Document:

exv10w4

 

Exhibit 10.4

BAKER HUGHES INCORPORATED

PERFORMANCE AWARD AGREEMENT

January 1, 2004

Name

Grantee

	 	 	 
	Date of Grant:
	 	 
	Number of Target Shares:
	 	 
	Expiration Date:

	 	December 31, 2006

GRANT OF PERFORMANCE AWARD

     The Compensation Committee (the “Committee”) of the Board of Directors of
Baker Hughes Incorporated, a Delaware corporation (the “Company”), hereby
grants to you, the above-named grantee, a performance award which shall entitle
you to receive shares of the Company’s Common Stock, $1.00 par value per share
(the “Common Stock”), pursuant to the Baker Hughes Incorporated 2002 Director &
Officer Long-Term Incentive Plan (the “Plan”), on the following terms and
conditions:

     Under this Performance Award Agreement (this “Agreement”), you will have
an opportunity to earn shares of Common Stock based upon the Company’s total
shareholder return for the Performance Period (as that term is defined below)
as compared with the total shareholder returns of the companies whose
securities comprised the Morgan Stanley Oil Services Index traded on the
Chicago Board Options Exchange on December 31, 2003 (the “Oil Services Index
Companies”).

     If (a) the Company’s total shareholder return for the three-year period
ending December 31, 2006 (the “Performance Period”), equals or exceeds the
median of the total shareholder returns of the Oil Services Index Companies for
the Performance Period, (b) a Change in Control of the Company has not occurred
on or before December 31, 2006, and (c) you remain in the active employ of the
Company and/or one or more wholly-owned subsidiaries of the Company through the
last day of the Performance Period, then the Company shall issue to you that
number of shares of Common Stock equal to (x) the number of shares of Common
Stock set forth above as the “Number of Target Shares” for your performance
award, multiplied by (y) the applicable “Percentage Target Earned” factor
specified in the table below.

	 	 	 	 	 
	Percentile Rank of the Company’s Total Shareholder Return for	 	Percentage
	the Performance Period as Compared to the Total Shareholder	 	Target
	Returns of all Oil Services Index Companies
	 	Earned

	95th Percentile or more
	 	 	200	%
	85th Percentile or more, but less than 95th Percentile
	 	 	150	%
	80th Percentile or more, but less than 85th Percentile
	 	 	125	%
	70th Percentile or more, but less than 80th Percentile
	 	 	100	%
	65th Percentile or more, but less than 70th Percentile
	 	 	75	%
	55th Percentile or more, but less than 65th Percentile
	 	 	50	%
	50th Percentile or more, but less than 55th Percentile
	 	 	25	%
	Less than 50th Percentile
	 	 	0	%

 

 

     If (a) the Company’s total shareholder return for the Performance Period
is less than the median of the total shareholder returns of the Oil Services
Index Companies for the Performance Period, and (b) a Change in Control of the
Company has not occurred on or before December 31, 2006, then the award
pursuant to this Agreement shall lapse and be forfeited as of December 31,
2006.

     Pursuant to Article 3 of the Plan, the Committee shall have the discretion
to calculate three-year total shareholder returns for the Oil Services Index
Companies, including the Company, and to determine the formula to achieve such
calculations.

     Any Common Stock issued pursuant to this Agreement shall be issued as soon
as reasonably practicable after December 31, 2006. You may not sell any shares
of the Common Stock to be issued under this Agreement until such shares are
delivered by the Company and you shall not have any of the rights of a
stockholder with respect to such shares, including, without limitation, the
right to vote such shares, the right to receive any cash or other dividends of
any nature, or the right to exercise any other rights, powers or privileges of
a holder of the shares, until such shares are issued by the Company.

     If a Change in Control of the Company occurs on or before December 31,
2006, your rights to a performance award under this Agreement will be
determined as provided in the Terms and Conditions of Award Agreements (dated
January 1, 2004) (the “Terms and Conditions”).

     Your performance award is granted pursuant to and governed by the terms of
the Plan, this Agreement and the Terms and Conditions.

	 	 	 	 	 	 	 
	

	 	BAKER HUGHES INCORPORATED	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	
 	 	 	 	 
	

	 	Michael E. Wiley — Chairman & CEO	 	 	 	 

 

 

BAKER HUGHES INCORPORATED

TERMS AND CONDITIONS

OF

AWARD AGREEMENTS

(January 1, 2004)

	1.	 	TERMINATION OF EMPLOYMENT. The following provisions will apply in the
event your employment with the Company and all wholly-owned subsidiaries
of the Company (collectively, the “Company Group”) terminates on or before
December 31, 2006:
	 
	1.1	 	        Termination Generally. If your employment with the Company Group
terminates as a result of your retirement on or before December 31, 2006
or for any other reason other than those described in Sections 1.2 through
1.6 below, the performance award granted to you (the “Performance Award”)
will be completely forfeited on the date your employment terminates.
	 
	1.2	 	        Termination for Cause. If your employment with the Company Group
terminates for Cause, the Performance Award will be completely forfeited
on the date your employment terminates. Termination for Cause includes
(without limitation) fraud, theft, embezzlement committed against the
Company Group or any of its affiliated companies or a customer of the
Company Group or any of its affiliated companies, or for conflict of
interest, unethical conduct, dishonesty affecting the assets, properties
or business of the Company Group or any of its affiliated companies,
willful misconduct, or continued material dereliction of duties.
	 
	1.3	 	        Potential or Actual Change in Control During 2004, 2005 or 2006.

	(i)	 	        Termination Without Cause or for Good Reason in Connection With a
Potential Change in Control on or Before December 31, 2006. The Company
will pay to you on or before ten (10) business days after the date your
employment with the Company Group terminates cash in an amount equal to
the Rank #1 Cash Amount (as that term is defined below) and thereafter the
Company will have no further obligations to you pursuant to your
Performance Award Agreement, if (a) the Company Group terminates your
employment without Cause on or before December 31, 2006, 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
December 31, 2006, 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 Company

Award Agreement

January 1, 2004

 

 

	 	 	(whether or not a Change in Control ever occurs). For purposes of
this Section 1.3, the term “Rank #1 Cash Amount” means (a) the
number of shares of Common Stock that will be issued to you under
the Performance Award if the Company’s total shareholder return for
the Performance Period is ranked in the 95th percentile, multiplied
by (b) the last per share sale price of the Common Stock, as
reported in the New York Stock Exchange Composite Transactions, on
the date of grant of the Performance Award.
	 
	(ii)	 	        Employment Not Terminated Before a Change in Control on or Before
December 31, 2006. If a Change in Control of the Company occurs on or
before December 31, 2006, 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 on or before ten (10) business days after
the date the Change in Control of the Company occurs an amount equal to
the Rank #1 Cash Amount, and thereafter the Company will have no further
obligations to you pursuant to your Performance Award Agreement.

	1.4	 	        Divestiture of Business Unit. Notwithstanding any other provision of the
Performance Award Agreement or these Terms and Conditions to the contrary,
if you are a member of the Company’s Strategy and Policy Council on the
date the Company Group divests its ownership of a business unit of the
Company or one or more subsidiaries (a “Unit”) and your employment with
the Company Group terminates in connection with such divestiture (other
than for Cause or death or due to your becoming permanently disabled
within the meaning of Section 1.5), the Company will pay you an amount
equal to the product of (1) and (2) where (1) is the amount of the
Performance Award you would have received under your Performance Award
Agreement if your employment with the Company Group had not been
terminated before the end of the Performance Period and (2) is a fraction,
the numerator of which is the number of days from the beginning of the
Performance Period through the date your employment with the Company Group
terminates and the denominator of which is the number of days in the
Performance Period. After your employment with the Company Group
terminates, all determinations regarding the amount payable under this
Section 1.4, including the time at which such amount, if any, will be
paid, will continue to be determined under the Plan, the Performance Award
Agreement and these Terms and Conditions. A “Divestiture” includes the
disposition of a Unit to an entity that the Company does not consolidate
in its financial statements, whether the disposition is structured as a
sale or transfer of stock, a merger, a consolidation or a sale or transfer
of assets, or a combination thereof, provided that a “Divestiture” shall
not include a disposition that constitutes a Change in Control.
	 
	1.5	 	        Disability. Notwithstanding any other provision of the Performance Award
Agreement or these Terms and Conditions to the contrary, if you become
permanently disabled while in the active employ of one or more members of
the Company Group, the Company will pay you an amount equal to the product
of (1) and (2) where (1) is the amount of the Performance Award you would
have received under your Performance Award Agreement if you had not become
permanently disabled before the end of the Performance Period and (2) is a
fraction, the numerator of which is the number of days from the beginning
of the Performance Period through the date you became permanently disabled
and the denominator of which is the number of days in the Performance
Period. After you become permanently disabled, all determinations
regarding the amount payable

Award Agreement

January 1, 2004

 

 

	 	 	under this Section 1.5, including the time at which such amount, if any,
will be paid, will continue to be determined under the Plan, the
Performance Award Agreement and these Terms and Conditions. For purposes
of this Section 1.5, you will be “permanently disabled” if you qualify
for long-term disability benefits under a long-term disability program
sponsored by the Company.
	 
	1.6	 	        Death. Notwithstanding any other provision of the Performance Award
Agreement or these Terms and Conditions to the contrary, if you die while
in the active employ of one or more members of the Company Group, the
Company will pay you an amount equal to the product of (1) and (2) where
(1) is the amount of the Performance Award you would have received under
your Performance Award Agreement if you had not died before the end of the
Performance Period and (2) is a fraction, the numerator of which is the
number of days from the beginning of the Performance Period through the
date of your death and the denominator of which is the number of days in
the Performance Period. After your death, all determinations regarding
the amount payable under this Section 1.6, including the time at which
such amount, if any, will be paid, will continue to be determined under
the Plan, the Performance Award Agreement and these Terms and Conditions.
	 
	2.	 	PROHIBITED ACTIVITY. Notwithstanding any other provision of these Terms
and Conditions or the Performance Award Agreement, if you engage in a
“Prohibited Activity,” as described below, while employed by one or more
members of the Company Group or within two years after the date your
employment with the Company Group terminates, then your right to receive
Common Stock, to the extent still outstanding at that time, shall
immediately thereupon be completely forfeited. If the Committee receives
an allegation that you have engaged in a Prohibited Activity, the
Committee, in its discretion, may extend the date by which the Company
will issue Common Stock under this Agreement for up to two months to allow
the Committee and its representatives to investigate the allegations. If
the Committee determines that you did not engage in a Prohibited Activity,
the Committee will instruct the Company to immediately issue the Common
Stock to be issued under the Performance Award. A “Prohibited Activity”
shall be deemed to have occurred, as determined by the Committee in its
sole and absolute discretion, if Grantee:

	(i)	 	        divulges 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 Grantee’s
public use, disclosure, or fault, or (b) becomes available to Grantee on a
non-confidential basis after Grantee’s employment termination date from a
source other than a member of the Baker Hughes Group prior to the public
use or disclosure by Grantee, 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; or
	 
	(ii)	 	        directly or indirectly, consults or becomes affiliated with, conducts,
participates or engages in, or becomes employed by, any business that is
competitive with the business of any member of the Baker Hughes Group,
wherever from time to time conducted throughout the world, including
situations where Grantee solicits or participates in or assists in any way
in the solicitation or

Award Agreement

January 1, 2004

 

 

	 	 	recruitment, directly or indirectly, of any employees of any member
of the Baker Hughes Group.

	3.	 	TAX WITHHOLDING. To the extent the receipt of Common Stock or other
payments pursuant to the Performance Award results in taxable income to
you, the Company is authorized to withhold from any remuneration payable
to you any tax required to be withheld by reason of such taxable income,
including (without limitation) shares of the Common Stock sufficient to
satisfy the withholding obligation based on the last per share sales price
of the Common Stock for the trading day immediately preceding the date
that the withholding obligation arises, as reported in the New York Stock
Exchange Composite Transactions.
	 
	4.	 	NONTRANSFERABILITY. The Performance Award is not transferable by you
otherwise than by will or by the laws of descent and distribution.
	 
	5.	 	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.
	 
	6.	 	MISCELLANEOUS. The Performance Award is granted 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” referred to the Grantee named in the Performance
Award Agreement. Capitalized terms that are not defined herein shall have
the meaning ascribed to such terms in the Plan or the Performance Award
Agreement.

Award Agreement

January 1, 2004exv10w5

 

Exhibit 10.5

Restricted Stock Award

     WHEREAS, as an incentive to retain the services of
                          the
Company desires to grant                          
                     (            )
restricted shares of the Common Stock
of the Company under the Company’s 2002 Director & Officer
Long-Term Incentive Plan;

     NOW, THEREFORE, BE IT RESOLVED, that the Company issue to
                         
                         
(            ) restricted shares of the
Common Stock of the Company, $1.00 par value per share
(“Restricted Shares”) under the Company’s 2002 Director &
Officer Long-Term Incentive Plan (“Plan”), all of which shares
are to vest on                in the year         , subject to continued
employment with the Company;

     RESOLVED FURTHER, that if
                                 voluntarily
terminates his employment with the Company or the Company
terminates his employment for cause, as defined in the Plan,
the Restricted Shares shall be forfeited to the Company to
become treasury shares of the Company;

     
RESOLVED FURTHER, that in the event
                                
does not remain employed by the Company due to his disability, his
death or his employment is terminated by the Company other than
for cause, all Restricted Shares shall immediately vest;

     RESOLVED FURTHER, that pending vesting of the Restricted
Shares,                                 
shall be entitled to dividends paid with
respect to the Restricted Shares;

     RESOLVED FURTHER, that the Restricted Shares shall be
issued pursuant to the Plan of the Company and are subject to
and governed by the additional terms and conditions of that
Plan, including (without limitation) the change of control
provisions of Section 16 of the Plan;

     RESOLVED FURTHER, that when the Restricted Shares are
issued and delivered to                                 , they shall be fully paid and
non-assessable and subject to the conditions described above;

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