferral election for a subsequent Plan Year, if he satisfies the eligibility
requirements set forth in Section 2.01, by effecting a new Participant Deferral election prior to
the Entry Date of such Plan Year, in the form and within the time period prescribed by the Plan
Administrator.

     3.06 Time and Form of Payment Specified in Participant Deferral Election. A Participant
Deferral election shall indicate the applicable time and form of payment, as provided in Sections
9.02, 9.03 and 9.04 for the Pay deferred under the election for such Plan Year and the net income
(or net loss) allocated with respect thereto. Such time and form of payment election for such Plan
Year shall also apply to any Company Deferrals for such Plan Year and the net income (or net loss)
allocated with respect thereto. Each Participant’s Accounts shall be divided into subaccounts to
reflect the Participant’s various elections respecting time and form of payment. Notwithstanding
the foregoing, with respect to the portion of a Participant’s Account attributable to the amount,
if any, credited to his Account on December 31, 1994, under the Plan as in effect immediately prior
to the January 1, 1995 restatement of the Plan, such portion and the net income (or net loss)
allocated with respect thereto shall be allocated to a subaccount which shall be payable at the
time and in the form provided under the Plan as in effect immediately prior to such restatement.
In accordance with procedures established by the Plan Administrator, a Participant may elect to
have his Account or subaccount balance paid or commence to be paid (i) upon the expiration of a
specified term following the Participant’s Separation from Service, (ii) as soon as
administratively practicable after December 31 of the Plan Year in which the Participant’s
Separation From Service occurs, (iii) on a date specified by the Participant that is at least 18
months following the end of the Plan Year for which the deferral election is made, or (iv) upon the
earlier to occur of the date specified in clause (iii) or the date specified in clause (ii) (the
“Deferral Period”). The Plan Administrator is authorized to establish written guidelines
concerning limitations on the number of subaccounts respecting time and form of payment that may be
maintained under the Plan for any given Participant. Any such written guidelines shall be deemed
to be incorporated by reference in the Plan. Once an election as to time and form of payment has
been made for a Plan Year, the election may not be changed by the Participant or former Participant
except as specified in Section 3.07.

     3.07 Irrevocable Change of Election of Time and/or Form of Payment for Grandfathered Amounts.
In accordance with procedures established by the Plan Administrator, a Participant or former
Participant may make a one-time irrevocable election to change the time and/or form of payment he
previously selected for all of the Grandfathered Amounts credited to his Account. Any such change
election must be made no later than 18 months before the date on which such amounts were scheduled
to be paid or commence to be paid under the Participant’s or former Participant’s original
election. In addition, any such change election may not provide for a payment or commencement of
payment that is earlier than 18 months after the date on which the change election is made. For
purposes of calculating the 18-month period, such period will commence on the first day of the
month immediately following the month in which the election is made.

9

 

     3.08 Change of Time and Form of Payment for Amounts Other Than Grandfathered Amounts. In
accordance with procedures established by the Plan Administrator, a Participant or former
Participant may make an election to change the time and/or form of payment he previously selected
for the amounts credited to his Account other than Grandfathered Amounts. Any such change election
must be made no later than 12 months before the date on which such amounts were scheduled to be
paid or commence to be paid under the Participant’s or former Participant’s original election. In
addition, any such change election may not provide for a payment or commencement of payment that is
earlier than five years after the date on which the amounts were
originally scheduled to be paid or commence
to be paid. For purposes of this Section 3.08, installment payments shall be treated as a single
payment.

     3.09 Suspension of Participant Deferrals Due to Withdrawal for Unforeseeable Financial
Emergency. Upon written petition of a Participant, in the event that the Plan Administrator
determines in its sole discretion that such Participant has suffered an Unforeseeable Financial
Emergency or that such Participant will, absent termination of such Participant’s Participant
Deferral election then in effect, suffer an Unforeseeable Financial Emergency, then the Participant
Deferral election of such Participant then in effect, if any, shall be terminated as soon as
administratively practicable after such determination. A Participant whose Participant Deferral
election has been so terminated may again make a new Participant Deferral election for a subsequent
Plan Year that commences at least twelve months after the effective date of such termination, if he
satisfies the eligibility requirements set forth in Section 2.01 and by effecting a new Participant
Deferral election for such Plan Year, in the form and within the time period prescribed by the Plan
Administrator.

ARTICLE IV

COMPANY DEFERRALS

     4.01 Company Matching Deferrals. For the 2005 Plan Year, for each payroll period, the Company
shall defer on a Participant’s behalf an amount equal to four percent of the Participant’s
Participant Deferrals made pursuant to Section 3.01(a). For the 2005 Plan Year, the Company shall
defer on the Participant’s behalf an amount equal to four percent of the Base Compensation with
respect to which the Participant’s Participant Deferral pursuant to Section 3.01(b) is made. For
the 2005 Plan Year Company Matching Deferrals made on a Participant’s behalf pursuant to this
Section 4.01 shall be credited to such Participant’s Company Matching Deferral Account as of the
date the corresponding Participant Deferral is credited to the Participant’s Account.

     For the 2006 and subsequent Plan Years the Company shall make a Company Matching Deferral on
behalf of a Participant who elects to defer pursuant to Section 3.01(a) or Section 3.01(b) an
amount equal (A) minus (B) where (A) is four percent of the Participant’s Base Compensation and
Bonus for the Plan Year (whether or not deferred under the Plan or the Thrift Plan) and (B) is the
amount of matching contributions made for the Participant for the Plan Year under the Thrift Plan.
For the 2006 and subsequent Plan Years, Company Matching Deferrals made on a Participant’s behalf
pursuant to this Section 4.01 shall be credited to such Participant’s Company Matching Deferral
Account in one or more installments, as determined by the Plan Administrator, as of a date or dates
within the Plan Year.

10

 

     4.02 Company Base Thrift Deferrals. For each payroll period, the Company shall defer an
amount on behalf of each Participant who is entitled to an allocation of “Company Base
Contributions” under the Thrift Plan for such payroll period. The amount of each such Company
Deferral shall be a percentage of the Participant’s Ineligible Thrift Plan Compensation, if any,
for such payroll period, with such percentage being equal to the percentage utilized under the
Thrift Plan to determine the Participant’s “Company Base Contribution” for such payroll period
under the Thrift Plan. Company Base Thrift Deferrals on behalf of a Participant pursuant to this
Section 4.02 shall be credited to such Participant’s Company Base Thrift Deferral Account in
accordance with the procedures established from time to time by the Plan Administrator.

     4.03 Company Pension Deferrals. For each payroll period, the Company shall defer an amount
on behalf of each Participant equal to the percentage of such Participant’s Ineligible Pension Plan
Compensation, if any, for such payroll period. Company Pension Deferrals on behalf of a
Participant pursuant to this Section 4.03 shall be credited to such Participant’s Company Pension
Deferral Account in accordance with the procedures established from time to time by the Plan
Administrator.

     4.04 Company Discretionary Deferrals. As of any date selected by the Company, the Company may
credit a Participant’s Company Discretionary Deferral Account with Company Discretionary Deferrals
in such amount, if any, as the Company shall determine in its sole discretion. Such credits may be
made on behalf of some Participants but not others, and such credits may vary in amount among
individual Participants.

     4.05 Time and Form of Payment Elections for Company Deferrals. A Participant who does not
have a time and form of payment election in effect pursuant to Section 3.06 for a given Plan Year
shall make a time and form of payment election, as provided in Sections 9.03 and 9.04, for Company
Base Thrift Deferrals, Company Pension Deferrals, and Company Discretionary Deferrals for such Plan
Year. Such election shall be made in accordance with the same procedures as apply to Participant
Deferral elections under Section 3.06. A Participant who had made a time and form of payment
election pursuant to this Section 4.05 may change his election for future Company Base Thrift
Deferrals, Company Pension Deferrals, and Company Discretionary Deferrals as of the Entry Date of
any subsequent Plan Year, by effecting a new election prior to the Entry Date of such Plan Year, in
the form and within the time period prescribed by the Plan Administrator. Each Participant’s
Accounts shall be divided into subaccounts to reflect the Participant’s various elections
respecting time and form of payment. Once an election as to time and form of payment has been made
for a Plan Year, the election may not be changed by the Participant or former Participant except as
specified in Section 3.07, or Section 3.08, as applicable.

ARTICLE V

VALUATION OF ACCOUNTS

     All amounts allocated to the Accounts of Participants shall be deemed to be invested as of the
date of such allocation, and the balance of each Account shall reflect the result of daily pricing
of the assets in which such Account is deemed to be invested from the time of such allocation until
the time of distribution.

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ARTICLE VI

DEEMED INVESTMENT OF FUNDS

     Participant’s and former Participant’s Accounts shall be deemed to be credited with earnings
and losses. For the purpose of determining the earnings or losses to be credited to the
Participant’s or former Participant’s Accounts under the Plan, the Plan Administrator shall assume
that the Participant’s or former Participant’s Accounts are invested in units or shares of the
Funds in the proportions selected by the Participant or former Participant in accordance with
procedures established by the Plan Administrator. This amount accrued by the Plan Administrator as
additional deferred compensation shall be a part of the Company’s obligation to the Participant or
former Participant. The determination of deemed earnings and losses on amounts deemed credited to
the Participant’s or former Participant’s Account shall in no way affect the ability of the general
creditors of the Company to reach the assets of the Company (including any rabbi trust maintained
in connection with the Plan) in the event of the insolvency or bankruptcy of the Company or place
the Participants or former Participants in a secured position ahead of the general creditors of the
Company. Although a Participant’s or former Participant’s investment selections made in accordance
with the terms of the Plan and such procedures as may be established by the Plan Administrator
shall be relevant for purposes of determining the Company’s obligation to the Participant or former
Participant under the Plan, there is no requirement that any assets of the Company (including those
held in any rabbi trust) shall be invested in accordance with the Participant’s or former
Participant’s investment selections.

     Each Participant or former Participant shall designate, in accordance with the procedures
established from time to time by the Plan Administrator, the manner in which the amounts allocated
to his Accounts shall be deemed to be invested from among the Funds made available from time to
time for such purpose by the Plan Administrator. Such Participant or former Participant may
designate one of such Funds for the deemed investment of all such amounts allocated to his Accounts
or he may split the deemed investment of such amounts allocated to his Accounts among such Funds in
such increments as the Plan Administrator may prescribe. If a Participant or former Participant
fails to make a proper designation, then his Accounts shall be deemed to be invested in the Fund or
Funds designated in a uniform and nondiscriminatory manner by the Plan Administrator from time to
time.

     A Participant may change his deemed investment designation for future deferrals to be
allocated to his Accounts. Any such change shall be made in accordance with the procedures
established by the Plan Administrator, and the frequency of such changes may be limited by the Plan
Administrator.

     A Participant or former Participant may elect to convert his deemed investment designation
with respect to the amounts already allocated to his Accounts. Any such conversion shall be made in
accordance with the procedures established by the Plan Administrator, and the frequency of such
conversions may be limited by the Plan Administrator.

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ARTICLE VII

DETERMINATION OF VESTED INTEREST AND FORFEITURES

     7.01 Vested Interest. A Participant or former Participant shall have a 100% Vested Interest
in amounts credited to his Participant Deferral Account and his Company Matching Deferral Account
at all times. A Participant or former Participant shall have a Vested Interest in the amounts
credited to his Company Base Thrift Deferral Account and Company Discretionary Deferral Account
equal to his nonforfeitable interest in his “Company Non-Matching Accounts” under the Thrift Plan.
A Participant or former Participant shall have a Vested Interest in the amounts credited to his
Company Pension Deferral Account equal to his nonforfeitable interest in his account under the
Pension Plan. Further, a Participant or former Participant shall have a 100% Vested Interest in
amounts credited to his Company Base Thrift Deferral Account, Company Pension Deferral Account, and
Company Discretionary Deferral Account upon such Participant’s or former Participant’s Termination
of Employment after attainment of his Retirement Date or by reason of death.

     7.02 Forfeitures. A Participant or former Participant who incurs a Termination of Employment
with a Vested Interest in amounts credited to his Company Base Thrift Deferral Account, Company
Pension Deferral Account, and Company Discretionary Deferral Account that is less than 100%
(determined after giving effect to any provision in Section 7.01 that may provide for an increase
in such Participant’s Vested Interest upon a Termination of Employment) shall forfeit to the
Company the nonvested portion of amounts credited to his Company Base Thrift Deferral Account,
Company Pension Deferral Account, and Company Discretionary Deferral Account as of the date of such
Termination of Employment.

ARTICLE VIII

ACCELERATED DISTRIBUTIONS

     8.01 Restrictions on In-Service Distributions and Loans. Except as provided in Section 8.02,
or as elected by a Participant pursuant to Section 3.06 or Section 4.05 (as such election may be
changed pursuant to Section 3.07 or Section 3.08) Participants shall not be permitted to make
withdrawals from, or to receive distributions under, the Plan while they are employed by the
Company or an Affiliate. Participants shall not, at any time, be permitted to borrow from the
Trust Fund. Except as provided in Sections 8.02 and 14.04, all benefits under the Plan shall be
paid in accordance with the provisions of Article IX.

     8.02 Emergency Benefit. In the event that the Plan Administrator, upon written petition of a
Participant who has not incurred a Termination of Employment, determines in its sole discretion
that such Participant has suffered an Unforeseeable Financial Emergency, such Participant shall be
entitled to a distribution in an amount not to exceed the lesser of (a) the amount determined by
the Plan Administrator as necessary to meet such Participant’s needs created by the Unforeseeable
Financial Emergency or (b) the then value of such Participant’s Vested Interest in his Accounts.
Such benefit shall be paid in a single lump sum payment as soon as administratively practicable
after the Plan Administrator has made its determinations with respect to the availability and
amount of such benefit. If a Participant’s Accounts are deemed to be invested in more than one
Fund, such benefit shall be distributed pro rata from

13

 

each Fund in which such Accounts are deemed to be invested. If a Participant’s Accounts
contain more than one distribution subaccount, such benefit shall be considered to have been
distributed, first, from the subaccount with respect to which the earliest distribution would be
made, then, from the subaccount with respect to which the next earliest distribution would be made,
and continuing in such manner until the amount of such distribution has been satisfied.

ARTICLE IX

PAYMENT OF BENEFITS

     9.01 Amount of Benefit. Upon the expiration of the Deferral Period, the Participant (or, in
the event of the death of the Participant while employed by the Company or an Affiliate, the
Participant’s designated beneficiary) or former Participant shall be entitled to a benefit equal in
value to the Participant’s or former Participant’s Vested Interest in the balance in his Accounts
as of the date the payment of such benefit is to commence pursuant to Section 9.02 (adjusted for
subsequent deemed investment gains or losses in the case of benefits paid in the form of
installments).

     9.02 Time of Payment of Grandfathered Amounts. Payment of a Participant’s or former
Participant’s benefit under Section 9.01 shall be made or shall commence, with respect to such
Participant’s or former Participant’s Accounts, or with respect to such Participant’s or former
Participant’s subaccounts established pursuant to Section 3.06 and/or Section 4.05 separately and
respectively, as follows. To the extent that the Participant or former Participant elected to have
his Accounts or subaccounts paid upon his Termination of Employment, the Participant’s or former
Participant’s benefit shall be paid or commence to be paid as soon as administratively practicable
after the last day of the calendar year coincident with or next following the date the Participant
or former Participant incurs a Termination of Employment. To the extent that the Participant or
former Participant elected to have his Accounts or subaccounts paid after a specified term, the
Participant’s or former Participant’s benefit shall be paid or commence to be paid as soon as
administratively practicable after the expiration of such specified term. With respect to any
portion of a Participant’s or former Participant’s benefit for which no time of payment election is
in effect, payment of such amount shall be made or commence as soon as administratively practicable
after the last day of the calendar year coincident with or next following the date the Participant
or former Participant incurs a Termination of Employment. A Participant’s or former Participant’s
benefit shall not, however, be paid or commence payment prior to the date that all Participant
Deferrals and Company Deferrals made pursuant to the Plan have been allocated to such Participant’s
or former Participant’s Accounts.

     9.03 Time of Payment of Amounts Other Than Grandfathered Amounts. Payment of a Participant’s
or former Participant’s benefit under Section 9.01 shall be made or shall commence, with respect to
such Participant’s or former Participant’s Accounts, or with respect to such Participant’s or
former Participant’s subaccounts established pursuant to Section 3.06 and/or Section 4.05
separately and respectively, as follows. To the extent that the Participant or former Participant
elected to have his Accounts or subaccounts paid upon his Separation From Service, the
Participant’s or former Participant’s benefit shall be paid or commence to be paid on the later of
(1) the first day of the month coincident with or next following the date that is six

14

 

months after the date of the Separation From Service or (2) the first day of the Plan Year
next following the date of the Participant’s or former Participant’s Separation From Service. To
the extent that the Participant or former Participant elected to have his Accounts or subaccounts
paid after a specified term, the Participant’s or former Participant’s benefit shall be paid or
commence to be paid as soon as administratively practicable after the expiration of such specified
term. With respect to any portion of a Participant’s or former
Participant’s benefit for which an election was not made in
accordance with Section 3.06 or Section 4.05, payment of such amount shall be made or commence on the
later of (1) the first day of the month coincident with or next following the date that is six
months after the date of the Participant’s or former Participant’s Separation From Service or (2)
the first day of the Plan Year next following the date of the Participant’s or former Participant’s
Separation From Service. A Participant’s or former Participant’s benefit shall not, however, be
paid or commence payment prior to the date that all Participant Deferrals and Company Deferrals
made pursuant to the Plan have been allocated to such Participant’s or former Participant’s
Accounts.

     9.04 Alternative Forms of Benefit Payments. A Participant’s or former Participant’s benefit
under Section 9.01 shall be paid, with respect to such Participant’s or former Participant’s
Accounts, or with respect to such Participant’s or former Participant’s subaccounts established
pursuant to Section 3.06 and/or Section 4.05 separately and respectively, in one of the following
forms irrevocably elected by such Participant or former Participant pursuant to Section 3.06 and/or
Section 4.05:

     (a) A single lump sum payment; or

     (b) Any number (from two to 20 as designated by such Participant or former Participant)
of annual installment payments and, in the event of such Participant’s or former
Participant’s death prior to the receipt of all of the elected installment payments, the
remaining installments shall be paid to such Participant’s or former Participant’s
designated beneficiary as provided in Section 9.06. The amount of each annual installment
shall be computed by dividing the Vested Interest in the unpaid balance in the Participant’s
or former Participant’s Accounts as of the date of payment of such annual installment by the
number of annual installments remaining.

     With respect to any portion of a Participant’s or former Participant’s benefit for
which an election was not made in accordance with Section 3.06 or
Section 4.05, such amount shall be paid in the form of 15
annual installment payments to such Participant or former Participant or, in the event of
such Participant’s or former Participant’s death prior to his receipt of all such
installments, to his designated beneficiary as provided in Section 9.06; provided, however, that the Plan Administrator may, in its sole discretion, elect to make such benefit payment
in any other available form. If a Participant or former Participant dies prior to the date
the payment of his benefit begins and if no form of payment election is in effect for any
portion of such Participant’s or former Participant’s benefit, such amount shall be paid to
the Participant’s or former Participant’s designated beneficiary in the form described in
the preceding sentence. If a Participant or former Participant dies prior to the date the
payment of his benefit begins with a form of payment election in effect, then benefit
payments shall be made to the Participant’s or former Participant’s designated beneficiary
in the form elected by the Participant or former Participant.

15

 

     9.05 Accelerated Pay-Out of Certain Grandfathered Amounts. Notwithstanding any provision in
Section 9.03 to the contrary, if a Participant’s or former Participant’s benefit payments
respecting Grandfathered Amounts credited to any one subaccount established pursuant to Section
3.06 or Section 4.05 are to be paid in a form other than a single lump sum payment and the
aggregate Grandfathered Amounts credited to such subaccount at the time of commencement of such
payments is less than $50,000, then the Plan Administrator may, in its sole discretion, elect to
cause such Grandfathered Amounts credited to such subaccount to be paid in a single lump sum
payment.

     9.06 Designation of Beneficiaries.

     (a) Each Participant or former Participant shall have the right to designate the
beneficiary or beneficiaries to receive payment of his benefit in the event of his death.
Each such designation shall be made by executing the beneficiary designation form prescribed
by the Plan Administrator and filing same with the Plan Administrator. Any such designation
may be changed at any time by execution of a new designation in accordance with this
Section.

     (b) If no such designation is on file with the Plan Administrator at the time of the
death of the Participant or former Participant or such designation is not effective for any
reason as determined by the Plan Administrator, then the designated beneficiary or
beneficiaries to receive such benefit shall be as follows:

     (i) If a Participant or former Participant leaves a surviving spouse, his
benefit shall be paid to such surviving spouse;

     (ii) If a Participant or former Participant leaves no surviving spouse, his
benefit shall be paid to such Participant’s or former Participant’s executor or
administrator, or to his heirs at law if there is no administration of such
Participant’s or former Participant’s estate.

     9.07 Payment of Benefits. To the extent the Trust Fund has sufficient assets, the Trustee
shall pay benefits to Participants or former Participants or their respective beneficiaries, except
to the extent the Company pays the benefits directly and provides adequate evidence of such payment
to the Trustee. To the extent the Trustee does not or cannot pay benefits out of the Trust Fund,
the benefits shall be paid by the Company. Any benefit payments made to a Participant, or former
Participant, or for his benefit pursuant to any provision of the Plan shall be debited to such
Participant’s or former Participant’s Accounts. All benefit payments shall be made in cash to the
fullest extent practicable.

     9.08 Unclaimed Benefits. In the case of a benefit payable on behalf of a Participant or
former Participant, if the Plan Administrator is unable, after reasonable efforts, to locate the
Participant, the former Participant or the beneficiary to whom such benefit is payable, upon the
Plan Administrator’s determination thereof, such benefit shall be forfeited to the Company.
Notwithstanding the foregoing, if subsequent to any such forfeiture the Participant, the former
Participant or beneficiary to whom such benefit is payable makes a valid claim for such benefit,

16

 

such forfeited benefit (without any adjustment for earnings or loss) shall be restored to the
Plan by the Company and paid in accordance with the Plan.

     9.09 Plan Administrator Determination of Pay-Out of Certain Benefits. Notwithstanding any
provision in Section 3.06 to the contrary, the form of payment of a Participant’s or former
Participant’s benefits with respect to the portion of his Account attributable to the amount, if
any, credited to his Account on December 31, 1994, under the Plan as in effect immediately prior to
the January 1, 1995 restatement of the Plan, and the net income (or net loss) allocated with
respect thereto may, in the sole discretion of the Plan Administrator, be changed from the form
elected by such Participant or former Participant pursuant to the provisions of the Plan as in
effect immediately prior to the January 1, 1995 restatement of the Plan to one or more other forms
provided in Section 9.04. In making its determination as to the form(s) of payment, the Plan
Administrator may consider the age, family status, health, financial status, or such other facts as
it deems relevant respecting the Participant or former Participant. The Participant or former
Participant may, but shall not be required to, express his preference to the Plan Administrator as
to such form(s) of payment, but the Plan Administrator shall be under no obligation to follow such
preference. Any such change shall be prior to the time such portion becomes payable to such
Participant or former Participant.

     9.10 Statutory Benefits. If any benefit obligations are required to be paid under the Plan to
a Participant or former Participant in conjunction with severance of employment under the laws of
the country where the Participant or former Participant is employed or under federal, state or
local law, the benefits paid to a Participant or former Participant pursuant to the provisions of
the Plan will be deemed to be in satisfaction of any statutorily required benefit obligations.

     9.11 Payment to Alternate Payee Under Domestic Relations Order. Plan benefits that are
awarded to an Alternate Payee in a Domestic Relations Order shall be paid to the Alternate Payee at
the time and in the form directed in the Domestic Relations Order. The Domestic Relations Order
may provide for an immediate lump sum payment to an Alternate Payee. A Domestic Relations Order
may not otherwise provide for a time or form of payment that is not permitted under the Plan. A
Domestic Relations Order will be disregarded to the extent it awards an Alternate Payee benefits in
excess of the applicable Participant’s or former Participant’s Vested Interest.

ARTICLE X

ADMINISTRATION OF THE PLAN

     10.01 Plan Administrator. Baker Hughes shall be the “Plan Administrator” and the “named
fiduciary” for purposes of ERISA and shall be subject to service of process on behalf of the Plan.

     10.02 Resignation and Removal. The members of a Committee serving as Plan Administrator shall
serve at the pleasure of the Board; they may be officers, directors, or Employees of the Company or
any other individuals. At any time during his term of office, any member of a Committee or any
individual serving as Plan Administrator may resign by giving

17

 

written notice to the Board, such resignation to become effective upon the appointment of a
substitute or, if earlier, the lapse of thirty days after such notice is given as herein provided.
At any time during its term of office, and for any reason, any member of a Committee or any
individual serving as Plan Administrator may be removed by the Board.

     10.03 Records and Procedures. The Plan Administrator shall keep appropriate records of its
proceedings and the administration of the Plan and shall make available for examination during
business hours to any Participant, former Participant or the beneficiary of any Participant or
former Participant such records as pertain to that individual’s interest in the Plan. If a
Committee is performing duties as the Plan Administrator, the Committee shall designate the
individual or individuals who shall be authorized to sign for the Plan Administrator and, upon such
designation, the signature of such individual or individuals shall bind the Plan Administrator.

     10.04 Self-Interest of Plan Administrator. Neither the members of a Committee nor any
individual Plan Administrator shall have any right to vote or decide upon any matter relating
solely to himself under the Plan or to vote in any case in which his individual right to claim any
benefit under the Plan is particularly involved. In any case in which any Committee member or
individual Plan Administrator is so disqualified to act, the other members of the Committee shall
decide the matter in which the Committee member or individual Plan Administrator is disqualified.

     10.05 Compensation and Bonding. Neither the members of a Committee nor any individual Plan
Administrator shall receive compensation with respect to their services on the Committee or as Plan
Administrator. To the extent required by applicable law, or required by the Company, neither the
members of a Committee nor any individual Plan Administrator shall furnish bond or security for the
performance of their duties hereunder.

     10.06 Plan Administrator Powers and Duties. The Plan Administrator shall supervise the
administration and enforcement of the Plan according to the terms and provisions hereof and shall
have all powers necessary to accomplish these purposes, including, but not by way of limitation,
the right, power, and authority:

     (a) to make rules, regulations, and bylaws for the administration of the Plan that are
not inconsistent with the terms and provisions hereof, and to enforce the terms of the Plan
and the rules and regulations promulgated thereunder by the Plan Administrator;

     (b) to construe in its discretion all terms, provisions, conditions, and limitations of
the Plan;

     (c) to correct any defect or to supply any omission or to reconcile any inconsistency
that may appear in the Plan in such manner and to such extent as it shall deem in its
discretion expedient to effectuate the purposes of the Plan;

     (d) to employ and compensate such accountants, attorneys, investment advisors, and
other agents, employees, and independent contractors as the Plan Administrator may deem
necessary or advisable for the proper and efficient administration of the Plan;

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     (e) to determine in its discretion all questions relating to eligibility;

     (f)
to determine whether and when a Participant has incurred a Separation
from Service or Termination of
Employment, and the reason for such termination;

     (g) to make a determination in its discretion as to the right of any individual to a
benefit under the Plan and to prescribe procedures to be followed by distributees in
obtaining benefits hereunder;

     (h) to receive and review reports from the Trustee as to the financial condition of the
Trust Fund, including its receipts and disbursements; and

     (i) to establish or designate Funds as deemed investment options as provided in Article
VI.

     10.07 Reliance on Documents, Instruments, etc. The Plan Administrator may rely on any
certificate statement or other representation made on behalf of the Company, any Employee or any
Participant, which the Plan Administrator in good faith believes to be genuine, and on any
certificate, statement, report or other representation made to it by any agent or any attorney,
accountant or other expert retained by it or the Company in connection with the operation and
administration of the Plan.

     10.08 Claims Review Procedures; Claims Appeals Procedures.

     (a) Claims Review Procedures. When a benefit is due, the Participant, or the
person entitled to Benefits under Section 9.06, should submit a claim to the office
designated by the Plan Administrator to receive claims. Under normal circumstances, the Plan
Administrator will make a final decision as to a claim within 90 days after receipt of the
claim. If the Plan Administrator notifies the claimant in writing during the initial 90-day
period, it may extend the period up to 180 days after the initial receipt of the claim. The
written notice must contain the circumstances necessitating the extension and the
anticipated date for the final decision. If a claim is denied during the claims period, the
Plan Administrator must notify the claimant in writing, and the written notice must set
forth in a manner calculated to be understood by the claimant:

(1) the specific reason or reasons for the denial;

(2) specific reference to the Plan provisions on which the denial is based;

(3) a description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or information
is necessary; and

(4) an explanation of the Plan claims review procedures and time limits, including a
statement of the claimant’s right to bring a civil action under section 502(a) of
ERISA.

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If a decision is not given to the Participant within the claims review period, the claim is treated
as if it were denied on the last day of the claims review period.

     (b) Claims Appeals Procedures. For purposes of this section the Participant or
the person entitled to Benefits under Section 10 is referred to as the “claimant.” If a
claimant’s claim made pursuant to Section 10.08(a) is denied and he wants a review, he must
apply to the Plan Administrator in writing. That application can include any arguments,
written comments, documents, records, and other information relating to the claim for
benefits. In addition, the claimant is entitled to receive on request and free of charge
reasonable access to and copies of all information relevant to the claim. For this purpose,
“relevant” means information that was relied on in making the benefit determination or that
was submitted, considered or generated in the course of making the determination, without
regard to whether it was relied on, and information that demonstrates compliance with the
Plan’s administrative procedures and safeguards for assuring and verifying that Plan
provisions are applied consistently in making benefit determinations. The Plan
Administrator must take into account all comments, documents, records, and other information
submitted by the claimant relating to the claim, without regard to whether the information
was submitted or considered in the initial benefit determination. The claimant may either
represent himself or appoint a representative, either of whom has the right to inspect all
documents pertaining to the claim and its denial. The Plan Administrator can schedule any
meeting with the claimant or his representative that it finds necessary or appropriate to
complete its review.

     The request for review must be filed within 90 days after the denial. If it is not, the
denial becomes final. If a timely request is made, the Plan Administrator must make its
decision, under normal circumstances, within 60 days of the receipt of the request for
review. However, if the Plan Administrator notifies the claimant prior to the expiration of
the initial review period, it may extend the period of review up to 120 days following the
initial receipt of the request for a review. All decisions of the Plan Administrator must be
in writing and must include the specific reasons for its action, the Plan provisions on
which its decision is based, and a statement that the claimant is entitled to receive, upon
request and free of charge, reasonable access to, and copies of, all documents, records, and
other information relevant to the claimant’s claim for benefits, and a statement of the
claimant’s right to bring an action under section 502(a) of ERISA If a decision is not
given to the claimant within the review period, the claim is treated as if it were denied on
the last day of the review period.

     Within 60 days of receipt by a claimant of a notice denying a claim under the preceding
paragraph, the claimant or his or her duly authorized representative may request in writing
a full and fair review of the claim by the Plan Administrator. The Plan Administrator may
extend the 60-day period where the nature of the benefit involved or other attendant
circumstances make such extension appropriate. In connection with such review, the claimant
or his or her duly authorized representative may review pertinent documents and may submit
issues and comments in writing. The Plan Administrator shall make a decision promptly, and
not later than 60 days after the Plan’s receipt of a request for review, unless special
circumstances (such as the need to hold a hearing) require an extension of time for
processing, in which case a decision shall be rendered as

20

 

soon as possible, but not later than 120 days after receipt of a request for review.
The decision on review shall be in writing and shall include specific reasons for the
decision, written in a manner calculated to be understood by the claimant, and specific
references to the pertinent Plan provisions on which the decision is based.

     10.09 Company to Supply Information. The Company shall supply full and timely information to
the Plan Administrator, including, but not limited to, information relating to each Participant’s
Base Compensation, Bonus, Ineligible Thrift Plan Compensation, Ineligible Pension Plan
Compensation, age, Retirement, death, or other cause of Termination of Employment and such other
pertinent facts as the Plan Administrator may require. The Company shall advise the Trustee of
such of the foregoing facts as are deemed necessary for the Trustee to carry out the Trustee’s
duties under the Plan and the Trust Agreement. When making a determination in connection with the
Plan, the Plan Administrator shall be entitled to rely upon the aforesaid information furnished by
the Company.

     10.10 Indemnity. To the extent permitted by applicable law, the Company shall indemnify and
save harmless the Board, each member of the Committee, each delegate of the Committee or the Board
and the Plan Administrator against any and all expenses, liabilities and claims (including legal
fees incurred to investigate or defend against such liabilities and claims) arising out of their
discharge in good faith of responsibilities under or incident to the Plan. Expenses and
liabilities arising out of willful misconduct shall not be covered under this indemnity. This
indemnity shall not preclude such further indemnities as may be available under insurance purchased
by the Company or provided by the Company under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, as such indemnities are permitted under applicable law.

ARTICLE XI

ADMINISTRATION OF FUNDS

     11.01 Payment of Expenses. All expenses incident to the administration of the Plan and Trust,
including but not limited to, legal, accounting, Trustee fees, and expenses of the Plan
Administrator, may be paid by the Company and, if not paid by the Company, shall be paid by the
Trustee from the Trust Fund, if any.

     11.02 Trust Fund Property. All income, profits, recoveries, contributions, forfeitures and
any and all moneys, securities and properties of any kind at any time received or held by the
Trustee, if any, shall be held for investment purposes as a commingled Trust Fund pursuant to the
terms of the Trust Agreement. The Plan Administrator shall maintain one or more Accounts in the
name of each Participant or former Participant, but the maintenance of an Account designated as the
Account of a Participant or former Participant shall not mean that such Participant or former
Participant shall have a greater or lesser interest than that due him by operation of the Plan and
shall not be considered as segregating any funds or property from any other funds or property
contained in the commingled fund. No Participant or former Participant shall have any title to any
specific asset in the Trust Fund, if any.

21

 

ARTICLE XII

ADOPTION OF PLAN BY OTHER EMPLOYERS

     12.01 Adoption Procedure.

     (a) With the written approval of the Plan Administrator, any entity that is an
Affiliate may adopt the Plan by appropriate action of its board of directors or noncorporate
counterpart, as evidenced by a written instrument executed by an authorized officer of such
entity or an executed adoption agreement (approved by the board of directors or noncorporate
counterpart of the Affiliate), agreeing to be bound by all the terms, conditions and
limitations of the Plan except those, if any, specifically described in the adoption
instrument, and providing all information required by the Plan Administrator. The Plan
Administrator and the adopting Affiliate may agree to incorporate specific provisions
relating to the operation of the Plan that apply to the adopting Affiliate only and shall
become, as to such adopting Affiliate and its employees, a part of the Plan.

     (b) The provisions of the Plan may be modified so as to increase the obligations of an
adopting Affiliate only with the consent of such Affiliate, which consent shall be
conclusively presumed to have been given by such Affiliate unless the Affiliate gives the
Company written notice of its rejection of the amendment within 30 days after the adoption
of the amendment.

     (c) The provisions of the Plan shall apply separately and equally to each adopting
Affiliate and its employees in the same manner as is expressly provided for the Company and
its employees, except that the power to appoint or otherwise affect the Plan Administrator
and the power to amend or terminate the Plan shall be exercised by the Company. The Plan
Administrator shall act as the agent for each Affiliate that adopts the Plan for all
purposes of administration thereof.

     (d) Any adopting Affiliate may, by appropriate action of its board of directors or
noncorporate counterpart, terminate its participation in the Plan. Moreover, the Plan
Administrator may, in its discretion, terminate an Affiliate’s participation in the Plan at
any time.

     (e) The Plan will terminate with respect to any Affiliate that has adopted the Plan
pursuant to this Section if the Affiliate ceases to be an Affiliate or revokes its adoption
of the Plan by resolution of its board of directors or noncorporate counterpart evidenced by
a written instrument executed by an authorized officer of the Affiliate. If the Plan
terminates with respect to any Affiliate, the employees of that Affiliate will no longer be
eligible to be Participants in the Plan.

     (f) For purposes of the Code and ERISA, the Plan as adopted by the Affiliates shall
constitute a single plan rather than a separate plan of each Affiliate.

     12.02
No Joint Venture Implied. The document which evidences the adoption of the Plan by an
Affiliate shall become a part of the Plan. However, neither the adoption of the Plan

22

 

by an Affiliate nor any act performed by it in relation to the Plan shall ever create a joint
venture or partnership relation between it and any other Affiliate.

ARTICLE XIII

NATURE OF THE PLAN

AND ESTABLISHMENT OF THE TRUST

     13.01 Nature of the Plan. The Company intends and desires by the adoption of the Plan to
recognize the value to the Company of the past and present services of employees covered by the
Plan and to encourage and assure their continued service with the Company by making more adequate
provision for their future retirement security. The establishment of the Plan is, in part, made
necessary by certain benefit limitations which are imposed on the Thrift Plan and the Pension Plan
by the Code. The Plan is intended to constitute an unfunded, unsecured plan of deferred
compensation for a select group of management or highly compensated employees of the Company. Plan
benefits herein provided are a contractual obligation of the Company which shall be paid out of the
Company’s general assets. Nevertheless, subject to the terms hereof and of the Trust Agreement,
the Company may transfer money or other property to the Trustee to provide Plan benefits hereunder,
and the Trustee shall pay Plan benefits to Participants, former Participants and their
beneficiaries out of the Trust Fund. To the extent the Company transfers assets to the Trustee
pursuant to the Trust Agreement, the Plan Administrator may, but need not, establish procedures for
the Trustee to invest the Trust Fund in accordance with each Participant’s or former Participant’s
designated deemed investments pursuant to Article VI respecting the portion of the Trust Fund
assets equal to such Participant’s or former Participant’s Accounts.

     13.02 Establishment of the Trust. The Board, in its sole discretion, may establish the Trust
and direct Baker Hughes, for and on behalf of each Company, to enter into the Trust Agreement. In
such event, the Company shall remain the owner of all assets in the Trust Fund and the assets shall
be subject to the claims of the Company’s creditors if the Company ever becomes insolvent. For
purposes hereof, the Company shall be considered “insolvent” if (a) the Company is unable to pay
its debts as they become due or (b) the Company is subject to a pending proceeding as a debtor
under the United States Bankruptcy Code (or any successor federal statute). The chief executive
officer of the Company and its board of directors shall have the duty to inform the Trustee in
writing if the Company becomes insolvent. Such notice given under the preceding sentence by any
party shall satisfy all of the parties’ duty to give notice. When so informed, the Trustee shall
suspend payments to the Participants and former Participants and hold the assets for the benefit of
the Company’s general creditors. If the Company subsequently alleges that it is no longer
insolvent or if the Trustee receives a written allegation from a third party that the Company is
insolvent, the Trustee shall suspend payments to the Participants and former Participants and hold
the Trust Fund for the benefit of the Company’s general creditors, and shall determine in
accordance with the Trust Agreement whether the Company is insolvent. If the Trustee determines
that the Company is not insolvent, the Trustee shall resume payments to the Participants and former
Participants. No Participant, former Participant or beneficiary shall have any preferred claim to,
or any beneficial ownership interest in, any assets of the Trust Fund, and, upon commencement of
participation in the Plan,

23

 

each Participant and former Participant shall have agreed to waive his priority credit
position, if any, under applicable state law with respect to the assets of the Trust Fund.

ARTICLE XIV

MISCELLANEOUS

     14.01 Plan Not Contract of Employment. The adoption and maintenance of the Plan shall not be
deemed to be a contract between the Company and any individual or to be consideration for the
employment of any individual. Nothing herein contained shall be deemed to (a) give any individual
the right to be retained in the employ of the Company, (b) restrict the right of the Company to
discharge any individual at any time, (c) give the Company the right to require any individual to
remain in the employ of the Company, or (d) restrict any individual’s right to terminate his
employment at any time.

     14.02 Alienation of Interest Forbidden. The interest of a Participant, former Participant or
his beneficiary or beneficiaries hereunder may not be sold, transferred, assigned, or encumbered in
any manner, either voluntarily or involuntarily, and any attempt so to anticipate, alienate, sell,
transfer, assign, pledge, encumber, or charge the same shall be null and void; neither shall the
benefits hereunder be liable for or subject to the debts, contracts, liabilities, engagements or
torts of any individual to whom such benefits or funds are payable, nor shall they be an asset in
bankruptcy or subject to garnishment, attachment or other legal or equitable proceedings. The
provisions of this Section 14.02 shall not apply to a Domestic Relations Order.

     14.03 Withholding. All credits to a Participant’s or former Participant’s Accounts and
payments provided for hereunder shall be subject to applicable withholding and other deductions as
shall be required of the Company under any applicable local, state or federal law.

     14.04 Amendment and Termination. The Board, may from time to time, in its discretion, amend,
in whole or in part, any or all of the provisions of the Plan on behalf of any Company; provided,
however, that no amendment may be made that would impair the rights of a Participant or former
Participant with respect to amounts already credited to his Accounts. The Board may terminate the
Plan at any time. If the Plan is terminated, (a) the Grandfathered Amounts credited to a
Participant’s or former Participant’s Account shall be paid to such Participant, or former
Participant, or his designated beneficiary in the manner specified by the Plan Administrator, which
may include the payment of a single lump sum payment in full satisfaction of all of such
Participant’s, former Participant’s or beneficiary’s benefits hereunder, and (b) any other amounts
credited to the Participant’s or former Participant’s Account shall be paid to such Participant, or
former Participant, or his designated beneficiary at the time(s) and in the form(s) elected by the
Participant or former Participant under sections 3.06 and 4.05 (as such elections may have been
changed pursuant to Section 3.07).

     14.05 Severability. If any provision of the Plan shall be held illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining provisions hereof; instead,
each provision shall be fully severable and the Plan shall be construed and enforced as if said
illegal or invalid provision had never been included herein.

24

 

     14.06 Arbitration. Any controversy arising out of or relating to the Plan, including without
limitation, any and all disputes, claims (whether in tort, contract, statutory or otherwise) or
disagreements concerning the interpretation or application of the provisions of the Plan, the
Company’s employment of the Participant, or former Participant, and the termination of that
employment, shall be resolved by arbitration in accordance with the Employee Benefit Plan Claims
Arbitration Rules of the American Arbitration Association (the “AAA”) then in effect. No
arbitration proceeding relating to the Plan may be initiated by either the Company or the
Participant, or former Participant, unless the claims review and appeals procedures specified in
Section 10.08 have been exhausted. Within ten (10) business days of the initiation of an
arbitration hereunder, the Company and the Participant, or former Participant, will each separately
designate an arbitrator, and within twenty (20) business days of selection, the appointed
arbitrators will appoint a neutral arbitrator from the panel of AAA National Panel of Employee
Benefit Plan Claims Arbitrators. The arbitrators shall issue their written decision (including a
statement of finding of facts) within thirty (30) days from the date of the close of the
arbitration hearing. The decision of the arbitrators selected hereunder will be final and binding
on both parties. This arbitration provision is expressly made pursuant to and shall be governed by
the Federal Arbitration Act, 9 U.S.C. Sections 1-16 (or replacement or successor statute).
Pursuant to Section 9 of the Federal Arbitration Act, the Company and any Participant agrees that
any judgment of the United States District Court for the District in which the headquarters of
Baker Hughes is located at the time of initiation of an arbitration hereunder shall be entered upon
the award made pursuant to the arbitration. Nothing in this Section 14.06 shall be construed to,
in any way, limit the scope and effect of Article X. In any arbitration proceeding full effect
shall be given to the rights, powers, and authorities of the Plan Administrator under Article X.

     14.07 2005 and 2006 Section 409A Transition Procedures. During the 2005 Plan Year, in
accordance with procedures established by the Plan Administrator, Participants shall be permitted
to cancel, in whole or in part, their elections to defer pursuant to Section 3.01(b) of the Plan
for the 2005 Plan Year. For the 2005 Plan Year, in accordance with procedures established by the
Plan Administrator pursuant to Department of Treasury Notice 2005-1, Q-21, no later than March 15,
2005 Participants shall be permitted to make deferral elections under Section 3.01(b) with respect
to bonuses payable during 2005. In accordance with procedures established by the Plan
Administrator and Section 409A, during 2005 and/or 2006 Participants shall be permitted to make
elections as to the time and form of payment of Plan benefits other than Grandfathered Amounts.

     14.08 Compliance With Section 409A. Except with respect to Grandfathered Amounts, the Plan
shall be operated in compliance with Section 409A and the provisions of Section 409A shall override
any provisions of the Plan to the extent that they are inconsistent with Section 409A.

     14.09 Governing Law. All provisions of the Plan shall be construed in accordance with the
laws of Texas, except to the extent preempted by federal law and except to the extent that the
conflicts of laws provisions of the State of Texas would require the application of the relevant
law of another jurisdiction, in which event the relevant law of the State of Texas will nonetheless
apply, with venue for litigation being in Houston, Texas.

25

 

     IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly
authorized officer this 27th day of October, 2005.

	 	 	 	 	 
	 	 	BAKER HUGHES INCORPORATED
	 
	 	 	 	 
	 

	 	By:	 	/s/ Michele Gest
	 

	 	 	 	 
	 

	 	Title:
	 	     Director, Global Benefits

26exv10w2

 

Exhibit 10.2

	 	 	 
	Baker Hughes Incorporated

	 	3900 Essex Lane, Suite 1200 
	 

	 	Houston, Texas 77027
	 

	 	P. O. Box 4740
	 

	 	Houston, Texas 77210-4740
	 

	 	Tel 713-439-8751
	 

	 	Fax 713-439-8966
	 

	 	chad.deaton@bakerhughes.com
	 
	 	 
	 

	 	Chad C. Deaton
	 

	 	Chairman of the Board and
	

	 	Chief Executive Officer

October 26,
2005
 
Mr. James R. Clark

Baker Hughes Incorporated

3900 Essex Lane Houston,
Texas 77027

Re: Employment Letter dated February 15, 2001

Dear Rod:

The Compensation Committee of the Baker Hughes Incorporated Board of Directors at
its meeting held on October 26, 2005 has credited you with five years of service as
of your first day of employment (March 7, 2001) for determining your eligibility for
retirement under the Company’s benefits and compensation programs, including all
past and future stock option grants, the Company’s Incentive Compensation Plan and
Employee Stock Purchase Plan.

Very truly yours,

	 	 	 
	/s/
Chad Deaton

	 	 
	Chad C. Deaton

	 	 
	Chairman and Chief Executive Officer
	 	 

 

 

	 	 	 
	Baker Hughes Incorporated
	 	 
	 

	 	3900 Essex Lane, Suite 1200
	 

	 	Houston, Texas 77027-5177
	February 15, 2001

	 	P.O. Box 4740 (77210-4740)
	 

	 	Tel 713-439-8351
	 

	 	Fax 713-439-8966
	 

	 	andy.szescila@bakerhughes.com
	 
	 	 
	 

	 	Andrew J. Szescila
	 

	 	Chief Operating Officer

PERSONAL AND CONFIDENTIAL

Mr. James
Roderick Clark

10 Crownberry Court

The Woodlands, TX 77381

Dear James:

I am pleased to offer you the position of President of Baker Petrolite located in
Sugar Land, Texas. This position will report to Andy Szescila, Chief Operating
Officer. The elements of your compensation package are as follows:

	1.	 	The effective date will be approximately March 1, 2001.
	 
	2.	 	The position is classified as an Executive Salary Grade 5. Your base salary
will be
$24,166.67 per month, paid biweekly as earned, effective the date of your
employment.
	 
	3.	 	The compensation package includes participation in the Company’s incentive
compensation program. Bonus levels for Grade 5 are 50% Expected Value (EV).
Bonus levels are based upon your base salary and are contingent upon the Company
achieving predetermined financial results set in connection with the Company’s
annual fiscal year plan and approval by the Compensation Committee of the Board
of
Directors. You will be eligible to participate in the 2001 fiscal year incentive
compensation program, on a prorated basis, which commences on January 1, 2001.
	 
	4.	 	You will be eligible to participate in the Company-sponsored Thrift (401k)
Plan,
Supplemental Retirement Plan (“SRP”) and Employee Stock Purchase Plan at the
next entrance date for each of the Plans (Thrift & SRP =
approximately April, 2001;
and Employee Stock Purchase Plan = January 1, 2002).

			
	 	 	 
	James Roderick Clark
	 	Page 1 of 3

 

 

	5.	 	Insurance coverage available to you upon date of employment will include a choice
of several levels of medical and dental insurance, including vision care, as well as
life, accidental death and dismemberment, short- and long-term disability and
business travel accident insurance.
	 
	6.	 	Vacation is advanced to each employee’s vacation bank each January 1, the
beginning of the fiscal year. You will be eligible for four (4) weeks of vacation in
2001.
	 
	7.	 	You will be eligible for a perquisite bank in the amount of $15,000.00, which entitles
you to a choice of executive perquisites in accordance with this program’s guidelines.
A copy of the policy covering the perquisite program is enclosed.
	 
	8.	 	You will be covered by the Company’s Executive Severance Policy, which covers all
U.S. based executives. Its purpose is to provide executives, who are terminated for
specific reasons, an income for a fixed period of time while actively looking for other
employment.
	 
	9.	 	As an inducement to accept this offer, and subject to you becoming employed at
BHI, you will be granted a stock option for 25,000 shares of BHI common stock.
This option grant is subject to the approval of the Compensation Committee of the
BHI Board of Directors. The strike price per share for the shares covered by this
option grant will be the market price per share of BHI common stock on the date of
the grant, which will be the date upon which the grant is approved by the
Compensation Committee. This option will vest as follows: 33-1/3% will vest on the
one year anniversary date of this option grant, 33-1/3% will vest on the two year
anniversary of this option grant and the remaining 33-1/3% will vest on the third year
anniversary of this option grant. The option will have a term of ten years, subject to
the terms of the BHI Stock Option Plan.
	 
	10.	 	Because you will be President of Baker Petrolite, you will be required to own
common stock in Baker Hughes, Inc. equal to two times base salary within five years
from the date of your employment. Subject to approval of the Compensation
Committee of the Board, effective March 1, 2002, you will receive a one-time grant
of restricted common stock of the Company equal to the number of shares of common
stock of the Company that you own on March 1, 2002, not to exceed 25, 000 shares.
Vesting of these restricted shares will occur upon retirement from the Company,
involuntary termination (unless due to cause), permanent disability or death and is
subject to other terms and conditions of the grant. Retirement for this purpose means
attaining age 55 with at least 10 years of service with the Company. On the first day
of employment, you will be credited with five years of service for purposes of this
program.

			
	 	 	 
	James Roderick Clark
	 	Page 2 of 3

 

 

These benefits and others for which you may be eligible will be explained to you in detail
at an orientation session that will be conducted during your first week of work.

This offer is contingent, however, upon successful completion of the following: a) a
physical examination, which includes drug testing; b) written acknowledgment of receipt of the
enclosed Substance Abuse and Search Policy in effect at the Company’s offices; c) a background
check, which includes civil and criminal litigation history, as well as a credit check and
verification of degrees, certifications and/or licenses; d) an application for employment; e) a
Form I-9; and f) verification of current compensation.

Please acknowledge your acceptance of this offer by signing in the space provided below and
returning one original to Evan Ginn. The additional copy is for your records. We look forward to
having you join the Baker Hughes Team!

Sincerely,

/s/ Andrew Szesclia

Andrew Szesclia

Chief Operating Officer

			
	 	 	AGREED AND ACCEPTED:

/s/ James Roderick Clark

 

James Roderick Clark

Date: 2/16/01

Enclosures

			
	 	 	 
	James Roderick Clark
	 	Page 3 of 3

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