Document:

exv10w41

 

Exhibit 10.41

BAKER HUGHES INCORPORATED

STOCK OPTION AGREEMENT

Grantee

Date of Grant:

Total Number of Shares Granted:

Exercise Price per Share:

Expiration Date:

	 	 	 
	Terms of Award; Vesting Schedule:

	 	3 years, with vesting in installments of 33 1/3% on
	 

	 	the anniversary date of the Date of Grant in each of
	 

	 	the years ___, ___and ___.

GRANT OF OPTION

The Board of Directors of Baker Hughes Incorporated, a Delaware corporation (the “Company”),
pursuant to the Baker Hughes Incorporated 2002 Director & Officer Long-Term Incentive Plan (the
“Plan”), hereby grants to you, the above-named Grantee, effective as of the Date of Grant set forth
above, nonqualified stock option to purchase the total number of shares set forth above of the
Company’s $1 par value per share common stock at the exercise price set forth above for each share
subject to this option, subject to adjustment as provided in the Plan. The option is exercisable
in installments in accordance with the Vesting Schedule set forth above with the exercise price
payable at the time of exercise. To the extent not exercised, installments shall be cumulative and
may be exercised in whole or in part until the option terminates. This option may not be exercised
after the Expiration Date.

By your acceptance of the option, you agree that the option is granted under, governed by and
subject to the terms of the Plan, this Stock Option Agreement and the Terms and Conditions of
Option Agreements dated ___, 2006.

	 	 	 
	 

	 	BAKER HUGHES INCORPORATED
	 
	 	 
	 

	 	 
	 

	 	Chad C. Deaton — Chairman & CEO

 

 

BAKER HUGHES INCORPORATED

TERMS AND CONDITIONS

OF

OPTION AGREEMENTS

_______________, 2006

     These Terms and Conditions are applicable to an option granted to a member of the Board of
Directors of the Company (the “Board”), who is not an employee of the Company, pursuant to the
Baker Hughes Incorporated 2002 Director & Officer Long-Term Incentive Plan (the “Plan”), and are
incorporated as part of the Stock Option Agreement setting forth the terms of such option (the
“Agreement”).

	1.	 	TERMINATION OF SERVICE. The following provisions will apply in the event Grantee’s service
on the Board terminates before the Expiration Date set forth in the Agreement:

1.1 Termination Generally. If Grantee’s service on the Board terminates before the
Expiration Date for any reason other than the reason described in Section 1.2 below, then
(a) Grantee’s rights under the option that have not then vested shall vest on the effective
date of the termination of Grantee’s service on the Board (the “Termination Date”) and (b)
all of Grantee’s rights in the option shall terminate and become null and void on the
earlier of the Expiration Date or five (5) years after the Termination Date.

1.2 Removal from the Board. If Grantee is removed from the Board and in the fiscal
year of the Company preceding the year in which Grantee is removed from the Board Grantee
failed to attend at least 66 percent of the meetings of the Board and any committees of the
Board on which Grantee then served as a director, then all of Grantee’s rights in the option
shall terminate and become null and void on the earlier of the Expiration Date or the date
Grantee is removed from the Board.

	2.	 	CHANGE IN CONTROL. Notwithstanding any other provision of the Agreement or these Terms and
Conditions to the contrary, if a Change in Control of the Company occurs before the Expiration
Date and before Grantee’s service on the Board terminates then Grantee’s rights under the
option that have not then vested shall vest on the effective date of the Change in Control of
the Company.
	 
	3.	 	CASHLESS EXERCISE. Cashless exercise, in accordance with the terms of the Plan, shall be
available to Grantee for the shares subject to the option.
	 
	4.	 	NONTRANSFERABILITY. Except as specified in these Terms and Conditions, the option and the
Agreement are not transferable or assignable by Grantee other than by will or the laws of
descent and distribution, and shall be exercisable during Grantee’s lifetime only by Grantee.
	 
	5.	 	CAPITAL ADJUSTMENTS AND REORGANIZATIONS. The existence of the option shall not affect in any
way the right or power of the Company or any company the stock of which is issued pursuant to
the Agreement to make or authorize any adjustment, recapitalization, reorganization or other
change in its capital structure or its business, engage in any merger or consolidation, issue
any debt or equity securities, dissolve or liquidate, or sell, lease, exchange or otherwise
dispose of all or any part of its assets or business, or engage in any other corporate act or
proceeding.
	 
	6.	 	NO RIGHTS AS A STOCKHOLDER. Grantee shall not have any rights as a stockholder of the
Company with respect to any shares covered by the option until the date of the issuance of the
stock certificate or certificates to Grantee for such shares following exercise of the option
pursuant to the Agreement and the Terms and Conditions and payment for the shares. No
adjustment shall be made for dividends or other rights for which the record date is prior to
the date such certificate or certificates are issued.

 

 

	7.	 	SECURITIES ACT LEGEND. Grantee consents to the placing on any certificate for the Shares of
an appropriate legend restricting resale or other transfer of the Shares except in accordance
with such Act and all applicable rules thereunder.
	 
	8.	 	LIMIT OF LIABILITY. Under no circumstances will the Company be liable for any indirect,
incidental, consequential or special damages (including lost profits) of any form incurred by
any person, whether or not foreseeable and regardless of the form of the act in which such a
claim may be brought, with respect to the Plan or the Company’s role as Plan sponsor.
	 
	9.	 	MISCELLANEOUS. The Agreement and the option are awarded pursuant to and is subject to all of
the provisions of the Plan, which are incorporated by reference herein, including all
amendments to the Plan, if any. In the event of a conflict between these Terms and Conditions
and the Plan provisions, the Plan provisions will control. Capitalized terms that are not
defined herein shall have the meanings ascribed to such terms in the Plan or the Agreement.exv10w42

 

Exhibit 10.42

BAKER HUGHES INCORPORATED

PERFORMANCE UNIT AWARD AGREEMENT

Name

Awardee

	 	 	 
	Date of Award:
	 	 
	 

	 	 
	Number of Performance Units Awarded:
	 	 
	 

	 	 

AWARD OF PERFORMANCE UNITS

     The Compensation Committee (the “Committee”) of the Board of Directors of Baker Hughes
Incorporated, a Delaware corporation (the “Company”), pursuant to the Baker Hughes Incorporated
2002 Director & Officer Long-Term Incentive Plan (the “Plan”), hereby awards to you, the
above-named awardee, effective as of the Date of Award set forth above, that number of Performance
Units set forth above (each, a “Performance Unit”, and collectively, the “Performance Units”), on
the terms and conditions set forth in this Performance Unit Award Agreement (this “Agreement”).

     Each Performance Unit provides you an opportunity to earn a cash payment based upon the
cumulative Baker Value Added (as that term has been defined by the Committee) achieved by the
Company for the three-year period beginning___, and ending ___(the “Performance Period”)
as compared with the Entry Level Baker Value Added, Expected Value Baker Value Added and Over
Achievement Baker Value Added established by the Committee for the Performance Period. The
Committee may not increase the amount payable under this Agreement.

     If the cumulative Baker Value Added for the Performance Period is less than the Entry Level
Baker Value Added and a Change in Control of the Company has not occurred on or before the last day
of the Performance Period, then the award pursuant to this Agreement shall lapse and be forfeited
as of ___.

     The Committee’s determination of Baker Value Added and the cumulative Baker Value Added for
the Performance Period for purposes of this Agreement shall be binding upon all persons.

     Any amount payable to you pursuant to this Agreement will be paid to you by the Employer on
March ___, unless otherwise provided under the Terms and Conditions. Such payment will be made
to you in exchange for the Performance Units and thereafter you shall have no further rights with
respect to such Performance Units or the Agreement.

 

 

     If a Change in Control of the Company occurs or your employment with the Company and
Affiliates terminates on or before the last day of the Performance Period, your rights to the
Performance Units and a payment under this Agreement will be determined as provided in the attached
Terms and Conditions of Award Agreements (dated___) (the “Terms and Conditions”).

     The Performance Units that are awarded hereby to you shall be subject to the prohibitions and
restrictions set forth herein with respect to the sale or other disposition of such Performance
Units and the obligation to forfeit and surrender such Performance Units.

     The Performance Units and your rights under this Agreement may not be sold, assigned, pledged,
exchanged, hypothecated or otherwise transferred, encumbered or disposed of (other than by will or
the applicable laws of descent and distribution). Any such attempted sale, assignment, pledge,
exchange, hypothecation, transfer, encumbrance or disposition in violation of this Agreement shall
be void and the Company Group shall not be bound thereby.

     Capitalized terms that are not defined herein shall have the meaning ascribed to such terms in
the Plan or the Terms and Conditions.

     In accepting the award of Performance Units set forth in this Agreement you accept and agree
to be bound by all the terms and conditions of the Plan, this Agreement and the Terms and
Conditions.

	 	 	 
	 

	 	BAKER HUGHES INCORPORATED
	 	 	 
	 

	 	 
	 

	 	Chad C. Deaton — Chairman & CEO

 

 

BAKER HUGHES INCORPORATED

TERMS AND CONDITIONS

OF

AWARD AGREEMENTS

 

CHANGE IN CONTROL/TERMINATION OF EMPLOYMENT. The following provisions will apply in the event a

Change in Control of the Company occurs, or your employment with the Company and all Affiliates

(collectively, the “Company Group”) terminates, before the last day of the Performance Period (as

that term is defined in the Performance Unit Agreement awarded to you (the “Agreement”)).

1.1 Termination Generally. If your employment with the Company Group terminates on
or before the last day of the Performance Period for any reason other than one of the
reasons described in Sections 1.2 through 1.5 below, all of your rights in the Agreement,
including all rights to the Performance Units granted to you, will lapse and be completely
forfeited on the date your employment terminates.

1.2 Potential or Actual Change in Control.

(i) Termination Without Cause or for Good Reason in Connection With a Potential
Change in Control on or Before the Last Day of the Performance Period. If (a)
the Company Group terminates your employment without Cause on or before the last day
of the Performance Period prior to a Change in Control of the Company (whether or
not a Change in Control ever occurs) and such termination is at the request or
direction of a Person who has entered into an agreement with the Company the
consummation of which would constitute a Change in Control of the Company or is
otherwise in connection with or in anticipation of a Change in Control of the
Company (whether or not a Change in Control ever occurs) or (b) you terminate your
employment with the Company Group for Good Reason on or before the last day of the
Performance Period prior to a Change in Control of the Company (whether or not a
Change in Control ever occurs) and such termination or the circumstance or event
which constitutes Good Reason occurs at the request or direction of a Person who has
entered into an agreement with the Company the consummation of which would
constitute a Change in Control of the Company or is otherwise in connection with or
in anticipation of a Change in Control of the Employer (whether or not a Change in
Control ever occurs), then the Company will pay to you in cash an amount determined
under the following formula in lieu of any other amounts under the Agreement:

(1) multiplied by (2) multiplied by (3) divided by (4)

where (1) is the Target Value set forth in the Agreement of a Performance Unit, (2)
is the number of Performance Units that were awarded to you under the Agreement, (3)
is the number of days from (and including) the first day of the Performance Period
to (and including) the day before the date your employment

1

 

relationship with the Company Group terminates as described in this Section 1.2(i),
and (4) is the number of days during the Performance Period. Any amount payable to
you pursuant to this Section 1.2(i) will be paid by the Company to you ten (10)
business days after the date your employment relationship with the Company Group
terminates. Such payment will be made to you in exchange for the Performance Units
and thereafter you shall have no further rights with respect to such Performance
Units or the Agreement and the Company Group will have no further obligations to you
pursuant to the Performance Units or the Agreement.

(ii) Employment Not Terminated Before a Change in Control on or Before the Last
Day of the Performance Period. If a Change in Control of the Company occurs on
or before the last day of the Performance Period and your employment with the
Company Group does not terminate before the date the Change in Control of the
Company occurs, then the Company will pay to you in cash an amount determined under
the following formula in lieu of any other amounts under the Agreement:

(1) multiplied by (2) multiplied by (3) divided by (4)

where (1) is the Target Value set forth in the Agreement of a Performance Unit, (2)
is the number of Performance Units that were awarded to you under the Agreement, (3)
is the number of days from (and including) the first day of the Performance Period
to (and including) the day before the date the Change in Control of the Company
occurs, and (4) is the number of days during the Performance Period. Any amount
payable to you pursuant to this Section 1.2(ii) will be paid by the Company to you
ten (10) business days after the date the Change in Control of the Company occurs.
Such payment will be made to you in exchange for the Performance Units and
thereafter you shall have no further rights with respect to such Performance Units
or the Agreement and the Company Group will have no further obligations to you
pursuant to the Performance Units or the Agreement.

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

(1) multiplied by (2) multiplied by (3) divided by (4)

where (1) is the Target Value set forth in the Agreement of a Performance Unit, (2) is the
number of Performance Units that were awarded to you under the Agreement, (3) is the number
of days from (and including) the first day of the Performance Period to (and including) the
day you become permanently disabled, and (4) is the number of days during the Performance
Period. Any amount payable to you pursuant to this Section 1.3 will be paid by the Company
to you ten (10) business days after the date you become

2

 

permanently disabled. Such payment will be made to you in exchange for the Performance
Units and thereafter you shall have no further rights with respect to such Performance Units
or the Agreement and the Company Group will have no further obligations to you pursuant to
the Performance Units or the Agreement. For purposes of this Section 1.3, you will be
“permanently disabled” if you (a) are unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not less than 12
months, or (b) are, by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits for a period of not less
than three (3) months under an accident and health plan covering employees of the Company
Group.

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

(1) multiplied by (2) multiplied by (3) divided by (4)

where (1) is the Target Value set forth in the Agreement of a Performance Unit, (2) is the
number of Performance Units that were awarded to you under the Agreement, (3) is the number
of days from (and including) the first day of the Performance Period to (and including) the
date of your death, and (4) is the number of days during the Performance Period. Any amount
payable to your estate pursuant to this Section 1.4 will be paid to your estate by the
Employer ten (10) business days after the date of your death. Such payment will be made in
exchange for the Performance Units and thereafter your estate and heirs, executors,
administrators shall have no further rights with respect to such Performance Units or the
Agreement and the Company Group will have no further obligations pursuant to the Performance
Units or the Agreement.

1.5 Retirement. Notwithstanding any other provision of the Agreement or these Terms
and Conditions to the contrary, if your employment with the Company Group terminates as a
result of your Retirement before the last day of the Performance Period, then the number of
Performance Units issued to you under the Agreement shall automatically be reduced (without
further action by you and/or the Company) on the date your employment relationship with the
Company Group terminates to that number of Performance Units determined under the following
formula (the “Retirement Adjusted Performance Units”):

(1) multiplied by (2) divided by (3)

where (1) is the number of Performance Units that were originally awarded to you under the
Agreement, (2) is the number of days from (and including) the first day of the Performance
Period to (and including) the day before the date your employment relationship with the
Company Group terminates due to Retirement, and (3) is the

3

 

number of days during the Performance Period. The excess of the Performance Units that were
originally awarded to you under the Agreement over the Retirement Adjusted Performance Units
shall be immediately forfeited on the date of the termination of your employment
relationship with the Company Group due to Retirement. Any amount payable to you pursuant
to this Section 1.5 will be paid on March 13, 2009. For purposes of this Section 1.5, the
term “Retirement” means the voluntary termination of your employment relationship with the
Company Group on or after the date on which the sum of your age and years of service with
the Company Group equals 65.

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

4

 

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

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