-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
ICC1ovL38x9cP477vInTGgi8h4wLl7o9Czi5e9HuNCoZ7sClNsMVQAcZu/4UP0fV
KZd26Pekt4VHQFUsgPz0fg==
<SEC-DOCUMENT>0000950129-99-001008.txt : 19990318
<SEC-HEADER>0000950129-99-001008.hdr.sgml : 19990318
ACCESSION NUMBER: 0000950129-99-001008
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 31
CONFORMED PERIOD OF REPORT: 19981231
FILED AS OF DATE: 19990317
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: BAKER HUGHES INC
CENTRAL INDEX KEY: 0000808362
STANDARD INDUSTRIAL CLASSIFICATION: OIL & GAS FILED MACHINERY & EQUIPMENT [3533]
IRS NUMBER: 760207995
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT:
SEC FILE NUMBER: 001-09397
FILM NUMBER: 99566867
BUSINESS ADDRESS:
STREET 1: 3900 ESSEX LANE
CITY: HOUSTON
STATE: TX
ZIP: 77027
BUSINESS PHONE: 7134398600
MAIL ADDRESS:
STREET 1: P O BOX 4740
CITY: HOUSTON
STATE: TX
ZIP: 77210-4740
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<DESCRIPTION>BAKER HUGHES INCORPORATED - DATED 12/31/98
<TEXT>
<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
<TABLE>
<S> <C>
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
</TABLE>
---------------------
COMMISSION FILE NUMBER 1-9397
---------------------
BAKER HUGHES INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 76-0207995
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
3900 ESSEX LANE, HOUSTON, TEXAS 77027-5177
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713)439-8600
---------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
<S> <C>
Common Stock, $1 Par Value New York Stock Exchange
Pacific Exchange
Swiss Exchange
</TABLE>
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
---------------------
At March 3, 1999, the registrant had outstanding 327,204,472 shares of
Common Stock, $1 par value. The aggregate market value of the Common Stock on
such date (based on the closing price on the New York Stock Exchange) held by
nonaffiliates was approximately $5,917,274,025.
---------------------
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Annual Report to Stockholders for 1998 are
incorporated by reference into Parts I and II.
Portions of Registrant's 1998 Proxy Statement for the Annual Meeting of
Stockholders to be held April 28, 1999 are incorporated by reference into Part
III.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
PART I
ITEM 1. BUSINESS
The Company is engaged in the oilfield and process industry segments.
In addition, the Company manufactures and sells other products and provides
services to industries that are not related to the oilfield or continuous
process industries. The Company conducts certain of its operations through joint
ventures, partnerships or alliances.
The Company is a Delaware corporation that was formed in connection
with the combination of Baker International Corporation ("Baker") and Hughes
Tool Company ("Hughes") consummated on April 3, 1987 (the "Combination"). The
Company acquired Western Atlas Inc. ("Western Atlas") in a merger completed on
August 10, 1998. As used herein, the "Company" refers to Baker Hughes
Incorporated and its subsidiaries, unless the context clearly indicates
otherwise.
For additional industry segment information for the year ended December
31, 1998, the three month period ended December 31, 1997 and for each of the two
years in the period ended September 30, 1997, see Note 13 of Notes to
Consolidated Financial Statements which Notes are incorporated herein by
Reference in Part II, Item 8 ("Notes to Consolidated Financial Statements").
OILFIELD
The Company is a leading supplier of reservoir-centered products,
services and systems to the worldwide oil and gas industry. Through its eight
oilfield service companies, the Company provides products and services for oil
and gas exploration, drilling, completion and production.
The Company provides seismic data acquisition and processing services
to assist oil and gas companies in evaluating the producing potential of
sedimentary basins and in locating productive zones. The Company conducts
seismic surveys on land, in deep waters and across shallow-water transition
zones worldwide. Seismic information can reduce field development and production
costs by reducing turnaround time, lowering drilling risks and minimizing the
number of wells necessary to explore and develop reservoirs. The Company's major
competitors in providing these services are Geco-Prakla, a division of
Schlumberger, Ltd. ("Schlumberger"), Compagnie Generale de Geophysique and
Petroleum Geo-Services ASA.
The Company manufactures and markets a broad range of roller cutter
bits and fixed cutter diamond bits, ranging upward from 3-3/4 inches in
diameter, which are designed for drilling in specific types of rock formations,
and slimhole bits for the worldwide oil, gas and geothermal industries. The
Company believes that it is a leading worldwide manufacturer of bits and that
its principal competitors in this area are Smith International, Inc. ("Smith"),
the Security DBS operating unit of Halliburton Company ("Halliburton") and Reed
Tool Company and Hycalog, each operating units of Schlumberger.
The Company also produces and markets drilling fluids (muds) for oil
and gas well drilling,
<PAGE> 3
as well as chemical additives and specialty chemicals, and provides technical
services in connection with their respective formulation and use. Drilling
fluids, that are usually comprised of barite and bentonite combined with other
chemicals in a water, chemical or oil base, are used to clean the bottom of a
hole by removing cuttings and transporting them to the surface, to cool the bit
and drill string, to control formation pressures and to seal porous well
formations. The Company also furnishes on-site, around-the-clock laboratory
analysis and examination of circulated and recovered drilling fluids and
recovered drill cuttings to detect the presence of hydrocarbons and identify the
formations penetrated by the drill bit. The Company's principal competitors with
regard to these products and services are M-I Drilling Fluids, an operating unit
of Smith, and Baroid Corporation, a subsidiary of Halliburton.
The Company believes that it is a leading supplier of directional and
horizontal drilling services, downhole motors, drilling fluid systems, coring
services, subsurface surveying and measurement-while-drilling services to the
oil and gas industry. The Company's specialized positive displacement downhole
motors help operators to steer wells into subsurface geologic strata where oil
and gas may be found (often referred to as pay zones) for conventional
directional drilling and short, medium and long-radius horizontal drilling. A
full range of measurement-while-drilling systems that the Company provides use
mud-pulse telemetry to deliver real-time downhole information on the drilling
process and the reservoir. The systems are available for every application, from
directional-only service through real-time logging-while-drilling. With regard
to these products and services, the Company competes principally with
Halliburton Energy Services, an operating unit of Halliburton, Sperry-Sun
Drilling Services, a subsidiary of Halliburton, and Anadrill, a subsidiary of
Schlumberger.
The Company provides a broad range of well logging and data analysis
services for various phases of drilling and production. These services are
designed to measure rock and fluid properties of subsurface geologic formations.
New-generation high-resolution logging instruments, together with faster data
transmission techniques, have often provided for the transfer of larger amounts
of data from the borehole to the surface in less time than older techniques.
These new-generation tools, used in combination with other logging instruments
and sensors to obtain simultaneous multiple measurements, have often resulted in
more accurate reservoir evaluation while reducing logging turnaround time than
the older techniques, and consequently can lower drilling costs and risks. The
Company's largest competitors in this market include Schlumberger and
Halliburton.
After oil and gas wells are drilled, the operator must complete and
equip the well using production tools, serviced to achieve safety and long-term
productivity, protect the well against pressure and corrosion damage and
stimulate or repair the well during its productive life. The Company provides a
broad range of production tools and oilfield services to meet many of these
needs.
Packers are a major product of the Company. The Company's customers
use packers to seal the space between the production tubing and the casing to
protect the casing from reservoir pressures and corrosive formation fluids and
also to maintain the separation of productive zones. The Company believes that
it is a leading worldwide producer of packers and that its principal
-2-
<PAGE> 4
competitors for sale of packers are Dresser Oil Tools and Halliburton Energy
Services, operating units of Halliburton, and Camco, an operating division of
Schlumberger.
The Company manufactures and sells liner hanger tools and equipment.
The Company's customers use these tools and equipment to suspend and set strings
of casing pipe in oil and gas wells. The Company believes that it is a leading
worldwide producer of liner hangers and its primary competitor in this area is
the Nodeco division of Weatherford International Inc. ("Weatherford").
-3-
<PAGE> 5
The Company provides fishing tool services using specialized tools to
locate, dislodge and retrieve twisted off, dropped or damaged pipe, tools or
other objects from the well bore. The Company's major fishing tool competitors
are Weatherford and Smith. The Company also provides inflatable and mechanical
packers that its customers use in testing the potential of a well during the
drilling phase prior to installation of casing, and under-reamers, which enlarge
the well bore at any point below the surface to form a production cavity.
The Company offers gravel packing, a specialized service that prevents
sand from entering the well bore and reducing productivity, as well as other
sand control services. It also provides tubing conveyed perforating services to
provide paths through the casing and cement sheath in wells so that oil and gas
can enter the well bore from the formation. Major gravel packing competitors
include Dowell, a division of Schlumberger, and Halliburton Energy Services.
Tubing conveyed perforating competitors include the Well Testing division of
Schlumberger and Halliburton Energy Services and Dresser Oil Tools, both
operating units of Halliburton. The Company's gravel packing products and
services also compete with frac-pack services that pressure pumping companies,
such as BJ Services Company, Dowell and Halliburton Energy Services, provide.
The Company also provides other completion, remedial and production
products and services, including control systems for surface and subsurface
safety valves and surface flow lines and flow regulators and packers used in
secondary recovery waterflood projects. The Company's primary competitors for
these products and services are Halliburton Energy Services and Camco.
The Company is a leader in proprietary technology for oilfield electric
submersible pumping ("ESP") systems, which help raise oil to the surface. It
also provides variable speed motor controllers and specialty armored power
cables. Its major competition in ESPs is Reda, a division of Schlumberger.
The Company plays a leading role in project management and the
integration of products and services from the Company and other service
producers. The Company seeks clients and partners for oil and gas exploration
and production opportunities who value the subsurface information technologies
that the Company possesses to exploit the full potential of hydrocarbon-bearing
properties. The Company has multidisciplinary project teams of geophysicists,
geologists and reservoir engineers that offer a wide range of experience in
exploration and production techniques, including integrated geoscience
subsurface analysis, reservoir characterization economic and risk analysis,
drilling recommendations and project management and implementation. Halliburton
and Schlumberger are the principal competitors with this capability.
Recent new technology that the Company has offered its customers
includes downhole hydrocyclone oil/water separation systems, multi-lateral
drilling and completion systems, coiled tubing drilling systems, remote
actuated, downhole completion tools and rotary closed loop drilling systems.
The Company manufactures oilfield specialty chemicals and integrated
chemical technology solutions for petroleum production, transportation and
refining. These chemicals include specialty chemicals that production segments
of the petroleum industry use, as well as industrial chemicals that customers
use in refining, waste water treatment, mineral handling and cooling and boiler
water processes. The Company also provides chemical technology solutions to
-4-
<PAGE> 6
other industrial markets throughout the world including petrochemicals, fuel
additives, plastics, imaging, adhesives, steel and crop protection. The Company
believes it is a leader in worldwide specialty oilfield chemicals and that its
primary competitor is the Nalco-Exxon joint venture. The Company designs and
manufactures systems for the treatment of produced water and its reinjection.
PROCESS
The Company provides a broad range of solid/liquid separation equipment
and systems to concentrate its customers' product or separate and remove waste
material in the mineral, industrial, pulp and paper and municipal industries.
The Company's product lines include vacuum filters (drum, disc and horizontal
belt), filter presses, belt presses, granular media filters, thickeners,
clarifiers, flotation cells and aeration equipment. The Company's principal
competitors for sales for mineral and industrial applications are Krauss Maffei,
Outokumpu and Svedala; the Company's principal competitors for sales for
municipal applications are Envirex and General Filter, both business units of
United States Filter Corporation ("U.S. Filter"), and Walker Process; and the
Company's principal competitor for sales for pulp and paper applications is
Ahlstrom.
The Company designs and manufactures process solutions for the oilfield
and refinery markets. These solutions include equipment for the processing and
conditioning of seawater for injection, desalting oil streams and separating oil
from water in oil production streams, with products consisting of fine filters,
coarse filters, nutshell filters, flotation units, hydrocyclones, coalescers,
deaeration towers, electrochlorinators and electrostatic desalters. The primary
competitors in this area are Kvaerner, Serck Baker and U.S. Filter.
The Company manufactures a broad range of continuous and batch
centrifuges and specialty filters that are each widely used in the
environmental, chemical, minerals and pharmaceutical markets to dewater or
classify process and waste streams. The Company's principal competitors in its
continuous centrifuge product line are Alfa-Lavel/Sharples, Tomoe and Flottweg.
There are numerous small and large companies that compete in the batch
centrifuge and filter product lines.
The Company provides parts and service for all of its process equipment
product lines through a global network of personnel and facilities strategically
located to serve the customer community. The Company also offers facilities
operation services for processes that utilize many of the Company's process
equipment product and service lines.
MARKETING, COMPETITION AND ECONOMIC CONDITIONS
The Company markets the products of each of its principal industry
segments primarily through the Company's own sales organizations on a product
line basis, although certain of its products and services are marketed through
supply stores, independent distributors or sales representatives. The Company
ordinarily provides technical and advisory services to assist in its customer's
use of the Company's products and services. Stockpoints and service centers for
oilfield products and services are located in areas of drilling and production
activity throughout the world. The Company markets its oilfield products and
services in nearly all of the oil producing countries. Stockpoints and service
centers for process products and services are located near the Company's
-5-
<PAGE> 7
customers' operations, and the Company markets process products and services
throughout the world. In certain areas outside the United States where direct
product sales efforts are not practicable, the Company utilizes licensees, sales
representatives and distributors.
The products of each of the Company's principal industry segments are
sold in highly competitive markets, and its revenues and earnings can be
affected by changes in competitive prices, fluctuations in the level of activity
in major markets, general economic conditions and governmental regulation. The
Company competes effectively with the oil and gas industry's largest integrated
oilfield service providers. The Company believes that the principal competitive
factors in the industries that it serves are product and service quality and
availability, technical proficiency and price.
Further information concerning Marketing, Competition and Economic
Conditions is contained under the caption "Business Environment" in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the 1998 Annual Report to Stockholders and is incorporated herein
by reference.
INTERNATIONAL OPERATIONS
The Company's operations are subject to the risks inherent in doing
business in multiple countries with various legal and political policies. These
risks include war, boycotts, political changes, expropriation, currency
restrictions, taxes and changes in currency exchange rates. Although it is
impossible to predict the likelihood of such occurrences or their effect on the
Company, management believes these risks to be acceptable. However, there can be
no assurance that an occurrence of any one of these events would not have a
material adverse effect on its operations.
RESEARCH AND DEVELOPMENT; PATENTS
At December 31, 1998, the equivalent of approximately 800 full-time
employees were engaged in research and development activities directed primarily
toward improvement of existing products and services, design of specialized
products to meet specific customer needs and development of new products and
processes. For information regarding the amounts of research and development
expense for the year ended December 31, 1998, the three month period ended
December 31, 1997 and for each of the two years in the period ended September
30, 1997, see Note 17 of Notes to Consolidated Financial Statements.
The Company has followed a policy of seeking patent protection both
inside and outside the United States for products and methods that appear to
have commercial significance. The Company believes its patents and trademarks to
be adequate for the conduct of its business, and while it regards patent and
trademark protection important to its business and future prospects, it
considers its established reputation, the reliability of its products and the
technical skills of its personnel to be more important. The Company aggressively
pursues protection of its patents against patent infringement worldwide.
-6-
<PAGE> 8
BUSINESS DEVELOPMENTS
OILFIELD
Oilfield Operations consists of eight operating divisions: Baker Atlas,
Baker Hughes INTEQ, Baker Oil Tools, Baker Petrolite, Centrilift, E&P Solutions,
Hughes Christensen and Western Geophysical. Business developments during fiscal
1998 have positioned these divisions among the market leaders in providing
products, services and technologies in the drilling, completion and production
processes.
In August 1998, the Company completed its acquisition of Western Atlas,
which specializes in land, marine and transition-zone seismic data acquisitions
and processing services, well-logging and completion services and reservoir
characterization and project management services. With the combination of the
Company and Western Atlas, the Company has enhanced its strategic position in
providing integrated "life of field" and "reservoir management" related products
and services. These products and services span the planning, exploration,
development and production phases of an oil and gas reservoir, integrating the
Company's drilling, completion and production technologies with Western Atlas'
reservoir information technologies. This acquisition also gave the Company the
ability to provide integrated product and service offerings and project
management on an outsourced basis by combining the Company's drilling solutions
with Western Atlas' seismic and reservoir information technologies.
During the year ended December 31, 1998, the Company acquired and
disposed of several additional oilfield businesses, none of which had a material
effect on the Company's results of operations.
PROCESS
Baker Process provides separation technologies, continuous process
solutions and centrifuges and filters for the mineral, industrial, pulp and
paper, municipal and petroleum industries.
During the year ended December 31, 1998, the Company acquired several
additional process businesses, none of which had a material effect on the
Company's results of operations.
EMPLOYEES
At December 31, 1998, the Company had a total of approximately 32,300
employees, as compared to approximately 33,400 employees at December 31, 1997
and a 1998 peak of approximately 36,500 employees in May 1998. Approximately
3,000 employees at December 31, 1998 were represented under collective
bargaining agreements that terminate at various times through July 2002. The
Company believes that its relations with its employees are satisfactory.
-7-
<PAGE> 9
EXECUTIVE OFFICERS
The following table shows as of March 3, 1999, the name of each
executive officer of the Company, together with his age and all offices
presently held with the Company.
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL AGE
- ------------------ ---
<S> <C> <C>
Max L. Lukens 50 Chief Executive Officer of the Company since October 1996; President of the
Company since October 1998 and from October 1995 to August 1998; and Chairman
of the Board since January 1997. Employed 1981. Vice President and Chief
Financial Officer of Baker, 1984-1987; Senior Vice President and Chief
Financial Officer of the Company, 1987-1989; President, Baker Hughes Production
Tools, 1989-1993; Senior Vice President of the Company, 1987-1994; Executive
Vice President, 1994-1995; President, Baker Hughes Oilfield Operations,
1993-1995; and Chief Operating Officer of the Company, 1995-1996.
Thomas R. Bates, Jr. 49 Senior Vice President of the Company since June 1998. Employed 1998. President
and Chief Executive Officer of Weatherford Enterra 1997-1998; and President of
Anadrill Division of Schlumberger 1992-1997.
George S. Finley 47 Senior Vice President and Chief Administrative Officer of the Company since
1995. Employed 1982. Controller of the Company, 1987-1993; Vice President of
the Company, 1990-1995; and Chief Financial Officer of Baker Hughes Oilfield
Operations, 1993-1995.
James W. Harris 40 Controller of the Company since December 1998; and Vice President-Tax of the
Company since December 1997. Director of Tax from 1994-1997. Employed 1994.
Eric L. Mattson 47 Senior Vice President of the Company since 1994; and Chief Financial Officer of
the Company since 1993. Employed 1980. Treasurer of the Company, 1983-1994; and
Vice President of the Company, 1988 to 1994.
Lawrence O'Donnell, III 41 Vice President and General Counsel of the Company since 1995. Employed 1991.
Deputy General Counsel of the Company, 1991-1995; Vice President and General
Counsel, Baker Hughes Oilfield Operations, 1994-1995; and Corporate Secretary
of the Company, 1992-1996.
</TABLE>
-8-
<PAGE> 10
<TABLE>
<S> <C> <C>
Andrew J. Szescila 51 Senior Vice President of the Company since July 1997; Vice President of the
Company from 1995-1997; and President of Hughes Christensen Company from
1989-1997. Employed 1973. President, BJ Services International, 1987-1988; and
President, Baker Service Tools, 1988-1989.
</TABLE>
There are no family relationships among the executive officers of the
Company.
The Company follows the practice of electing its officers annually in
October.
ENVIRONMENTAL MATTERS
The Company is subject to U.S. federal, state and local regulations
with regard to air and water quality and other environmental matters. The
Company believes that it is in substantial compliance with these regulations.
Regulation in this area is in the process of development, and changes in
standards of enforcement of existing regulations as well as the enactment and
enforcement of new legislation may require the Company, as well as its
customers, to modify, supplement or replace equipment or facilities or to change
or discontinue present methods of operation.
While making projections of future costs in the environmental area can
be difficult and uncertain, based upon current information, the Company
estimates that during the fiscal year ending December 31, 1999, the Company will
spend approximately $24,683,000 to enable the Company to comply with U.S.
federal, state and local provisions that have been enacted or adopted regulating
the discharge of materials into the environment or otherwise relating to the
protection of the environment (collectively, "Environmental Regulations"). Based
upon current information, the Company believes that its compliance with
Environmental Regulations will not have a material adverse effect upon the
capital expenditures, earnings and competitive position of the Company because
the Company has adequate reserves for such compliance expenditures or the cost
to the Company for such compliance will be small when compared to the Company's
overall net worth.
In addition to the amounts described in the preceding paragraph, based
upon current information, the Company estimates that it will incur capital
expenditures of approximately $6,500,000 for environmental control equipment
during the fiscal year ending December 31, 1999. Based upon current information,
the Company believes that capital expenditures for environmental control
equipment for the 1999 and 2000 fiscal years, as well as such future periods as
the Company deems relevant, will not have a material adverse effect upon the
financial condition of the Company because the aggregate amount of these
expenditures for those periods is or will be small when compared to the
Company's overall net worth.
The Company and certain of its subsidiaries and divisions have been
identified as a potentially responsible party ("PRP") as a result of substances
which may have been released in the
-9-
<PAGE> 11
past at various sites more fully discussed below. The United States
Environmental Protection Agency (the "EPA") and appropriate state agencies are
supervising investigative and clean-up activities at these sites.
(a) Baker Petrolite Corporation ("BPC"), a subsidiary of the
Company, Hughes Christensen Company ("HC"), Milpark Drilling Fluids
("Milpark") (now known as INTEQ), and Baker Oil Tools ("BOT"), a
division of Baker Hughes Oilfield Operations, Inc. ("BHOO"), have been
named as PRPs in the Sheridan Superfund Site, located in Hempstead,
Texas. The remedial work at this site is being overseen by the Texas
Natural Resource Conservation Commission ("TNRCC"). A trust (the
"Sheridan Site Trust") was formed to manage the site remediation and
administrative details of the project. The Company participates as a
member of the Sheridan Site Trust. Total remedial and administrative
costs are estimated by Sheridan Site Trust officials to total
approximately $30,000,000. Contribution of the Company's subsidiaries
and divisions (including Baker Hughes Tubular Services, Inc. ("BHTS"),
which was sold to ICO on September 30, 1992), is estimated to be 1.81%
of those costs.
(b) Spectrace Instruments, Inc. ("Spectrace"), the assets of
which were sold to Thermo-Electron Corporation on March 15, 1994, is a
named respondent to an EPA Administrative Order associated with the MEW
Study Area, an eight square mile soil and groundwater contamination
site located in Mountain View, California. A group of PRPs estimates
that the total cost of remediation will be approximately $80,000,000.
The Company's environmental consultants have conducted extensive
investigations of Spectrace's operating facility located within the MEW
Study Area and have concluded that Spectrace's activities could not
have been the source of any contamination in the soil or groundwater at
and around the MEW Study Area. The EPA has informed the Company that no
further work needs to be performed on Spectrace's site and indicated
that the EPA does not believe there is a contaminant source on the
property. However, the Company continues to be named in the EPA's
Administrative Order. The Company continues to believe the EPA's
Administrative Order for Remedial Design and Remedial Action is not
valid with respect to the Company's subsidiary and is seeking the
withdrawal of the Administrative Order with respect to the Company's
subsidiary.
(c) In June 1998, Magna Corporation (now known as BPC) was
named as a de minimis PRP at the Operating Industries Superfund Site
located in Monterrey Park, California. The EPA has alleged that the
company has transported, disposed, or arranged for disposal of, 12,600
gallons of waste material to the site and has demanded a contribution
of $43,200 to assist with the remedial response. The Company is
presently considering the demand.
(d) In May 1987, Baker Performance Chemicals Incorporated (now
known as BPC) entered into an Agreed Administrative Order with the then
Texas
-10-
<PAGE> 12
Water Commission, now known as the TNRCC, with respect to soil and
groundwater contamination at the Odessa - Hillmont site located in
Odessa, Texas. This site was previously used by BPC as a chemical
blending plant. The contaminated soil has been removed, and the site
continues in the groundwater recovery/treatment phase at an annual cost
to the Company of approximately $20,000.
(e) Oil Base, Inc. and Hughes Drilling Fluids (now known as
INTEQ) have been identified by the EPA as PRPs in the PAB Oil and
Chemical Superfund Site located in Abbeville, Louisiana. The
remediation of the site was completed in 1998. Operating and
maintenance costs of the environmental monitoring system at the site is
estimated to total $1,000,000. The Company's allocated share of this
cost, based on allocated volume (4.5%) is $45,000.
(f) PA Inc., a former subsidiary of the Company, was
identified as a PRP in the Sonics International Site, a former
hazardous waste disposal facility located near Ranger, Texas. This site
is currently being administered by the TNRCC under the Texas Superfund
Statute. The Company allegedly contributed 1.64% of the waste volume at
the site. It is not possible at this time to quantify the Company's
ultimate liability. The remediation proposed by the TNRCC is estimated
to cost $700,000.
(g) Milpark (now known as INTEQ) has been identified as a PRP
at the Toups Farm Superfund Site (eligible for cleanup under the Texas
State Cleanup Fund) located north of South Lake near Hallettsville,
Texas. The site consists of approximately 21 acres and was operated
over the years as a municipal landfill, fence post treating company and
a hog farm. Based on available information, the Company does not
believe that it has any liability for contamination at the site.
(h) Milpark (now known as INTEQ) and Baker Sand Control (now
known as BOT) have been named as PRPs at the DL Mud Superfund Site
located in Abbeville, Louisiana. This site was used for the disposal of
used drilling fluids and drilling muds. However, another named PRP is
responsible for a majority of the waste volume disposed at this site,
and such PRP is presently engaged in the remediation of the site. To
date neither the other PRP nor the EPA have produced any substantive
waste disposal or transportation documentation linking the Company or
its subsidiaries or divisions to the environmental conditions at the
site. The Company does not anticipate that it will have any liability
for this site.
(i) Milpark (now known as INTEQ) has been named as a PRP at
the Mar Services Superfund site located in Crankton, Louisiana. It has
been estimated that the contribution to this site by the Company's
subsidiary is approximately 0.08% of the total volume of solids at the
site (based upon a volumetric calculation). The site is now undergoing
investigative studies to determine the remedial action plan as well as
a total estimated cost for remediation.
-11-
<PAGE> 13
(j) Teleco Oilfield Services, Inc. ("Teleco") (now known as
INTEQ) has been named as a PRP at the Solvent Recycling Service of New
England Superfund Site located in Southington, Connecticut.
Approximately 1,000 companies have been named as PRPs at this site.
Calculations from the PRP group verified by the Company, indicate that
Teleco contributed 0.00006% of the volume at the site. The total cost
of cleanup at the site is currently estimated to be $3,500,000. A de
minimis buyout offer from either the EPA or the PRP group is
anticipated in the future.
(k) In January 1996, Petrolite Corporation (now known as BPC)
was named as a PRP by the TNRCC at the McBay Oil and Gas State
Superfund Site in Grapevine, Texas. The Company has disputed its
involvement in the site based on the fact that it has no knowledge of
transporting waste to the site. However, the Company has transacted
product sales to McBay Oil and Gas Company. Documentation of product
sales has been sent to the TNRCC. Based on available information, the
Company does not believe that it has any liability for contamination at
this site.
(l) In July 1997, Petrolite Corporation (now known as BPC),
was named by the EPA as a PRP at the Shore Refinery Site, Kilgore,
Gregg County, Texas. The Company has completed a thorough search of its
documents and records. The Company has concluded that it has not
arranged for the disposal, treatment, or transportation of hazardous
substances or used oil at the site. To date, the EPA has not produced
any substantive, hazardous substance treatment, disposal or
transportation documentation linking the Company or any of its
subsidiaries or divisions to the environmental conditions at the site.
The Company does not believe that it has any liability for
contamination at the site.
While PRPs in Superfund actions have joint and several liability for
all costs of remediation in many of the sites described above, it is not
possible at this time to quantify the Company's ultimate exposure because the
project is either in its early investigative or remediation stage. Based upon
current information, the Company does not believe that probable and reasonably
possible expenditures in connection with any of the sites described above are
likely to have a material adverse effect on the Company's financial condition
because: (i) the Company has established adequate reserves to cover what the
Company presently believes will be its ultimate liability with respect to the
matter, (ii) the Company and its subsidiaries have only limited involvement in
the sites based upon a volumetric calculation, as described above, (iii) there
are other PRPs that have greater involvement on a volumetric calculation basis
who have substantial assets and who may reasonably be expected to pay their
share of the cost of remediation, (iv) where discussed above, the Company has
insurance coverage or contractual indemnities from third parties to cover the
ultimate liability, and (v) the Company's ultimate liability, based upon current
information, is small compared to the Company's overall net worth.
-12-
<PAGE> 14
The Company is subject to various other governmental proceedings
relating to environmental matters, but the Company does not believe that any of
these matters is likely to have a material adverse effect on its financial
condition.
ITEM 2. PROPERTIES
The Company operates 80 manufacturing plants, almost all of which are
owned, ranging in size from approximately 750 square feet to approximately
306,700 square feet of manufacturing space and totaling more than 3,860,000
square feet. Of such total, approximately 2,570,000 square feet (67%) are
located in the United States, 270,000 square feet (7%) are located in the
Western Hemisphere exclusive of the United States, 875,000 square feet (23%) are
located in Europe, and 145,000 square feet (3%) are located in the Eastern
Hemisphere exclusive of Europe. These manufacturing plants by industry segment
and geographic area appear in the table below. The Company also owns or leases
and operates various customer service centers and shops, and sales and
administrative offices throughout the geographic areas in which it operates.
<TABLE>
<CAPTION>
Other Other
United Western Eastern
States Hemisphere Europe Hemisphere Total
------ ---------- ------ ---------- -----
<S> <C> <C> <C> <C> <C>
Oilfield 39 8 10 10 67
Process 6 2 4 1 13
</TABLE>
The Company believes that its manufacturing facilities are well
maintained. The Company also has a significant investment in service vehicles,
rental tools and equipment. During 1998 and 1997, the Company recognized
permanent impairments and wrote down to net realizable value
-13-
<PAGE> 15
certain inventory, property, plant and equipment. For further information
regarding these write-downs, see Note 8 of Notes to Consolidated Financial
Statements. Property additions increased in 1998 as the Company added capacity
to meet the increased market demand.
ITEM 3. LEGAL PROCEEDINGS
The Company is sometimes named as a defendant in litigation relating to
the products and services it provides. The Company insures against these risks
to the extent deemed prudent by its management, but no assurance can be given
that the nature and amount of such insurance will in every case fully indemnify
the Company against liabilities arising out of pending and future legal
proceedings relating to its business activities.
See also "Item 1. Business - Environmental Matters."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
-14-
<PAGE> 16
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock, $1.00 par value per share (the "Common Stock"), of
the Company is principally traded on The New York Stock Exchange. The Common
Stock is also traded on the Pacific Exchange and the Swiss Exchange. At March 3,
1999, there were approximately 98,741 stockholders and 29,180 stockholders of
record.
For information regarding quarterly high and low sales prices on the
New York Stock Exchange for the Common Stock, during the two years ended
December 31, 1998 and information regarding dividends declared on the Common
Stock during the two years ended December 31, 1998, see Note 19 of Notes to
Consolidated Financial Statements.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth under the caption "Selected Financial Data"
in the 1998 Annual Report to Stockholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information set forth under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in the 1998
Annual Report to Stockholders ("MD&A") is incorporated herein by reference.
ITEM 7.a QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information set forth under the sub-caption "Quantitative and
Qualitative Market Risk Disclosures" under MD&A is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Company and the
independent auditors' report set forth in the 1998 Annual Report to Stockholders
are incorporated herein by reference:
-15-
<PAGE> 17
Independent Auditors' Report.
Consolidated Statements of Operations for the year ended December 31,
1998, the three month period ended December 31, 1997 and for each of
the two years in the period ended September 30, 1997.
Consolidated Statements of Financial Position as of December 31, 1998
and 1997.
Consolidated Statements of Stockholders' Equity for the year ended
December 31, 1998, the three month period ended December 31, 1997 and
for each of the two years in the period ended September 30, 1997.
Consolidated Statements of Cash Flows for the year ended December 31,
1998, the three month period ended December 31, 1997 and for each of
the two years in the period ended September 30, 1997.
Notes to Consolidated Financial Statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
-16-
<PAGE> 18
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the directors of the Company is set forth in the
section entitled "Election of Directors" in the Proxy Statement of the Company
for the Annual Meeting of Stockholders to be held April 28, 1999, which section
is incorporated herein by reference. For information regarding executive
officers of the Company, see "Item 1. Business -- Executive Officers."
Additional information regarding compliance by directors and executive officers
with Section 16(a) of the Securities Exchange Act of 1934, as amended, is set
forth under the section entitled "Compliance with Section 16(a) of the
Securities Exchange Act of 1934" in the Proxy Statement for the Annual Meeting
of Stockholders to be held on April 28, 1999, which section is incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information for this item is set forth in the section entitled
"Executive Compensation" in the Proxy Statement of the Company for the Annual
Meeting of Stockholders to be held April 28, 1999, which section is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning security ownership of certain beneficial owners
and management is set forth in the sections entitled "Voting Securities" and
"Security Ownership of Management" in the Proxy Statement of the Company for the
Annual Meeting of Stockholders to be held April 28, 1999, which sections are
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
-17-
<PAGE> 19
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) LIST OF DOCUMENTS FILED AS PART OF THIS REPORT
(1) Financial Statements
All financial statements of the Registrant as set forth under
Item 8 of this Annual Report on Form 10-K.
(2) Financial Statement Schedules:
Financial statement schedules are omitted because of the
absence of conditions under which they are required or because
all material information required to be reported is included
in the consolidated financial statements and notes thereto.
(3) Exhibits:
3.1 Restated Certificate of Incorporation.
3.2 By-Laws.
3.3 Certificate of Designation of Series L Preferred
Stock of Baker Hughes Incorporated (filed as Exhibit
3.3 to Annual Report of Baker Hughes Incorporated on
Form 10-K for the year ended September 30, 1996 and
incorporated herein by reference).
4.1 Rights of Holders of the Company's Long-Term Debt.
The Company has no long-term debt instrument with
regard to which the securities authorized thereunder
equal or exceed 10% of the total assets of the
Company and its subsidiaries on a consolidated basis.
The Company agrees to furnish a copy of its long-term
debt instruments to the SEC upon request.
4.2 Restated Certificate of Incorporation (filed as
Exhibit 3.1 hereto).
4.3 By-Laws (filed as Exhibit 3.2 hereto).
4.4 Certificate of Designation of Series L Preferred
Stock of Baker Hughes Incorporated (filed as Exhibit
4.4 to Annual Report of Baker Hughes Incorporated on
Form 10-K for the year ended September 30, 1996 and
incorporated herein by reference).
-18-
<PAGE> 20
10.1 Employment Agreement between Baker Hughes
Incorporated and Max L. Lukens dated as of
January 1, 1998.
10.2 Severance Agreement between Baker Hughes Incorporated
and G. Stephen Finley dated as of July 23, 1997
(filed as Exhibit 10.6 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).
10.3 Severance Agreement between Baker Hughes Incorporated
and Max L. Lukens dated as of July 23, 1997 (filed as
Exhibit 10.9 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).
10.4 Severance Agreement between Baker Hughes Incorporated
and Eric L. Mattson dated as of July 23, 1997 (filed
as Exhibit 10.10 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).
10.5 Severance Agreement between Baker Hughes Incorporated
and Lawrence O'Donnell, III dated as of July 23, 1997
(filed as Exhibit 10.11 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).
10.6 Severance Agreement between Baker Hughes Incorporated
and Andrew J. Szescila dated as of July 23, 1997
(filed as Exhibit 10.13 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).
10.7 Form of Amendment 1 to Severance Agreement between
Baker Hughes Incorporated and each of G. Stephen
Finley, Max L. Lukens, Eric L. Mattson, Lawrence
O'Donnell, III and Andrew J. Szescila effective
November 11, 1998.
10.8 Severance Agreement between Baker Hughes Incorporated
and Thomas R. Bates, Jr. dated as of January 27,
1999.
10.9 Amended and Restated 1991 Employee Stock Bonus Plan
of Baker Hughes Incorporated (filed as Exhibit 10.15
to Annual Report of Baker Hughes Incorporated on Form
10-K for the year ended September 30, 1997 and
incorporated herein by reference).
10.10 Amendment No. 1997-1 to the Amended and Restated 1991
Employee Stock Bonus Plan (filed as Exhibit 10.16 to
Annual Report of Baker Hughes
-19-
<PAGE> 21
Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).
10.11 Amendment No. 1999-1 to the Amended and Restated 1991
Employee Stock Bonus Plan.
10.12 Restated 1987 Stock Option Plan of Baker Hughes
Incorporated (amended as of October 24, 1990) (filed
as Exhibit 10.17 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).
10.13 1987 Convertible Debenture Plan of Baker Hughes
Incorporated (amended as of October 24, 1990) (filed
as Exhibit 10.18 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).
10.14 Baker Hughes Incorporated Supplemental Retirement
Plan.
10.15 Amendment No. 1997-1 to the Baker Hughes Incorporated
Supplemental Retirement Plan (filed as Exhibit 10.20
to Annual Report of Baker Hughes Incorporated on Form
10-K for the year ended September 30, 1997 and
incorporated herein by reference).
10.16 Amendment No. 1999-1 to the Baker Hughes Incorporated
Supplemental Retirement Plan.
10.17 Executive Severance Policy.
10.18 1993 Stock Option Plan.
10.19 Amendment No. 1997-1 to the 1993 Stock Option Plan
(filed as Exhibit 10.23 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).
10.20 Amendment No. 1999-1 to the 1993 Stock Option Plan.
10.21 1993 Employee Stock Bonus Plan.
10.22 Amendment No. 1997-1 to the 1993 Employee Stock Bonus
Plan (filed as Exhibit 10.25 to Annual Report of
Baker Hughes Incorporated on Form 10-K for the year
ended September 30, 1997 and incorporated herein by
reference).
10.23 Amendment No. 1999-1 to the 1993 Employee Stock Bonus
Plan.
10.24 Amended and Restated Director Compensation Deferral
Plan.
10.25 1995 Employee Annual Incentive Compensation Plan
(filed as Exhibit 10.16 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended
September 30, 1994 and incorporated herein by
reference).
10.26 Amendment No. 1997-1 to the 1995 Employee Annual
Incentive Compensation Plan (filed as Exhibit 10.25
to Annual Report of Baker Hughes Incorporated on Form
10-K for the year ended September 30, 1997 and
incorporated herein by reference).
-20-
<PAGE> 22
10.27 Amendment No. 1999-1 to the 1995 Employee Annual
Incentive Compensation Plan.
10.28 1995 Stock Award Plan (filed as Exhibit 10.17 to
Annual Report of Baker Hughes Incorporated on Form
10-K for the year ended September 30, 1994 and
incorporated herein by reference).
10.29 Amendment No. 1997-1 to the 1995 Stock Award Plan
(filed as Exhibit 10.27 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by
reference).
10.30 Amendment No. 1999-1 to the 1995 Stock Award Plan.
10.31 Long Term Incentive Plan. (filed as Exhibit 10.31 to
Annual Report of Baker Hughes Incorporated on Form
10-K for the year ended September 30, 1997).
10.32 Amendment No. 1999-1 to Long Term Incentive Plan.
10.33 1998 Employee Stock Option Plan.
10.34 Amendment No. 1999-1 to 1998 Employee Stock Option
Plan.
10.35 Form of Credit Agreement, dated as of October 1,
1998, among Baker Hughes Incorporated and fourteen
banks for $750,000,000, in the aggregate for all
banks.
10.36 Form of Credit Agreement dated as of October 1, 1998
among Baker Hughes Incorporated and fourteen banks
for $250,000,000, in the aggregate for all banks.
10.37 Form of Nonqualified Stock Option Agreement for
executive officers effective October 1, 1998.
10.38 Form of Nonqualified Stock Option Agreement for
employees effective October 1, 1998.
10.39 Form of Nonqualified Stock Option Agreement for
executive officers effective October 1, 1998.
10.40 Form of Incentive Stock Option Agreement for
executive officers effective October 1, 1998.
10.41 Form of Nonqualified Stock Option Agreement for
directors effective October 25, 1995 (filed as
Exhibit 10.16 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended
September 30, 1996 and incorporated herein by
reference).
-21-
<PAGE> 23
10.42 Form of Nonqualified Stock Option Agreement for
employees effective October 25, 1995 (filed as
Exhibit 10.16 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended
September 30, 1996 and incorporated herein by
reference).
10.43 Form of Incentive Stock Option Agreement for
employees effective October 25, 1995 (filed as
Exhibit 10.16 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended
September 30, 1996 and incorporated herein by
reference).
10.44 Agreement and Plan of Merger among Baker Hughes
Incorporated, Baker Hughes Missouri, Inc., Baker
Hughes Delaware, Inc., Petrolite Corporation and Wm.
S. Barnickel & Company, dated as of February 25, 1997
(filed as Exhibit 2.1 to Form 8-K dated March 5, 1997
and incorporated herein by reference).
10.45 Agreement and Plan of Merger among Baker Hughes
Incorporated, Baker Hughes Delaware I, Inc. and
Western Atlas Inc. dated as of May 10, 1998 (filed as
Exhibit 2.1 to Form 8-K dated May 20, 1998 and
incorporated herein by reference).
10.46 Distribution and Indemnity Agreement dated October
31, 1997, between Western Atlas Inc. and UNOVA, Inc.
(filed as Exhibit 10.18 to Western Atlas Inc.'s Form
10-Q for the quarter ended September 30, 1997 and
incorporated herein by reference).
10.47 Tax Sharing Agreement dated October 31, 1997, between
Western Atlas Inc. and UNOVA, Inc. (filed as Exhibit
10.19 to Western Atlas Inc.'s form 10-Q for the
quarter ended September 30, 1997 and incorporated
herein by reference).
10.48 Intellectual Property Agreement dated October 31,
1997, between Western Atlas Inc. and UNOVA, Inc.
(filed as Exhibit 10.20 to Western Atlas Inc.'s Form
10-Q for the quarter ended September 30, 1997 and
incorporated herein by reference).
10.49 Employee Benefits Agreement dated October 31, 1997,
between Western Atlas Inc. and UNOVA, Inc. (filed as
Exhibit 10.21 to Western Atlas Inc.'s Form 10-Q for
the quarter ended September 30, 1997 and incorporated
herein by reference).
10.50 Corporate Executive Loan Program.
-22-
<PAGE> 24
13.1 Portions of 1998 Annual Report to Stockholders.
21.1 Subsidiaries of Registrant.
23.1 Consent of Deloitte & Touche LLP.
27.1 Financial Data Schedule (for SEC purposes only).
(b) REPORTS ON FORM 8-K:
A report on Form 8-K dated December 18, 1998 was filed with the
Commission on December 21, 1998 reporting that the Company has restated its
financial statements to account for using the pooling of interests method of
business combinations and reflecting the audited transition period related to
the Company's change in fiscal year.
-23-
<PAGE> 25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized on the
17th day of March, 1999.
BAKER HUGHES INCORPORATED
By /s/ MAX L. LUKENS
-----------------------------------------
(Max L. Lukens, Chief Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ MAX L. LUKENS
- ----------------------------------------- Chairman of the Board, President March 17, 1999
(Max L. Lukens) and Chief Executive Officer
(principal executive officer)
/s/ E.L. MATTSON
- ----------------------------------------- Senior Vice President and March 17, 1999
(E. L. Mattson) Chief Financial Officer
(principal financial officer)
/s/ JAMES W. HARRIS
- ----------------------------------------- Vice President and Controller March 17, 1999
(James W. Harris) (principal accounting officer)
/s/ LESTER M. ALBERTHAL, JR.
- ----------------------------------------- Director March 17, 1999
(Lester M. Alberthal, Jr.)
/s/ VICTOR G. BEGHINI
- ----------------------------------------- Director March 17, 1999
(Victor G. Beghini)
- ----------------------------------------- Director March , 1999
(Alton J. Brann)
</TABLE>
-24-
<PAGE> 26
<TABLE>
<S> <C> <C>
/s/ JOSEPH T. CASEY
- ----------------------------------------- Director March 17, 1999
(Joseph T. Casey)
/s/ EUNICE M. FILTER
- ----------------------------------------- Director March 17, 1999
(Eunice M. Filter)
/s/ JOE B. FOSTER
- ----------------------------------------- Director March 17, 1999
(Joe B. Foster)
/s/ CLAIRE W. GARGALLI
- ----------------------------------------- Director March 17, 1999
(Claire W. Gargalli)
/s/ RICHARD D. KINDER
- ----------------------------------------- Director March 17, 1999
(Richard D. Kinder)
- ----------------------------------------- Director March , 1999
(John F. Maher)
/s/ JAMES F. McCALL
- ----------------------------------------- Director March 17, 1999
(James F. McCall)
/s/ H. JOHN RILEY, JR.
- ----------------------------------------- Director March 17, 1999
(H. John Riley, Jr.)
/s/ JOHN R. RUSSELL
- ----------------------------------------- Director March 17, 1999
(John R. Russell)
/s/ CHARLES L. WATSON
- ----------------------------------------- Director March 17, 1999
(Charles L. Watson)
/s/ MAX P. WATSON, JR.
- ----------------------------------------- Director March 17, 1999
(Max P. Watson, Jr.)
</TABLE>
-25-
<PAGE> 27
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS DESCRIPTION
- ------- -----------
<S> <C>
3.1 Restated Certificate of Incorporation.
3.2 By-Laws.
3.3 Certificate of Designation of Series L Preferred Stock of Baker Hughes
Incorporated (filed as Exhibit 3.3 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended September 30, 1996 and
incorporated herein by reference).
4.1 Rights of Holders of the Company's Long-Term Debt. The Company has no
long-term debt instrument with regard to which the securities
authorized thereunder equal or exceed 10% of the total assets of the
Company and its subsidiaries on a consolidated basis. The Company
agrees to furnish a copy of its long-term debt instruments to the SEC
upon request.
4.2 Restated Certificate of Incorporation (filed as Exhibit 3.1 hereto).
4.3 By-Laws (filed as Exhibit 3.2 hereto).
4.4 Certificate of Designation of Series L Preferred Stock of Baker Hughes
Incorporated (filed as Exhibit 4.4 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended September 30, 1996 and
incorporated herein by reference).
</TABLE>
<PAGE> 28
<TABLE>
<S> <C>
10.1 Employment Agreement between Baker Hughes Incorporated and Max L.
Lukens dated as of January 1, 1998.
10.2 Severance Agreement between Baker Hughes Incorporated and G. Stephen
Finley dated as of July 23, 1997 (filed as Exhibit 10.6 to Annual
Report of Baker Hughes Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by reference).
10.3 Severance Agreement between Baker Hughes Incorporated and Max L. Lukens
dated as of July 23, 1997 (filed as Exhibit 10.9 to Annual Report of
Baker Hughes Incorporated on Form 10-K for the year ended September 30,
1997 and incorporated herein by reference).
10.4 Severance Agreement between Baker Hughes Incorporated and Eric L.
Mattson dated as of July 23, 1997 (filed as Exhibit 10.10 to Annual
Report of Baker Hughes Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by reference).
10.5 Severance Agreement between Baker Hughes Incorporated and Lawrence
O'Donnell, III dated as of July 23, 1997 (filed as Exhibit 10.11 to
Annual Report of Baker Hughes Incorporated on Form 10-K for the year
ended September 30, 1997 and incorporated herein by reference).
10.6 Severance Agreement between Baker Hughes Incorporated and Andrew J.
Szescila dated as of July 23, 1997 (filed as Exhibit 10.13 to Annual
Report of Baker Hughes Incorporated on Form 10-K for the year ended
September 30, 1997 and incorporated herein by reference).
10.7 Form of Amendment 1 to Severance Agreement between Baker Hughes
Incorporated and each of G. Stephen Finley, Max L. Lukens, Eric L.
Mattson, Lawrence O'Donnell, III and Andrew J. Szescila effective
November 11, 1998.
10.8 Severance Agreement between Baker Hughes Incorporated and Thomas R.
Bates, Jr. dated as of January 27, 1999.
10.9 Amended and Restated 1991 Employee Stock Bonus Plan of Baker Hughes
Incorporated (filed as Exhibit 10.15 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended September 30, 1997 and
incorporated herein by reference).
10.10 Amendment No. 1997-1 to the Amended and Restated 1991 Employee Stock
Bonus Plan (filed as Exhibit 10.16 to Annual Report of Baker Hughes
</TABLE>
<PAGE> 29
<TABLE>
<S> <C>
Incorporated on Form 10-K for the year ended September 30, 1997 and
incorporated herein by reference).
10.11 Amendment No. 1999-1 to the Amended and Restated 1991 Employee Stock
Bonus Plan.
10.12 Restated 1987 Stock Option Plan of Baker Hughes Incorporated (amended
as of October 24, 1990) (filed as Exhibit 10.17 to Annual Report of
Baker Hughes Incorporated on Form 10-K for the year ended September 30,
1997 and incorporated herein by reference).
10.13 1987 Convertible Debenture Plan of Baker Hughes Incorporated (amended
as of October 24, 1990) (filed as Exhibit 10.18 to Annual Report of
Baker Hughes Incorporated on Form 10-K for the year ended September 30,
1997 and incorporated herein by reference).
10.14 Baker Hughes Incorporated Supplemental Retirement Plan.
10.15 Amendment No. 1997-1 to the Baker Hughes Incorporated Supplemental
Retirement Plan (filed as Exhibit 10.20 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended September 30, 1997
and incorporated herein by reference).
10.16 Amendment No. 1999-1 to the Baker Hughes Incorporated Supplemental
Retirement Plan.
10.17 Executive Severance Policy.
10.18 1993 Stock Option Plan.
10.19 Amendment No. 1997-1 to the 1993 Stock Option Plan (filed as Exhibit
10.23 to Annual Report of Baker Hughes Incorporated on Form 10-K for
the year ended September 30, 1997 and incorporated herein by
reference).
10.20 Amendment No. 1999-1 to the 1993 Stock Option Plan.
10.21 1993 Employee Stock Bonus Plan.
10.22 Amendment No. 1997-1 to the 1993 Employee Stock Bonus Plan (filed as
Exhibit 10.25 to Annual Report of Baker Hughes Incorporated on Form
10-K for the year ended September 30, 1997 and incorporated herein by
reference).
10.23 Amendment No. 1999-1 to the 1993 Employee Stock Bonus Plan.
10.24 Amended and Restated Director Compensation Deferral Plan.
10.25 1995 Employee Annual Incentive Compensation Plan (filed as Exhibit
10.16 to Annual Report of Baker Hughes Incorporated on Form 10-K for
the year ended September 30, 1994 and incorporated herein by
reference).
10.26 Amendment No. 1997-1 to the 1995 Employee Annual Incentive Compensation
Plan (filed as Exhibit 10.25 to Annual Report of Baker Hughes
Incorporated on Form 10-K for the year ended September 30, 1997 and
incorporated herein by reference).
</TABLE>
<PAGE> 30
<TABLE>
<S> <C>
10.27 Amendment No. 1999-1 to the 1995 Employee Annual Incentive Compensation
Plan.
10.28 1995 Stock Award Plan (filed as Exhibit 10.17 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended September 30, 1994
and incorporated herein by reference).
10.29 Amendment No. 1997-1 to the 1995 Stock Award Plan (filed as Exhibit
10.27 to Annual Report of Baker Hughes Incorporated on Form 10-K for
the year ended September 30, 1997 and incorporated herein by
reference).
10.30 Amendment No. 1999-1 to the 1995 Stock Award Plan.
10.31 Long Term Incentive Plan. (filed as Exhibit 10.31 to Annual Report of
Baker Hughes Incorporated on Form 10-K for the year ended September 30,
1997).
10.32 Amendment No. 1999-1 to Long Term Incentive Plan.
10.33 1998 Employee Stock Option Plan.
10.34 Amendment No. 1999-1 to 1998 Employee Stock Option Plan.
10.35 Form of Credit Agreement, dated as of October 1, 1998, among Baker
Hughes Incorporated and fourteen banks for $750,000,000, in the
aggregate for all banks.
10.36 Form of Credit Agreement dated as of October 1, 1998 among Baker Hughes
Incorporated and fourteen banks for $250,000,000, in the aggregate for
all banks.
10.37 Form of Nonqualified Stock Option Agreement for executive officers
effective October 1, 1998.
10.38 Form of Nonqualified Stock Option Agreement for employees effective
October 1, 1998.
10.39 Form of Nonqualified Stock Option Agreement for executive officers
effective October 1, 1998.
10.40 Form of Incentive Stock Option Agreement for executive officers
effective October 1, 1998.
10.41 Form of Nonqualified Stock Option Agreement for directors effective
October 25, 1995 (filed as Exhibit 10.16 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended September 30, 1996
and incorporated herein by reference).
</TABLE>
<PAGE> 31
<TABLE>
<S> <C>
10.42 Form of Nonqualified Stock Option Agreement for employees effective
October 25, 1995 (filed as Exhibit 10.16 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended September 30, 1996
and incorporated herein by reference).
10.43 Form of Incentive Stock Option Agreement for employees effective
October 25, 1995 (filed as Exhibit 10.16 to Annual Report of Baker
Hughes Incorporated on Form 10-K for the year ended September 30, 1996
and incorporated herein by reference).
10.44 Agreement and Plan of Merger among Baker Hughes Incorporated, Baker
Hughes Missouri, Inc., Baker Hughes Delaware, Inc., Petrolite
Corporation and Wm. S. Barnickel & Company, dated as of February 25,
1997 (filed as Exhibit 2.1 to Form 8-K dated March 5, 1997 and
incorporated herein by reference).
10.45 Agreement and Plan of Merger among Baker Hughes Incorporated, Baker
Hughes Delaware I, Inc. and Western Atlas Inc. dated as of May 10, 1998
(filed as Exhibit 2.1 to Form 8-K dated May 20, 1998 and incorporated
herein by reference).
10.46 Distribution and Indemnity Agreement dated October 31, 1997, between
Western Atlas Inc. and UNOVA, Inc. (filed as Exhibit 10.18 to Western
Atlas Inc.'s Form 10-Q for the quarter ended September 30, 1997 and
incorporated herein by reference).
10.47 Tax Sharing Agreement dated October 31, 1997, between Western Atlas
Inc. and UNOVA, Inc. (filed as Exhibit 10.19 to Western Atlas Inc.'s
form 10-Q for the quarter ended September 30, 1997 and incorporated
herein by reference).
10.48 Intellectual Property Agreement dated October 31, 1997, between Western
Atlas Inc. and UNOVA, Inc. (filed as Exhibit 10.20 to Western Atlas
Inc.'s Form 10-Q for the quarter ended September 30, 1997 and
incorporated herein by reference).
10.49 Employee Benefits Agreement dated October 31, 1997, between Western
Atlas Inc. and UNOVA, Inc. (filed as Exhibit 10.21 to Western Atlas
Inc.'s Form 10-Q for the quarter ended September 30, 1997 and
incorporated herein by reference).
10.50 Corporate Executive Loan Program.
13.1 Portions of 1998 Annual Report to Stockholders.
21.1 Subsidiaries of Registrant.
23.1 Consent of Deloitte & Touche LLP.
27.1 Financial Data Schedule (for SEC purposes only).
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.1
<SEQUENCE>2
<DESCRIPTION>RESTATED CERTIFICATE OF INCORPORATION
<TEXT>
<PAGE> 1
Exhibit 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
BAKER HUGHES INCORPORATED
- -------------------------------------------------------------------------------
PURSUANT TO SECTIONS 245 AND 242 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
- -------------------------------------------------------------------------------
BAKER HUGHES INCORPORATED (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, hereby adopts the following Restated Certificate of Incorporation
pursuant to Sections 245 and 242 of said General Corporation Law and certifies
as follows:
1. The name of this corporation is:
BAKER HUGHES INCORPORATED.
2. The Certificate of Incorporation of the Corporation was originally filed
with the Secretary of State of the State of Delaware on November 3, 1986.
3. The Restated Certificate of Incorporation was duly adopted by unanimous
written consent of the Board of Directors of the Corporation dated December
17, 1986, and by unanimous vote of all the stockholders on December 18, 1986
in accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware.
4. The Restated Certificate of Incorporation supersedes the original
Certificate of Incorporation.
5. The Certificate of Incorporation is hereby amended and restated in its
entirety to read as follows:
FIRST: The name of this Corporation is:
BAKER HUGHES INCORPORATED
SECOND: The address of its registered office in the State of Delaware is
The Corporation Trust Center, 1209 Orange Street in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is
The Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
1
<PAGE> 2
FOURTH: The total number of shares of stock which the Corporation shall
have the authority to issue is 415,000,000 shares of capital stock
consisting of 15,000,000 shares of preferred stock, par value $1.00 per
share (the "Preferred Stock") and 400,000,000 shares of common stock, par
value $l.00 per share (the "Common Stock").
The designations, powers, preferences and relative, participating,
optional or other special rights and qualifications, limitations or
restrictions of the Preferred Stock shall be established by resolution of
the Board of Directors pursuant to Section 151 of the General Corporation
Law of the State of Delaware.
FIFTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter or
repeal the by-laws of the Corporation.
SIXTH: Election of directors need not be by written ballot unless the
by-laws of the Corporation shall so provide.
SEVENTH: The by-laws of the Corporation shall not be made, repealed,
altered, amended or rescinded by the stockholders of the Corporation except
by the vote of the holders of not less than 75% of the total voting power
of all shares of stock of the Corporation entitled to vote in the election
of directors, considered for purposes of this Article SEVENTH as one class.
EIGHTH: No action shall be taken by the stockholders except at an annual
or special meeting of stockholders and stockholders may not act by written
consent.
NINTH: Special meetings of the stockholders of the Corporation for any
purpose or purposes may be called at any time by the Board of Directors, or
by a committee of the Board of Directors which has been duly designated by
the Board of Directors and whose powers and authority, as provided in a
resolution of the Board of Directors or in the by-laws of the Corporation,
include the power to call such meetings. Special meetings of stockholders
of the Corporation may not be called by any other person or persons.
TENTH: No director of this Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law, (iii) under Section 174 of
the General Corporation Law of Delaware, or (iv) for any transaction from
which the director derived an improper personal benefit.
2
<PAGE> 3
If the General Corporation Law of the State of Delaware is hereafter
amended to authorize corporate action further limiting or eliminating the
personal liability of directors, then the liability of the director to the
Corporation shall be limited or eliminated to the full extent permitted by
the General Corporation Law of the State of Delaware, as so amended from
time to time. Any repeal or modification of this Article shall be
prospective only, and shall not adversely affect any limitation on the
personal liability of a director of the Corporation existing at the time of
such repeal or modification.
ELEVENTH: The initial directors of the Corporation shall serve for a
term ending on the date of the first annual meeting of stockholders next
following September 30, 1987. Thereafter, the Board of Directors shall be
divided into three classes, Class I, Class II and Class III. The number of
directors in each class shall be the whole number contained in the quotient
arrived at by dividing the authorized number of directors by three, and if
a fraction is also contained in such quotient then if such fraction is
one-third (1/3) the extra director shall be a member of Class III and if
the fraction is two-thirds (2/3) one of the extra directors shall be a
member of Class III and the other shall be a member of Class II. After
division of the Board of Directors into classes, each director shall serve
for a term ending on the date of the third annual meeting following the
annual meeting at which such director was elected; provided, however, that
the initial directors appointed to Class I shall serve for a term ending on
the date of the first annual meeting next following September 30, 1988, the
initial directors appointed to Class II shall serve for a term ending on
the date of the second annual meeting next following September 30, 1988,
and the initial directors appointed to Class III shall serve for a term
ending on the date of the third annual meeting next following September 30,
1988.
The number of directors shall be fixed from time to time by the by-laws
of the Corporation or an amendment thereof duly adopted by the Board of
Directors or by the stockholders acting in accordance with Article SEVENTH
herein. In the event of any increase or decrease in the authorized number
of directors, (a) each director then serving as such shall nevertheless
continue as a director of the class of which he is a member until the
expiration of his current term, or his prior death, retirement, resignation
or removal, and (b) the newly created or eliminated directorships
resulting from such increase or decrease shall be apportioned by the Board
of Directors to such class or classes as shall, so far as possible, bring
the number of directors in the respective classes into conformity with the
formula in this Article, as applied to the new authorized number of
directors.
Notwithstanding any of the foregoing provisions of this Article, each
director shall serve until his successor is elected and qualified or until
his death, retirement, resignation or removal. No director may be removed
during his term except for cause.
3
<PAGE> 4
TWELFTH: The affirmative vote of the holders of not less than 75% of
the outstanding shares of "Voting Stock" (as hereinafter defined) of the
Corporation, including the affirmative vote of the holders of not less than
66 2/3% of the outstanding shares of Voting Stock not owned, directly or
indirectly, by any "Related Person" (as hereinafter defined), shall be
required for the approval or authorization of any "Business Combination"
(as hereinafter defined) of the Corporation with any Related Person;
provided, however, that the 66 2/3% voting requirement referred to above
shall not be applicable if the Business Combination is approved by the
affirmative vote of the holders of not less than 90% of the outstanding
shares of Voting Stock; and further provided that the 75% voting
requirement shall not be applicable if:
(1) The Board of Directors of the Corporation by a vote of not less than 75%
of the directors then holding office (a) have expressly approved in advance
the acquisition of outstanding shares of Voting Stock of the Corporation that
caused the Related Person to become a Related Person or (b) have approved the
Business Combination prior to the Related Person involved in the Business
Combination having become a Related Person;
(2) The Business Combination is solely between the Corporation and another
corporation, 100% of the Voting Stock of which is owned directly or
indirectly by the Corporation; or
(3) All of the following conditions have been met: (a) the Business
Combination is a merger or consolidation, the consummation of which is
proposed to take place within one year of the date of the transaction pursuant
to which such person became a Related Person and the cash or fair market value
of the property, securities or other consideration to be received per share by
holders of Common Stock of the Corporation in the Business Combination is not
less than the highest per share price (with appropriate adjustments for
recapitalizations and for stock splits, reverse stock splits and stock
dividends) paid by the Related Person in acquiring any of its holdings of the
Corporation's Common Stock; (b) the consideration to be received by such
holders is either cash or, if the Related Person shall have acquired the
majority of its holdings of the Corporation's Common Stock for a form of
consideration other than cash, in the same form of consideration as the
Related Person acquired such majority; (c) after such Related Person has
become a Related Person and prior to the consummation of such Business
Combination: (i) except as approved by a majority of the "Continuing
Directors" (as hereinafter defined), there shall have been no failure to
declare and pay at the regular date therefor any full quarterly dividends
(whether or not cumulative) on any outstanding Shares of Preferred Stock of
the Corporation, (ii) there shall have been no reduction in the annual rate
of dividends paid per share on the Corporation's Common Stock (adjusted as
appropriate for recapitalizations and for stock splits, reverse stock splits
and stock dividends) except as approved by a majority of the Continuing
4
<PAGE> 5
Directors, (iii) such Related Person shall not have become the "Beneficial
Owner" (as hereinafter defined) of any additional shares of Voting Stock of
the Corporation except as part of the transaction which resulted in such
Related Person becoming a Related Person, and (iv) such Related Person shall
not have received the benefit, directly or indirectly (except proportionately
as a stockholder), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantages provided by
the Corporation, whether in anticipation of or in connection with such
Business Combination or otherwise; and (d) a proxy statement, responsive to
the requirements of the Securities Exchange Act of 1934, as amended ("Exchange
Act") and the rules and regulations thereunder (or any subsequent provisions
replacing the Exchange Act, rules or regulations), shall be mailed to all
stockholders of record at least 30 days prior to the consummation of the
Business Combination for the purpose of soliciting stockholder approval of the
Business Combination and shall contain at the front thereof, in a prominent
place, any recommendations as to the advisability (or inadvisability) of the
Business Combination which the Continuing Directors, or any of them, may
choose to state and, if deemed advisable by a majority of the Continuing
Directors, an opinion of a reputable investment banking firm as to the
fairness (or unfairness) of the terms of such Business Combination from the
point of view of the remaining stockholders of the Corporation (such
investment banking firm to be selected by a majority of the Continuing
Directors and to be paid a reasonable fee for its services by the Corporation
upon receipt of such opinion).
For the purposes of this Article:
(i) The term "Business Combination" shall mean (a) any merger or
consolidation of the Corporation or a subsidiary with or into a Related
Person, (b) any sale, lease, exchange, transfer or other disposition,
including without limitation a mortgage or any other security device, of all
or any "Substantial Part" (as hereinafter defined) of the assets either of the
Corporation (including, without limitation, any voting securities of a
subsidiary) or of a subsidiary to a Related Person (other than a distribution
by the Corporation or a subsidiary to the Related Person of assets in
connection with a pro rata distribution by the Corporation to all
stockholders), (c) any merger or consolidation of a Related Person with or
into the Corporation or a subsidiary of the Corporation, (d) any sale, lease,
exchange, transfer or other disposition of all or any Substantial Part of the
assets of a Related Person to the Corporation or a subsidiary of the
Corporation, (e) the issuance of any securities (other than by way of pro rata
distribution to all stockholders) of the Corporation or a subsidiary of the
Corporation to a Related Person, (f) the acquisition by the Corporation or a
subsidiary of the Corporation of any securities of a Related Person, (g) any
recapitalization that would have the effect of increasing the voting power of
a Related Person, (h) any series or combination of transactions having the
5
<PAGE> 6
same effect, directly or indirectly, as any of the foregoing and (i) any
agreement, contract or arrangement providing for any of the transactions
described in this definition of Business Combination.
(ii) The term "Continuing Director" shall mean any member of the Board of
Directors of the Corporation who is not affiliated with a Related Person and
who was a member of the Board of Directors immediately prior to the time that
the Related Person became a Related Person, and any successor to a Continuing
Director who is not affiliated with the Related Person and is recommended to
succeed a Continuing Director by a majority of Continuing Directors then
serving as members of the Board of Directors of the Corporation.
(iii) The term "Related Person" shall mean and include any individual,
corporation, partnership or other person or entity which, together with its
"Affiliates" and "Associates" (as defined on October 1, 1986 in Rule 12b-2
under the Exchange Act), is the "Beneficial Owner" (as defined on October 1,
1986 in Rule 13d-3 under the Exchange Act) in the aggregate of 10% or more of
the outstanding Voting Stock of the Corporation, and any Affiliate or
Associate of any such individual, corporation, partnership or other person or
entity.
(iv) The term "Substantial Part" shall mean more than 10% of the book value
of the total assets of the Corporation in question as of the end of its most
recent fiscal year ending prior to the time the determination is being made.
(v) Without limitation, any shares of Common Stock of the Corporation that
any person has the right to acquire pursuant to any agreement, or upon
exercise of conversion rights, warrants or options, or otherwise, shall be
deemed beneficially owned by such person.
(vi) For the purposes of subparagraph (3) of this Article, the term "other
consideration to be received" shall include, without limitation, Common Stock
of the Corporation retained by its existing public shareholders in the event
of a Business Combination in which the Corporation is the surviving
corporation.
(vii) The term "Voting Stock" shall mean all outstanding shares of capital
stock of the Corporation or another corporation entitled to vote generally in
the election of directors and each reference to a proportion of shares of
Voting Stock shall refer to such proportion of the votes entitled to be cast
by such shares.
THIRTEENTH: The provisions set forth in this Article THIRTEENTH and in
Articles SEVENTH (dealing with the alteration of Bylaws by stockholders),
EIGHTH (dealing with the prohibition against stockholder action without
meetings), TENTH (dealing with
6
<PAGE> 7
liability of directors), ELEVENTH (dealing with the classification and number
of directors) and TWELFTH (dealing with the 75% vote of stockholders required
for certain Business Combinations) herein may not be repealed or amended in
any respect, and no Article imposing cumulative voting in the election of
directors may be added, unless such action is approved by the affirmative vote
of not less than 75% of the total voting power of all shares of stock of the
Corporation entitled to vote in the election of directors, considered for
purposes of this Article THIRTEENTH as one class. Amendment to the provisions
set forth in this Article THIRTEENTH and in Article TWELFTH shall also require
the affirmative vote of 66 2/3% of such total voting power excluding the vote
of shares owned by a "Related Person" (as defined in Article THIRTEENTH). The
voting requirements contained in Article SEVENTH, Article TWELFTH and this
Article THIRTEENTH herein shall be in addition to the voting requirements
imposed by law, other provisions of this Certificate of Incorporation or any
Certificate of Designation of Preferences in favor of certain classes or
series of classes of shares of the Corporation.
FOURTEENTH: The Corporation reserves the right to amend, alter, change or
repeal any provisions contained in this Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation. Notwithstanding the foregoing, the provision set forth in
Articles SEVENTH, EIGHTH, TENTH, ELEVENTH, TWELFTH and THIRTEENTH may not be
repealed or amended in any respect unless such repeal or amendment is
approved as specified in Article THIRTEENTH herein.
IN WITNESS WHEREOF, BAKER HUGHES INCORPORATED has caused this Restated
Certificate of Incorporation to be executed, signed and acknowledged by Patrick
T. Doyle, its Vice President, who states under penalty of perjury that the
facts stated herein are true, and to be attested by Sandra E. Alford, its
Assistant Secretary this 3rd day of April, 1987.
/s/ Patrick T. Doyle
----------------------------
Patrick T. Doyle
Vice President
Attest:
/s/ Sandra E. Alford
- -----------------------------
Sandra E. Alford
Assistant Secretary
7
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.2
<SEQUENCE>3
<DESCRIPTION>BY-LAWS
<TEXT>
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
BAKER HUGHES INCORPORATED
As Amended
December 2, 1998
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
ARTICLE I - Offices ............................................................................1
Section 1. Registered Office ..............................................................1
Section 2. Other Offices ..................................................................1
ARTICLE II - Meetings of Stockholders ..........................................................1
Section 1. Place of Meetings...............................................................1
Section 2. Annual Meeting of Stockholders..................................................1
Section 3. Quorum; Adjourned Meetings and Notice Thereof ..................................1
Section 4. Voting .........................................................................2
Section 5. Proxies.........................................................................2
Section 6. Special Meetings ...............................................................2
Section 7. Notice of Stockholders' Meetings ...............................................2
Section 8. Waiver of Notice ...............................................................2
Section 9. Maintenance and Inspection of Stockholder List .................................3
Section 10. Stockholder Action by Written Consent Without a Meeting ........................3
Section 11. Inspectors of Election .........................................................3
Section 12. Procedure for Stockholders' Meetings............................................4
Section 13. Order of Business ..............................................................4
Section 14. Procedures for Bringing Business before an Annual Meeting ......................4
Section 15. Procedures for Nominating Directors ............................................5
ARTICLE III - Directors ........................................................................5
Section 1. Number and Qualification of Directors ..........................................5
Section 2. Election and Term of Office ....................................................6
Section 3. Resignation and Removal of Directors ...........................................6
Section 4. Vacancies ......................................................................7
Section 5. Powers .........................................................................7
Section 6. Place of Directors' Meetings ...................................................7
Section 7. Regular Meetings ...............................................................7
Section 8. Special Meetings ...............................................................7
Section 9. Quorum .........................................................................8
Section 10. Action Without Meeting .........................................................8
Section 11. Telephonic Meetings ............................................................8
Section 12. Meetings and Action of Committees ..............................................8
Section 13. Special Meetings of Committees .................................................9
Section 14. Minutes of Committee Meetings ..................................................9
Section 15. Compensation of Directors ......................................................9
Section 16. Indemnification ................................................................9
</TABLE>
ii
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE IV - Officers .........................................................................11
Section 1. Officers ......................................................................11
Section 2. Election of Officers ..........................................................11
Section 3. Subordinate Officers ..........................................................11
Section 4. Removal and Resignation of Officers ...........................................12
Section 5. Vacancies in Offices ..........................................................12
Section 6. Chairman of the Board .........................................................12
Section 7. Vice Chairman of the Board ....................................................12
Section 8. President .....................................................................12
Section 9. Vice Presidents ...............................................................12
Section 10. Secretary ......................................................................12
Section 11. Chief Financial Officer ........................................................13
Section 12. Treasurer and Controller ......................................................13
ARTICLE V - Certificate of Stock ..............................................................13
Section 1. Certificates ...................................................................13
Section 2. Signatures on Certificates .....................................................13
Section 3. Statement of Stock Rights, Preferences, Privileges..............................14
Section 4. Lost Certificates ..............................................................14
Section 5. Transfers of Stock .............................................................14
Section 6. Fixing Record Date .............................................................14
Section 7. Registered Stockholders ........................................................15
ARTICLE VI - General Provisions - Dividends ...................................................15
Section 1. Dividends ......................................................................15
Section 2. Payment of Dividends; Directors' Duties.........................................15
Section 3. Checks .........................................................................15
Section 4. Corporate Contracts and Instruments ............................................15
Section 5. Fiscal Year ....................................................................15
Section 6. Manner of Giving Notice ........................................................16
Section 7. Waiver of Notice ...............................................................16
Section 8. Annual Statement ...............................................................16
ARTICLE VII - Amendments ......................................................................16
Section 1. Amendment by Directors .........................................................16
Section 2. Amendment by Stockholders ......................................................17
</TABLE>
iii
<PAGE> 4
BYLAWS
OF
BAKER HUGHES INCORPORATED
ARTICLE I
Offices
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The Corporation may also have offices at such other places
both within and without the State of Delaware as the Board of Directors may from
time to time determine or the business of the Corporation may require.
ARTICLE II
Meetings of Stockholders
Section 1. All meetings of the stockholders shall be held at such place
either within or without the State of Delaware as shall be designated from time
to time by the Board of Directors and stated in the notice of the meeting.
Section 2. An annual meeting of stockholders shall be held on the
fourth Wednesday in January in each year, if not a legal holiday, and if a legal
holiday, then on the next business day following, at 2:00 p.m. or at such other
date and time as may be determined from time to time by resolution adopted by
the Board of Directors, for the purpose of electing, subject to Article III,
Section 17 hereof, one class of the directors of the Corporation, and
transacting such other business as may properly be brought before the meeting.
Section 3. A majority of the stock issued and outstanding and entitled
to vote at any meeting of stockholders, the holders of which are present in
person or represented by proxy, without regard to class or series, shall
constitute a quorum for the transaction of business except as otherwise provided
by law, by the Certificate of Incorporation, or by these Bylaws. A quorum, once
established, shall not be broken by the withdrawal of enough votes to leave less
than a quorum and the votes present may continue to transact business until
adjournment provided that any action taken (other than adjournment) is approved
by at least a majority of the shares required to constitute a quorum. If,
however, such quorum shall not be present or represented at any meeting of the
stockholders, a majority of the voting stock represented in person or by proxy
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. If the adjournment is for more than thirty (30) days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote thereat.
1
<PAGE> 5
Section 4. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or
the Certificate of Incorporation or these Bylaws, a different vote is required
in which case such express provision shall govern and control the decision of
such question.
Section 5. At each meeting of the stockholders, each stockholder having
the right to vote may vote in person or may authorize another person or persons
to act for him by proxy appointed by an instrument in writing subscribed by such
stockholder and bearing a date not more than three years prior to said meeting,
unless said instrument provides for a longer period. All proxies must be filed
with the Secretary of the Corporation at the beginning of each meeting in order
to be counted in any vote at the meeting. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
telegraphic transmission or otherwise) by the stockholder or the stockholder's
attorney in fact. Each stockholder shall have one vote for each share of stock
having voting power, registered in his name on the books of the Corporation on
the record date set by the Board of Directors as provided in Article V, Section
6 hereof.
Section 6. Special meetings of the stockholders, for any purpose, or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called at any time by the Board of Directors or by a
committee of the Board of Directors which has been duly designated by the Board
of Directors and whose powers and authority, as provided in a resolution of the
Board of Directors or in these Bylaws, include the power to call such meetings.
Special meetings of stockholders of the Corporation may not be called by any
other person or persons. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 7. Any notice requested to be given to stockholders by statute,
the Certificate of Incorporation or these Bylaws, including notice of any
meeting of stockholders, shall be given personally, by first-class mail or by
telegraphic communication, charges prepaid, addressed to the stockholder at the
address of such stockholder appearing on the books of the Corporation or given
by the stockholder to the Corporation for the purpose of notice. If no such
address appears on the Corporation's books or has been so given, notice shall be
deemed to have been given if sent by first-class mail or telegraphic
communication to the Corporation's principal executive office, or if published
at least once in a newspaper of general circulation in the county where such
principal executive office is located. Notice shall be deemed to have been given
at the time when delivered personally or deposited in the mail or sent by
telegram.
If any notice addressed to a stockholder at the address of such
stockholder appearing on the books of a Corporation is returned to the
Corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the stockholder
at such address, all further notices shall be deemed to have been duly given
without further mailing if the same shall be available to the stockholder upon
written demand of the stockholder at the principal executive office of the
Corporation for a period of one year from the date of the giving of such notice.
Section 8. Attendance of a person at a meeting shall constitute a
waiver of notice to such person of such meeting, except when the person objects
at the beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened, or objects to the consideration of
matters not included in the notice of the meeting.
2
<PAGE> 6
Section 9. The officer or agent who has charge of the stock ledger of
the Corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where their
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept open at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present. The stock ledger of the Corporation shall be the only evidence
as to who are the stockholders entitled to examine such list or to vote at any
meetings of stockholders.
Section 10. No action shall be taken by stockholders except at an
annual or special meeting of stockholders, and stockholders may not act by
written consent.
Section 11. Before any meeting of stockholders, the Board of Directors
may appoint any persons other than nominees for office to act as inspectors of
election at the meeting or its adjournment. If no inspectors of election are so
appointed, the chairman of the meeting may, and on the request of any
stockholder or a stockholder's proxy shall, appoint inspectors of election at
the meeting. The number of inspectors shall be either one or three. If
inspectors are appointed at a meeting on the request of one or more stockholders
or proxies, the holders of a majority of shares or their proxies present at the
meeting shall determine whether one or three inspectors are to be appointed. If
any person appointed as inspector fails to appear or fails or refuses to act,
the chairman of the meeting may, and upon the request of any stockholder or a
stockholder's proxy shall, appoint a person to fill such vacancy.
The duties of these inspectors shall be as follows:
(a) Determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the
existence of a quorum, and the authenticity, validity and effect of
proxies;
(b) Receive votes or ballots;
(c) Hear and determine all challenges and questions in
any way arising in connection with the right to vote;
(d) Count and tabulate all votes;
(e) Determine when the polls shall close;
(f) Determine the results; and
(g) Do any other acts that may be proper to conduct the
election or vote with fairness to all stockholders.
3
<PAGE> 7
Section 12. Meetings of the stockholders shall be presided over by the
Chairman of the Board of Directors, or in his absence, by the Vice Chairman, the
President or by any Vice President, or, in the absence of any of such officers,
by a chairman to be chosen by a majority of the stockholders entitled to vote at
the meeting who are present in person or by proxy. The Secretary, or, in his
absence, any person appointed by the chairman, shall act as secretary of all
meetings of the stockholders.
Section 13. The order of business at all meetings of stockholders shall
be as determined by the chairman of the meeting.
Section 14. Notwithstanding anything in these Bylaws to the contrary,
no business shall be conducted at an annual meeting of the stockholders except
in accordance with the procedures hereinafter set forth in this Section 14;
provided, however, that nothing in this Section 14 shall be deemed to preclude
discussion by any stockholder of any business properly brought before the annual
meeting in accordance with said procedures.
At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be properly
brought before an annual meeting, business must be (1) specified in the notice
of meeting (or any supplement thereto) given by or at the direction of the
Board, (2) otherwise properly brought before the meeting by or at the direction
of the Board, or (3) otherwise properly brought before the meeting by a
stockholder. In addition to any other applicable requirements, for business to
be properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the Corporation not less than
one hundred twenty (120) days in advance of the first annual anniversary of the
date of the Corporation's proxy statement released to stockholders in connection
with the previous year's annual meeting of stockholders, except that if no
annual meeting was held in the previous year or the date of the annual meeting
has been changed by more than thirty (30) calendar days from the date
contemplated at the time of the previous year's proxy statement, notice by the
stockholder to be timely must be so received not later than the close of
business on the tenth (10th) day following the day on which such notice of the
date of the annual meeting was mailed or such public disclosure was made. Any
adjournment(s) or postponement(s) of the original meeting whereby the meeting
will reconvene within 30 days from the original date shall be deemed for
purposes of notice to be a continuation of the original meeting and no business
may be brought before any such reconvened meeting unless timely notice of such
business was given to the Secretary of the Corporation for the meeting as
originally scheduled. A stockholder's notice to the Secretary shall set forth as
to each matter the stockholder proposes to bring before the annual meeting (i) a
brief description of the business desired to be brought before the annual
meeting and their reasons for conducting such business at the annual meeting,
(ii) the name and record address of the stockholder proposing such business,
(iii) the class and number of shares of the Corporation which are beneficially
owned by the stockholders, and (iv) any material interest of the stockholder in
such business.
The Chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 14, and if
he should so determine, he shall so declare to the meeting and any such business
not properly brought before the meeting shall not be transacted.
4
<PAGE> 8
Section 15. Notwithstanding anything in these Bylaws to the contrary,
only persons who are nominated in accordance with the procedures hereinafter set
forth in this Section 15 shall be eligible for election as directors of the
Corporation.
Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of stockholders only (1) by or at the
direction of the Board of Directors or (2) by any stockholder of the Corporation
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in this Section 15. Such nominations, other than
those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice shall be delivered to or mailed and received at
the principal executive offices of the Corporation not less than 120 days, nor
more than 150 days, in advance of the first annual anniversary of the date of
the Corporation's proxy statement released to stockholders in connection with
the previous year's annual meeting of stockholders, except that if no annual
meeting was held in the previous year or the date of the annual meeting has been
changed by more than 30 calendar days from the date contemplated at the time of
the previous year's proxy statement, notice by the stockholder to be timely must
be so received not later than the close of business on the tenth day following
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure was made. Any adjournment(s) or postponement(s) of the
original meeting whereby the meeting will reconvene within thirty (30) days from
the original date shall be deemed for purposes of notice to be a continuation of
the original meeting and no nominations by a shareholder of persons to be
elected directors of the Corporation may be made at any such reconvened meeting
other than pursuant to a notice that was timely for the meeting on the date
originally scheduled. Such stockholder's notice shall set forth: (i) as to each
person whom the stockholder proposes to nominate for election or re-election as
a director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended, or any successor regulation thereto (including such
person's written consent to being named in the proxy statement as a nominee and
to serving as a director if elected); and (ii) as to the stockholder giving
notice (A) the name and address, as they appear on the Corporation's books, of
such stockholder, and (B) the class and number of shares of the Corporation
which are beneficially owned by such stockholder. At the request of the Board of
Directors, any person nominated by the Board of Directors for election as a
director shall furnish to the Secretary of the Corporation that information
required to be set forth in a stockholder's notice of nomination which pertains
to the nominee.
The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by this Section 15, and if he should so determine, he
shall so declare to the meeting and the defective nomination shall be
disregarded.
ARTICLE III
Directors
Section 1. The Board of Directors shall consist of a minimum of twelve
(12) and a maximum of sixteen (16) directors. The number of directors shall be
fixed from time to time within the minimum and the maximum number established by
the then elected Board of Directors. The number of directors until changed by
the Board shall be fifteen (15). The maximum number of directors may not be
increased by the Board of Directors
5
<PAGE> 9
to exceed sixteen without the affirmative vote of 75% of the members of the
entire Board. The directors need not be stockholders. No officer of the
Corporation may serve on a board of directors of any company having a present or
retired employee on the Corporation's Board of Directors. No person may stand
for election as a director if within the previous one (1) year he has resigned
from the Board as a result of the tenure provisions of Article III, Section 3
hereof regarding service for more than ten (10), eleven (11) or twelve (12)
consecutive years on the Board. No person associated with an organization whose
services are contracted by the Corporation shall serve on the Corporation's
Board of Directors; provided, however, that this prohibition may be waived by a
majority of the members of the whole Board if the Board in its judgment
determines that such waiver would be in the best interest of the Corporation.
Section 2. The Board of Directors shall be divided into three classes,
Class I, Class II and Class III. The number of directors in each class shall be
the whole number contained in the quotient arrived at by dividing the authorized
number of directors by three, and if a fraction is also contained in such
quotient then if such fraction is one-third (1/3), the extra director shall be a
member of Class III, and if the fraction is two-thirds (2/3), one of the extra
directors shall be a member of Class III and the other a member of Class II.
Each director shall serve for a term ending on the date of the third annual
meeting following the annual meeting at which such director was elected;
provided, however, that the directors initially appointed to Class I shall serve
for a term ending on the date of the first annual meeting next following
September 30, 1988, the directors initially appointed to Class II shall serve
for a term ending on the date of the second annual meeting next following
September 30, 1988, and the directors initially appointed to Class III shall
serve for a term ending on the date of the third annual meeting next following
September 30, 1988. One class of the directors shall be elected at each annual
meeting of the stockholders. If any such annual meeting is not held or the
directors are not elected thereat, the directors may be elected at any special
meeting of stockholders held for that purpose. All directors shall hold office
until their respective successors are elected and qualified or until their
earlier death, resignation or removal.
Section 3. Directors who are employees of the Corporation must resign
from the Board of Directors at the time of any diminution in their duties or
responsibilities as an officer, at the time they leave the employ of the
Corporation for any reason or on their 70th birthday. A director's term of
office shall automatically terminate on the date of the annual meeting of
stockholders following: (i) his seventieth (70th) birthday; (ii) the third
anniversary of his retirement from his principal occupation; (iii) unless he is
an officer of the Corporation, the date on which he has served on the
Corporation's Board of Directors a total of ten (10) complete years; (iv) any
fiscal year in which he has failed to attend at least sixty-six percent (66%) of
the meetings of the Board of Directors and any committees of the Board of
Directors on which such director serves; or (v) the first anniversary of any
change in his employment (other than a promotion or lateral movement within the
same organization). The above requirements of Section 3 of Article III may be
waived by a majority of the members of the whole Board (excluding the director
whose resignation would otherwise be required) if the Board in its judgment
determines that such waiver would be in the best interest of the Corporation.
Any director may be removed for cause by the holders of a majority of the shares
of the Corporation entitled to vote in the election of directors; stockholders
may not remove any director without cause. The Board of Directors may not remove
any director for or without cause, and no recommendation by the Board of
Directors that a director be removed for cause may be made to the stockholders
except by the affirmative vote of not less than seventy-five percent (75%) of
the members of the whole Board; provided that
6
<PAGE> 10
the Board may remove any director who fails to resign as required by the
provisions of these Bylaws.
Section 4. Except as otherwise provided by statute or the Certificate
of Incorporation, in the case of any increase in the number of directors, such
additional director or directors shall be proposed for election to terms of
office that will most nearly result in each class of directors containing
one-third (1/3) of the entire number of members of the whole Board, and, unless
such position is to be filled by a vote of the stockholders at an annual or
special meeting, shall be elected by a majority vote of the directors in such
class or classes, voting separately by class. In the case of any vacancy in the
Board of Directors, however created, the vacancy or vacancies shall be filled by
majority vote of the directors remaining in the class in which the vacancy
occurs or, if only one such director remains, by such director. In the event one
or more directors shall resign, effective at a future date, such vacancy or
vacancies shall be filled as provided herein. Directors so chosen or elected
shall hold office for the remaining term of the directorship to which appointed.
Any director elected or chosen as provided herein shall serve for the unexpired
term of office or until his successor is elected and qualified or until his
earlier death, resignation or removal.
In the event of any decrease in the authorized number of directors, (a)
each director then serving as such shall nevertheless continue as a director of
the class of which he is a member until the expiration of this current term, or
his prior death, resignation or removal, and (b) the newly eliminated
directorships resulting from such decrease shall be apportioned by the Board of
Directors to such class or classes as shall, so far as possible, bring the
number of directors in the respective classes into conformity with the formula
in Section 2 hereof as applied to the newly authorized number of directors.
Section 5. The property and business of the Corporation shall be
managed by or under the direction of its Board of Directors. In addition to the
powers and authorities by these Bylaws expressly conferred upon them, the Board
may exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute, by the Certificate of Incorporation or by these
Bylaws directed or required to be exercised or done by the stockholders.
Meetings of the Board of Directors
Section 6. The directors may hold their meetings and have one or more
offices, and keep the books of the Corporation outside the State of Delaware.
Section 7. Regular meetings of the Board of Directors may be held
without notice at such time and place as shall from time to time be determined
by the Board. Except as otherwise provided by statute, any business may be
transacted at any regular meeting of the Board of Directors.
Section 8. Special meetings of the Board of Directors may be called by
the Chairman of the Board, the Vice Chairman or the President on at least
twenty-four hours' notice, or such shorter period as the person calling deems
appropriate, to each director. Special meetings shall be called by the President
or the Secretary in like manner and on like notice on the written request of any
two directors unless the Board consists of only one director, in which case
special meetings shall be called by the President or Secretary in like manner
and on like notice on the written request of the sole director.
7
<PAGE> 11
Section 9. At all meetings of the Board of Directors a majority of the
authorized number of directors shall be necessary and sufficient to constitute a
quorum for the transaction of business, and the vote of a majority of the
directors present at any meeting at which there is a quorum, shall be the act of
the Board of Directors, except as may be otherwise specifically provided by
statute, by the Certificate of Incorporation or by these Bylaws. If a quorum
shall not be present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present. If only one
director is authorized, such sole director shall constitute a quorum. A meeting
at which a quorum is initially present may continue to transact business
notwithstanding the withdrawal of directors, if any action is approved by at
least a majority of the required quorum for such meeting.
Section 10. Unless otherwise restricted by statute, the Certificate of
Incorporation or these Bylaws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
Section 11. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
a meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
Committees of Directors
Section 12. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each such
committee to consist of one or more of the directors of the Corporation. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. If no alternate members have been appointed, the committee member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any absent or
disqualified member. The Board of Directors shall, by resolution passed by a
majority of the whole Board, designate one member of each committee as chairman
of such committee. Each such chairman shall hold such office for a period not in
excess of five years, and shall upon surrender of such chairmanship resign from
membership on such committee. Any such committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the Corporation, but no such committee shall have the power or
authority to authorize an amendment to the Certificate of Incorporation (except
that a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of Directors,
fix the designations and any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the Corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the Corporation, or fix the number or shares
of any series of stock or authorize the increase or decrease of the shares of
any series), adopt an agreement of
8
<PAGE> 12
merger or consolidation, recommend to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommend to the stockholders a dissolution of the Corporation or a revocation
of a dissolution, or amend the Bylaws of the Corporation; and, unless the
resolution or the Certificate of Incorporation expressly so provide, no such
committee shall have the power or authority to declare a dividend, to authorize
the issuance of stock or to adopt a certificate of ownership and merger.
Section 13. Special meetings of committees may be called by the
Chairman of such committee, the Chairman of the Board or the President, on at
least forty-eight (48) hours notice to each member and alternate member.
Alternate members shall have the right to attend all meetings of the committee.
The Board of Directors may adopt rules of the government of any committee not
inconsistent with the provisions of these Bylaws. If a committee is comprised of
an odd number of members, a quorum shall consist of a majority of that number.
If the committee is comprised of an even number of members, a quorum shall
consist of one-half (1/2) of that number. If a committee is comprised of two
members, a quorum shall consist of both members.
Section 14. Each Committee shall keep regular minutes of its meetings
and report the same to the Board of Directors when requested.
Compensation of Directors
Section 15. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, the Board of Directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Indemnification
Section 16. (a) The Corporation shall indemnify every person who is or
was a party or is or was threatened to be made a party to any threatened,
pending or completed action, suit, or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation), by reason of the fact that he is or was a director, officer or
employee of the Corporation or any of its direct or indirect wholly-owned
subsidiaries or, while a director, officer or employee of the Corporation or any
of its direct or indirect wholly-owned subsidiaries, is or was serving at the
request of the Corporation or any of its direct or indirect wholly-owned
subsidiaries, as a director, officer or employee, of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
against expenses (including counsel fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding, to the full extent permitted by applicable law;
provided that the Corporation shall not be obligated to indemnify any such
person against any such action, suit or proceeding which is brought by such
person against the Corporation or any of its direct or indirect wholly-owned
subsidiaries or the directors of the Corporation or any of its direct or
indirect wholly-owned subsidiaries, other than an action brought by such person
to enforce his rights to indemnification hereunder, unless a majority of the
Board of Directors of the Corporation shall have previously approved the
9
<PAGE> 13
bringing of such action, suit or proceeding, and provided further that the
Corporation shall not be obligated to indemnify any such person against any
action, suit or proceeding arising out of any adjudicated criminal, dishonest or
fraudulent acts, errors or omissions of such person or any adjudicated willful,
intentional or malicious acts, errors or omissions of such person.
(b) The Corporation shall indemnify every person who is or was a
party or is or was threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was licensed to practice
law and an employee (including an employee who is or was an officer) of the
Corporation or any of its direct or indirect wholly-owned subsidiaries and,
while acting in the course of such employment committed or is alleged to have
committed any negligent acts, errors or omissions in rendering professional
legal services at the request of the Corporation or pursuant to his employment
(including, without limitation, rendering written or oral legal opinions to
third parties) against expenses (including counsel fees), judgments, fines, and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding, to the full extent permitted by applicable
law; provided that the Corporation shall not be obligated to indemnify any such
person against any action, suit or proceeding arising out of any adjudicated
criminal, dishonest or fraudulent acts, errors or omissions of such person or
any adjudicated willful, intentional or malicious acts, errors or omissions of
such person.
(c) The Corporation shall indemnify every person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, or employee of the Corporation, or any of its direct or indirect
wholly-owned subsidiaries or, while a director, officer, or employee of the
Corporation or any of its direct or indirect wholly-owned subsidiaries, is or
was serving at the request of the Corporation or any of its direct or indirect
wholly-owned subsidiaries, as a director, officer, or employee of another
corporation, partnership, joint venture, trust, employee benefit plan, or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
(d) To the extent that a director, officer, or employee of the
Corporation, or any of its direct or indirect wholly-owned subsidiaries, has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a), (b) and (c) of this section, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(e) Any indemnification under subsections (a), (b) and (c) of this
section (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, or
10
<PAGE> 14
employee is proper in the circumstances because he has met the applicable
standard of conduct set forth in subsections (a), (b) and (c) of this section.
Such determination shall be made (1) by the Board of Directors by a majority
vote of a quorum consisting of Directors who were not parties to such action,
suit or proceeding, or (2) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (3) by the stockholders.
(f) Expenses (including attorneys' fees) incurred by an officer or
director of the Corporation or any of its direct or indirect wholly-owned
subsidiaries in defending a civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Corporation as authorized in this Section 16. Such expenses incurred by
other employees and agents may be so paid upon such terms and conditions, if
any, as the Board of Directors deems appropriate.
(g) The indemnification and advancement of expenses provided by,
or granted pursuant to, this Section 16 shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any provision of law, the Corporation's Certificate of
Incorporation, the Certificate of Incorporation or Bylaws or other governing
documents of any direct or indirect wholly-owned subsidiary of the Corporation,
or any agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding any of the positions or having any of the relationships referred
to in this Section 16.
(h) The indemnification and advancement of expenses provided by,
or granted pursuant to, this Section 16 shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer or employee and shall inure to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE IV
Officers
Section 1. The officers of the Corporation shall be a Chairman of the
Board, a Vice Chairman of the Board, a President, a Chief Financial Officer, a
Vice President, a Secretary, a Treasurer and a Controller. The Corporation may
also have, at the discretion of the Board of Directors, one or more additional
Vice Presidents, and such other officers as may be appointed in accordance with
the provisions of Section 3 of this Article.
Section 2. The officers of the Corporation, except such officers as may
be appointed in accordance with the provisions of Section 3 or Section 5 of this
Article, shall be chosen by the Board of Directors, and each shall serve at the
pleasure of the Board, subject to the rights, if any, of any officer under any
contract of employment.
Section 3. The Board of Directors may appoint, and may empower the
President to appoint, such other officers as the business of the Corporation may
require, each of whom shall hold office for such period, have such authority and
perform such duties as are provided in the Bylaws or as the Board of Directors
may from time to time determine.
11
<PAGE> 15
Section 4. Any officer may be removed, either with or without cause, by
the Board of Directors, at any regular or special meeting thereof, or except in
case of an officer chosen by the Board of Directors, by any officer upon whom
such power of removal may be conferred by the Board of Directors, provided that
such removal shall not prejudice the remedy of such officer for breach of any
contract of employment.
Any officer may resign at any time by giving written notice to the
Corporation. Any such resignation shall take effect on receipt of such notice or
at any later time specified therein. Unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective. Any
such resignation is without prejudice to the rights, if any, of the Corporation
under any contract to which the officer is a party.
Section 5. A vacancy in any office because of death, resignation,
removal, disqualification or any other cause shall be filled in the manner
prescribed in these Bylaws for regular appointments to such office.
Section 6. The Chairman of the Board shall, if present, preside at all
meetings of the Board of Directors and of the stockholders, and shall exercise
and perform such other powers and duties as may be from time to time assigned to
him by the Board of Directors or prescribed by the Bylaws.
Section 7. The Vice Chairman of the Board shall exercise and perform
such powers and duties as may be from time to time assigned to him by the Board
of Directors or prescribed in these Bylaws. In the absence of the Chairman of
the Board, the Vice Chairman of the Board shall preside at all meetings of the
stockholders and the Board of Directors.
Section 8. The President shall be the chief executive officer of the
Corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and the officers of
the Corporation. In the absence of the Chairman of the Board and the Vice
Chairman of the Board, the President shall preside at all meetings of the
stockholders and the Board of Directors. He shall have the general powers and
duties of management usually vested in the office of President of a corporation,
and shall have such other powers and duties as may be prescribed by the Board of
Directors or the Bylaws.
Section 9. In the absence or disability of the President, the Vice
Presidents, if any, in order of their rank as fixed by the Board of Directors,
or if not ranked, the Vice President designated by the President, shall perform
all the duties of the President, and when so acting shall have all the powers
of, and be subject to all the restrictions upon, the President. The Vice
Presidents shall have such other powers and perform such other duties as from
time to time may be prescribed for them respectively by the Board of Directors,
these Bylaws or the President.
Section 10. The Secretary shall keep or cause to be kept, at the
principal office or such other place as the Board of Directors may order, a book
of minutes of all meetings and actions of directors, committees of directors and
stockholders, with the time and place of holding, whether regular or special,
and, if special, how authorized, the notice thereof given, the names of those
present at directors' and committee meetings, the number of shares present or
represented at stockholders' meetings, and the proceedings thereof.
12
<PAGE> 16
The Secretary shall keep, or cause to be kept, at the principal office
or at the office of the Corporation's transfer agent or registrar, a share
register, or a duplicate share register, showing the names of all stockholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates issued for the same, and the number and date of
cancellation of every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the Board of Directors required by these Bylaws or by
law to be given, and he shall keep the seal of the Corporation, if one be
adopted, in safe custody, and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or by the Bylaws.
Section 11. The Chief Financial Officer shall keep and maintain, or
cause to be kept and maintained, adequate and correct books and records of
accounts of the properties and business transactions of the Corporation,
including accounts of its assets, liabilities, receipts, disbursements, gains,
losses, capital, retained earnings and shares. The books of account shall be
open at all times to inspection by any director.
The Chief Financial Officer shall deposit all moneys and other
valuables in the name and to the credit of the Corporation with such
depositories as may be designated by the Board of Directors. He shall disburse
the funds of the Corporation as may be ordered by the Board of Directors, shall
render to the President and Directors, whenever they request it, an account of
all of his transactions as Chief Financial Officer and of the financial
condition of the Corporation, and shall have other powers and perform such other
duties as may be prescribed by the Board of Directors or the Bylaws.
Section 12. The Treasurer and the Controller shall each have such
powers and perform such duties as from time to time may be prescribed for him by
the Board of Directors, the President or these Bylaws.
ARTICLE V
Certificate of Stock
Section 1. Shares of the stock of the Corporation may be represented by
certificates or uncertificated. Owners of shares of the stock of the Corporation
shall be recorded in the share register of the Corporation, and ownership of
such shares shall be evidenced by a certificate or book-entry notation in the
share register of the Corporation. Any certificates representing such shares
shall be signed by, or in the name of the Corporation by, the Chairman or Vice
Chairman of the Board of Directors, or the President or a Vice President, and by
the Secretary or any Assistant Secretary, if one be appointed, or the Treasurer
or an Assistant Treasurer of the Corporation, certifying the number of shares
represented by the certificate owned by such stockholder in the Corporation.
Section 2. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
13
<PAGE> 17
Section 3. If the Corporation shall be authorized to issue more than
one class of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualification,
limitations or restrictions of such preferences and/or rights shall be set forth
in full or summarized on the face or back of the certificate which the
Corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided by statute, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the Corporation shall issue to represent such class or series of stock, a
statement that the Corporation will furnish without charge to each stockholder
who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
Lost, Stolen or Destroyed Certificates
Section 4. The Board of Directors, the Secretary and the Treasurer each
may direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the owner of such certificate, or his legal representative. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to furnish the Corporation a bond in such form and
substance and with such surety as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.
Transfers of Stock
Section 5. Upon surrender to the Corporation, or the transfer agent of
the Corporation, of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall be
the duty of the Corporation to issue a new certificate or other evidence of such
new shares to the person entitled thereto, cancel the old certificate and record
the transaction upon its books. Uncertificated shares shall be transferred in
the share register of the Corporation upon the written instruction originated by
the appropriate person to transfer the shares.
Fixing Record Date
Section 6. In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of the stockholders, or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix a record date which shall
not be more than 60 nor less than 10 days before the date of such meeting, nor
more than 60 days prior to any other action. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall apply
to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
14
<PAGE> 18
Registered Stockholder
Section 7. The Corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact thereof and,
accordingly, shall not be bound to recognize any equitable or other claim or
interest in such share on the part of any other person, whether or not it shall
have express or other notice thereof, save as expressly provided by the laws of
the State of Delaware.
ARTICLE VI
General Provisions
Dividends
Section 1. Dividends upon the capital stock of the Corporation, subject
to the provisions of the Certificate of Incorporation, if any, may be declared
by the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property or in shares of the Corporation's
capital stock, subject to the provisions of the Certificate of Incorporation.
Section 2. Before declaration of any dividend, there may be set aside
out of any funds of the Corporation available for dividends such sum or sums as
the Board of Directors from time to time, in its absolute discretion, thinks
proper as a reserve fund to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the Corporation, or for such other
purpose as the Board of Directors shall think conducive to the interests of the
Corporation, and the Board of Directors may thereafter abolish any such reserve
in its absolute discretion.
Checks
Section 3. All checks, drafts or other orders for payment of money,
notes or other evidences of indebtedness, issued in the name of or payable to
the Corporation shall be signed by such officer or officers as the Board of
Directors or the President or any Vice President, acting jointly, may from time
to time designate.
Section 4. The President, any Vice President, the Secretary or the
Treasurer may enter into contracts and execute instruments on behalf of the
Corporation. The Board of Directors, the President or any Vice President may
authorize any officer or officers, and any employee or employees or agent or
agents of the Corporation or any of its subsidiaries, to enter into any contract
or execute any instrument in the name of and on behalf of the Corporation, and
such authority may be general or confined to specific instances.
Fiscal Year
Section 5. The fiscal year of the Corporation shall be January 1
through December 31, unless otherwise fixed by resolution of the Board of
Directors.
15
<PAGE> 19
Notices
Section 6. Whenever, under the provisions of the statutes, the
Certificate of Incorporation or these Bylaws, notice is required to be given to
any director, it shall not be construed to require personal notice, but such
notice may be given in writing, by mail, addressed to such director, at his
address as it appears on the records of the Corporation (unless prior to mailing
of such notice he shall have filed with the Secretary a written request that
notices intended for him be mailed to some other address, in which case such
notice shall be mailed to the address designated in the request) with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail; provided, however, that,
in the case of notice of a special meeting of the Board of Directors, if such
meeting is to be held within seven calendar days after the date of such notice,
notice shall be deemed given as of the date such notice shall be accepted for
delivery by a courier service that provides "opening of business next day"
delivery, so long as at least one attempt shall have been made, on or before the
date such notice is accepted for delivery by such courier service, to provide
notice by telephone to each director at his principal place of business and at
his principal residence. Notice to directors may also be given by telegram, by
personal delivery, by telephone or by facsimile.
Section 7. Whenever any notice is required to be given under the
provisions of the statutes, the Certificate of Incorporation or these Bylaws, a
waiver thereof in writing, or by telegraph, cable or other written form of
recorded communication, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto.
Annual Statement
Section 8. The Board of Directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
Corporation.
ARTICLE VII
Amendments
Section 1. Except any amendment to this Article VII and to Article II,
Section 6, Article II, Section 10, Article III, Section 1 (as it relates to
increases in the number of directors), Article III, Section 2, the last sentence
of Article III, Section 3 (as it relates to removal of directors), Article III,
Section 4, Article III, Section 16 and Article VI, Section 6 of these Bylaws, or
any of such provisions, which shall require approval by the affirmative vote of
directors representing at least seventy-five percent (75%) of the number of
directors provided for in accordance with Article III, Section 1, and except as
otherwise expressly provided in a bylaw adopted by the stockholders as
hereinafter provided, the directors, by the affirmative vote of a majority of
the whole Board and without the assent or vote of the stockholders, may at any
meeting, make, repeal, alter, amend or rescind any of these Bylaws, provided the
substance of the proposed amendment or other action shall have been stated in a
notice of the meeting.
16
<PAGE> 20
Section 2. These Bylaws may not be altered, amended or rescinded, and
new Bylaws may not be adopted, by the stockholders of the Corporation except by
the vote of the holders of not less than seventy-five percent (75%) of the total
voting power of all shares of stock of the Corporation entitled to vote in the
election of directors, considered for such purpose as one class.
17
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>4
<DESCRIPTION>EMPLOYMENT AGREEMENT - MAX L. LUKENS
<TEXT>
<PAGE> 1
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
by and between
BAKER HUGHES INCORPORATED
and
M. L. LUKENS
January 1, 1998
<PAGE> 2
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of January 1, 1998, by and between M. L.
Lukens (the "Executive") and Baker Hughes Incorporated, a Delaware corporation
(the "Company").
WHEREAS, the Executive is currently employed by the Company as its
Chief Executive Officer and is a party to an employment agreement with the
Company(the "Prior Agreement"), effective as of December 7, 1994, and a
Severance Agreement, dated as of July 23, 1997 (the "Severance Agreement");
WHEREAS, the Board of Directors of the Company (the "Board")
desires to provide for the continued employment of the Executive and to
encourage the attention and dedication to the Company of the Executive as a
member of the Company's management, in the best interests of the Company and its
shareholders;
WHEREAS, the Executive is willing to commit himself to serve the
Company, on the terms and conditions herein provided; and
WHEREAS, the Company and the Executive desire to terminate and
supersede the Prior Agreement (but not the Severance Agreement) and to set forth
in this Agreement the terms and conditions of the Executive's employment;
NOW, THEREFORE, in consideration of the premises and the
respective covenants and agreements of the parties herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. Employment; Term. The Company hereby agrees to employ the
Executive, and the Executive hereby accepts such employment, on the terms and
conditions hereinafter set forth. The period of employment of the Executive by
the Company hereunder (the "Employment Period") shall commence on the date first
written above (the "Effective Date") and shall end on the Executive's Date of
Termination (as defined in Section 7(b) hereof). The term of this Agreement (the
"Term") shall begin on the Effective Date and shall end on the third anniversary
thereof; provided, that, beginning on January 1, 1999 and on each January 1
thereafter, the Term shall automatically be extended for one additional year
unless, prior to the September 30 of the preceding year, the Company or the
Executive shall have given notice to not extend the Term.
2. Position and Duties. As of the Effective Date, the Executive
shall serve as Chairman of the Board, President and Chief Executive Officer of
the Company, in which capacity the Executive shall perform the usual and
customary duties of such office, which shall be those normally inherent in such
capacity in U.S. publicly held corporations of similar size and character.
<PAGE> 3
The Executive agrees and acknowledges that, in connection with his employment
relationship with the Company, the Executive owes fiduciary duties to the
Company and will act accordingly.
During the Employment Period, the Executive agrees to devote
substantially his full time, attention and energies to the Company's business
and agrees to faithfully and diligently endeavor to the best of his ability to
further the best interests of the Company. The Executive shall not engage in any
other business activity, whether or not such business activity is pursued for
gain, profit or other pecuniary advantage. Subject to the covenants of Section 9
herein, this shall not be construed as preventing the Executive from investing
his own assets in such form or manner as will not require his services in the
daily operations of the affairs of the companies in which such investments are
made. Further, subject to Section 9 herein, the Executive may serve as a
director of other companies so long as such service is not injurious to the
Company and so long as such service does not present the Executive with a
conflict of interest.
In keeping with the Executive's fiduciary duties to the Company,
the Executive agrees that he shall not, directly or indirectly, become involved
in any conflict of interest, or upon discovery thereof, allow such a conflict to
continue. Moreover, the Executive agrees that he shall promptly disclose to the
Board any facts which might involve any reasonable possibility of a conflict of
interest.
Circumstances in which a conflict of interest on the part of the
Executive would or might arise, and which should be reported immediately by the
Executive to the Board, include the following: (a) ownership of a material
interest in, acting in any capacity for, or accepting directly or indirectly any
payments, services or loans from a supplier, contractor, subcontractor, customer
or other entity with which the Company does business; (b) misuse of information
or facilities to which the Executive has access in a manner which will be
detrimental to the Company's interest; (c) disclosure or other misuse of
Confidential Information (as defined in Section 9); (d) acquiring or trading in,
directly or indirectly, other properties or interests connected with the design,
manufacture or marketing of products designed, manufactured or marketed by the
Company; (e) the appropriation to the Executive or the diversion to others,
directly or indirectly, of any opportunity in which it is known or could
reasonably be anticipated that the Company would be interested; and (f) the
ownership, directly or indirectly, of a material interest in an enterprise in
competition with the Company or its dealers and distributors or acting as a
director, officer, partner, consultant, employee or agent of any enterprise
which is in competition with the Company or its dealers or distributors.
Further, the Executive covenants, warrants and represents that he shall:
(i) Devote his full and best efforts to the fulfillment of his
employment obligations;
(ii) Exercise the highest degree of fiduciary loyalty and care and
the highest standards and conduct in the performance of his duties; and
<PAGE> 4
(iii) Endeavor to prevent any harm, in any way, to the business or
reputation of the Company.
3. Place of Performance. In connection with the Executive's
employment by the Company, the Executive's principal business address shall be
at the Company's current principal executive offices in Houston, Texas (the
"Principal Place of Employment") or in such other place as the Executive and the
Company may agree.
4. Compensation and Related Matters.
(a) Base Salary. During the Employment Period, the Company
shall pay the Executive an annual base salary ("Base Salary") in an amount that
shall be established from time to time by the Board or the Compensation
Committee of the Board (the "Compensation Committee"), payable in approximately
equal installments in accordance with the Company's customary payroll practices;
provided, however, that the Base Salary shall be not less than the Executive's
annual base salary on the day immediately prior to the date hereof. The Base
Salary shall be reviewed at least annually during the Employment Period and may
be increased but not decreased during the Employment Period.
(b) Bonuses. During the Employment Period, the Executive
shall be eligible to participate in the Company's 1995 Employee Annual Incentive
Compensation Plan, as amended (the "Annual Incentive Plan"), or any successor
plan thereto. The bonus opportunity afforded the Executive pursuant to this
Section 4(b) may vary from year to year and any bonus earned thereunder (the
"Annual Bonus") shall be paid at a time and in a manner consistent with the
Company's customary practice.
(c) Equity-Based Compensation. During the Employment Period,
the Executive shall be entitled to receive equity-based compensation awards on
substantially similar terms and conditions no less favorable than awards made to
the other senior executive officers of the Company. Such awards shall be
commensurate with the awards normally granted to the chief executive officer of
other public companies similar in size and character to the Company. Such awards
may be granted pursuant to the terms of an equity-based compensation plan of the
Company or otherwise, provided that any grant made other than pursuant to any
such Company plan shall be approved by either the Board or the Compensation
Committee.
(d) Expenses. The Company shall promptly reimburse the
Executive for all reasonable business expenses incurred during the Employment
Period by the Executive in performing services hereunder, including all expenses
of travel and living expenses while away from home on business or at the request
of and in the service of the Company, provided that such expenses are incurred
and accounted for in accordance with the policies and procedures established by
the Company.
<PAGE> 5
(e) Other Benefits. During the Employment Period, the
Executive shall be entitled to participate in all of the employee benefit plans
and arrangements made available by the Company to its other senior executive
officers, subject to and on a basis consistent with the terms, conditions and
overall administration of such plans and arrangements, and shall be entitled to
all perquisites and special benefits suitable to the character of the Chief
Executive Officer, including, but not limited to, executive life insurance, club
memberships, financial planning (including tax return preparation) and an annual
physical examination. Notwithstanding the foregoing, the Company shall have the
right to change, amend or discontinue any benefit plan, program, or perquisite,
so long as such changes are similarly applicable to senior executive officers of
the Company generally.
(f) Vacation. During the Employment Period, the Executive
shall be entitled to vacation in accordance with the standard written policy of
the Company with regard to vacations of employees.
(g) Services Furnished. During the Employment Period, the
Executive shall at all times be provided with office space, stenographic
assistance and such other facilities and services as are suitable to his
position and no less favorable than those being provided to the Executive by the
Company as of the date hereof.
5. Offices. Subject to Sections 2, 3 and 4 hereof, the
Executive agrees to serve without additional compensation, if elected or
appointed thereto, as a director of any of the Company's subsidiaries and as a
member of any committees of the board of directors of any such corporations, and
in one or more executive positions of any of the Company's subsidiaries,
provided that the Executive is indemnified for serving in any and all such
capacities on a basis no less favorable than is currently or may be provided to
any other director of the Company, any of its subsidiaries, or in connection
with any such executive position, as the case may be.
6. Termination. The Employment Period shall end in the event
of a termination of the Executive's employment in accordance with any of the
provisions of Section 6 or 7, and the Term shall expire in the event of a
termination of Executive's employment by the Company for Cause or by the
Executive without Good Reason, in each case, on the Executive's Date of
Termination.
(a) Death. The Executive's employment hereunder shall
terminate upon his death.
(b) Disability. If, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of his duties hereunder for the entire
period of ninety (90) days in the aggregate during any period of twelve (12)
consecutive months or it is reasonably expected that such disability will exist
for more than such period of time, and within thirty (30) days after written
Notice of Termination (as defined in Section 7) is given (which notice may be
given during such
<PAGE> 6
ninety (90) day period) shall not have returned to the performance of his duties
hereunder on a full-time basis, the Company may terminate the Executive's
employment hereunder for "Disability."
During any period that the Executive fails to perform his
duties hereunder as a result of incapacity due to physical or mental illness
("Disability Period"), the Executive shall continue to receive his Base Salary
at the rate in effect at the beginning of such period as well as all other
payments and benefits set forth in Section 4 hereof, reduced by any payments
made to the Executive during the Disability Period under the disability benefit
plans of the Company then in effect or under the Social Security disability
insurance program.
(c) Cause. The Company may terminate the Executive's
employment hereunder for Cause. For purposes of this Agreement, the Company
shall have "Cause" to terminate the Executive's employment hereunder upon the
occurrence of any of the following events:
(i) the commission by the Executive of an act of fraud,
embezzlement, theft or other criminal act constituting a felony;
(ii) a material breach by the Executive of any provision of
this Agreement;
(iii) the failure by the Executive to perform any and all
material covenants under this Agreement for any reason other than the
Executive's death, Disability or following the Executive's delivery of a
Notice of Termination for Good Reason; or
(iv) a material breach by the Executive of the Company's
Standards of Ethical Conduct.
provided, that, the Executive shall have thirty (30) business days from the date
on which the Executive receives the Company's Notice of Termination for Cause
under clause (ii), (iii) or (iv) above to remedy any such occurrence otherwise
constituting Cause under such clause (ii), (iii) or (iv).
Cause shall not exist unless and until the Company has delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than two-thirds (2/3) of the entire membership of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with his counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of the conduct set forth in this Section 6(c) and
specifying the particulars thereof in detail.
<PAGE> 7
(d) Good Reason. The Executive may terminate his
employment hereunder for "Good Reason." Good Reason for the Executive's
termination of employment shall mean the occurrence, without the Executive's
prior written consent, of any one or more of the following;
(i) the assignment to the Executive of any duties
inconsistent with the Executive's position (including status, office,
title and reporting requirements), authorities, duties or other
responsibilities as contemplated by Section 2 of this Agreement;
(ii) the relocation of the Principal Place of Employment to a
location more than fifty (50) miles from the Principal Place of
Employment;
(iii) a material reduction in any element of the Executive's
compensation as set forth in Section 4 hereof, other than in connection
with a Company-wide reduction of such benefits;
(iv) a material breach by the Company of any provision of
this Agreement;
provided, in any case, that the Company shall have thirty (30) business days
from the date on which the Company receives the Executive's Notice of
Termination for Good Reason to remedy any such occurrence otherwise constituting
Good Reason.
(e) Either party hereto may terminate this Agreement at
any time by giving the Board no more than thirty (30) days' prior written
notice, in accordance with Section 7 hereof, of such party's intent to so
terminate this Agreement.
7. Termination Procedure.
(a) Notice of Termination. Any termination of the
Executive's employment by the Company or by the Executive (other than
termination pursuant to Section 6(a) hereof) shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section 12
hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice that shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
(b) Date of Termination. "Date of Termination" shall mean
(i) if the Executive's employment is terminated pursuant to Section 6(a) above,
the date of the Executive's death, (ii) if the Executive's employment is
terminated pursuant to Section 6(b) above, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned to the
performance of his duties on a full-time basis during such thirty (30) day
period), (iii) if the Executive's employment is terminated pursuant to Section
6(c) above, the date specified
<PAGE> 8
in the Notice of Termination, (iv) if the Executive's employment is terminated
pursuant to Section 6(d) above, the date on which a Notice of Termination is
given or any later date (within thirty (30) days of the date of such Notice of
Termination) set forth in such Notice of Termination and (v) if the Executive's
employment is terminated for any other reason, the date specified in the Notice
of Termination, which date shall be not later than thirty (30) days following
the date on which Notice of Termination is given; provided, however, that, if
within ten (10) days after any Notice of Termination is given the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning such termination, the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual written agreement of
the parties, by a binding and final arbitration award or by a final judgment,
order or decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been perfected).
(c) Compensation During Dispute. If a purported
termination occurs during the Term, and such termination is disputed in
accordance with subsection (b) of this Section 7, the Company shall continue to
pay the Executive the full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to, Base Salary) and continue
the Executive as a participant in all compensation, benefit and insurance plans
in which the Executive was participating when the notice giving rise to the
dispute was given, until the Date of Termination, determined in accordance with
subsection (b) of this Section 7. Amounts paid under this Section 7(c) are in
addition to all other amounts due under this Agreement and shall not be offset
against or reduce any other amounts due under this Agreement.
8. Compensation upon Termination or During Disability.
(a) Accrued Obligation Defined. For purposes of this
Agreement, payment of the "Accrued Obligation" shall mean payment by the Company
to the Executive (or his designated beneficiary or legal representative, as
applicable), when due, of all vested benefits to which the Executive is entitled
under the terms of the employee benefit plans in which the Executive is a
participant as of the Date of Termination and a lump sum amount in cash equal to
the sum of (i) the Executive's Base Salary through the Date of Termination, (ii)
any compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon) and any accrued vacation pay and (iii) any other
amounts due the Executive as of the Date of Termination, in each case to the
extent not theretofore paid.
(b) Disability; Death. Following the termination of the
Executive's employment pursuant to Sections 6(a) or (b) hereof, the Company
shall pay to the Executive (or his designated beneficiary or legal
representative, if applicable)): (i) the Accrued Obligation, (ii) an amount in
cash equal to one-half of the Executive's Base Salary as in effect on the Date
of Termination (for each year and prorated for any partial years) for the
remainder of the Term (as such Term may have been extended), and (iii) a lump
sum in cash equal to the Executive's Expected Value (as defined in the Annual
Incentive Plan, and assuming for this purpose that any performance goals under
such Plan for such Plan year have been achieved), or similar award opportunity
under a successor plan thereto, for the year in which the Date of
<PAGE> 9
Termination occurs. The amount payable pursuant to clause (ii) above shall be
paid in accordance with the Company's ordinary payroll practices.
(c) By the Company for Cause. If during the Term the
Executive's employment is terminated by the Company pursuant to Section 6(c)
hereof, the Company shall pay to the Executive the Accrued Obligation within
thirty (30) days following the Date of Termination. Following such payment, the
Company shall have no further obligations to the Executive other than as may be
required by law or the terms of an employee benefit plan of the Company.
(d) By the Executive Without Good Reason. If during the
Term the Executive terminates his employment for any reason other than Good
Reason, the Company shall pay to the Executive the Accrued Obligation within
thirty (30) days following the Date of Termination. Following such payment, the
Company shall have no further obligations to the Executive other than as may be
required by law or the terms of an employee benefit plan of the Company.
(e) By the Company Without Cause or by the Executive
for Good Reason. If during the Term the Executive's employment is terminated by
the Company other than for Cause, death or Disability or if the Executive
terminates his employment for Good Reason, then
(i) the Company shall pay the Executive the Accrued
Obligation;
(ii) the Company shall continue to pay to the
Executive his Base Salary (at the rate in effect as of the Date of
Termination) for the remainder of the Term (as such Term may have been
extended), payable consistent with the Company's normal payroll
practices; provided, however, that for purposes of this clause (ii), Base
Salary shall be deemed to increase or decrease on each January 1
following the Date of Termination by the GNP price deflator adjustment as
published by the Federal government for the previous 12 months,
determined by the then public accounting firm of record of the Company
(that performs the annual audit);
(iii) the Company shall, once a year for the remainder
of the Term (as such Term may have been extended), consistent with the
Company's normal payroll practices, pay to the Executive an amount equal
to the Executive's Expected Value (as defined in the Annual Incentive
Plan, and assuming for this purpose that any performance goals under
such Plan for such Plan year have been achieved), or similar award
opportunity under a successor plan thereto, for the year in which the
Date of Termination occurs, provided, however, that for purposes of this
clause (iii), Expected Value shall be deemed to increase or decrease on
each January 1 following the Date of Termination by the GNP price
deflator adjustment as published by the Federal government
<PAGE> 10
for the previous 12 months, determined by the then public accounting firm
of record of the Company (that performs the annual audit);
(iv) all equity-based awards then held by Executive
shall become fully vested; and
(v) the Company shall continue to provide to the
Executive the benefits described in Section 4(e) and (g) hereof for the
remainder of the Term (as such Term may have been extended), provided,
that such benefits shall be reduced to the extent benefits of the same
type are received by or made available to the Executive during such
period, and provided, further, that the Executive shall have the
obligation to notify the Company that he is entitled to or receiving such
benefits.
The Company agrees that, if the Executive's employment with the Company
terminates during the Term, the Executive is not required to seek other
employment or to attempt in any way to reduce any amounts payable to the
Executive by the Company pursuant to this Section 8. Further, except with
respect to the benefits provided pursuant to clause (vi) above, the amount of
any payment or benefit provided for in this Agreement shall not be reduced by
any compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company, or otherwise.
9. Confidential Information; Non-Competition;
Non-Solicitation.
(a) Confidential Information. The Executive shall hold
in a fiduciary capacity for the benefit of the Company all trade secrets,
confidential information, and knowledge or data relating to the Company and its
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company and which shall not have been or hereafter
become public knowledge (other than by acts by the Executive or representatives
of the Executive in violation of this Agreement) (hereinafter being collectively
referred to as "Confidential Information"). The Executive shall not, without the
prior written consent of the Company or as may otherwise be required by law or
legal process, communicate or divulge any such trade secrets, information,
knowledge or data to anyone other than the Company and those designated by the
Company. Any termination of the Executive's employment or of this Agreement
shall have no effect on the continuing operation of this Section 9(a). The
Executive agrees to return all Confidential Information, including all
photocopies, extracts and summaries thereof, and any such information stored
electronically on tapes, computer disks or in any other manner to the Company at
any time upon request by the Company and upon the termination of his employment
hereunder for any reason.
(b) Non-Competition. During the Employment Period and
for a period of two (2) years following the Date of Termination (such period
following the Employment Period, the "Restricted Period"), the Executive shall
not engage in Competition, as
<PAGE> 11
defined below, with the Company; provided, that it shall not be a violation of
this Section 9(b) for the Executive to become the registered or beneficial owner
of up to two percent (2%) of any class of the capital stock of a corporation
registered under the Securities Exchange Act of 1934, as amended, provided that
the Executive does not actively participate in the business of such corporation
until such time as this covenant expires.
For purposes of this Agreement, Competition by the
Executive shall mean the Executive's engaging in, or otherwise directly or
indirectly being employed by or acting as a consultant or lender to, or being a
director, officer, employee, principal, agent, stockholder, member, owner or
partner of, or permitting his name to be used in connection with the activities
of any other business or organization which competes, directly or indirectly,
with the business of the Company as the same shall be constituted at any time
during the Term.
(c) Non-Solicitation. During the Restricted Period,
Executive agrees that he will not, directly or indirectly, for his benefit or
for the benefit of any other person, firm or entity, do any of the following:
(i) solicit from any customer doing business with the
Company as of the Date of Termination, business of the same or of a
similar nature to the business of the Company with such customer;
(ii) solicit from any known potential customer of the
Company business of the same or of a similar nature to that which has
been the subject of a known written or oral bid, offer or proposal by the
Company, or of substantial preparation with a view to making such a bid,
proposal or offer, within six (6) months prior to such Date of
Termination;
(iii) solicit the employment or services of, or hire,
any person who was known to be employed by or was a known consultant to
the Company upon the Date of Termination, or within six (6) months prior
thereto; or
(iv) otherwise knowingly interfere with the business
or accounts of the Company.
The Executive and the Company agree and acknowledge that the
Company has a substantial and legitimate interest in protecting the Company's
Confidential Information and goodwill. The Executive and the Company further
agree and acknowledge that the provisions of this Section 9 are reasonably
necessary to protect the Company's legitimate business interests and are
designed to protect the Company's Confidential Information and goodwill.
The Executive agrees that the scope of the restrictions as to
time, geographic area, and scope of activity in this Section 9 are reasonably
necessary for the protection of the Company's legitimate business interests and
are not oppressive or injurious to the public interest.
<PAGE> 12
The Executive agrees that in the event of a breach or threatened breach of any
of the provisions of this Section 9 the Company shall be entitled to injunctive
relief against the Executive's activities to the extent allowed by law, and the
Executive waives any requirement for the posting of any bond by the Company in
connection with such action. The Executive further agrees that any breach or
threatened breach of any of the provisions of Section 9(a) would cause
irreparable injury to the Company for which it would have no adequate remedy at
law.
(d) Publicity. The Executive agrees that the Company
may use, and hereby grants the Company the nonexclusive and worldwide right to
use, the Executive's name, picture, likeness, photograph, signature or any other
attribute of the Executive's persona (all of such attributes are hereafter
collectively referred to as "Persona") in any media for any advertising,
publicity or other purpose at any time, either during or subsequent to his
employment by the Company. The Executive agrees that such use of his Persona
will not result in any invasion or violation of any privacy or property rights
the Executive may have; and the Executive agrees that he will receive no
additional compensation for the use of his Persona. The Executive further agrees
that any negatives, prints or other material for printing or reproduction
purposes prepared in connection with the use of his Persona by the Company shall
be and are the sole property of the Company.
10. Indemnification; Legal Fees. The Company shall indemnify
the Executive to the fullest extent permitted by the laws of the Company's state
of incorporation in effect at that time, or certificate of incorporation and
by-laws of the Company, whichever affords the greater protection to the
Executive. The Executive will be entitled to any insurance policies the Company
may elect to maintain generally for the benefit of its officers and directors
against all costs, charges and expenses incurred in connection with any action,
suit or proceeding to which he may be made a party by reason of being a director
or officer of the Company.
11. Successors; Binding Agreement.
(a) Company's Successors. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle the Executive to compensation
from the Company in the same amount and on the same terms as he would be
entitled to hereunder if he terminated his employment for Good Reason, except
that for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which executes and delivers
the agreement provided for in this Section 11 or which otherwise becomes bound
by all the terms and provisions of this Agreement by operation of law.
<PAGE> 13
(b) Executive's Successors. This Agreement and all
rights of the Executive hereunder shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts would still be payable to him hereunder
if he had continued to live, all such amounts unless otherwise provided herein
shall be paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee or other designee or, if there is no such designee, to the
Executive's estate.
12. Notice. For the purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Max L. Lukens
3415 Albans
Houston, Texas 77005
If to the Company:
Baker Hughes Incorporated
3900 Essex Lane, Suite 1200
Houston, Texas 70027
Attention: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
13. Amendment or Modification; Waiver. No provisions of this
Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing signed by the Executive and such officer of
the Company as may be specifically designated by the Board or its compensation
committee. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in Agreement.
14. Arbitration. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators in Houston, Harris County, Texas,
in accordance with the Commercial
<PAGE> 14
Arbitration Rules of the American Arbitration Association then in effect or of
such similar organization as the parties hereto may mutually agree. Judgment may
be entered on the arbitrator's award in any court having jurisdiction.
The arbitrators shall award the prevailing party in the
arbitration its costs and expenses, including reasonable attorney's fees,
incurred in enforcing the provisions of this Agreement in arbitration.
15. Governing Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
Texas without regard to its conflicts of law principles.
16. Miscellaneous. All references to sections of any statute
shall be deemed also to refer to any successor provisions to such sections. The
obligations of the parties under Sections 8, 9, 10 and 14 hereof shall survive
the expiration of the Term. The compensation and benefits payable to the
Executive or his beneficiary under Section 8 of this Agreement shall be in lieu
of any other severance benefits to which the Executive may otherwise be entitled
upon his termination of employment under any severance plan, program, policy or
arrangement of the Company other than the Severance Agreement, and the Executive
shall not be entitled to receive any benefits under Section 8 hereof if he has
become eligible to receive benefits under the Severance Agreement.
17. Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect throughout the Term. Should any one or more of the
provisions of this Agreement be held to be excessive or unreasonable as to
duration, geographical scope or activity, then that provision shall be construed
by limiting and reducing it so as to be reasonable and enforceable to the extent
compatible with the applicable law.
18. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
19. Release. In consideration of the benefits and
compensation which may be awarded to the Executive pursuant to Section 8 of this
Agreement, the Executive hereby agrees to execute and be bound by, as a
condition precedent to receiving said benefits and compensation, the Release
attached hereto as Exhibit A, such Release being incorporated herein by
reference.
20. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and, as of the Effective Date, supersedes all prior agreements, promises,
covenants, arrangements, communications,
<PAGE> 15
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto; provided, however, that the Severance
Agreement shall not be superseded hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date first above written.
ATTEST: BAKER HUGHES INCORPORATED
By: By:
---------------------- ----------------------------
Name: Name: John F. Maher
Title: Title: Chairman,
Compensation Committee
M. L. LUKENS
-------------------------------
<PAGE> 16
EXHIBIT A
RELEASE
As a material inducement for the Company to enter into this
Agreement, the Executive hereby irrevocably and unconditionally releases,
acquits and forever discharges the Company and its affiliated companies and
their directors, officers, employees and representatives, (collectively
"Releasees"), from any and all claims, liabilities, obligations, damages, causes
of action, demands, costs, losses and/or expenses (including attorneys' fees) of
any nature whatsoever, whether known or unknown, including, but not limited to,
rights arising out of alleged violations of any contracts, express or implied,
any covenant of good faith and fair dealing, express or implied, or any tort, or
any legal restrictions on the Company's right to terminate employees, or any
federal, state or other governmental statute, regulation, or ordinance,
including, without limitation, Title VII of the Civil Rights Act of 1964, and
the Federal Age Discrimination in Employment Act, which the Executive claims to
have against any of the Releasees. In addition, the Executive waives all rights
and benefits afforded by any state laws which provide in substance that a
general release does not extend to claims which a person does not know or
suspect to exist in his favor at the time of executing the release which, if
known by him, must have materially affected the Executive's settlement with the
other person. The only exception to the foregoing are claims and rights that may
arise after the date of execution of this Release.
The Executive represents and acknowledges that in executing this
Release he does not rely and has not relied upon any representation or
statement, oral or written, not set forth herein or in the Agreement made by any
of the Releasees or by any of the Releasees' agents, representatives or
attorneys with regard to the subject matter, basis or effect of this Release,
the Agreement or otherwise.
The Executive represents and agrees that he fully understands his
right to discuss all aspects of this Release with his private attorney, that to
the extent, if any, that he desires, he has availed himself of this right, that
he has carefully read and fully understands all of the provisions of this
Release and that he is voluntarily entering into this Release.
AGREED AND ACCEPTED, on this day of , 19 .
----- --------- --
MAX L. LUKENS
--------------------------
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>5
<DESCRIPTION>FORM OF AMENDMENT NO.1 TO SERVERANCE AGREEMENT
<TEXT>
<PAGE> 1
EXHIBIT 10.7
AMENDMENT 1 TO SEVERANCE AGREEMENT
This Amendment 1 to Severance Agreement ("Amendment 1") is made and
entered into effective November 11, 1998, by and between BAKER HUGHES
INCORPORATED, A Delaware corporation (the "Company") and __________________ (the
"Executive").
WHEREAS, the Company and the Executive desire to make certain changes
to that certain Severance Agreement dated as of July 23, 1997, by and between
the Company and the Executive (the "Severance Agreement"), to conform the
Severance Agreement with the form executed by other executives of the Company
and to take into account the recent Change in Control (as defined in the
Severance Agreement) involving Western Atlas Inc.;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the Company and the Executive hereby agree as
follows:
1. Term. The following shall be added to the end of Paragraph 2 of
the Severance Agreement:
"; and further provided, however, that solely with respect to any
rights or claims of the Executive in connection with the Change in
Control brought about by the merger with Western Atlas Inc. which
occurred on August 10, 1998, the Term shall be deemed to expire on
September 1, 2000, but for all other purposes and other events of
Change in Control which may occur subsequent to August 10, 1998, this
proviso shall have no force or effect."
2. 13th Month Good Reason Waiver. The following language which
appears in lines 3, 4, and 5 of Section 6.1(ii) of the Severance
Agreement is hereby deleted:
"or (ii) the Executive voluntarily terminates his employment for any
reason during the one-month period commencing on the first anniversary
of the Change in Control,"
All capitalized terms in this Amendment 1 shall have the definition
ascribed to those terms in the Severance Agreement. The Severance Agreement
continues in full force and effect, except as amended hereby. This Amendment 1
may be executed in several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same instrument.
EXECUTED effective the day and year first written above.
Company:
BAKER HUGHES INCORPORATED
By:
----------------------------------
John F. Maher
Chairman-Compensation Committee
of the Board of Directors
Executive:
-------------------------------------
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>6
<DESCRIPTION>SEVERANCE AGREEMENT - THOMAS R. BATES, JR.
<TEXT>
<PAGE> 1
EXHIBIT 10.8
SEVERANCE AGREEMENT
THIS AGREEMENT, dated as of January 27, 1999, is made by and between
BAKER HUGHES INCORPORATED, a Delaware corporation (the "Company"), and THOMAS R.
BATES, JR. (the "Executive").
WHEREAS, the Company considers it essential to the best interests of
its stockholders to foster the continued employment of key management personnel;
and
WHEREAS, the Board recognizes that, as is the case with many publicly
held corporations, the possibility of a Change in Control exists and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders; and
WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Company's management, including the Executive, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definitions of capitalized terms used in this
Agreement are provided in the last Section hereof.
2. Term of Agreement. Subject to the provisions of Section 12.2 hereof,
the Term of this Agreement shall commence on the date hereof and shall continue
in effect through December 31, 2000; provided, however, that commencing on
January 1, 2000 and each January 1 thereafter (an "Extension Date"), the Term
shall automatically be extended for one additional year (i.e., resulting in a
two-year Term on the Extension Date) unless, not later than September 30 of the
year preceding the Extension Date, the Company or the Executive shall have given
notice not to extend the Term; and further provided, however, that if a Change
in Control shall have occurred during the Term, the Term shall expire no earlier
than twenty-four (24) months beyond the month in which such Change in Control
occurred.
-1-
<PAGE> 2
3. Company's Covenants Summarized. In order to induce the Executive to
remain in the employ of the Company and in consideration of the Executive's
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the Severance Payments and the
other payments and benefits described herein. Except as provided in Section 9.1
hereof, no Severance Payments shall be payable under this Agreement unless there
shall have been (or, under the terms of the second sentence of Section 6.1
hereof, there shall be deemed to have been) a termination of the Executive's
employment with the Company following a Change in Control and during the Term.
This Agreement shall not be construed as creating an express or implied contract
of employment and, except as otherwise agreed in writing between the Executive
and the Company, the Executive shall not have any right to be retained in the
employ of the Company.
4. The Executive's Covenants. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event of a Potential Change in
Control during the Term, the Executive will remain in the employ of the Company
until the earliest of (i) a date which is six (6) months from the date of such
Potential Change of Control, (ii) the date of a Change in Control, (iii) the
date of termination by the Executive of the Executive's employment for Good
Reason or by reason of death, Disability or Retirement, or (iv) the termination
by the Company of the Executive's employment for any reason.
5. Compensation Other Than Severance Payments.
5.1 Following a Change in Control and during the Term, during any
period that the Executive fails to perform the Executive's full-time duties with
the Company as a result of incapacity due to physical or mental illness, the
Company shall pay the Executive's full salary to the Executive at the rate in
effect at the commencement of any such period, together with all compensation
and benefits payable to the Executive under the terms of any compensation or
benefit plan, program or arrangement maintained by the Company during such
period, until the Executive's employment is terminated by the Company for
Disability.
-2-
<PAGE> 3
5.2 If the Executive's employment shall be terminated for any reason
following a Change in Control and during the Term, the Company shall pay the
Executive's full salary to the Executive through the Date of Termination at the
rate in effect immediately prior to the Date of Termination or, if higher, the
rate in effect immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, together with all compensation and
benefits payable to the Executive through the Date of Termination under the
terms of the Company's compensation and benefit plans, programs or arrangements
as in effect immediately prior to the Date of Termination or, if more favorable
to the Executive, as in effect immediately prior to the first occurrence of an
event or circumstance constituting Good Reason.
5.3 If the Executive's employment shall be terminated for any reason
following a Change in Control and during the Term, the Company shall pay to the
Executive the Executive's normal post-termination compensation and benefits as
such payments become due. Such post-termination compensation and benefits shall
be determined under, and paid in accordance with, the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements as
in effect immediately prior to the Date of Termination or, if more favorable to
the Executive, as in effect immediately prior to the occurrence of the first
event or circumstance constituting Good Reason.
5.4 Upon the occurrence of a Change in Control all options to acquire
shares of Company stock, all shares of restricted Company stock and all other
equity or phantom equity incentives held by the Executive under any plan of the
Company (including, but not limited to, the Company's 1997 Long Term Incentive
Plan, 1995 Stock Award Plan (and the Stock Matching Programs thereunder), 1993
Stock Option Plan, 1993 Stock Bonus Plan and 1991 Stock Bonus Plan) shall become
immediately vested, exercisable and nonforfeitable and all conditions thereof
(including, but not limited to, any required holding periods) shall be deemed to
have been satisfied, subject however, to the provisions of the applicable plan
or stock option agreement on vesting and the period of exercisability following
a Change in Control.
-3-
<PAGE> 4
6. Severance Payments.
6.1 If the Executive's employment is terminated following a Change in
Control and during the Term, other than (A) by the Company for Cause, (B) by
reason of death or Disability, or (C) by the Executive without Good Reason,
then, the Company shall pay the Executive the amounts, and provide the Executive
the benefits, described in this Section 6.1 ("Severance Payments") and Section
6.2, in addition to any payments and benefits to which the Executive is entitled
under Section 5 hereof. For purposes of this Agreement, the Executive's
employment shall be deemed to have been terminated following a Change in Control
by the Company without Cause or by the Executive with Good Reason, if (i) the
Executive's employment is terminated by the Company without Cause prior to a
Change in Control (whether or not a Change in Control ever occurs) and such
termination was 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, (ii) the Executive terminates his employment for Good Reason prior
to a Change in Control (whether or not a Change in Control ever occurs) and the
circumstance or event which constitutes Good Reason occurs at the request or
direction of such Person described in clause (i), or (iii) the Executive's
employment is terminated by the Company without Cause or by the Executive for
Good Reason and such termination or the circumstance or event which constitutes
Good Reason is otherwise in connection with or in anticipation of a Change in
Control (whether or not a Change in Control ever occurs). For purposes of any
determination regarding the applicability of the immediately preceding sentence,
any position taken by the Executive shall be presumed to be correct unless the
Company establishes to the Committee by clear and convincing evidence that such
position is not correct.
(A) In lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination and in lieu of any severance
benefit otherwise payable to the Executive, the Company shall pay to the
Executive a lump sum severance payment, in cash, equal to three times the
sum of (i) the Executive's base salary as in effect immediately prior to
the Date of Termination or, if higher, in effect immediately prior to the
first occurrence of
-4-
<PAGE> 5
an event or circumstance constituting Good Reason, and (ii) the average
annual bonus earned by the Executive pursuant to any annual bonus or
incentive plan maintained by the Company in respect of the three fiscal
years ending immediately prior to the fiscal year in which occurs the Date
of Termination or, if higher, immediately prior to the fiscal year in which
occurs the first event or circumstance constituting Good Reason; provided,
that if the Executive has not participated in an annual bonus or incentive
plan maintained by the Company for the entirety of such three-year period,
the amount referred to in this clause (ii) shall be calculated using such
lesser number of bonuses as have been actually earned by the Executive in
respect of such lesser period.
(B) For the thirty-six (36) month period immediately following
the Date of Termination, the Company shall arrange to provide the Executive
and his dependents life, disability, accident and health insurance benefits
and perquisites (including, but not limited to, executive life insurance,
club memberships, financial planning and tax preparation, annual physical
examination and charitable contributions), in each case, substantially
similar to those provided to the Executive and his dependents immediately
prior to the Date of Termination or, if more favorable to the Executive,
those provided to the Executive and his dependents immediately prior to the
first occurrence of an event or circumstance constituting Good Reason, at
no greater cost to the Executive than the cost to the Executive immediately
prior to such date or occurrence; provided, however, that, unless the
Executive consents to a different method (after taking into account the
effect of such method on the calculation of "parachute payments" pursuant
to Section 6.2 hereof), such health insurance benefits shall be provided
through a third-party insurer. Benefits otherwise receivable by the
Executive pursuant to this Section 6.1(B) shall be reduced to the extent
benefits of the same type are received by or made available to the
Executive during the thirty-six (36) month period following the Executive's
termination of employment (and any such benefits received by or made
available to the Executive shall be reported to the Company by the
-5-
<PAGE> 6
Executive); provided, however, that the Company shall reimburse the
Executive for the excess, if any, of the cost of such benefits to the
Executive over such cost immediately prior to the Date of Termination or,
if more favorable to the Executive, the first occurrence of an event or
circumstance constituting Good Reason.
(C) Notwithstanding any provision of the Baker Hughes
Incorporated 1995 Employee Annual Incentive Compensation Plan (the "Annual
Incentive Plan"), the Company shall pay to the Executive a lump sum amount,
in cash, equal to the sum of (i) any unpaid incentive compensation which
has been allocated or awarded to the Executive for a completed fiscal year
or other measuring period preceding the Date of Termination under the
Annual Incentive Plan and which, as of the Date of Termination, is
contingent only upon the continued employment of the Executive to a
subsequent date, and (ii) a pro rata portion to the Date of Termination of
the aggregate value of all contingent incentive compensation awards to the
Executive for all then uncompleted periods under the Annual Incentive Plan,
calculated as to each such award by multiplying the award that the
Executive would have earned on the last day of the performance award
period, assuming the achievement, at the expected value target level, of
the individual and corporate performance goals established with respect to
such award, by the fraction obtained by dividing the number of full months
and any fractional portion of a month during such performance award period
through the Date of Termination by the total number of months contained in
such performance award period; provided, however, that if such termination
of employment occurs during the same year in which the Change in Control
occurs, the pro-rata bonus payment referred to in clause (ii) above shall
be offset by any payments received under the Annual Incentive Plan in
connection with such Change in Control.
(D) In addition to the retirement benefits to which the Executive
is entitled under the Company's Thrift Plan (the "Thrift Plan") and the
Company's Supplemental Retirement Plan (the "SRP"), the Company shall
-6-
<PAGE> 7
pay the Executive a lump sum amount, in cash, equal to the present value of
the employer-provided contributions, deferrals and allocations the
Executive would have received had he continued to participate, after the
Date of Termination, in the Thrift Plan and the SRP for three (3)
additional years, assuming for this purpose that (i) the Executive earned
compensation for purposes of the Thrift Plan and SRP during such three-year
period the amount used to calculate the Executive's severance payment under
subparagraph (A) of this Section 6.1, and (ii) the percentages of
contributions, deferrals and allocations made under the Thrift Plan and the
SRP by or on behalf of the Executive during such three-year period are the
same percentages of contributions, deferrals and allocations in effect on
the date of the Change in Control or the Date of Termination, whichever is
more favorable to the Executive.
(E) If the Executive would have become entitled to benefits under
the Company's post-retirement health care or life insurance plans, as in
effect immediately prior to the Date of Termination or, if more favorable
to the Executive, as in effect immediately prior to the first occurrence of
an event or circumstance constituting Good Reason, had the Executive's
employment terminated at any time during the period of thirty-six (36)
months after the Date of Termination, the Company shall provide such
post-retirement health care or life insurance benefits to the Executive and
the Executive's dependents commencing on the later of (i) the date on which
such coverage would have first become available and (ii) the date on which
benefits described in subsection (B) of this Section 6.1 terminate.
(F) The Company shall provide the Executive with outplacement
services suitable to the Executive's position for a period of three years
or, if earlier, until the first acceptance by the Executive of an offer of
employment.
-7-
<PAGE> 8
6.2 (A) Whether or not the Executive becomes entitled to the
Severance Payments, if any of the payments or benefits received or to be
received by the Executive in connection with a Change in Control or the
Executive's termination of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any
Person whose actions result in a Change in Control or any Person affiliated with
the Company or such Person) (such payments or benefits, excluding the Gross-Up
Payment, being hereinafter referred to as the "Total Payments") will be subject
to the Excise Tax, the Company shall pay to the Executive an additional amount
(the "Gross-Up Payment") such that the net amount retained by the Executive,
after deduction of any Excise Tax on the Total Payments and any federal, state
and local income and employment taxes and Excise Tax upon the Gross-Up Payment,
shall be equal to the Total Payments.
(B) For purposes of determining whether any of the Total Payments
will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of
the Total Payments shall be treated as "parachute payments" (within the meaning
of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel ("Tax
Counsel") reasonably acceptable to the Executive and selected by the accounting
firm which was, immediately prior to the Change in Control, the Company's
independent auditor (the "Auditor"), such payments or benefits (in whole or in
part) do not constitute parachute payments, including by reason of section
280G(b)(4)(A) of the Code, (ii) all "excess parachute payments" within the
meaning of section 280G(b)(l) of the Code shall be treated as subject to the
Excise Tax unless, in the opinion of Tax Counsel, such excess parachute payments
(in whole or in part) represent reasonable compensation for services actually
rendered (within the meaning of section 280G(b)(4)(B) of the Code) in excess of
the Base Amount allocable to such reasonable compensation, or are otherwise not
subject to the Excise Tax, and (iii) the value of any noncash benefits or any
deferred payment or benefit shall be determined by the Auditor in accordance
with the principles of sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income tax at the highest marginal rate of federal income taxation
in the calendar year in which
-8-
<PAGE> 9
the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Executive's
residence on the Date of Termination (or if there is no Date of Termination,
then the date on which the Gross-Up Payment is calculated for purposes of this
Section 6.2), net of the maximum reduction in federal income taxes which could
be obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is finally determined to be
less than the amount taken into account hereunder in calculating the Gross-Up
Payment, the Executive shall repay to the Company, within five (5) business days
following the time that the amount of such reduction in the Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to such
reduction (plus that portion of the Gross-Up Payment attributable to the Excise
Tax and federal, state and local income and employment taxes imposed on the
Gross-Up Payment being repaid by the Executive, to the extent that such
repayment results in a reduction in the Excise Tax and a dollar-for-dollar
reduction in the Executive's taxable income and wages for purposes of federal,
state and local income and employment taxes, plus interest on the amount of such
repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. In
the event that the Excise Tax is determined to exceed the amount taken into
account hereunder in calculating the Gross-Up Payment (including by reason of
any payment the existence or amount of which cannot be determined at the time of
the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in
respect of such excess (plus any interest, penalties or additions payable by the
Executive with respect to such excess) within five (5) business days following
the time that the amount of such excess is finally determined. The Executive and
the Company shall each reasonably cooperate with the other in connection with
any administrative or judicial proceedings concerning the existence or amount of
liability for Excise Tax with respect to the Total Payments.
6.3 The payments provided in subsections (A), (C) and (D) of Section
6.1 hereof and in Section 6.2 hereof shall be made not later than the fifth day
following the Date of Termination; provided, however, that if the amounts of
such payments
-9-
<PAGE> 10
cannot be finally determined on or before such day, the Company shall pay to the
Executive on such day an estimate, as determined in good faith by the Executive
or, in the case of payments under Section 6.2 hereof, in accordance with Section
6.2 hereof, of the minimum amount of such payments to which the Executive is
clearly entitled and shall pay the remainder of such payments (together with
interest on the unpaid remainder (or on all such payments to the extent the
Company fails to make such payments when due) at 120% of the rate provided in
section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after the Date of
Termination. In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall constitute a
loan by the Company to the Executive, payable on the fifth (5th) business day
after demand by the Company (together with interest at 120% of the rate provided
in section 1274(b)(2)(B) of the Code), but only to the extent such amount has
not been paid by the Executive pursuant to Section 6.2(C) above. At the time
that payments are made under this Agreement, the Company shall provide the
Executive with a written statement setting forth the manner in which such
payments were calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from Tax
Counsel, the Auditor or other advisors or consultants (and any such opinions or
advice which are in writing shall be attached to the statement).
6.4 The Company also shall pay to the Executive all legal fees and
expenses incurred by the Executive in disputing in good faith any issue
hereunder relating to the termination of the Executive's employment, in seeking
in good faith to obtain or enforce any benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder. Such payments shall be made within five (5) business
days after delivery of the Executive's written requests for payment accompanied
with such evidence of fees and expenses incurred as the Company reasonably may
require.
-10-
<PAGE> 11
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in Control and during the
Term, any purported termination of the Executive's employment (other than by
reason of death) shall be communicated by written Notice of Termination from one
party hereto to the other party hereto in accordance with Section 10 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. Further, a Notice of Termination for Cause is required
to include a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board which was called and held for the purpose of considering
such termination (after reasonable notice to the Executive and an opportunity
for the Executive, together with the Executive's counsel, to be heard before the
Board) finding that, in the good faith opinion of the Board, the Executive was
guilty of conduct set forth in clause (i) or (ii) of the definition of Cause
herein, and specifying the particulars thereof in detail.
7.2 Date of Termination. "Date of Termination," with respect to any
purported termination of the Executive's employment after a Change in Control
and during the Term, shall mean (i) if the Executive's employment is terminated
for Disability, thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time performance of the
Executive's duties during such thirty (30) day period), and (ii) if the
Executive's employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a termination by the Company,
shall not be less than thirty (30) days (except in the case of a termination for
Cause) and, in the case of a termination by the Executive, shall not be less
than fifteen (15) days nor more than sixty (60) days, respectively, from the
date such Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen (15) days after
any Notice of Termination is given, or, if later, prior to the Date of
Termination (as
-11-
<PAGE> 12
determined without regard to this Section 7.3), the party receiving such Notice
of Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be extended until the earlier of (i)
the date on which the Term ends or (ii) the date on which the dispute is finally
resolved, either by mutual written agreement of the parties or by a final
judgment, order or decree of an arbitrator or a court of competent jurisdiction
(which is not appealable or with respect to which the time for appeal therefrom
has expired and no appeal has been perfected); provided, however, that the Date
of Termination shall be extended by a notice of dispute given by the Executive
only if such notice is given in good faith and the Executive pursues the
resolution of such dispute with reasonable diligence.
7.4 Compensation During Dispute. If a purported termination occurs
following a Change in Control and during the Term and the Date of Termination is
extended in accordance with Section 7.3 hereof, the Company shall continue to
pay the Executive the full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to, salary) and continue the
Executive as a participant in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving rise to the dispute
was given or those plans in which the Executive was participating immediately
prior to the first occurrence of an event or circumstance giving rise to the
Notice of Termination, if more favorable to the Executive, until the Date of
Termination, as determined in accordance with Section 7.3 hereof. Amounts paid
under this Section 7.4 are in addition to all other amounts due under this
Agreement (other than those due under Section 5.2 hereof) and shall not be
offset against or reduce any other amounts due under this Agreement.
8. No Mitigation. The Company agrees that, if the Executive's
employment with the Company terminates during the Term, the Executive is not
required to seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to Sections 5, 6 or 7.4 hereof.
Further, the amount of any payment or benefit provided for in this Agreement
(other than Section 6.1(B) hereof but including (but not limited to) Section 7.4
hereof) shall not be reduced by any compensation earned by the Executive as the
result of employment by
-12-
<PAGE> 13
another employer, by retirement benefits, by offset against any amount claimed
to be owed by the Executive to the Company, or otherwise.
9. Successors; Binding Agreement.
9.1 In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Executive to compensation from the Company in the same amount
and on the same terms as the Executive would be entitled to hereunder if the
Executive were to terminate the Executive's employment for Good Reason after a
Change in Control, except that, for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed the Date of
Termination.
9.2 This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive shall
die while any amount would still be payable to the Executive hereunder (other
than amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the executors, personal representatives or administrators of the Executive's
estate.
10. Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed, if to the
Executive, to the address inserted below the Executive's signature on the final
page hereof and, if to the Company, to the address set forth below, or to such
other address as either party may have
-13-
<PAGE> 14
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:
To the Company:
3900 Essex Lane
Suite 1200
Houston, Texas 77027
Attention: General Counsel
11. Miscellaneous. Except as otherwise specifically provided in Section
12.2 below, no provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and signed
by the Executive and such officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any breach by the other
party hereto of, or of any lack of compliance with, any condition or provision
of this Agreement to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. This Agreement supersedes any other agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof which have been made by either party; provided, however,
that this Agreement shall supersede any agreement setting forth the terms and
conditions of the Executive's employment with the Company only in the event that
the Executive's employment with the Company is terminated on or following a
Change in Control, by the Company other than for Cause or by the Executive other
than for Good Reason; and provided further that all agreements otherwise
superseded by this Agreement shall be automatically reinstated with full force
and effect to the extent this Agreement is terminated or otherwise rendered
inapplicable or amended in accordance with Section 12.2 hereof. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Texas. All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of any
applicable withholding
-14-
<PAGE> 15
required under federal, state or local law and any additional withholding to
which the Executive has agreed. The obligations of the Company and the Executive
under this Agreement which by their nature may require either partial or total
performance after the expiration of the Term (including, without limitation,
those under Sections 6 and 7 hereof) shall survive such expiration.
12. Validity; Pooling.
12.1 Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
12.2 Pooling. In the event that (A) the Company is party to a
transaction which is otherwise intended to qualify for "pooling of interests"
accounting treatment, (B) such transaction constitutes a Change in Control
within the meaning of Section 15(G)(III) and (C) individuals who satisfy the
requirements in clauses (i) and (ii) below constitute more than two-thirds (2/3)
of the number of directors of the entity surviving such transaction and the
parent thereof, if any: individuals who (i) immediately prior to such
transaction constitute the Board and (ii) on the date hereof constitute the
Board and any new director (other than a director whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of directors of the Company) whose appointment or election by
the Board or nomination for election by the Company's stockholders was approved
or recommended, by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so approved or
recommended then (a) this Agreement shall, to the extent practicable, be
interpreted so as to permit such accounting treatment, and (b) to the extent
that the application of clause (a) of this Section 12.2 does not preserve the
availability of such accounting treatment, then, to the extent that any
provision or combination of provisions of the Agreement disqualifies the
transaction as a "pooling" transaction (including, if applicable, the entire
Agreement), the Board shall have the right, by sending written notice to the
Executive prior to the Change in Control, to unilaterally amend (without the
consent of the Executive) such provision or provisions
-15-
<PAGE> 16
if and to the extent necessary (including declaring such provision or provisions
to be null and void as of the date hereof) so that such transaction may be
accounted for as a "pooling of interests." All determinations under this Section
12.2 shall be made by the Board prior to the Change in Control, based upon the
advice of the accounting firm whose opinion with respect to "pooling of
interests" is required as a condition to the consummation of such transaction.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. Settlement of Disputes; Arbitration.
14.1 All claims by the Executive for benefits under this Agreement
shall be directed to and determined by the Committee and shall be in writing.
Any denial by the Committee of a claim for benefits under this Agreement shall
be delivered to the Executive in writing within thirty (30) days after written
notice of the claim is provided to the Company in accordance with Section 10 and
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Committee shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Committee a decision of the
Committee within sixty (60) days after notification by the Committee that the
Executive's claim has been denied.
14.2 Any further dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Houston,
Texas in accordance with the rules of the American Arbitration Association then
in effect; provided, however, that the evidentiary standards set forth in this
Agreement shall apply. Judgment may be entered on the arbitrator's award in any
court having jurisdiction. Notwithstanding any provision of this Agreement to
the contrary, the Executive shall be entitled to seek specific performance of
the Executive's right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in connection with this
Agreement.
-16-
<PAGE> 17
15. Definitions. For purposes of this Agreement, the following terms
shall have the meanings indicated below:
(A) "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.
(B) "Auditor" shall have the meaning set forth in Section 6.2 hereof.
(C) "Base Amount" shall have the meaning set forth in section
280G(b)(3) of the Code.
(D) Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act.
(E) "Board" shall mean the Board of Directors of the Company.
(F) "Cause" for termination by the Company of the Executive's
employment shall mean (i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other than any
such failure resulting from the Executive's incapacity due to physical or mental
illness or any such actual or anticipated failure after the issuance of a Notice
of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof)
after a written demand for substantial performance is delivered to the Executive
by the Board, which demand specifically identifies the manner in which the Board
believes that the Executive has not substantially performed the Executive's
duties, or (ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its subsidiaries,
monetarily or otherwise. For purposes of clauses (i) and (ii) of this
definition, (x) no act, or failure to act, on the Executive's part shall be
deemed "willful" unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the Executive's act, or failure to
act, was in the best interest of the Company and (y) in the event of a dispute
concerning the application of this provision, no claim by the Company that Cause
exists shall be given effect unless the Company establishes to the Committee by
clear and convincing evidence that Cause exists.
(G) A "Change in Control" shall be deemed to have occurred if the event
set forth in any one of the following paragraphs shall have occurred:
-17-
<PAGE> 18
(I) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its affiliates) representing 20% or more
of the combined voting power of the Company's then outstanding
securities, excluding any Person who becomes such a Beneficial Owner in
connection with a transaction described in clause (i) of paragraph
(III) below; or
(II) the following individuals cease for any reason to constitute
a majority of the number of directors then serving: individuals who, on
the date hereof, constitute the Board and any new director (other than
a director whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of
directors of the Company) whose appointment or election by the Board or
nomination for election by the Company's stockholders was approved or
recommended by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors on the date hereof or
whose appointment, election or nomination for election was previously
so approved or recommended; or
(III) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any
other corporation, other than (i) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to represent (either
by remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof), in combination with the
ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any subsidiary of the Company,
at least 65% of the combined voting power of the securities of the
Company or such surviving entity or any
-18-
<PAGE> 19
parent thereof outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which no
Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities
Beneficially Owned by such Person any securities acquired directly
from the Company or its Affiliates other than in connection with the
acquisition by the Company or its Affiliates of a business)
representing 20% or more of the combined voting power of the Company's
then outstanding securities; or
(IV) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the Company's
assets to an entity, at least 65% of the combined voting power of the
voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company
immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.
(H) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
-19-
<PAGE> 20
(I) "Committee" shall mean (i) the individuals (not fewer than three in
number) who, on the date six months before a Change in Control, constitute the
Compensation Committee of the Board, plus (ii) in the event that fewer than
three individuals are available from the group specified in clause (i) above for
any reason, such individuals as may be appointed by the individual or
individuals so available (including for this purpose any individual or
individuals previously so appointed under this clause (ii)); provided, however,
that the maximum number of individuals constituting the Committee shall not
exceed six (6).
(J) "Company" shall mean Baker Hughes Incorporated and, except in
determining under Section 15(G) hereof whether or not any Change in Control of
the Company has occurred, shall include any successor to its business and/or
assets which assumes and agrees to perform this Agreement by operation of law,
or otherwise.
(K) "Date of Termination" shall have the meaning set forth in Section
7.2 hereof.
(L) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment, if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the Company
for a period of six (6) consecutive months, the Company shall have given the
Executive a Notice of Termination for Disability, and, within thirty (30) days
after such Notice of Termination is given, the Executive shall not have returned
to the full-time performance of the Executive's duties.
(M) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(N) "Excise Tax" shall mean any excise tax imposed under section 4999
of the Code.
(O) "Executive" shall mean the individual named in the first paragraph
of this Agreement.
(P) "Extension Date" shall have the meaning set forth in Section 2
hereof.
(Q) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express written
-20-
<PAGE> 21
consent) after any Change in Control, or prior to a Change in Control under the
circumstances described in clauses (ii) and (iii) of the second sentence of
Section 6.1 hereof (treating all references in paragraphs (I) through (VII)
below to a "Change in Control" as references to a "Potential Change in
Control"), of any one of the following acts by the Company, or failures by the
Company to act, unless, in the case of any act or failure to act described in
paragraph (I), (V), (VI) or (VII) below, such act or failure to act is corrected
prior to the Date of Termination specified in the Notice of Termination given in
respect thereof:
(I) the assignment to the Executive of any duties inconsistent
with the Executive's status as a senior executive officer of the
Company or a substantial adverse alteration in the nature or status of
the Executive's responsibilities from those in effect immediately prior
to the Change in Control;
(II) a reduction by the Company in the Executive's annual base
salary as in effect on the date hereof or as the same may be increased
from time to time except for across-the-board salary reductions
similarly affecting all senior executives of the Company and all senior
executives of any Person in control of the Company;
(III) the relocation of the Executive's principal place of
employment to a location more than 50 miles from the Executive's
principal place of employment immediately prior to the Change in
Control or the Company's requiring the Executive to be based anywhere
other than such principal place of employment (or permitted relocation
thereof) except for required travel on the Company's business to an
extent substantially consistent with the Executive's present business
travel obligations;
(IV) the failure by the Company to pay to the Executive any
portion of the Executive's current compensation except pursuant to an
across-the-board compensation deferral similarly affecting all senior
executives of the Company and all senior executives of any Person in
-21-
<PAGE> 22
control of the Company, or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such
compensation is due;
(V) the failure by the Company to continue in effect any
compensation plan in which the Executive participates immediately prior
to the Change in Control which is material to the Executive's total
compensation, including but not limited to the Company's 1997 Long Term
Incentive Plan, 1993 Stock Option Plan, 1993 Employee Stock Bonus Plan,
1991 Employee Stock Bonus Plan, 1995 Stock Award Plan (and the 1995,
1996 and 1997 Stock Matching Programs thereunder and any subsequent
Stock Matching Programs in which the Executive participates), 1987
Convertible Debenture Plan and 1995 Employee Annual Incentive
Compensation Plan or any substitute plans adopted prior to the Change
in Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such
plan, or the failure by the Company to continue the Executive's
participation therein (or in such substitute or alternative plan) on a
basis not materially less favorable, both in terms of the amount or
timing of payment of benefits provided and the level of the Executive's
participation relative to other participants, as existed immediately
prior to the Change in Control;
(VI) the failure by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by the
Executive under any of the Company's pension, savings, life insurance,
medical, health and accident, or disability plans in which the
Executive was participating immediately prior to the Change in Control
(except for across the board changes similarly affecting all senior
executives of the Company and all senior executives of any Person in
control of the Company), the taking of any other action by the Company
which would
-22-
<PAGE> 23
directly or indirectly materially reduce any of such benefits or
deprive the Executive of any material fringe benefit or perquisite
enjoyed by the Executive at the time of the Change in Control, or the
failure by the Company to provide the Executive with the number of
paid vacation days to which the Executive is entitled on the basis of
years of service with the Company in accordance with the Company's
normal vacation policy in effect at the time of the Change in Control;
or
(VII) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 7.1 hereof; for purposes of this
Agreement, no such purported termination shall be effective. The
Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to
physical or mental illness.
The Executive's continued employment shall not constitute consent to,
or a waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder.
For purposes of any determination regarding the existence of Good
Reason, any claim by the Executive that Good Reason exists shall be presumed to
be correct unless the Company establishes to the Committee by clear and
convincing evidence that Good Reason does not exist.
(R) "Gross-Up Payment" shall have the meaning set forth in Section 6.2
hereof.
(S) "Notice of Termination" shall have the meaning set forth in Section
7.1 hereof.
(T) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the
-23-
<PAGE> 24
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.
(U) "Potential Change in Control" shall be deemed to have occurred if
the event set forth in any one of the following paragraphs shall have occurred:
(I) the Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control;
(II) the Company or any Person publicly announces an intention to
take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(III) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 15% or more of
either the then outstanding shares of common stock of the Company or
the combined voting power of the Company's then outstanding securities
(not including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its affiliates); or
(IV) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
(V) "Retirement" shall, for purposes of Section 4 hereof, be deemed the
reason for the termination by the Executive of the Executive's employment if
such employment is terminated after completion of ten (10) years of service with
the Company and attainment of age fifty-five (55).
(W) "Severance Payments" shall have the meaning set forth in Section
6.1 hereof.
(X) "SRP" shall have the meaning set forth in Section 6.1 hereof.
(Y) "Tax Counsel" shall have the meaning set forth in Section 6.2
hereof.
(Z) "Term" shall mean the period of time described in Section 2 hereof
(including any extension, continuation or termination described therein).
-24-
<PAGE> 25
(AA) "Thrift Plan" shall have the meaning set forth in Section 6.1
hereof.
(BB) "Total Payments" shall mean those payments so described in Section
6.2 hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date above first written.
BAKER HUGHES INCORPORATED
By:
------------------------------------
Max L. Lukens
Chairman of the Board of Directors,
President & CEO
EXECUTIVE:
---------------------------------------
THOMAS R. BATES
Address:
58 Greenwards Lane
Sugar Land, Texas 77479
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.11
<SEQUENCE>7
<DESCRIPTION>AMEND.NO.1999-1 TO AMENDED 1991 EMP. STOCK BONUS
<TEXT>
<PAGE> 1
EXHIBIT 10.11
AMENDMENT NO. 1999-1 TO THE
AMENDED AND RESTATED
1991 EMPLOYEE STOCK BONUS PLAN
This Amendment No. 1999-1 is made to the Baker Hughes
Incorporated Amended and Restated 1991 Employee Stock Bonus Plan ("the Plan").
Capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Plan.
WHEREAS, Baker Hughes Incorporated (the "Company") has
determined that it is in its best interest and that of its stockholders to amend
the Plan as set forth herein;
NOW, THEREFORE, the Plan is amended as follows:
1. Clauses (ii) and (iii) of the first sentence of Paragraph 5
of the Plan are amended in their entirety to read as follows:
"(ii) the occurrence of a Change in Control other than an
event described only in clause (iii) of the definition of
Change in Control set forth in Paragraph 5 of the Plan, and
(iii) the termination of the eligible employee's employment if
(a) such eligible employee's employment is terminated by the
Company without Cause prior to a Change in Control (whether or
not a Change in Control ever occurs) and such termination was
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, (b) such eligible employee
terminates his or her employment for Good Reason prior to a
Change in Control (whether or not a Change in Control ever
occurs) and the circumstance or event which constitutes Good
Reason occurs at the request or direction of the Person
described in clause (a), (c) such eligible employee's
employment is terminated by the Company without Cause or by
the eligible employee for Good Reason and such termination or
1
<PAGE> 2
the circumstance or event which constitutes Good Reason is
otherwise in connection with or in anticipation of a Change in
Control (whether or not a Change in Control ever occurs) or
(d) such eligible employee's employment is terminated by the
Company without Cause or by the eligible employee for Good
Reason, in either case within 2 years following the occurrence
of a Change in Control described in clause (iii) of the
definition of Change in Control set forth in Paragraph 5 of
the Plan."
.
2 The definition of Change in Control set forth in Paragraph
5 of the Plan is amended in its entirety to read as follows:
"A "Change in Control" shall be deemed to have
occurred if the event set forth in any one of the following
paragraphs shall have occurred:
(i) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person
any securities acquired directly from the Company or its
affiliates) representing 20% or more of the combined voting
power of the Company's then outstanding securities, excluding
any Person who becomes such a Beneficial Owner in connection
with a transaction described in clause (a) of paragraph (iii)
below; or
(ii) the following individuals cease for any reason
to constitute a majority of the number of directors then
serving: individuals who, on the date hereof, constitute the
Board of Directors of the Company and any new director (other
than a director whose initial assumption of office is in
connection with an actual or threatened election contest
relating to the election of directors of the Company) whose
appointment or election by the Board of Directors of the
Company or nomination for
2
<PAGE> 3
election by the Company's stockholders was approved or
recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on
the date hereof or whose appointment, election or nomination
for election was previously so approved or recommended; or
(iii) there is consummated a merger or consolidation
of the Company or any direct or indirect subsidiary of the
Company with any other corporation, other than (a) a merger or
consolidation which would result in the voting securities of
the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity or any parent thereof), in combination
with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or
any subsidiary of the Company, at least 65% of the combined
voting power of the securities of the Company or such
surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, or (b) a merger or
consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or
becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities
Beneficially Owned by such Person any securities acquired
directly from the Company or its Affiliates other than in
connection with the acquisition by the Company or its
Affiliates of a business) representing 20% or more of the
combined voting power of the Company's then outstanding
securities; or
(iv) there is consummated a merger or consolidation
of the Company or any direct or indirect subsidiary of the
Company with any other corporation, other than a merger or
consolidation immediately following which the individuals who
comprise the Board immediately prior thereto constitute at
least a majority of
3
<PAGE> 4
the board of directors of the Company, the entity surviving
such merger or consolidation or any parent thereof (or a
majority plus one member where such board comprises an odd
number of members); or
(v) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets,
other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, at
least 65% of the combined voting power of the voting
securities of which are owned by stockholders of the Company
in substantially the same proportions as their ownership of
the Company immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall not
be deemed to have occurred by virtue of the consummation of
any transaction or series of integrated transactions
immediately following which the record holders of the common
stock of the Company immediately prior to such transaction or
series of transactions continue to have substantially the same
proportionate ownership in an entity which owns all or
substantially all of the assets of the Company immediately
following such transaction or series of transactions."
3 The second sentence of Paragraph 6 of the Plan is amended
by inserting immediately prior to the "." at the end thereof the following:
"other than an event described only in clause (iii) of the
definition of Change in Control set forth in Section 5 of the
Plan; and provided further, that the provisions of this
sentence shall be inapplicable to any sale of Option Shares or
Conversion Shares by an employee holding a Stock Award if such
sale occurs at any time following a Qualifying Termination."
4
<PAGE> 5
4 Clause (ii) of Paragraph 7 of the Plan is amended in its
entirety to read as follows:
"(ii) the occurrence of a Change in Control other than an
event described only in clause (iii) of the definition of
Change in Control set forth in Section 5 of the Plan."
The effective date of this Amendment No. 1999-1 shall be
January 27, 1999; provided, however, that, in the event that (A) the Company is
party to a transaction which is otherwise intended to qualify for "pooling of
interests" accounting treatment, (B) such transaction constitutes a Change in
Control within the meaning of the Plan and (C) individuals who satisfy the
requirements in clauses (i) and (ii) below constitute at least two-thirds (2/3)
of the number of directors of the entity surviving such transaction or any
parent thereof: individuals who (i) immediately prior to such transaction
constitute the Board of Directors of the Company and (ii) on the date hereof
constitute the Board of Directors of the Company and any new director (other
than a director whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of directors of
the Company) whose appointment or election by the Board of Directors of the
Company or nomination for election by the Company's stockholders was approved or
recommended, by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved or recommended
then (a) this Amendment No. 1999-1 shall, to the extent practicable, be
interpreted so as to permit such accounting treatment, and (b) to the extent
that the application of clause (a) of this sentence does not preserve the
availability of such accounting treatment, then, to the extent that any
provision or combination of provisions of this Amendment No. 1999-1 disqualifies
the transaction as a "pooling" transaction (including, if applicable, this
entire Amendment No. 1999-1), the Board of Directors of the Company shall amend
such provision or provisions if and to the extent necessary (including declaring
such provision or provisions to be null and void as of the date hereof) so that
such transaction may be accounted for as a "pooling of interests." All
determinations with respect to this paragraph shall be made by
5
<PAGE> 6
the Company, based upon the advice of the accounting firm whose opinion with
respect to "pooling of interests" is required as a condition to the consummation
of such transaction. Except as herein modified, the Plan shall remain in full
force and effect.
BAKER HUGHES INCORPORATED
By:
-----------------------------------
Name: G.S. Finley
Title: Senior Vice President
and Chief Administrative
Officer
6
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.14
<SEQUENCE>8
<DESCRIPTION>SUPPLEMENTAL RETIREMENT PLAN
<TEXT>
<PAGE> 1
Exhibit 10.14
BAKER HUGHES INCORPORATED
SUPPLEMENTAL RETIREMENT PLAN
Effective Date: January 1, 1989
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
- ------- ----
<S> <C>
I - DEFINITIONS AND CONSTRUCTION. . . . . . . . . . . . . . . . . I-1
II - PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . II-1
III - CONTRIBUTIONS AND ALLOCATIONS
OF INCOME OR LOSS . . . . . . . . . . . . . . . . . . . . . . III-1
IV - INVESTMENT OF FUNDS . . . . . . . . . . . . . . . . . . . . . IV-1
V - BENEFITS. . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
VI - ADMINISTRATION OF THE PLAN. . . . . . . . . . . . . . . . . . VI-1
VII - ADMINISTRATION OF FUNDS . . . . . . . . . . . . . . . . . . . VII-1
VIII - ADOPTING EMPLOYERS. . . . . . . . . . . . . . . . . . . . . . VIII-1
IX - DISCONTINUANCE OF CONTRIBUTIONS OR
TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . IX-1
X - NATURE OF THE PLAN. . . . . . . . . . . . . . . . . . . . . . X-1
XI - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . XI-1
</TABLE>
(i)
<PAGE> 2
BAKER HUGHES INCORPORATED
SUPPLEMENTAL RETIREMENT PLAN
W I T N E S S E T H :
WHEREAS, BAKER HUGHES INCORPORATED (the "Company") and other employing
companies have heretofore adopted the BAKER HUGHES INCORPORATED SUPPLEMENTAL
RETIREMENT PLAN, hereinafter referred to as the "Plan," for the benefit of their
eligible employees; and
WHEREAS, the Company desires to restate the Plan and to amend the Plan in
several respects, intending thereby to provide an uninterrupted and continuing
program of benefits;
NOW THEREFORE, the Plan is hereby restated in its entirety as follows with
no interruption in time, effective as of January 1, 1989, except as otherwise
indicated herein:
I.
DEFINITIONS AND CONSTRUCTION
1.1 Definitions. The capitalized words or terms used in the Plan and which
are not otherwise defined herein shall have the same meanings as such words or
terms have in the Baker Hughes Incorporated Thrift Plan, as the same may be
amended from time to time. Where the following words and phrases appear in the
Plan, they shall have the respective meanings set forth below, unless their
context clearly indicates to the contrary.
(1) Account: An individual account for each Member to which is credited his
contributions and the contributions made by the Employer on his behalf and
which is credited (or debited) for such account's allocation of net income
(or net loss) of the Trust Fund.
(2) Basic Compensation: An amount equal to a Member's "Compensation," as such
term is defined under the Thrift Plan.
I-1
<PAGE> 3
(3) Benefit Commencement Date: With respect to each Member or beneficiary, the
first day of the first period for which such Member's or beneficiary's
benefit is payable to him from the Trust Fund.
(4) Code: The Internal Revenue Code of 1986, as amended.
(5) Company: Baker Hughes Incorporated.
(6) Compensation: The term "Compensation" shall have the same meaning as is
assigned to such term under the Thrift Plan except that a Member's
Compensation (A) shall include amounts which he could have received in cash
in lieu of contributions made on his behalf by the Employer to this Plan
pursuant to Section 3.1 and Section 3.3(a) and (B) shall not be limited to
the maximum amount of compensation that can be considered by the Thrift
Plan pursuant to section 401(a)(17) of the Code. A Member's Compensation
for a Plan Year shall be determined as of the same date his compensation
for such year is determined pursuant to the Thrift Plan and, once
determined, shall be considered to remain unchanged for such year
regardless of job transfers or wage rate changes during such year.
(7) Directors: The Board of Directors of the Company.
(8) Effective Date: January 1, 1989, as to this restatement of the Plan.
(9) Eligible Employee: Any individual who is employed by an Employer and who is
a participant in the Thrift Plan.
(10) Employer: The Company and any other entity which adopts the Plan pursuant
to the provisions of Article VIII.
(11) Excess Compensation: A Member's Excess Compensation for a Plan Year shall
be equal to the amount by which his Compensation for such year exceeds the
maximum amount of compensation that can be considered by the Thrift Plan
for such year pursuant to section 401(a)(17) of the Code.
(12) Fund: A portion of the Trust Fund which is invested in a specified manner.
(13) Limitation: For each Plan Year, the greater of $30,000 or one-fourth of the
dollar limitation in effect under section 415(b)(1)(A) of the Code for such
year.
(14) Member: Any individual who has met the eligibility requirements for
participation in the Plan.
(15) Monthly Excess Compensation: A Member's Monthly Excess Compensation for a
Plan Year shall be equal to one-twelfth of his Excess Compensation for such
year.
I-2
<PAGE> 4
(16) Plan: The Baker Hughes Incorporated Supplemental Retirement Plan, as
amended from time to time.
(17) Plan Administrator: The Company, acting through its delegate.
(18) Plan Year: The twelve-consecutive month period commencing January 1 of each
year.
(19) Thrift Plan: The Baker Hughes Incorporated Thrift Plan, as amended from
time to time.
(20) Trust: The trust established under the Trust Agreement to hold and invest
contributions made under the Plan and from which the Plan benefits will be
distributed (to the extent permitted under the Trust Agreement).
(21) Trust Agreement: The agreement entered into between the Company and the
Trustee establishing the Trust.
(22) Trust Fund: The funds and properties held pursuant to the provisions of the
Trust Agreement, together with all income, profits and increments thereto.
(23) Trustee: The trustee or trustees qualified and acting under the Trust
Agreement at any time.
(24) Valuation Dates: The last business day of each calendar month and any other
interim Valuation Date determined by the Plan Administrator on a
nondiscriminatory basis.
1.2 Number and Gender. Wherever appropriate herein, words used in the
singular shall be considered to include the plural and the plural to include the
singular. The masculine gender, where appearing in this Plan, shall be deemed to
include the female gender.
1.3 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.
I-3
<PAGE> 5
II.
PARTICIPATION
2.1 Eligibility.
(a) Any Eligible Employee shall become a Member upon the first day of
the Plan Year for which the Employer determines that he will have Excess
Compensation.
(b) Any Eligible Employee who does not become a Member pursuant to
Paragraph (a) above shall become a Member upon the first day of the calendar
month for which the Employer determines that his Annual Additions under the
Thrift Plan will equal the Limitation in effect for the Plan Year in which such
month occurs.
(c) Paragraphs (a) and (b) above notwithstanding, an Eligible
Employee who was a participant in the Plan on the day prior to the Effective
Date shall remain a Member of this restatement thereof as of the Effective Date.
2.2 Cessation of Active Participation. Notwithstanding any provision
herein to the contrary, an Eligible Employee who has become a Member of the Plan
shall cease to be an active participant in the Plan immediately upon a change in
his employment status which results in him no longer being eligible to receive
an allocation of contributions under the Thrift Plan. Such an Eligible Employee
shall again become an active participant in the Plan immediately upon becoming
eligible to receive an allocation of contributions under the Thrift Plan as a
result of a subsequent change in his employment status.
III
CONTRIBUTIONS AND ALLOCATIONS OF INCOME OR LOSS
3.1 Member Contributions Attributable to Excess Compensation.
(a) A Member may elect to defer an integral percentage of from 2% to
10% of his Excess Compensation for a Plan Year by having the Employer contribute
the amount so deferred to the Plan. Excess Compensation for a Plan Year not so
deferred by such election shall be received by such Member in cash. A Member's
election to defer an amount of his Excess Compensation pursuant to this Section
shall be made by executing a compensation reduction agreement pursuant to which
the Member authorizes the Employer to reduce his Excess Compensation in the
elected amount and the Employer, in consideration thereof, agrees to contribute
an equal amount to the Plan. The reduction in a Member's Excess Compensation for
a Plan Year pursuant to his election under a compensation reduction agreement
shall be effected by Excess Compensation reductions within such Plan Year
following the effective date of such agreement.
(b) A Member's compensation reduction agreement shall become
effective as of the January 1 which is on or after the election is executed by
the Member and filed with the Employer. A Member's compensation reduction
II-1
<PAGE> 6
agreement shall remain in force and effect for all periods following the date of
its execution until modified or terminated or until such Member terminates his
employment. A Member who has elected to defer a portion of his Excess
Compensation may change his deferral election percentage (within the percentage
limits set forth in Paragraph (a) above), effective as of the first day of any
subsequent Plan Year, by executing and delivering to the Employer a new
compensation reduction agreement within the time period prescribed by the Plan
Administrator.
(c) A Member may cancel his compensation reduction agreement at any
time by executing and delivering to the Employer the form prescribed by the Plan
Administrator. Excess Compensation deferrals by a Member who so cancels his
compensation reduction agreement shall cease as soon as administratively
practicable after the Employer receives such form. A Member who so cancels his
compensation reduction agreement may again elect to defer a portion of his
Excess Compensation, effective as of the first day of any subsequent Plan Year,
by executing and delivering to the Employer a new compensation reduction
agreement within the time period prescribed by the Plan Administrator.
3.2 Employer Contributions Attributable to Excess Compensation.
(a) For each calendar month, the Employer shall contribute on a
Member's behalf an amount which equals 50% of the contributions made pursuant
to Section 3.1 on behalf of such Member during such month not in excess of 6% of
such Member's Excess Compensation for the payroll periods in such month with
respect to which contributions pursuant to Section 3.1 were made.
(b) For each calendar month, the Employer shall also contribute an
additional amount on behalf of each Member who is entitled to an allocation of
Employer Base Contributions under the Thrift Plan for such month. The amount of
each such monthly contribution shall be a percentage of such Member's Monthly
Excess Compensation, if any, with such percentage being equal to the percentage
utilized under the Thrift Plan to determine the Member's Employer Base
Contribution for such month under such plan.
(c) For each calendar month, the Employer shall also contribute an
additional amount on behalf of each Member who is entitled to an allocation of
Employer Supplemental Base Contributions under the Thrift Plan for such month.
The amount of each such monthly contribution shall be a percentage of such
Member's Monthly Excess Compensation, if any, with such percentage being equal
to the percentage utilized under the Thrift Plan to determine the Member's
Employer Supplemental Base Contribution for such month under such plan.
3.3 Contributions for Members Whose Annual Additions under the Thrift Plan
Equal the Limitation.
III-1
<PAGE> 7
(a) For each calendar month in which the Employer determines that a
Member's Annual Additions under the Thrift Plan equal the Limitation in effect
for the Plan Year in which such month occurs, the Employer shall withhold from
such Member's Basic Compensation the amount by which such Member's Cash or
Deferred Contributions and/or Voluntary Contributions to the Thrift Plan are
reduced solely because such member's Annual Additions under the Thrift Plan
equal such Limitation. The amount withheld from a Member's Basic Compensation
pursuant to this Paragraph shall be (1) determined based upon the Member's
elections in effect at the relevant times under the Thrift Plan with respect to
Cash or Deferred Contributions and/or Voluntary Contributions and (2)
contributed by the Employer to the Plan on behalf of such Member.
(b) For each calendar month in which the Employer determines that a
Member's Annual Additions under the Thrift Plan equal the Limitation in effect
for the Plan Year in which such month occurs, the Employer shall also contribute
on such Member's behalf an amount equal to the excess of:
(1) the amount of Employer contributions which would have been
allocated to the accounts of such Member under the Thrift Plan (other than
to his Deferred Income Account) for such month if the provisions of the
Thrift Plan were administered without regard to the limitations imposed by
section 415(c) of the Code on the amount of Annual Additions,
OVER
(2) the amount of Employer contributions which were in fact
allocated to the accounts of such Member under the Thrift Plan (other than
to his Deferred Income Account) for such month.
For purposes of determining the amount of Employer Matching Contributions which
would have been allocated to the account of a Member under the Thrift Plan, the
contributions to the Plan on a Member's behalf pursuant to Paragraph (a) above
shall be deemed to have been made to the Thrift Plan.
3.4 Payments to Trustee. Contributions under the Plan shall be paid by the
Employer directly to the Trustee as soon as practicable. On or about the date of
any such payment, the Plan Administrator shall be informed as to the amount of
such payment. Contributions made by a Member or on the Member's behalf shall be
credited to the Member's Account as received.
3.5 Allocation of Net Income or Loss.
(a) As of each Valuation Date, the Trustee shall determine the fair
market value of the Trust Fund assets and the net income (or net loss) of the
Trust Fund. The net income (or net loss) of each Fund within the Trust Fund
since the next preceding Valuation Date shall be ascertained by the Trustee and
shall be determined on the accrual basis of accounting; provided, however, that
such net income (or net loss) shall include any net increase or net decrease in
III-2
<PAGE> 8
the value of the assets of each such Fund since the next preceding Valuation
Date to the extent not otherwise accrued. As soon as is practicable after each
Valuation Date, the Trustee shall deliver to the Plan Administrator a written
statement of such determination.
(b) For purposes of allocations of net income (or net loss) of the
Trust Fund, each Member's Account shall be divided into subaccounts to reflect
such Member's investment designation in a particular Fund or Funds pursuant to
Article IV. As of each Valuation Date, the Plan Administrator shall adjust the
Account of each Member as follows:
(1) The net income (or net loss) of each Fund, separately and
respectively, shall be allocated among the corresponding subaccounts of the
Members who had such corresponding subaccounts on the next preceding
Valuation Date, and each such corresponding subaccount shall be credited
(or debited) with that portion of such net income (or net loss) which the
value of each such corresponding subaccount on such next preceding
Valuation Date was of the value of all such corresponding subaccounts on
such date; provided, however, that the value of such subaccounts as of the
next preceding Valuation Date shall be reduced by the amount of any
payments made therefrom since the next preceding Valuation Date.
(2) With respect to each Member whose employment is terminated
for any reason, so long as there is any balance in his Account, such
Account shall continue to receive allocations pursuant to this Section;
provided, however, that the value of such Account as of the next preceding
Valuation Date shall be reduced by the amount of any payments made
therefrom since the next preceding Valuation Date.
IV.
INVESTMENT OF FUNDS
On the form prescribed by the Plan Administrator, each Member shall
designate the manner in which the amounts allocated to his Account shall be
invested from among the following options:
OPTION 1 In fixed income or cash investments. Amounts invested under this
Option 1 shall be invested and reinvested by the Trustee primarily
with a view towards steady and dependable income through investment in
savings certificates, savings accounts, certificates of deposit,
short-term money market funds or other similar investments, corporate
bonds and, or other debt obligations and, or other fixed income
securities or assets. Amounts invested under this Option 1 shall be
invested as one Fund referred to as the Fixed Fund.
III-3
<PAGE> 9
OPTION 2 In equity investments. Amounts invested under this Option 2 shall be
invested and reinvested by the Trustee primarily with a view towards
maximum growth and long-term capital appreciation through investment
in common stocks and, or related equity securities or other assets.
Amounts invested under this Option 2 shall be invested as one Fund
referred to as the Investment Fund.
A Member may designate one of such options for all of the contributions to his
Account or he may split the investment of the contributions to his Account
between such options in 25% increments. No other type of designation will be
permitted. If a Member fails to make a designation, then contributions to his
Account shall be invested among the Funds in accordance with the Member's
investment designation in effect at the time of such failure under the Thrift
Plan with respect to contributions being allocated to his accounts maintained
under such Plan; provided, however, that if such failure occurs at a time when
there is either a greater or lesser number of investment funds maintained under
the Thrift Plan than are maintained under the Plan or at a time when the
investment funds maintained under the Thrift Plan are not of similar character
to the Funds maintained under the Plan, then contributions to his Account shall
be invested in the Fixed Fund until such time as the Member designates different
investment options as hereinafter provided.
A Member may change his designated investment option for future
contributions as of any January 1 or July 1 in the manner and on the form
prescribed by the Plan Administrator. Any such change shall be implemented as
soon as administratively practicable.
A Member may elect, as of any January 1 or July 1 and in the manner and on
the form prescribed by the Plan Administrator, to convert his investment
designation with respect to the amounts allocated to his Account prior to the
effective date of such conversion. Any such conversion shall be implemented as
soon as administratively practicable and shall be permitted only while the
Member is an active participant in the Thrift Plan.
V.
BENEFITS
5.1 Amount of Benefit. Upon termination of employment of a Member with the
Employer and all Controlled Entities for any reason, the Member, or, in the
IV-1
<PAGE> 10
event of the death of the Member prior to the Member's Benefit Commencement
Date, the Member's designated beneficiary, shall be entitled to a benefit equal
in value to the balance in the Member's Account as of the Valuation Date next
preceding his Benefit Commencement Date. A Member's employment shall not be
considered to have terminated at any time when the Employer is making
contributions under the Plan on behalf of such Member pursuant to Paragraph (b)
of either Section 3.2 or Section 3.3.
5.2 Time of Payment. Payment of a Member's benefit hereunder shall
commence as soon as administratively feasible after the Valuation Date
coincident with or next succeeding the date the Member or his beneficiary
becomes entitled to a benefit pursuant to Section 5.1.
5.3 Alternative Forms of Benefit Payments. A Member may elect to receive
his benefit payments in any one of the following forms by executing and properly
filing an irrevocable written election with the Employer (the form of such
written election shall be prescribed by the Plan Administrator) on or before the
date he becomes a Member of the Plan:
(a) A lump sum, cash payment;
(b) Annual installment payments for a term certain of either 5, 10 or
15 years payable to the Member or, in the event of such Member's death
prior to the end of such term certain, to his designated beneficiary as
provided in Section 5.4;
(c) Subject to the approval of the Plan Administrator, such other
form of benefit payment as a Member may elect.
In the event a Member fails to timely elect the form in which his benefit
payments are to be made, such benefit payments shall be in the form of annual
installment payments for a term certain of 15 years payable to such Member or,
in the event of such Member's death prior to the end of such term certain, to
his designated beneficiary as provided in Section 5.4; provided, however, that
the Plan Administrator may, in its sole discretion, elect to make such benefit
payments in any other form. If a Member dies prior to his Benefit Commencement
Date and if the Member failed to timely elect the form in which his benefit
payments are to be made, then benefit payments shall be made to the Member's
designated beneficiary in the form described in the preceding sentence. If a
Member dies prior to his Benefit Commencement Date and if the Member did timely
elect the form in which his benefit payments are to be made, then benefit
payments shall be made to the Member's designated beneficiary in the form
elected by the Member.
V-1
<PAGE> 11
5.4 Designation of Beneficiaries.
(a) Each Member 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 Member 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:
(1) If a Member leaves a surviving spouse, his benefit shall be
paid to such surviving spouse;
(2) If a Member leaves no surviving spouse, his benefit shall be
paid to such Member's executor or administrator, or to his heirs at law if
there is no administration of such Member's estate.
5.5 Payment of Benefits. To the extent the Trust Fund has sufficient
assets, the Trustee shall pay benefits to Members or their beneficiaries, except
to the extent the Employer 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
Employer. Any benefit payments made to a Member or for his benefit shall be
debited to such Member's Account. All benefit payments shall be made in cash to
the fullest extent practicable.
5.6 No Withdrawals or Loans. Members shall not be permitted to make
withdrawals from the Plan prior to termination of employment with the Employer
and all Controlled Entities. Subsequent to such termination, Members shall be
permitted to receive benefits under the Plan only as provided in this Article V.
Members shall not at any time be permitted to borrow from the Trust Fund.
5.7 Unclaimed Benefits. In the case of a benefit payable on behalf of a
Member, if the Plan Administrator is unable to locate the Member or beneficiary
to whom such benefit is payable, upon the Plan Administrator's determination
thereof, such benefit shall be forfeited, held in a suspense account and applied
to reduce Employer contributions next coming due. For all Valuation Dates prior
to such application, forfeited amounts held in the suspense account shall not
participate in allocations of the net income (or net loss) of the Trust Fund.
Notwithstanding the foregoing, if subsequent to any such forfeiture the Member
or beneficiary to whom such benefit is payable makes a valid claim for such
benefit, such forfeited benefit shall be restored to the Plan by means of an
additional Employer contribution.
V-2
<PAGE> 12
VI.
ADMINISTRATION OF THE PLAN
6.1 Appointment of Plan Administrator. The general administration of the
Plan shall be vested in the Plan Administrator which shall be appointed by the
Directors.
6.2 Resignation and Removal. At any time during its term of office, the
Plan Administrator may resign by giving written notice to the Directors, such
resignation to become effective upon the appointment of a substitute Plan
Administrator 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, the Plan Administrator may be removed by the Directors.
6.3 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 Member or beneficiary
such records as pertain to that individual's interest in the Plan. The Plan
Administrator shall designate the person or persons who shall be authorized to
sign for the Plan Administrator and, upon such designation, the signature of
such person or persons shall bind the Plan Administrator.
6.4 Indemnity. To the extent permitted by applicable law, the Company
shall indemnify and save harmless the Directors, the Plan Administrator and any
individual serving as Trustee against any and all expenses, liabilities and
claims (including legal fees incurred to 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.
6.5 Self-Interest of Plan Administrator. No delegate of the 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 a delegate of the Plan Administrator is so disqualified to act, the
Directors shall decide the matter in which he is disqualified.
6.6 Compensation and Bonding. The Plan Administrator shall not receive
compensation with respect to its services as Plan Administrator. To the extent
required by applicable law, or required by the Company, the Plan Administrator
shall furnish bond or security for the performance of their duties hereunder.
VI-1
<PAGE> 13
6.7 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, authority
and duty:
(a) to make rules, regulations and bylaws for the administration of
the Plan which are not inconsistent with the terms and provisions hereof,
provided such rules, regulations and bylaws are evidenced in writing and
copies thereof are delivered to the Trustee and to the Company;
(b) to construe all terms, provisions, conditions and limitations of
the Plan;
(c) to correct any defect or supply any omission or reconcile any
inconsistency that may appear in the Plan, in such manner and to such
extent as it shall deem expedient to carry the Plan into effect for the
greatest benefit of all interested parties;
(d) to employ and compensate such accountants, attorneys, investment
advisors and other agents and employees as the Plan Administrator may deem
necessary or advisable in the proper and efficient administration of the
Plan;
(e) to determine all questions relating to eligibility;
(f) to determine the amount, manner and time of payment of any
benefits and to prescribe procedures to be followed by distributees in
obtaining benefits;
(g) to make a determination as to the right of any person to a benefit
under the Plan; and
(h) to receive and review reports from the Trustee as to the financial
condition of the Trust Fund, including its receipts and disbursements.
6.8 Employer to Supply Information. The Employer shall supply full and
timely information to the Plan Administrator relating to the Compensation of all
Members, their ages, their retirement, death or other cause for termination of
employment and such other pertinent facts as the Plan Administrator may require.
The Employer 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. When making a determination in connection with the Plan, the Plan
Administrator shall be entitled to rely upon the aforesaid information furnished
by the Employer.
VI-2
<PAGE> 14
VII.
ADMINISTRATION OF FUNDS
7.1 Payment of Expenses. All expenses incident to the administration of
the Plan and Trust, including but not limited to, legaL accounting, Trustee
fees, expenses of the Plan Administrator and the cost of furnishing any bond or
security required of the Plan Administrator, may be paid by the Employer and, if
not paid by the Employer, shall be paid by the Trustee from the Trust Fund.
7.2 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 shall be held for investment purposes as a
commingled Trust Fund pursuant to the terms of the Trust Agreement. The Plan
Administrator shall maintain an Account in the name of each Member, but the
maintenance of an Account designated as the Account of a Member shall not mean
that such Member 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
Member shall have any title to any specific asset in the Trust Fund.
VIII.
ADOPTING EMPLOYERS
It is contemplated that other corporations, associations, partnerships or
proprietorships may adopt this Plan and thereby become Employers. Any such
entity, whether or not presently existing, may become a party hereto by
appropriate action of its officers without the need for approval of its board of
directors or noncorporate counterpart or of the Company; provided, however, that
such entity must be a Controlled Entity. The provisions of the Plan shall apply
separately and equally to each Employer 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 or the Trustee and the
power to amend or terminate the Plan and Trust Agreement shall be exercised by
the Company alone. Transfer of employment among Employers shall not be
considered a termination of employment hereunder. Any Employer may, by
appropriate action of its officers without the need for approval of its board of
directors or noncorporate counterpart or the Company, terminate its
participation in the Plan. Moreover, the Company may, in its discretion,
terminate an Employer's Plan participation at any time.
VII-1
<PAGE> 15
IX.
DISCONTINUANCE OF CONTRIBUTIONS OR TERMINATION
9.1 Declaration of Intent. The Employer has established the Plan with the
bona fide intention and expectation that from year to year it will be able to,
and will deem it advisable to, make its contributions as herein provided.
However, the Directors realize that circumstances not now foreseen, or
circumstances beyond their control, may make it either impossible or inadvisable
for the Employer to continue to make its contributions to the Trustee.
Therefore, the Directors shall have the power to discontinue contributions to
the Plan, terminate the Plan or partially terminate the Plan at any time
hereafter. The Plan Administrator and the Trustee shall be notified of such
discontinuance, termination or partial termination.
9.2 Administration of Plan in Case of Discontinuance of Contributions or
Termination.
(a) Upon discontinuance or termination, any previously unallocated
contributions and net income (or net loss) shall be allocated among the Accounts
of the Members on such date of discontinuance or termination according to the
provisions of Article III, as if such date of discontinuance or termination were
a Valuation Date. Thereafter, the net income (or net loss) shall continue to be
allocated to the Accounts of the Members until the balances are distributed. In
the event of termination, the date of the final distribution shall be treated as
a Valuation Date.
(b) In the case of a total or partial termination of the Plan, and in
the absence of a Plan amendment to the contrary, the balance of the Account of a
Member for whom the Plan is terminated shall be paid to such Member or his
designated beneficiary in the manner specified by the Plan Administrator, which
may include the payment of a single, lump sum cash payment in full satisfaction
of all such Member's or beneficiary's benefits hereunder.
X.
NATURE OF THE PLAN
The Employer intends and desires by the adoption of the Plan to recognize
the value to the Employer of the past and present services of employees covered
by the Plan and to encourage and assure their continued service with the
Employer by making more adequate provision for their future retirement security.
The establishment of the Plan is made necessary by certain benefit limitations
which are imposed on the Thrift Plan by the Employee Retirement Income Security
Act of 1974 and by the Code. The Plan is intended to constitute an unfunded,
IX-1
<PAGE> 16
unsecured promise of the Employer to pay benefits to each Member (or his
beneficiary) as herein provided out of the Employer's general assets.
Nevertheless, subject to the terms hereof and of the Trust Agreement, the
Employer shall transfer money or other property to the Trustee and the Trustee
shall pay Plan benefits to Members and their beneficiaries out of the Trust
Fund.
As a means of administering the assets of the Plan, the Employer has
adopted the Baker Hughes Incorporated Supplemental Retirement Plan Trust
Agreement pursuant to which Mellon Bank, N.A. serves as Trustee as of the
Effective Date. The Employer shall remain the owner of all assets in the Trust
Fund and the assets shall only be subject to the claims of Employer creditors if
the Employer ever goes into bankruptcy, or becomes insolvent. The term
"insolvent," as used herein shall mean the Employer's inability to pay, within a
reasonable time, its liabilities as they become due. The Director, Employee
Benefits of the Employer, the chief executive officer of the Employer and the
Board of Directors of the Employer shall have the duty to inform the Trustee,
within a reasonable time, if the Employer becomes insolvent or goes into
bankruptcy. 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 Members and hold the assets for the benefit of the
Employer's general creditors. If the Trustee receives a written allegation that
the Employer is bankrupt or insolvent, the Trustee shall suspend payments to the
Members and hold the Trust Fund for the benefit of the Employer's general
creditors, and shall determine within thirty days of receipt of such notice
whether the Employer is bankrupt or insolvent. If the Trustee determines that
the Employer is not bankrupt or insolvent, the Trustee shall resume payments to
the Members. No Member or beneficiary shall have any preferred claim to, or any
beneficial ownership interest in, any assets of the Trust Fund prior to the time
such assets are paid to such Member or beneficiary as benefits.
XI.
MISCELLANEOUS
11.1 Not Contract of Employment. The adoption and maintenance of this Plan
shall not be deemed to be a contract between the Employer and any person or to
be consideration for the employment of any person. Nothing herein contained
shall be deemed to give any person the right to be retained in the employ of the
Employer or to restrict the right of the Employer to discharge any person at any
time nor shall the Plan be deemed to give the Employer the right to require any
person to remain in the employ of the Employer or to restrict any person's right
to terminate his employment at any time.
11.2 Alienation of Interest Forbidden. The interest of a Member or his
beneficiary or beneficiaries hereunder may not be sold, transferred, assigned,
or encumbered in any manner, either voluntarily or involuntarily, and any
X-1
<PAGE> 17
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 person 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.
11.3 Amendment. The Company 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 the Company and all Employers; provided, however, that no amendment may be
made that would impair the rights of a Member with respect to amounts already
allocated to his Account.
11.4 Severability. If any provision of this 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.
11.5 Governing Laws. All provisions of the Plan shall be construed in
accordance with the laws of Texas except to the extent preempted by federal law.
EXECUTED effective as of January 1, 1989.
BAKER HUGHES INCORPORATED
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
XI-1
<PAGE> 18
FIRST AMENDMENT TO
BAKER HUGHES INCORPORATED
SUPPLEMENTAL RETIREMENT PLAN
WHEREAS, BAKER HUGHES INCORPORATED (the "Company") and other Employers have
heretofore adopted the BAKER HUGHES INCORPORATED SUPPLEMENTAL RETIREMENT PLAN
(the "Plan") for the benefit of their eligible employees; and
WHEREAS, the Company amended and restated the Plan on behalf of itself and
the other Employers, effective as of January 1, 1989; and
WHEREAS, the Company desires to further amend the Plan on behalf of itself
and other Employers;
NOW, THEREFORE, the Plan shall be amended as follows, effective as of
April 1, 1993:
1. The second and third paragraphs of Article IV of the Plan shall be
deleted and the following shall be substituted therefor:
"A Member may change his designated investment option for future
contributions as of the first day of any calendar quarter in the manner and
on the form prescribed by the Plan Administrator. Any such change shall be
implemented as soon as administratively feasible.
A Member may elect, as of the first day of any calendar quarter and in
the manner and on the form prescribed by the Plan Administrator, to convert
his investment designation with respect to the amounts allocated to his
Account prior to the effective date of such conversion. Any such conversion
shall be implemented as soon as administratively feasible and shall be
permitted only while the Member is an active participant in the Thrift
Plan."
2. As amended hereby, the Plan is specifically ratified and reaffirmed.
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed this 18th day of March, 1993.
BAKER HUGHES INCORPORATED
By: /s/ Thomas Scott Smith
-------------------------------------
Name: Thomas Scott Smith
Title: Director, Compensation and
Benefits
<PAGE> 19
RESOLUTIONS FOR THE
BAKER HUGHES INCORPORATED
ADMINISTRATIVE COMMITTEE
RESOLVED, that the First Amendment to Baker Hughes Incorporated
Supplemental Retirement Plan, a copy of which is attached and is directed to be
marked for identification and filed with the records of Baker Hughes
Incorporated (the "Company"), be and the same hereby is approved and adopted;
and
RESOLVED, that the appropriate officers of the Company be and they hereby
are authorized and directed to do and perform all such acts and things, to sign
such documents or instruments, and to take all other steps as they or any of
them may deem necessary, advisable, convenient or proper to effectuate the same
and accomplish the purpose of the foregoing.
DATED this 18th day of March, 1993.
/s/ T. Scott Smith
T. Scott Smith ------------------------------------------
Director, Compensation and Benefits
/s/ E. L. Mattson
E. L. Mattson ------------------------------------------
Treasurer
/s/ Phil Rice
Phil Rice ------------------------------------------
Vice President-Human Resources
/s/ G. S. Finley
G. S. Finley ------------------------------------------
Controller
<PAGE> 20
SEPTEMBER 2, 1992
INFORMATION STATEMENT
PURSUANT TO REGULATION SECTION 2520.104-23
1. Name Address of Employer:
Baker Hughes Incorporated
3900 Essex Lane, Suite 1200
Houston, TX 77027
2. Employer Identification No.:
76-0207995
3. The Employer and certain of its subsidiaries and affiliates maintain one
plan, the Baker Hughes Incorporated Supplemental Retirement Plan, primarily
for the purpose of providing deferred compensation for a select group of
management or highly-compensated employees. As of the date hereof, there
are 12 employees participating in the Plan.
/s/ T. Scott Smith
- --------------------------------
T. Scott Smith
Plan Administrator
RESOLUTIONS FOR
T. SCOTT SMITH
AS DELEGATE OF
THE BOARD OF DIRECTORS OF
BAKER HUGHES INCORPORATED
RESOLVED, that the restatement of the Baker Hughes Incorporated
Supplemental Retirement Plan, a copy of which is attached and is directed to be
marked for identification and filed with the records of Baker Hughes
Incorporated (the "Company"), be and the same hereby is approved and adopted on
behalf of the Company and all other adopting employers, effective as of
January 1, 1989; and
RESOLVED, that the appropriate officers of the Company be and they hereby
are authorized and directed to do and perform all such acts and things, to sign
such documents or instruments, and to take all other steps as they or any of
them may deem necessary, advisable, convenient or proper to effectuate the same
and accomplish the purpose of the foregoing, and to acquire and maintain a
qualified and exempt status for the Plan under the applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended.
DATED EFFECTIVE AS OF JANUARY 1, 1989.
/s/ T. Scott Smith
-----------------------------
T. Scott Smith
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.16
<SEQUENCE>9
<DESCRIPTION>AMEND. NO. 1999-1 TO SUPPLEMENTAL RETIREMENT PLAN
<TEXT>
<PAGE> 1
EXHIBIT 10.16
AMENDMENT NO. 1999-1 TO THE
SUPPLEMENTAL RETIREMENT PLAN
This Amendment No. 1999-1 is made to the Baker Hughes
Incorporated Supplemental Retirement Plan ("the Plan"). Capitalized terms used
but not defined herein shall have the meanings ascribed to them in the Plan.
WHEREAS, Baker Hughes Incorporated (the "Company") has
determined that it is in its best interest and that of its stockholders to amend
the Plan as set forth herein;
NOW, THEREFORE, the Plan is amended as follows:
1. Article I, Section 1.1(6) of the Plan is amended in
its entirety to read as follows:
"(6) Change in Control: A Change in Control shall be
deemed to have occurred if the event set forth in any
one of the following paragraphs shall have occurred:
(A) any Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the
Company (not including in the securities beneficially
owned by such Person any securities acquired directly
from the Company or its affiliates) representing 20%
or more of the combined voting power of the Company's
then outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with a
transaction described in clause (i) of paragraph (C)
below; or
(B) the following individuals cease for any
reason to constitute a majority of the number of
directors then serving: individuals who, on the date
hereof, constitute the Directors and any new director
(other than a
1
<PAGE> 2
director whose initial assumption of office is in
connection with an actual or threatened election
contest relating to the election of directors of the
Company) whose appointment or election by the
Directors or nomination for election by the Company's
stockholders was approved or recommended by a vote of
at least two-thirds (2/3) of the directors then still
in office who either were directors on the date
hereof or whose appointment, election or nomination
for election was previously so approved or
recommended; or
(C) there is consummated a merger or
consolidation of the Company or any direct or
indirect subsidiary of the Company with any other
corporation, other than (i) a merger or consolidation
which would result in the voting securities of the
Company outstanding immediately prior to such merger
or consolidation continuing to represent (either by
remaining outstanding or by being converted into
voting securities of the surviving entity or any
parent thereof), in combination with the ownership of
any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any
subsidiary of the Company, at least 65% of the
combined voting power of the securities of the
Company or such surviving entity or any parent
thereof outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation
effected to implement a recapitalization of the
Company (or similar transaction) in which no Person
is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not
including in the securi-
2
<PAGE> 3
ties Beneficially Owned by such Person any securities
acquired directly from the Company or its affiliates
other than in connection with the acquisition by the
Company or its affiliates of a business) representing
20% or more of the combined voting power of the
Company's then outstanding securities; or
(D) there is consummated a merger or
consolidation of the Company or any direct or
indirect subsidiary of the Company with any other
corporation, other than a merger or consolidation
immediately following which the individuals who
comprise the Board immediately prior thereto
constitute at least a majority of the board of
directors of the Company, the entity surviving such
merger or consolidation or any parent thereof (or a
majority plus one member where such board comprises
an odd number of members); or
(E) the stockholders of the Company approve
a plan of complete liquidation or dissolution of the
Company or there is consummated an agreement for the
sale or disposition by the Company of all or
substantially all of the Company's assets, other than
a sale or disposition by the Company of all or
substantially all of the Company's assets to an
entity, at least 65% of the combined voting power of
the voting securities of which are owned by
stockholders of the Company in substantially the same
proportions as their ownership of the Company
immediately prior to such sale.
Notwithstanding the foregoing, a "Change in
Control" shall not be deemed to have occurred by
virtue of the consummation of any transaction or
series of integrated transactions
3
<PAGE> 4
immediately following which the record holders of the
common stock of the Company immediately prior to such
transaction or series of transactions continue to
have substantially the same proportionate ownership
in an entity which owns all or substantially all of
the assets of the Company immediately following such
transaction or series of transactions.
For purposes of this Article I, Section
1.1(6) only, the term "affiliate" shall have the
meaning set forth in Rule 12b-2 promulgated under
Section 12 of the Exchange Act."
2 The last paragraph Article V, Section 5.2 of the Plan
is amended in its entirety to read as follows:
"Notwithstanding the foregoing, in the event of a
Change in Control other than an event described only in clause
(C) of Article I, Section 1.1(6) of the Plan, each Member's
Accounts created pursuant to this Plan, including each
Member's General Account and Base Contribution Account, shall
become fully vested in each such Member. A Member's Accounts
shall also become fully vested in such Member if (1) such
Member's employment is terminated by the Company without Cause
prior to a Change in Control (whether or not a Change in
Control ever occurs) and such termination was 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, (2) such Member terminates his or her
employment for Good Reason prior to a Change in Control
(whether or not a Change in Control ever occurs) and the
circumstance or event which constitutes Good Reason occurs at
the request or direction of the Person described in clause
(1),
4
<PAGE> 5
(3) such Member's employment is terminated by the Company
without Cause or by the Member for Good Reason and such
termination or the circumstance or event which constitutes
Good Reason is otherwise in connection with or in anticipation
of a Change in Control (whether or not a Change in Control
ever occurs) or (4) such Member's employment is terminated by
the Company without Cause or by the Member employee for Good
Reason, in either case within 2 years following the occurrence
of a Change in Control described in clause (C) of the
definition of Change in Control set forth in Article I,
Section 1.1(6) of the Plan."
The effective date of this Amendment No. 1999-1 shall be
January 27, 1999; provided, however, that, in the event that (A) the Company is
party to a transaction which is otherwise intended to qualify for "pooling of
interests" accounting treatment, (B) such transaction constitutes a Change in
Control within the meaning of the Plan and (C) individuals who satisfy the
requirements in clauses (i) and (ii) below constitute at least two-thirds (2/3)
of the number of directors of the entity surviving such transaction or any
parent thereof: individuals who (i) immediately prior to such transaction
constitute the Directors and (ii) on the date hereof constitute the Directors
and any new director (other than a director whose initial assumption of office
is in connection with an actual or threatened election contest relating to the
election of directors of the Company) whose appointment or election by the
Directors or nomination for election by the Company's stockholders was approved
or recommended, by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so approved or
recommended then (a) this Amendment No. 1999-1 shall, to the extent practicable,
be interpreted so as to permit such accounting treatment, and (b) to the extent
that the application of clause (a) of this sentence does not preserve the
availability of such accounting treatment, then, to the extent that any
provision or combination of provisions of this Amendment No. 1999-1 disqualifies
the transaction as a "pooling" transaction (including, if
5
<PAGE> 6
applicable, this entire Amendment No. 1999-1), the Directors shall amend such
provision or provisions if and to the extent necessary (including declaring such
provision or provisions to be null and void as of the date hereof) so that such
transaction may be accounted for as a "pooling of interests." All determinations
with respect to this paragraph shall be made by the Company, based upon the
advice of the accounting firm whose opinion with respect to "pooling of
interests" is required as a condition to the consummation of such transaction.
Except as herein modified, the Plan shall remain in full force and effect.
BAKER HUGHES INCORPORATED
By:
--------------------------------
Name: G.S. Finley
Title: Senior Vice President
and Chief Administrative
Officer
6
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.17
<SEQUENCE>10
<DESCRIPTION>EXECUTIVE SEVERANCE POLICY
<TEXT>
<PAGE> 1
Exhibit 10.17
POLICY: Baker Hughes Incorporated EFFECTIVE: October 1, 1988
(LOGO) Executive Severance Policy REVISED: September 1, 1992
APPROVED BY: J. D. Woods PAGE: 1 of 2
- --------------------------------------------------------------------------------
POLICY: Baker Hughes Incorporated ("BHI")
Executive Severance Policy (the "Policy")
SCOPE: This Policy covers all U.S.-based Executive Salary Grade System
employees (the "Executives") of Baker Hughes Incorporated, its
divisions, subsidiaries and BHI-controlled affiliates (the
"Company").
PURPOSE: To have a uniform Policy regarding severance benefits for all
U.S.-based Company Executives on the Executive Salary Grade
System. This Policy is intended to afford the specified
Executives whose employment is terminated for reasons specified
below an income stream for a fixed time period while such
Executives actively seek and obtain gainful employment or become
self-employed.
ELIGIBILITY: Executives shall be eligible for the benefits under this Policy
if (i) their employment is terminated because their position is
eliminated, or (ii) their employment is terminated in conjunction
with an acquisition, merger, spinoff, reorganization (either
business or personnel), facility closing or a discontinuance of
operations of the division in which such Executives are employed.
Executives shall not be eligible for the benefits under this
policy if they are terminated for any other reason, or if they
resign or retire. Executives shall not be eligible for the
benefits under this Policy if, in the event of an acquisition or
merger, they are offered a position by BHI or the successor
company at the same base salary at a work location within fifty
(50) miles of their current work location.
BENEFITS: Eligible Executives shall be eligible for the severance payments
described in the chart below and the attached sample Letter of
Explanation (the "Letter").
REQUIREMENTS: In order to receive the benefits under this Policy, such
Executives must agree in writing to a Settlement Agreement and
General Release (the "Agreement") in advance of receiving any
benefits (sample attached). Such Executives will not receive any
of the described severance benefits or any other severance
benefits in the absence of executing and agreeing to a Letter and
Agreement.
<PAGE> 2
POLICY: Baker Hughes Incorporated Executive Severance Policy
PAGE: 2 of 2
- --------------------------------------------------------------------------------
MISCELLANEOUS: The Company is an "employment at will" employer. Employees have
the right to resign their positions "at will" and the Company has
the right to terminate an employee "at will", with or without
notice of cause. No employee's "at will" status may be modified
except in a written contract executed by BHI's President.
The benefits described in this Policy and in the Letter shall be
interpreted and administered by BHI's Vice President of Human
Resources in accordance with the terms and conditions of the
various benefit plans described in the Letter.
Eligible Executives under this Policy may request outplacement
services but eligibility for such services will be determined at
the sole discretion of BHI's Vice President of Human Resources.
The benefits outlined in this Policy and the Letter supersede,
negate and replace all other benefits the Company has offered or
may offer to other Company employees, including those offered by
the division where such Executives are employed.
The benefits under this Policy and the Letter may be amended,
expanded or discontinued at any time at the sole discretion of
BHI, with or without notice.
The number of months of severance pay for such Executives is
indicated below by salary grade. All other benefits are described
in the Letter.
Salary Grade No. of Months
10-12 3
13-14 6
15-16 9
17-18 12
19-22 15
23 and above 18
[Form of Letter of Explanation]
SAMPLE ONLY
Date
<PAGE> 3
Name
Address
City, State Zip
RE: Letter of Explanation (the "Letter")
Baker Hughes Incorporated ("BHI")
Executive Severance Policy (the "Policy")
Dear :
----------------
It has been determined you are eligible for certain benefits under the above
referenced Policy upon termination of your employment with (the
"Company"). The Effective Date of your termination is .
Leave of Absence
1. You will be granted a ( ) month leave of absence beginning on
the Effective Date. During the leave of absence, the Company or BHI
will pay your salary of $ per month until you secure gainful
employment or become self-employed as an owner, partner, shareholder,
officer or director of a business for profit, whichever occurs first.
In the event you secure gainful employment or become self-employed and
earn less than your present salary, the Company or BHI will pay you the
difference from the date your new employment or self-employment
commences until the expiration of your leave of absence. Earnings
include all compensation, including but not limited to, wages,
salaries, bonuses, severance pay or net earnings from self-employment,
as determined for Internal Revenue purposes, which you earn during your
leave of absence.
2. During the period of your leave of absence, the group insurance
programs for medical, dental and life in which you are currently
enrolled will be continued in the normal course. All short-term
disability insurance and long-term disability insurance coverage shall
cease as of the Effective Date. All benefits for medical, dental and
life shall cease on the expiration of the term of your leave of absence
or when other medical, dental and life insurance coverage becomes
available to you when you secure gainful employment or become
self-employed as an owner, partner, shareholder, officer, or director of
a business for profit, whichever occurs first. Upon termination of your
coverage, you may be eligible to buy continuation coverage under the
terms and for the period mandated by federal law.
<PAGE> 4
Name
Date
Page 2
For purposes of paragraphs 1 and 2 of this letter, the terms
"self-employed" and "self-employment" shall mean activities in which
your personal services are a material income-producing factor of a
business for profit and shall exclude investments, other passive
activities or any other activity in which capital is a material
income-producing factor, irrespective of your degree of ownership as an
owner, partner, shareholder or degree of control as an officer or
director of such activity or investment.
3. You will be allowed, at your option, to continue to participate in the
BHI Employee Thrift Plan in accordance with the terms of the plan
throughout the term of your leave of absence as long as you are
receiving sufficient income from BHI or the Company to meet the minimum
payroll deduction participation requirement. No contributions will be
accepted during your leave of absence from any source other than income
from BHI or the Company. All benefits, contributions or disbursements,
if any, which accrued under that plan during your employment will be
awarded, vested or paid in accordance with the provisions of that plan
as of the expiration of the term of your leave of absence.
4. You will be allowed, at your option, to continue to participate in the
BHI Employee Stock Purchase Plan in accordance with the terms of the
plan throughout the term of your leave of absence as long as you are
receiving sufficient income from BHI or the Company to meet the minimum
payroll deduction participation requirement. No contributions will be
accepted during your leave of absence from any source other than income
from BHI or the Company. The expiration of the term of your leave of
absence will also terminate Employee Stock Purchase Plan eligibility,
with vesting and distribution, if any, being determined in accordance
with the provisions of that plan.
5. During your leave of absence, your rights, if any, under the BHI
Employee Stock Option Plan, and/or the BHI Convertible Debenture Plan,
will continue pursuant to the terms of those plans. No new options or
debenture grants will be awarded to you after the Effective Date. You
will be permitted to exercise or convert any option rights or
convertible debenture rights awarded to you prior to the Effective Date
for a period of up to three (3) months from the expiration of your
leave of absence or the normal expiration date of these rights,
whichever occurs first, but only to the extent these rights are vested
or convertible at the end of the above referenced time periods. If any
of your convertible debentures remain unconverted at the end of the
period in which they can be exercised, BHI will have the right to
repurchase the debentures for their face value.
<PAGE> 5
Name
Date
Page 3
6. Upon expiration of your leave of absence, you will be paid for vacation
earned but not taken as of the Effective Date. This payment will be
limited to a maximum of six (6) weeks earned but unused vacation and
specifically excludes payment for any vacation which was awarded under
the BHI Executive Perquisite Plan. You will not be eligible to receive
payment for vacation accrued but not earned as of the Effective Date.
You will not accrue or earn vacation time, or remuneration in lieu
thereof, during your leave of absence.
7. Any bonuses determined with reference to formal written objectives
shall be paid pro-rata as of the Effective Date based on your number of
months of active employment (i.e., bonuses will not accrue during your
leave of absence) completed during the fiscal year in which the
Effective Date falls. The bonus, if any, will be determined at the
Company's sole discretion based on interim results to the Effective
Date considering the following:
. Progress of the Company towards completion of its bonus goals for
the fiscal Year.
. Satisfactory performance related to the bonus plan for the most
recently completed quarter.
. Subject to the successful completion of the year-end audit of the
financial statements of the Company by its outside auditor and the
BHI Internal Audit Department.
8. During the term of your leave of absence, you will be permitted the
continued use of any Company vehicle assigned to you in accordance with
the Company's existing policy. Within thirty (30) days of the
termination of your leave of absence, or upon acceptance of other
employment or self-employment, you will be permitted to purchase any
vehicle assigned to you at the then fair market value of the vehicle as
determined by the Company. No new vehicle will be provided during your
leave of absence. Reasonable gasoline and maintenance expenses will be
reimbursed as submitted and approved on monthly expense reports in
accordance with the Company's existing policy.
9. All payments for monthly club memberships or other perquisites will
cease as of the Effective Date and said memberships or other Company
property, including Company credit cards, will be immediately returned
to the Company; provided, however, you will have the option of
purchasing said memberships at their fair market value as determined by
the Company.
<PAGE> 6
Name
Date
Page 4
10. The benefits described above supersede, negate and replace any other
benefits offered by the Company to you or other Company employees.
Issues regarding the interpretation, implementation or administration
of the benefits described above will be resolved by BHI's Vice
President of Human Resources, the appropriate BHI Group President and
BHI's President and Chief Executive Officer. The benefits awarded above
will be administered by BHI's Vice President of Human Resources.
11. BHI, at its sole discretion, may offer outplacement services to you if
such services are requested by you and it is determined by BHI's Vice
President of Human Resources that you would benefit from this kind of
service. The outplacement counselor will be chosen by BHI and costs
associated with this service will be for BHI's account.
12. By executing this letter you agree and accept the fact that the Company
is an "employment at will" employer and that as such an employee has
the right to resign his position "at will" and the Company has the
right to terminate an employee "at will".
13. Payment of the above severance benefits is contingent upon your
executing and returning the attached Settlement Agreement and General
Release (the "Agreement"). You are encouraged to consult an attorney
before executing this Letter and the attached Agreement if that is your
desire.
Conclusion
If the above reflects your understanding of the severance arrangement, please
indicate your approval and acceptance by affixing your signature in the space
provided below and returning the original to me retaining a copy for your files.
Sincerely,
- -----------------------------
Accepted, Approved and Agreed to this day of
, 19 .
- ------------------------------
Signature
- ------------------------------
Typed or Printed Name
<PAGE> 7
SETTLEMENT AGREEMENT AND GENERAL RELEASE
THIS SETTLEMENT AGREEMENT AND GENERAL RELEASE (the "Agreement") is made and
entered into by and between (hereinafter referred to as
"Employee") and BAKER HUGHES INCORPORATED and its subsidiaries and affiliates
(hereinafter referred to as the "Company").
W I T N E S S E T H:
WHEREAS, the Employee's active service with the Company has or will soon
terminate; and
WHEREAS, the Company has offered certain benefits to the Employee under the
provisions of the Company's Executive Severance Policy (the "Policy") and the
attendant Letter of Explanation (the "Letter") as consideration to the Employee
to enter into this Agreement; and
WHEREAS, the Employee and the Company desire to settle fully and finally
all difference between them including, but in no way limited to, any differences
that might arise out of Employee's employment with the Company and the
termination thereof;
NOW, THEREFORE, in consideration of the premises and mutual promises herein
contained, and in conjunction with the Policy and the Letter, it is agreed as
follows:
FIRST: This Agreement shall not in any way be construed as an admission by
the Company that it has acted wrongfully with respect to the Employee or any
other person, or that the Employee has any rights whatsoever against the
Company, and the Company specifically disclaims any liability to or wrongful
acts against the Employee or any other person, on the part of itself, its
employees or its agents.
SECOND: The Employee represents, understands and agrees that his/her active
employment with the Company has or will soon terminate, and that he/she will
not apply for or otherwise seek employment with the Company at any time.
THIRD: The Employee further agrees that during any period in which he/she
is receiving benefits under the Policy or the Letter, he/she will not solicit or
participate in or assist in any way in the solicitation or recruitment, directly
or indirectly, of any Company employees or customers. Additionally, the Employee
agrees that during any period the Employee is receiving benefits under the
Policy or the Letter, the Employee shall not engage in any business or venture
or become employed by any person or entity which engages in a business activity
which competes, directly or indirectly, with the business activities of the
Company. In view of the nature of the Employees's employment and the information
and trade secrets which the Employee has received during the course of his/her
employment, the Employee likewise agrees that the Company would be irreparably
harmed by any violation or threatened violation of this Agreement, and that the
Company shall be entitled to injunctive relief prohibiting the Employee from any
violation or threatened violation of this Agreement.
<PAGE> 8
FOURTH: The Employee represents and agrees that he/she fully understands
his/her right to discuss all aspects of this Agreement with his/her private
attorney, that to the extent, if any, that he/she desires, he/she has availed
himself/herself of this right, that he/she has carefully read and fully
understands all of the provisions of this Agreement and that he/she is
voluntarily entering into this Agreement.
FIFTH: As a material inducement to the Company to enter into this
Agreement, the Employee hereby irrevocably and unconditionally releases, acquits
and forever discharges the Company and each of the Company's owners,
stockholders, predecessors, successors, assigns, agents, directors, officers,
employee's representatives and attorneys of such divisions, subsidiaries,
affiliates (and agents, directors, officers, employees and attorneys of such
divisions, subsidiaries and affiliates), and all persons acting by, through,
under or in concert with any of them (collectively "Releasees"), or any of them,
from any and all charges, complaints, claims, liabilities, obligations,
promises, agreements, controversies, damages, actions, causes of action, suits,
rights, demands, costs, losses, debts and expenses (including attorneys' fees
and costs actually incurred) of any nature whatsoever, known or unknown,
suspected or unsuspected, including, but not limited to, rights arising out of
alleged violations of any contracts, express or implied, any covenant of good
faith and fair dealing, express or implied, or any tort, or any legal
restrictions on the Company's right to terminate employees, or any federal,
state or other governmental statute, regulation, or ordinance, including,
without limitation, Title VII of the Civil Rights Act of 1964 and the Federal
Age Discrimination in Employment Act, which the Employee now has, owns or holds,
or claims to have, own or hold, or which the Employee at any time heretofore
had, owned or held, or claimed to have, own or hold, or which the Employee at
any time hereinafter may have, own or hold, or claim to have, own or hold
against each or any of the Releasees. In addition, the Employee waives all
rights and benefits afforded by any state laws which provide in substance that a
general release does not extend to claims which a person does not know or
suspect to exist in his/her favor at the time of executing the release which, if
known by him/her, must have materially affected his/her settlement with the
other person. The only exception to the foregoing shall be claims for wages and
benefits specifically promised under the Policy and the Letter.
SIXTH: The Employee represents and acknowledges that in executing the
Agreement he/she does not rely and has not relied upon any representation or
statement, oral or written, not set forth herein made by any of the Releasees or
by any of the Releasees' agents, representatives or attorneys with regard to the
subject matter, basis or effect of this Agreement or otherwise.
-2-
<PAGE> 9
This Agreement, the Policy and the Letter sets forth the entire agreement
between the parties hereto, and fully supersedes any and all prior agreements or
understandings, oral or written, between the parties hereto pertaining to the
subject matter hereof.
This Agreement, the Policy and the Letter shall be construed and
interpreted in accordance with the laws of the State of Texas with venue for
litigation being in Houston, Texas.
PLEASE READ CAREFULLY. THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND
UNKNOWN CLAIMS.
EXECUTED at (city), (state),
this day of ,19 .
-----------------------------
-----------------------------
Name Printed
EXECUTED at (city), (state),
this day of ,19 .
BAKER HUGHES INCORPORATED
BY:
-------------------------
-----------------------------
Name Printed
-3-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.18
<SEQUENCE>11
<DESCRIPTION>1993 STOCK OPTION PLAN
<TEXT>
<PAGE> 1
EXHIBIT 10.18
BAKER HUGHES INCORPORATED
1993 STOCK OPTION PLAN
ARTICLE I
INTRODUCTION
1. PURPOSE. This 1993 Stock Option Plan, which shall be known as the "1993
STOCK OPTION PLAN" and which is hereinafter referred to as the "PLAN," is
intended to promote the interests of Baker Hughes Incorporated ("COMPANY") and
its stockholders by encouraging employees of the Company and its subsidiaries
and non-employee directors of the Company to acquire or increase their equity
interest in the Company, thereby giving them an added incentive to work toward
the continued growth and success of the Company. The Board of Directors also
contemplates that through the adoption of the Plan, the Company, its
subsidiaries and affiliated entities will be better able to compete for the
services of personnel needed for the continued growth and success of the
Company.
2. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided in Article
I, Section 4, Article II, Paragraph 3(e), Article III, Paragraph 3(e), and
Article IV, Paragraph 5(e), the aggregate number of shares of Common Stock, $1
par value per share, of the Company ("COMMON STOCK") to be delivered upon
exercise of all options granted under the Plan shall not exceed 6,500,000
shares. In the event the number of shares to be delivered upon the exercise in
full of any option granted under the Plan is reduced for any reason whatsoever
or in the event any option granted under the Plan can no longer under any
circumstances be exercised, the number of shares no longer subject to such
option shall thereupon be released from such option and shall thereafter be
available to be re-optioned under the Plan. Shares issued pursuant to the
exercise of options granted under the Plan shall be fully paid and
nonassessable.
3. ADMINISTRATION OF THE PLAN. Subject to the provisions of the Plan, the
Compensation Committee of the Board of Directors of the Company (the
"COMMITTEE") shall interpret the Plan and all options granted under the Plan,
shall make such rules as it deems necessary for the proper administration of
the Plan, shall make all other determinations necessary or advisable for the
administration of the Plan and shall correct any defect or supply any omission
or reconcile any inconsistency in the Plan or in any option granted under the
Plan in the manner and to the extent that the Committee deems desirable to
carry the Plan or any option into effect. Any action taken or determination
made by the Committee pursuant to this and the other paragraphs of the Plan
shall be conclusive on all parties. The act or determination of a majority of
the Committee shall be deemed to be the act or determination of the Committee.
The Committee shall consist of at least three members of the Board of
Directors of the Company appointed by and holding office during the pleasure of
the Board of Directors of the Company. Other than options granted to Non-
Employee Directors (as hereinafter defined) pursuant to Article IV, no options
may be granted under the Plan to any member of the Committee during the term of
1
<PAGE> 2
his membership on the Committee. No person shall be eligible to serve on the
Committee unless he is then a "disinterested person" within the meaning of
Paragraph (d)(3) of Rule 16b-3 ("RULE 16B-3") promulgated under the Securities
Exchange Act of 1934, as amended (the "ACT"), if and as the Rule is then in
effect. The members of the Committee shall be solely "outside directors,"
within the meaning of section 162(m) of the Internal Revenue Code of 1986, as
amended (the "CODE") and applicable interpretive authority thereunder.
4. AMENDMENT AND DISCONTINUANCE OF THE PLAN. The Board of Directors of the
Company may amend, suspend or terminate the Plan; provided, however, that each
such amendment of the Plan (a) extending the period within which options may be
granted under the Plan, (b) increasing the aggregate number of shares of Common
Stock to be optioned under the Plan except as provided in Article II, Paragraph
3(e), Article III, Paragraph 3(e), Article IV, Paragraph 5(e) and the next
succeeding sentence, (c) changing the class of employees to whom options may be
granted under Article II or III, (d) materially increasing the benefits to
optionees under the Plan, (e) modifying the provisions of Article IV, or (f)
granting options to Non-Employee Directors other than pursuant to Article IV,
shall, in each case, be subject to approval by the stockholders of the Company;
provided, further, however, that no amendment, suspension or termination of the
Plan may cause the Plan to fail to meet the requirements of Rule 16b-3 or may,
without the consent of the holder of an option granted under Article II, III, or
IV, terminate such option or adversely affect such person's rights in any
material respect (unless such change is required in order to cause the benefits
under the Plan to qualify as "performance based compensation" within the meaning
of section 162(m) of the Code and applicable interpretive authority thereunder).
The Board of Directors of the Company may increase the aggregate number of
shares of Common Stock that may be issued under the Plan provided that the full
amount of such increase shall be reserved solely for issuance as provided in
Article I, Paragraph 5(a), and provided that the number of shares issuable to
persons subject to Section 16(a) of the Act in connection with such increases
shall not, in the aggregate, exceed 650,000 shares.
5. GRANTING OF OPTIONS TO EMPLOYEES. The Committee shall have authority to
grant, prior to the expiration date of the Plan, to employees of the Company
and its subsidiaries (as defined in section 424 of the Code) ("EMPLOYEE
OPTIONEES"), options to purchase, on the terms and conditions hereinafter set
forth in Articles II and III, authorized but unissued, or reacquired, shares of
Common Stock as follows:
(a) to a broad-based group of Employee Optionees, including those
described in Paragraph 5(b) below, options granted pursuant to Article II,
provided such grants under this Paragraph 5(a) shall, unless increased by
the Board of Directors, be limited to options to purchase 1,500,000 shares
of Common Stock and shall be made only to those Employee Optionees, in such
amounts and at such times as determined in the discretion of the Committee;
and
2
<PAGE> 3
(b) to Employee Optionees who are key employees (including officers and
directors who are also key employees), options granted pursuant to Article
II and/or Article III, provided such grants shall be made only to those
Employee Optionees, in such amounts and at such times as determined in the
discretion of the Committee, and, for this purpose, the Committee may
consider the Employee Optionee's office or position, degree of
responsibility for and contribution to the growth and success of the
Company, length of service, age, promotions, potential and any other
factors which it may deem relevant.
Options granted to Employee Optionees under Article III shall be "incentive
stock options," within the meaning of section 422(b) of the Code, and are
hereinafter referred to as "incentive stock options." All other options granted
to Employee Optionees under the Plan shall be granted pursuant to Article II,
and are hereinafter referred to as "nonqualified options." Notwithstanding the
foregoing, grants of options to any one Employee Optionee under the Plan shall
be limited to options to purchase no more than 400,000 shares of Common Stock
per calendar year.
6. GRANTING OF OPTIONS TO NON-EMPLOYEE DIRECTORS. All options granted to Non-
Employee Directors shall be options to purchase, on the terms and conditions
hereinafter set forth in Article IV, authorized but unissued, or reacquired,
shares of Common Stock and shall be nonqualified options.
7. OPTION AGREEMENTS. Each option under the Plan shall be evidenced by a
written agreement between the Company and the Eligible Optionee which shall
contain such terms and conditions, and may be exercisable for such periods, as
may be approved by the Committee, which terms and conditions need not be
identical.
8. EFFECTIVE DATE. The Plan shall become effective as of October 27, 1993,
provided the Plan is approved by the Board of Directors of the Company and
approved by the shareholders of the Company within twelve months thereafter.
Notwithstanding any other provisions of the Plan, no option under the Plan
shall be exercisable prior to such shareholder approval. Except with respect to
options then outstanding, if not sooner terminated under the provisions of
Article I, Paragraph 4, the Plan shall terminate upon and no further options
shall be granted after the expiration of ten years from October 27, 1993.
9. MISCELLANEOUS. All references in the Plan to "Articles," "Paragraphs," and
other subdivisions refer to the corresponding Articles, Paragraphs, and
subdivisions of the Plan.
10. RULE 16B-3 COMPLIANCE. The Company intends:
(a) that the Plan meet the requirements of Rule 16b-3;
3
<PAGE> 4
(b) that participation by Non-Employee Directors under Article IV of the
Plan will not prohibit them from being "disinterested persons" within the
meaning of Rule 16b-3(d)(3) with respect to administration of the Plan or
with respect to administration of any other plan of the Company;
(c) that transactions of the type specified in the first paragraph of
Rule 16b-3 by Non-Employee Directors pursuant to Article IV of the Plan
will be exempt from the operation of section 16(b) of the Act; and
(d) that transactions of the type specified in the first paragraph of
Rule 16b-3 by officers of the Company (whether or not they are directors)
pursuant to the Plan will be exempt from the operation of section 16(b) of
the Act. In all cases, the terms, provisions, conditions and limitations of
the Plan shall be construed and interpreted consistent with the Company's
intent as stated in this Article I, Paragraph 10.
11. RECAPITALIZATION OR REORGANIZATION. If (i) the Company shall not be the
surviving entity in any merger, consolidation or other reorganization (or
survives only as a subsidiary of an entity other than a previously wholly-owned
subsidiary of the Company), (ii) the Company sells, leases or exchanges all or
substantially all of its assets to any other person or entity (other than a
wholly-owned subsidiary of the Company), (iii) the Company is to be dissolved
and liquidated, (iv) any person or entity, including a "group" as contemplated
by section 13(d)(3) of the Act, acquires or gains ownership or control
(including, without limitation, power to vote) of more than 50% of the
outstanding shares of the Company's voting stock (based upon voting power), or
(v) as a result of or in connection with a contested election of directors, the
persons who were directors of the Company before such election shall cease to
constitute a majority of the Board of Directors of the Company (each such event
is referred to herein as a "CORPORATE CHANGE"), no later than (a) ten days
after the approval by the shareholders of the Company of such merger,
consolidation, reorganization, sale, lease or exchange of assets or dissolution
or such election of directors or (b) thirty days after a change of control of
the type described in Clause (iv), the Committee, acting in its sole discretion
without the consent or approval of any optionee, shall act to effect one or
more of the following alternatives, which may vary among individual optionees
and which may vary among options held by any individual optionee: (1)
accelerate the time at which options then outstanding may be exercised so that
such options may be exercised in full for a limited period of time on or before
a specified date (before or after such Corporate Change) fixed by the
Committee, after which specified date all unexercised options and all rights of
optionees thereunder shall terminate, (2) require the mandatory surrender to
the Company by selected optionees of some or all of the outstanding options
held by such optionees (irrespective of whether such options are then
exercisable under the provisions of the Plan) as of a date, before or after
such Corporate Change, specified by the Committee, in which event the Committee
shall thereupon cancel such options and the Company shall pay to each optionee
4
<PAGE> 5
an amount of cash per share equal to the excess, if any, of the amount
calculated below (the "CHANGE OF CONTROL VALUE") of the shares subject to such
option over the exercise price(s) under such options for such shares, (3) make
such equitable adjustments to options then outstanding as the Committee deems
appropriate to reflect such Corporate Change (provided, however, that the
Committee may determine in its sole discretion that no adjustment is necessary
to options then outstanding) or (4) provide that thereafter upon any exercise of
an option theretofore granted the optionee shall be entitled to purchase under
such option, in lieu of the number of shares of Common Stock then covered by
such option the number and class of shares of stock or other securities or
property (including, without limitation, cash) to which the optionee would have
been entitled pursuant to the terms of the agreement of merger, consolidation or
sale of assets and dissolution if, immediately prior to such merger,
consolidation or sale of assets and dissolution the optionee had been the holder
of record of the number of shares of Common Stock then covered by such option.
For the purposes of clause (2) above, the "CHANGE OF CONTROL VALUE" shall equal
the amount determined in clause (i), (ii) or (iii), whichever is applicable, as
follows: (i) the per share price offered to shareholders of the Company in any
such merger, consolidation, reorganization, sale of assets or dissolution
transaction, (ii) the price per share offered to shareholders of the Company in
any tender offer or exchange offer whereby a Corporate Change takes place, or
(iii) if such Corporate Change occurs other than pursuant to a tender or
exchange offer, the fair market value per share of the shares into which such
options being surrendered are exercisable, as determined by the Committee as of
the date determined by the Committee to be the date of cancellation and
surrender of such options. In the event that the consideration offered to
shareholders of the Company in any transaction described herein consists of
anything other than cash, the Committee shall determine the fair cash equivalent
of the portion of the consideration offered which is other than cash. Any
adjustment provided for herein shall be subject to any required shareholder
action.
ARTICLE II
NONQUALIFIED STOCK OPTIONS
1. ELIGIBLE EMPLOYEES. All Employee Optionees shall be eligible to receive
nonqualified options under this Article II.
2. CALCULATION OF EXERCISE PRICE. The exercise price to be paid for each
share of Common Stock deliverable upon exercise of each nonqualified option
granted under Article II shall be equal to the fair market value per share of
Common Stock at the time of grant as determined by the Committee, based on the
composite transactions in the Common Stock as reported by The Wall Street
Journal, and shall be equal to the per share price of the last sale of Common
Stock on the trading day prior to the grant of such option. The exercise price
for each nonqualified option granted under Article II shall be subject to
adjustment as provided in Article II, Paragraph 3(e).
5
<PAGE> 6
3. TERMS AND CONDITIONS OF OPTIONS. Nonqualified options granted under
Article II shall be in such form as the Committee may from time to time
approve. Options granted under Article II shall be subject to the following
terms and conditions and may contain such additional terms and conditions, not
inconsistent with Article II, as the Committee shall deem desirable:
(a) OPTION PERIOD AND CONDITIONS AND LIMITATIONS ON EXERCISE. Subject to
Article II, Paragraph 4, no nonqualified option granted under Article II
shall be exercisable with respect to any of the shares subject to the
option later than the date which is ten years after the date of grant (the
"NONQUALIFIED OPTION EXPIRATION DATE"). To the extent not prohibited by
other provisions of the Plan, each nonqualified option granted under
Article II shall be exercisable at such time or times as the Committee in
its discretion may determine at or prior to the time such option is granted
(unless otherwise extended by the Committee pursuant to Article II,
Paragraph 3 (b)(2)(iii)); provided, however, that unless the Committee
determines otherwise, each nonqualified option granted under Article II
shall be exercisable from time to time, in whole or in part, at any time
prior to the Nonqualified Option Expiration Date.
(b) TERMINATION OF EMPLOYMENT AND DEATH. For purposes of Article II and
each nonqualified option granted under Article II, an Employee Optionee's
employment shall be deemed to have terminated at the close of business on
the day preceding the first date on which he is no longer for any reason
whatsoever (including his death) employed by the Company or a subsidiary of
the Company. An Employee Optionee shall be considered to be in the
employment of the Company or a subsidiary of the Company as long as he
remains an employee of the Company or a subsidiary of the Company, whether
active or on an authorized leave of absence. Any question as to whether and
when there has been a termination of such employment, and the cause of such
termination, shall be determined by the Committee and its determination
shall be final. If an Employee Optionee's employment is terminated for any
reason whatsoever (including his death), each nonqualified option granted
to him under Article II and all of his rights thereunder shall wholly and
completely terminate:
(1) With respect to options not then exercisable, at the time the
Employee Optionee's employment is terminated; and
(2) With respect to options then exercisable:
(i) At the time the Employee Optionee's employment is terminated
if his employment is terminated because he is discharged for fraud,
theft or embezzlement committed against the
6
<PAGE> 7
Company or a subsidiary, affiliated entity or customer of the
Company, or for conflict of interest (other than legitimate
competition); or
(ii) At the expiration of a period of one year after the Employee
Optionee's death (but in no event later than the Nonqualified Option
Expiration Date) if the Employee Optionee's employment is terminated
by reason of his death. A nonqualified option granted under Article
II may be exercised by the Employee Optionee's estate or by the
person or persons who acquire the right to exercise his option by
bequest or inheritance with respect to any or all of the shares
remaining subject to his option at the time of his death; or
(iii) Unless it is otherwise provided in the option agreement or
otherwise extended in the discretion of the Committee in the event
of the Employee Optionee's retirement, at the expiration of a period
of three years after the Employee Optionee's employment is
terminated because of retirement (such that the Employee Optionee's
age plus years of service with the Company and its subsidiaries
equals or exceeds sixty-five) or disability (but in no event later
than the Nonqualified Option Expiration Date); or
(iv) At the expiration of a period of three months after the
Employee Optionee's employment is terminated (but in no event later
than the Nonqualified Option Expiration Date) if the Employee
Optionee's employment is terminated for any reason other than his
death, retirement, disability or the reasons specified in Article
II, Paragraph 3 (b)(2)(i).
(c) MANNER OF EXERCISE. In order to exercise a nonqualified option
granted under Article II, the person or persons entitled to exercise it
shall deliver to the Company payment in full for the shares being
purchased, together with any required withholding tax. The payment of the
exercise price for each option granted under Article II and any required
withholding tax shall either be in cash or through delivery to the Company
of shares of Common Stock, or by any combination of cash or shares; the
value of each share of Common Stock delivered shall be deemed to be equal
to the per share price of the last sale of Common Stock on the trading day
prior to the date the option is exercised, based on the composite
transactions in the Common Stock as reported in The Wall Street Journal. If
the Committee so requires, such person or persons shall also deliver a
written representation that all shares being purchased are being acquired
for investment and not with a view to, or for resale in connection with,
any distribution of such shares. An option agreement may, in the discretion
of the Committee, provide for a "cashless exercise" of a nonqualified
option by establishing procedures whereby the Employee Optionee, by a
properly executed written notice, directs (1) an immediate market sale or
margin loan respecting all or a part of the shares of Common Stock to which
he is entitled upon exercise pursuant to an extension of credit by the
7
<PAGE> 8
Company to the Employee Optionee of the option price, (2) the delivery of
the shares of Common Stock from the Company directly to a brokerage firm
and (3) the delivery of the option price from sale or margin loan proceeds
from the brokerage firm directly to the Company. An option agreement may
also, in the discretion of the Committee, provide for the withholding of
Federal, state or local income tax upon exercise of a nonqualified option
from any cash or stock remuneration (from the Plan or otherwise) then or
thereafter payable by the Company to the Employee Optionee.
(d) OPTIONS NOT TRANSFERABLE. No nonqualified option granted under
Article II shall be transferable otherwise than by will or by the laws of
descent and distribution and, during the lifetime of the Employee Optionee
to whom any such option is granted, it shall be exercisable only by the
Employee Optionee. Any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of, or to subject to execution, attachment or similar
process, any nonqualified option granted under Article II, or any right
thereunder, contrary to the provisions hereof, shall be void and
ineffective, shall give no right to the purported transferee, and shall, at
the sole discretion of the Committee, result in forfeiture of the option
with respect to the shares involved in such attempt.
(e) ADJUSTMENT OF SHARES. In the event that at any time after the effective
date of the Plan the outstanding shares of Common Stock are changed into or
exchanged for a different number or kind of shares of the Company or other
securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split, stock dividend, or
combination of shares, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares subject to Article II (including
shares as to which all outstanding nonqualified options granted under Article
II, or portions thereof then unexercised, shall be exercisable), to the end
that after such event the shares subject to Article II of the Plan and each
Employee Optionee's proportionate interest shall be maintained as before the
occurrence of such event. Such adjustment in an outstanding nonqualified
option granted under Article II shall be made without change in the total
price applicable to the option or the unexercised portion of the option
(except for any change in the aggregate price resulting from rounding-off of
share quantities or prices) and with any necessary corresponding adjustment in
exercise price per share. Any such adjustment made by the Committee shall be
final and binding upon all Employee Optionees, the Company, and all other
interested persons.
(f) LISTING AND REGISTRATION OF SHARES. Each nonqualified option granted
under Article II shall be subject to the requirement that if at any time
the Committee determines, in its discretion, that the listing,
registration, or qualification of the shares subject to such option under
8
<PAGE> 9
any securities exchange or under any state or Federal law, or the consent
or approval of any governmental regulatory body, is necessary or desirable
as a condition of, or in connection with, the issue or purchase of shares
thereunder, such option may not be exercised in whole or in part unless
such listing, registration, qualification, consent or approval shall have
been effected or obtained and the same shall have been free of any
conditions not acceptable to the Committee.
4. AMENDMENT. The Committee may, with the consent of the person or persons
entitled to exercise any outstanding nonqualified option granted under Article
II, amend such nonqualified option; provided, however, that any such amendment
shall be subject to shareholder approval when required in Article I, Paragraph
4. The Committee may at any time or from time to time, in its discretion, in
the case of any nonqualified option previously granted under Article II which
is not then immediately exercisable in full, accelerate the time or times at
which such option may be exercised to any earlier time or times. The Committee,
in its absolute discretion, may grant to holders of outstanding nonqualified
options granted under Article II, in exchange for the surrender and
cancellation of such options, new options having exercise prices lower (or
higher) than the exercise price provided in the options so surrendered and
cancelled and containing such other terms and conditions, in accordance with
the terms of the Plan, as the Committee may deem appropriate.
5. OTHER PROVISIONS.
(a) The person or persons entitled to exercise, or who have exercised, a
nonqualified option granted under Article II shall not be entitled to any
rights as a stockholder of the Company with respect to any shares subject to
such option until he shall have become the holder of record of such shares.
(b) No nonqualified option granted under Article II shall be construed as
limiting any right which the Company or any subsidiary of the Company may have
to terminate at any time, with or without cause, the employment of any person
to whom such option has been granted.
(c) Notwithstanding any provision of the Plan or the terms of any
nonqualified option granted under Article II, the Company shall not be required
to issue any shares hereunder if such issuance would, in the judgment of the
Committee, constitute a violation of any state or Federal law or of the rules
or regulations of any governmental regulatory body.
ARTICLE III
INCENTIVE STOCK OPTIONS
1. ELIGIBLE EMPLOYEES. Key employees (including officers and directors who
are also key employees) of the Company and its subsidiaries (as defined in
9
<PAGE> 10
section 424 of the Code) shall be eligible to receive incentive stock options,
within the meaning of section 422(b) of the Code, under this Article III.
2. CALCULATION OF EXERCISE PRICE. The exercise price to be paid for each
share of Common Stock deliverable upon exercise of each incentive stock option
granted under Article III shall be equal to the fair market value per share of
Common Stock at the time of grant as determined by the Committee, based on the
composite transactions in the Common Stock as reported by The Wall Street
Journal, and shall be equal to the per share price of the last sale of Common
Stock on the trading day prior to the grant of such option; provided, however,
that in the case of an Employee Optionee who, at the time such option is
granted, owns more than 10% of the total combined voting power of all classes
of stock of the Company or any subsidiary corporation, within the meaning of
section 422(b)(6) of the Code, then the exercise price per share shall be at
least 110% of the fair market value per share of Common Stock at the time of
grant. The exercise price for each incentive stock option shall be subject to
adjustment as provided in Article III, Paragraph 3(e).
3. TERMS AND CONDITIONS OF OPTIONS. Incentive stock options granted under
Article III shall be in such form as the Committee may from time to time
approve. Options granted under Article III shall be subject to the following
terms and conditions and may contain such additional terms and conditions, not
inconsistent with Article III, as the Committee shall deem desirable:
(a) OPTION PERIOD AND CONDITIONS AND LIMITATIONS ON EXERCISE. Subject to
Article III, Paragraph 4, no incentive stock option granted under Article
III shall be exercisable with respect to any of the shares subject to such
option later than the date which is ten years after the date of grant;
provided, however, that in the case of an Employee Optionee who, at the
time such option is granted, owns more than 10% of the total combined
voting power of all classes of stock of the Company or any subsidiary
corporation, within the meaning of section 422(b)(6) of the Code, then such
option shall not be exercisable with respect to any of the shares subject
to such option later than five years after the date of grant. The date on
which an incentive stock option ultimately becomes unexercisable under the
previous sentence is hereinafter referred to as the "ISO EXPIRATION DATE."
To the extent not prohibited by other provisions of the Plan, each
incentive stock option granted under Article III shall be exercisable at
such time or times as the Committee in its discretion may determine at or
prior to the time such option is granted (unless otherwise extended by the
Committee pursuant to Article III, Paragraph 3 (b)(2)(iii)); provided,
however, that unless the Committee determines otherwise, each incentive
stock option granted under Article III shall be exercisable from time to
time, in whole or in part, subject to the dollar limitations set forth in
Article III, Paragraph 3(g), at any time prior to the ISO Expiration Date.
(b) TERMINATION OF EMPLOYMENT AND DEATH. For purposes of Article III and
each incentive stock option granted under Article III, an Employee
Optionee's employment shall be deemed to have terminated at the close of
business on the day preceding the first date on which he is no longer for
10
<PAGE> 11
any reason whatsoever (including his death) employed by the Company or a
subsidiary of the Company. An Employee Optionee shall be considered to be
in the employment of the Company or a subsidiary of the Company as long as
he remains an employee of the Company or a subsidiary of the Company,
whether active or on an authorized leave of absence. Any question as to
whether and when there has been a termination of such employment, and the
cause of such termination, shall be determined by the Committee and its
determination shall be final. If an Employee Optionee's employment is
terminated by any reason whatsoever (including his death), each incentive
stock option granted to him and all of his rights thereunder shall wholly
and completely terminate:
(1) With respect to options not then exercisable, at the time the
Employee Optionee's employment is terminated; and
(2) With respect to options then exercisable:
(i) At the time the Employee Optionee's employment is terminated
if his employment is terminated because he is discharged for fraud,
theft or embezzlement committed against the Company or a subsidiary,
affiliated entity or customer of the Company, or for conflict of
interest (other than legitimate competition); or
(ii) At the expiration of a period of one year after the Employee
Optionee's death (but in no event later than the ISO Expiration
Date) if the Employee Optionee's employment is terminated by reason
of his death. An incentive stock option granted under Article III of
the Plan may be exercised by the Employee Optionee's estate or by
the person or persons who acquire the right to exercise his option
by bequest or inheritance with respect to any or all of the shares
remaining subject to his option at the time of his death; or
(iii) Unless it is otherwise provided in the option agreement or
otherwise extended in the discretion of the Committee after the date
which is three months after the Employee Optionee's retirement, at
the expiration of a period of three years after the Employee
Optionee's employment is terminated because of retirement (such that
the Employee Optionee's age plus years of service with the Company
and its subsidiaries equals or exceeds sixty-five) or disability
(but in no event later than the ISO Expiration Date); or
(iv) At the expiration of a period of three months after the
Employee Optionee's employment is terminated (but in no event later
than the ISO Expiration Date) if the Employee Optionee's employment
is terminated for any other reason than his death, retirement,
disability or the reasons specified in Article III, Paragraph 3
(b)(2)(i).
11
<PAGE> 12
In the event and to the extent that an incentive stock option
granted under Article III is not exercised (i) within three months
after the Employee Optionee's employment is terminated because of
retirement or disability not within the meaning of section 22(e)(3)
of the Code or (ii) within one year after the Employee Optionee's
employment is terminated because of disability within the meaning of
section 22(e)(3) of the Code, such option shall be taxed as a
nonqualified option and shall be subject to the manner of exercise
provisions described in Article II, Paragraph 3(c).
(c) MANNER OF EXERCISE. In order to exercise an incentive stock option
granted under Article III, the person or persons entitled to exercise it
shall deliver to the Company payment in full for the shares being
purchased. The payment of the exercise price for each option granted under
Article III shall either be in cash or through delivery to the Company of
shares of Common Stock, or by any combination of cash or shares; the value
of each share of Common Stock delivered shall be deemed to be equal to the
per share price of the last sale of Common Stock on the trading day prior
to the date the option is exercised, based on the composite transactions in
the Common Stock as reported in The Wall Street Journal. If the Committee
so requires, such person or persons shall also deliver a written
representation that all shares being purchased are being acquired for
investment and not with a view to, or for resale in connection with, any
distribution of such shares. An option agreement may, in the discretion of
the Committee, provide for a "cashless exercise" of an incentive stock
option by establishing procedures whereby the Employee Optionee, by a
properly executed written notice, directs (1) an immediate market sale or
margin loan respecting all or a part of the shares of Common Stock to which
he is entitled upon exercise pursuant to an extension of credit by the
Company to the Employee Optionee of the option price, (2) the delivery of
the shares of Common Stock from the Company directly to a brokerage firm
and (3) the delivery of the option price from sale or margin loan proceeds
from the brokerage firm directly to the Company. An option agreement may
also, in the discretion of the Committee, provide for the withholding of
Federal, state or local income tax upon exercise of an incentive stock
option from any cash or stock remuneration (from the Plan or otherwise)
then or thereafter payable by the Company to the Employee Optionee.
(d) OPTIONS NOT TRANSFERABLE. No incentive stock option granted under
Article III shall be transferable otherwise than by will or by the laws of
descent and distribution and, during the lifetime of the Employee Optionee
to whom any option is granted, it shall be exercisable only by such
Employee Optionee. Any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of, or to subject to execution, attachment or similar
process, any incentive stock option granted under Article III, or any right
thereunder, contrary to the provisions hereof, shall be void and
12
<PAGE> 13
ineffective, shall give no right to the purported transferee, and shall, at
the sole discretion of the Committee, result in forfeiture of the option
with respect to the shares involved in such attempt.
(e) ADJUSTMENT OF SHARES. In the event that at any time after the
effective date of the Plan the outstanding shares of Common Stock are
changed into or exchanged for a different number or kind of shares of the
Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split, stock
dividend, or combination of shares, the Committee shall make an appropriate
and equitable adjustment in the number and kind of shares subject to
Article III (including shares as to which all outstanding incentive stock
options granted under Article III, or portions thereof then unexercised,
shall be exercisable), to the end that after such event the shares subject
to Article III of the Plan and each Employee Optionee's proportionate
interest shall be maintained as before the occurrence of such event. Such
adjustment in an outstanding incentive stock option shall be made without
change in the total price applicable to the option or the unexercised
portion of the option (except for any change in the aggregate price
resulting from rounding-off of share quantities or prices) and with any
necessary corresponding adjustment in exercise price per share. Any such
adjustment made by the Committee shall be final and binding upon all
Employee Optionees, the Company, and all other interested persons. Any
adjustment of an incentive stock option under this paragraph shall be made
in such manner as not to constitute a "modification" within the meaning of
section 424(h)(3) of the Code.
(f) LISTING AND REGISTRATION OF SHARES. Each incentive stock option
granted under Article III shall be subject to the requirement that if at
any time the Committee determines, in its discretion, that the listing,
registration, or qualification of the shares subject to such option upon
any securities exchange or under any state or Federal law, or the consent
or approval of any governmental regulatory body, is necessary or desirable
as a condition of, or in connection with, the issue or purchase of shares
thereunder, such option may not be exercised in whole or in part unless
such listing, registration qualification, consent or approval shall have
been effected or obtained and the same shall have been free of any
conditions not acceptable to the Committee.
(g) LIMITATION ON AMOUNT. Notwithstanding any other provision of the
Plan, the aggregate fair market value (determined as of the time the
incentive stock option is granted) of the Common Stock with respect to
which incentive stock options are exercisable for the first time by an
Employee Optionee, under all incentive stock option plans of the Company
and its subsidiaries, during any calendar year cannot exceed $100,000 as
provided under section 422(d) of the Code.
4. AMENDMENT. The Committee may, with the consent of the person or persons
entitled to exercise any outstanding incentive stock option granted under
Article III, amend such incentive stock option; provided, however, that any
13
<PAGE> 14
such amendment shall be subject to shareholder approval when required in
Article I, Paragraph 4. Subject to Article III, Paragraph 3(g), the Committee
may at any time or from time to time, in its discretion, in the case of any
incentive stock option previously granted under Article III which is not then
immediately exercisable in full, accelerate the time or times at which such
option may be exercised to any earlier time or times.
5. OTHER PROVISIONS.
(a) The person or persons entitled to exercise, or who have exercised, an
incentive stock option granted under Article III shall not be entitled to
any rights as a stockholder of the Company with respect to any shares
subject to such option until he shall have become the holder of record of
such shares.
(b) No incentive stock option granted under Article III shall be
construed as limiting any right which the Company or any subsidiary of the
Company may have to terminate at any time, with or without cause, the
employment of any person to whom such option has been granted.
(c) Notwithstanding any provision of the Plan or the terms of any
incentive stock option granted under Article III, the Company shall not be
required to issue any shares hereunder if such issuance would, in the
judgment of the Committee, constitute a violation of any state or Federal
law or of the rules or regulations of any governmental regulatory body.
(d) The Committee may require any person who exercises an incentive stock
option to give prompt notice to the Company of any disposition of shares of
Common Stock acquired upon exercise of an incentive stock option within one
year after the transfer of shares to such person.
ARTICLE IV
NON-EMPLOYEE DIRECTOR STOCK OPTIONS
1. ELIGIBLE PERSONS. Persons who are members of the Board of Directors of the
Company but are not employees of the Company or of its subsidiaries ("NON-
EMPLOYEE DIRECTORS") shall be eligible to receive options under, and solely
under, this Article IV.
2. INITIAL AND ANNUAL GRANTING OF OPTIONS TO NON-EMPLOYEE DIRECTORS. Subject
to the limitation of the number of shares of Common Stock set forth in Article
I, Paragraph 2, (a) a nonqualified option to purchase 2,000 shares of Common
Stock is hereby granted to each Non-Employee Director who is elected or
appointed to the Board of Directors of the Company after the effective date of
the Plan and prior to the expiration of the Plan, effective on the date of his
initial election or appointment, if applicable (which date shall be the date of
14
<PAGE> 15
grant for purposes hereof), and (b) a nonqualified option to purchase 1,000
shares of Common Stock is hereby granted, effective the fourth Wednesday of
October of each year from and after the effective date of the Plan until the
expiration of the Plan, to each person who is a Non-Employee Director on each
such date (which date shall be the date of grant for purposes hereof). The Non-
Employee Director grants set forth in this Article IV, Paragraph 2 are provided
to replace and supersede, and not to supplement, the Non-Employee Director
grants provided in Article IV, Paragraph 2 and Paragraph 3 of the Company's
1987 Stock Option Plan.
3. ADDITIONAL GRANTING OF OPTIONS TO NON-EMPLOYEE DIRECTORS. Subject to the
limitation of the number of shares of Common Stock set forth in Article I,
Paragraph 2, Non-Employee Directors shall, in the discretion of the Committee,
be eligible to receive additional nonqualified options under this Article IV in
lieu of directors fees and/or retainers, in accordance with such terms as may
be approved by the Committee.
4. CALCULATION OF EXERCISE PRICE. The exercise price to be paid for each
share of Common Stock deliverable upon exercise of each option granted under
Article IV shall be equal to the fair market value per share of Common Stock at
the time of grant as determined by the Committee, based on the composite
transactions in the Common Stock as reported by The Wall Street Journal, and
shall be equal to the per share price of the last sale of Common Stock on the
trading day prior to the grant of such option, provided, that the exercise
price of each option granted under Article IV, Paragraph 3 may, in the
discretion of the Committee, be discounted from fair market value. The exercise
price for each option granted under Article IV shall be subject to adjustment
as provided in Article IV, Paragraph 5(e).
5. TERMS AND CONDITIONS OF OPTIONS. Subject to the provisions of this Article
IV, Paragraph 5, options granted under Article IV shall be in such form as the
Committee may from time to time approve. Options granted under Article IV shall
be subject to the following terms and conditions:
(a) OPTION PERIOD AND CONDITIONS AND LIMITATIONS ON EXERCISE. Each option
granted under Article IV shall be exercisable from time to time, in whole
or in part, at any time after one year from the date of grant and prior to
the date which is seven years after the date of grant (the "OPTION
EXPIRATION DATE").
(b) TERMINATION OF DIRECTORSHIP AND DEATH. For purposes of Article IV and
each option granted under Article IV, a Non-Employee Director's
directorship shall be deemed to have terminated at the close of business on
the day preceding the first date on which he ceases to be a member of the
Board of Directors of the Company for any reason whatsoever (including his
death). If a Non-Employee Director's directorship is terminated for any
reason whatsoever (including his death), each option granted to him under
Article IV and all of his rights thereunder shall wholly and completely
terminate:
15
<PAGE> 16
(1) With respect to each option granted within the one-year period
preceding such termination, at the time the Non-Employee Director's
directorship is terminated; and
(2) With respect to each option granted prior to the one-year period
preceding such termination:
(i) At the time the Non-Employee Director's directorship is
terminated if his directorship is terminated as a result of his
removal from the Board of Directors for cause (other than disability
or in accordance with the provision of the Company's Bylaws
regarding automatic termination of directors' terms of office); or
(ii) At the expiration of a period of one year after the Non-
Employee Director's death (but in no event later than the Option
Expiration Date) if the Non-Employee Director's directorship is
terminated by reason of his death. An option granted under Article
IV may be exercised by the Non-Employee Director's estate or by the
person or persons who acquire the right to exercise his option by
bequest or inheritance with respect to any or all of the shares
remaining subject to his option at the time of his death; or
(iii) At the expiration of a period of three years after the Non-
Employee Director's directorship is terminated as a result of such
person's resignation or removal from the Board of Directors of the
Company because of disability or in accordance with the provisions
of the Company's Bylaws regarding automatic termination of
directors' terms of office (but in no event later than the Option
Expiration Date); or
(iv) At the expiration of a period of three months after the Non-
Employee Director's directorship is terminated (but in no event
later than the Option Expiration Date) if the Non-Employee
Director's directorship is terminated for any reason other than the
reasons specified in Article IV, Paragraphs 5 (b)(2)(i) through 5
(b)(2)(iii).
(c) MANNER OF EXERCISE. In order to exercise an option granted under
Article IV, the person or persons entitled to exercise it shall deliver to
the Company payment in full for the shares being purchased, together with
any required withholding tax. The payment of the exercise price for each
option granted under Article IV and any required withholding tax shall
either be in cash or through delivery to the Company of shares of Common
Stock, or by any combination of cash or shares; the value of each share of
Common Stock delivered shall be deemed to be equal to the per share price
of the last sale of Common Stock on the trading day prior to the date the
option is exercised, based on the composite transactions in the Common
16
<PAGE> 17
Stock as reported in The Wall Street Journal. If the Committee so requires,
such person or persons shall also deliver a written representation that all
shares being purchased are being acquired for investment and not with a
view to, or for resale in connection with, any distribution of such shares.
An option agreement may, in the discretion of the Committee, provide for a
"cashless exercise" of a nonqualified option by establishing procedures
whereby the Non-Employee Director, by a properly executed written notice,
directs (1) an immediate market sale or margin loan respecting all or a
part of the shares of Common Stock to which he is entitled upon exercise
pursuant to an extension of credit by the Company to the Non-Employee
Director of the option price, (2) the delivery of the shares of Common
Stock from the Company directly to a brokerage firm and (3) the delivery of
the option price from sale or margin loan proceeds from the brokerage firm
directly to the Company. An option agreement may also, in the discretion of
the Committee, provide for the withholding of Federal, state or local
income tax upon exercise of a nonqualified option from any cash or stock
remuneration (from the Plan or otherwise) then or thereafter payable by the
Company to the Non-Employee Director.
(d) OPTIONS NOT TRANSFERABLE. No option granted under Article IV shall be
transferable otherwise than by will or by the laws of descent and
distribution and, during the lifetime of the Non-Employee Director to whom
any such option is granted, it shall be exercisable only by such Non-
Employee Director. Any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of, or to subject to execution, attachment or similar
process, any option granted under Article IV, or any right thereunder,
contrary to the provisions hereof, shall be void and ineffective, shall
give no right to the purported transferee, and shall, at the sole
discretion of the Committee, result in forfeiture of the option with
respect to the shares involved in such attempt.
(e) ADJUSTMENT OF SHARES. In the event that at any time after the
effective date of the Plan the outstanding shares of Common Stock are
changed into or exchanged for a different number or kind of shares of the
Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split, stock
dividend, or combination of shares, the Committee shall make an appropriate
and equitable adjustment in the number and kind of shares subject to
Article IV (including shares as to which all outstanding options granted
under Article IV, or portions thereof then unexercised, shall be
exercisable), to the end that after such event the shares subject to
Article IV of the Plan and each Non-Employee Director's proportionate
interest shall be maintained as before the occurrence of such event. Such
adjustment in an outstanding option granted under Article IV shall be made
without change in the total price applicable to the option or the
unexercised portion of the option (except for any change in the aggregate
price resulting from rounding-off of share quantities or prices) and with
17
<PAGE> 18
any necessary corresponding adjustment in exercise price per share. Any
such adjustment made by the Committee shall be final and binding upon all
Non-Employee Directors, the Company, and all other interested persons.
(f) LISTING AND REGISTRATION OF SHARES. Each option granted under Article
IV shall be subject to the requirement that if at any time the Committee
determines, in its discretion, that the listing, registration, or
qualification of the shares subject to such option under any securities
exchange or under any state or Federal law, or the consent or approval of
any governmental regulatory body, is necessary or desirable as a condition
of, or in connection with, the issue or purchase of shares thereunder, such
option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected
or obtained and the same shall have been free of any conditions not
acceptable to the Committee.
6. AMENDMENT. The Committee may, with the consent of the person or persons
entitled to exercise any outstanding nonqualified option granted under Article
IV, amend such nonqualified option; provided, however, that any such amendment
shall be subject to shareholder approval when required in Article I, Paragraph
4.
7. OTHER PROVISIONS.
(a) The person or persons entitled to exercise, or who have exercised, an
option granted under Article IV shall not be entitled to any rights as a
stockholder of the Company with respect to any shares subject to such
option until he shall have become the holder of record of such shares.
(b) No option granted under Article IV shall be construed as limiting any
right which either the stockholders of the Company or the Board of
Directors of the Company may have to remove at any time, with or without
cause, any person to whom such option has been granted from the Board of
Directors of the Company.
(c) Notwithstanding any provision of the Plan or the terms of any option
granted under Article IV, the Company shall not be required to issue any
shares hereunder if such issuance would, in the judgment of the Committee,
constitute a violation of any state or Federal law or of the rules or
regulations of any governmental regulatory body.
(d) Notwithstanding any provision of the Plan, the Committee may not
exercise any discretion with respect to this Article IV which would be
inconsistent with the intent that (i) the Plan meet the requirements of
Rule 16b-3 promulgated by the Securities Exchange Commission under the Act
and (ii) any Non-Employee Director who is eligible to receive a grant or to
whom a grant is made pursuant this Article IV will not for such reason
18
<PAGE> 19
cease to be a "disinterested person" within the meaning of such Rule 16b-3
with respect to the Plan and other stock related plans of the Company or
any of its affiliates. Specifically, in the event of a Corporate Change, as
defined in Article I, Paragraph 11, the Committee may, with respect to
options under this Article IV, only exercise the alternative in clause (2)
of Article I, Paragraph 11, or such other alternatives specified in Article
I, Paragraph 11 as would not, in the opinion of legal counsel of the
Company, violate the limitations contained in the immediately preceding
sentence.
19
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.20
<SEQUENCE>12
<DESCRIPTION>AMENDMENT NO. 1999-1 TO 1993 STOCK OPTION PLAN
<TEXT>
<PAGE> 1
EXHIBIT 10.20
AMENDMENT NO. 1999-1 TO THE
1993 STOCK OPTION PLAN
This Amendment No. 1999-1 is made to the Baker Hughes
Incorporated 1993 Stock Option Plan ("the Plan"). Capitalized terms used but not
defined herein shall have the meanings ascribed to them in the Plan.
WHEREAS, Baker Hughes Incorporated (the "Company") has
determined that it is in its best interest and that of its stockholders to amend
the Plan as set forth herein;
NOW, THEREFORE, the Plan is amended as follows:
1. Article I, Paragraphs 11(a), (b) and (f) of the Plan are
amended in their entirety to read as follows:
"11. Change in Control.
(a) Notwithstanding any provision of the
Plan to the contrary, in the event of an occurrence of a
Change in Control other than an event described only in clause
(3) of Paragraph 11(f) of the Plan, all options granted
pursuant to this Plan shall become fully vested and
exercisable.
(b) Notwithstanding any provision of the
Plan to the contrary, all outstanding options held by an
Employee Optionee shall become fully vested and exercisable as
of the effective date of termination of such Employee
Optionee's employment if (i) such Employee Optionee's
employment is terminated by the Company without Cause prior to
a Change in Control (whether or not a Change in Control ever
occurs) and such termination was 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, (ii) such Employee Optionee terminates his or her
employment for Good Reason prior to a Change in Control
(whether or not a Change in Control ever occurs) and the
circumstance
1
<PAGE> 2
or event which constitutes Good Reason occurs at the request
or direction of the Person described in clause (i), (iii) such
Employee Optionee's employment is terminated by the Company
without Cause or by the Employee Optionee for Good Reason and
such termination or the circumstance or event which
constitutes Good Reason is otherwise in connection with or in
anticipation of a Change in Control (whether or not a Change
in Control ever occurs) or (iv) such Employee Optionee's
employment is terminated by the Company without Cause or by
the Employee Optionee for Good Reason, in either case within 2
years following the occurrence of a Change in Control
described in clause (3) of Paragraph 11(f) of the Plan.
(f) A "Change in Control" shall be deemed to
have occurred if the event set forth in any one of the
following paragraphs shall have occurred:
(1) any Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company
or its affiliates) representing 20% or more of the combined
voting power of the Company's then outstanding securities,
excluding any Person who becomes such a Beneficial Owner in
connection with a transaction described in clause (i) of
paragraph (3) below; or
(2) the following individuals cease
for any reason to constitute a majority of the number of
directors then serving: individuals who, on the date hereof,
constitute the Board of Directors of the Company and any new
director (other than a director whose initial assumption of
office is in connection with an actual or threatened election
contest relating to the election of directors of the Company)
whose appointment or election by the Board of Directors of the
Company or nomination for election by the Company's
stockholders was approved
2
<PAGE> 3
or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on
the date hereof or whose appointment, election or nomination
for election was previously so approved or recommended; or
(3) there is consummated a merger or
consolidation of the Company or any direct or indirect
subsidiary of the Company with any other corporation, other
than (i) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit
plan of the Company or any subsidiary of the Company, at least
65% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or
(ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not including in
the securities Beneficially Owned by such Person any
securities acquired directly from the Company or its
Affiliates other than in connection with the acquisition by
the Company or its Affiliates of a business) representing 20%
or more of the combined voting power of the Company's then
outstanding securities; or
(4) there is consummated a merger or
consolidation of the Company or any direct or indirect
subsidiary of the Company with any other corporation, other
than a merger or consolidation immediately following which the
individuals who comprise the Board immediately prior thereto
constitute at least a majority of the board of directors of
the Company,
3
<PAGE> 4
the entity surviving such merger or any parent thereof (or a
majority plus one member where such board comprises an odd
number of members); or
(5) the stockholders of the Company
approve a plan of complete liquidation or dissolution of the
Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets, other than a sale or disposition by the
Company of all or substantially all of the Company's assets to
an entity, at least 65% of the combined voting power of the
voting securities of which are owned by stockholders of the
Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control"
shall not be deemed to have occurred by virtue of the
consummation of any transaction or series of integrated
transactions immediately following which the record holders of
the common stock of the Company immediately prior to such
transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the
Company immediately following such transaction or series of
transactions."
2 Article II, Paragraph 3(b)(2)(i) of the Plan is amended by
inserting the phrase "(but in no event later than the Nonqualified Option
Expiration Date)" after the second appearance of the phrase "termination of
employment" therein.
3 Article II, Paragraph 3(b)(2)(iv) of the Plan is amended
in its entirety to read as follows:
"At the expiration of a period of three months after
the Employee Optionee's employment is terminated (but in no
event later than the Nonqualified Option Expiration Date) if
the
4
<PAGE> 5
Employee Optionee's employment is terminated for any reason
other than his death, retirement, disability or the reasons
specified in this Article II, Paragraph 3(b)(2)(i), if such
termination of employment occurs prior to a Change in Control
or after the second anniversary of a Change in Control, and
two years following such termination of employment (but in no
event later than the Nonqualified Option Expiration Date) if
such termination is either by the Company without Cause or by
the Employee Optionee for Good Reason and, in either case,
occurs within two years following a Change in Control (in each
case, as such term is defined in Article I, Paragraph 11(f)
hereof)."
4 Article III, Paragraph 3(b)(2)(i) of the Plan is amended
by inserting the phrase "(but in no event later than the ISO Expiration Date)"
after the second appearance of the phrase "termination of employment" therein".
5 Article III, Paragraph 3(b)(2)(iv) of the Plan is amended
in its entirety to read as follows:
"At the expiration of a period of three months after
the Employee Optionee's employment is terminated (but in no
event later than the ISO Expiration Date) if the Employee
Optionee's employment is terminated for any reason other than
his death, retirement, disability or the reasons specified in
this Article III, Paragraph 3(b)(2)(i), if such termination of
employment occurs prior to a Change in Control or after the
second anniversary of a Change in Control, and two years
following such termination of employment (but in no event
later than the ISO Expiration Date) if such termination is
either by the Company without Cause or by the Employee
Optionee for Good Reason and, in either case, occurs within
two years following a Change in Control (in each case, as such
term is defined in Article I, Paragraph 11(f) hereof)."
6 Article IV, Paragraph 5(b)(2)(i) of the Plan is amended by
inserting the phrase "(but in no event
5
<PAGE> 6
later than the Option Expiration Date)" after the second appearance of the
phrase "termination of service" therein.
7 Article IV, Paragraph 5(b)(2)(iv) of the Plan is amended
in its entirety to read as follows:
"At the expiration of a period of three months after
the Non-Employee Director's directorship is terminated (but in
no event later than the Option Expiration Date) if the
Non-Employee Director's directorship is terminated for any
reason other than the reasons specified in Article IV,
Paragraphs 5(b)(2)(i) through 5(b)(2)(iii), if such
termination of directorship occurs prior to a Change in
Control or after the second anniversary of a Change in
Control, and two years following such termination of
directorship (but in no event later than the Option Expiration
Date) if such termination occurs within two years following a
Change in Control (in each case, as such term is defined in
Article I, Paragraph 11(f) hereof)."
The effective date of this Amendment No. 1999-1 shall be
January 27, 1999; provided, however, that, in the event that (A) the Company is
party to a transaction which is otherwise intended to qualify for "pooling of
interests" accounting treatment, (B) such transaction constitutes a Change in
Control within the meaning of the Plan and (C) individuals who satisfy the
requirements in clauses (i) and (ii) below constitute at least two-thirds (2/3)
of the number of directors of the entity surviving such transaction or any
parent thereof: individuals who (i) immediately prior to such transaction
constitute the Board of Directors of the Company and (ii) on the date hereof
constitute the Board of Directors of the Company and any new director (other
than a director whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of directors of
the Company) whose appointment or election by the Board of Directors of the
Company or nomination for election by the Company's stockholders was approved or
recommended, by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors on the date hereof or whose appointment,
6
<PAGE> 7
election or nomination for election was previously so approved or recommended
then (a) this Amendment No. 1999-1 shall, to the extent practicable, be
interpreted so as to permit such accounting treatment, and (b) to the extent
that the application of clause (a) of this sentence does not preserve the
availability of such accounting treatment, then, to the extent that any
provision or combination of provisions of this Amendment No. 1999-1 disqualifies
the transaction as a "pooling" transaction (including, if applicable, this
entire Amendment No. 1999-1), the Board of Directors of the Company shall amend
such provision or provisions if and to the extent necessary (including declaring
such provision or provisions to be null and void as of the date hereof) so that
such transaction may be accounted for as a "pooling of interests." All
determinations with respect to this paragraph shall be made by the Company,
based upon the advice of the accounting firm whose opinion with respect to
"pooling of interests" is required as a condition to the consummation of such
transaction. Except as herein modified, the Plan shall remain in full force and
effect.
BAKER HUGHES INCORPORATED
By:
--------------------------------------
Name: G.S. Finley
Title: Senior Vice President
and Chief Administrative Officer
7
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.21
<SEQUENCE>13
<DESCRIPTION>1993 EMPLOYEE STOCK BONUS PLAN
<TEXT>
<PAGE> 1
EXHIBIT 10.21
BAKER HUGHES INCORPORATED
1993 EMPLOYEE STOCK BONUS PLAN
1. PURPOSE OF THE PLAN. The Baker Hughes Incorporated 1993 Employee Stock
Bonus Plan (the "PLAN") is intended to promote the interests of Baker Hughes
Incorporated (the "COMPANY") and its subsidiaries and its stockholders by
encouraging employees of the Company and its subsidiaries to increase their
equity interests in the Company, thereby giving them an added incentive to work
toward the continued growth and success of the Company. The Plan provides an
incentive to such employees who have been granted options under the Baker
Hughes Incorporated 1993 Stock Option Plan (the "STOCK OPTION PLAN") to
encourage such employees to remain in the employ of the Company and its
subsidiaries and to retain the shares acquired by the exercise of such options
("OPTION SHARES") for a minimum of three years from the issuance of such Option
Shares. Accordingly, the Company may grant to such employees awards
representing rights to receive shares of common stock of the Company, $1 par
value ("STOCK"), subject to certain restrictions in accordance with the terms
and conditions herein established ("STOCK AWARDS").
2. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Compensation Committee ("COMMITTEE") of the Board of Directors of the Company.
Subject to the provisions of the Plan, the Committee shall interpret the Plan,
shall make such rules as it deems necessary for the proper administration of
the Plan, shall make all other determinations necessary or advisable for the
administration of the Plan and shall correct any defect or supply any omission
or reconcile any inconsistency in the Plan or in any Stock Award granted under
the Plan in the manner and to the extent that the Committee deems desirable to
carry the Plan into effect. Any action taken or determination made by the
Committee pursuant to this and the other paragraphs of the Plan shall be
conclusive on all parties. The act or determination of a majority of the
Committee at a meeting where a quorum is present shall be deemed to be the act
or determination of the Committee.
1
<PAGE> 2
The Committee shall consist of at least three members of the Board of
Directors of the Company appointed by and holding office for a term determined
by and in the discretion of the Board of Directors of the Company. No Stock
Awards may be granted under the Plan to any member of the Committee during the
term of his membership on the Committee. No person shall be eligible to serve
on the Committee unless he is then a "disinterested person" within the meaning
of Paragraph (d)(3) of Rule 16b-3 ("RULE 16B-3") promulgated under the
Securities Exchange Act of 1934, as amended (the "ACT"), if and as such Rule is
then in effect.
3. ELIGIBILITY TO RECEIVE STOCK AWARDS. Stock Awards shall be granted under
the Plan to those employees of the Company and its subsidiaries (excluding non-
employee directors) who are issued Option Shares under the Stock Option Plan
during the Company's 1993 fiscal year and thereafter. A Stock Award may be
granted to the same employee on more than one occasion.
4. SHARES SUBJECT TO THE PLAN. The aggregate number of shares of Stock which
may be issued to employees under Paragraph 5 of the Plan shall not exceed
1,300,000 shares of Stock; however, such amount may be increased by the Board of
Directors of the Company up to an amount not to exceed one-fifth of the number
of Option Shares which may be issued, from time to time, under the terms of the
Stock Option Plan, without additional approval from the stockholders of the
Company; provided, that (i) the full amount of such increase shall be reserved
solely for issuance to a broad-based group of employees and (ii) the number of
shares issuable to persons subject to Section 16(a) of the Act in connection
with such increases shall not, in the aggregate, exceed 130,000 shares. Such
shares of Stock may consist of authorized but unissued shares or previously
issued shares reacquired by the Company. Any of such shares of Stock which
remain unissued at the termination of the Plan shall cease to be subject to the
Plan, but until termination of the Plan, the Company shall at all times make
available a sufficient number of shares of Stock to meet the requirements of the
Plan.
The aggregate number of shares of Stock which may be issued under the Plan may
be adjusted to reflect a change in capitalization of the Company, such as a
stock dividend or stock split.
5. ISSUANCE OF STOCK AWARDS. Stock Awards shall be issued to eligible
employees in the form of shares of Stock ("STOCK AWARD SHARES") in an amount
equal to one Stock Award Share for every five Option Shares acquired by
exercise pursuant to options (whether nonqualified or incentive) granted under
the Stock Option Plan on the third anniversary of the issuance of Option Shares
issued pursuant to the exercise of an option granted under the Stock Option
Plan, to the extent such eligible employee has not violated the Forfeiture
Restrictions defined in Paragraph 6 below. Upon the issuance of Option Shares,
the Committee or the Company shall notify in writing each employee entitled to
receive a Stock Award hereunder of the number of Stock Award Shares to be
issued in accordance with the Plan. In addition to a Stock Award, at the time
2
<PAGE> 3
of the issuance of the Stock Award Shares, the Company will pay to the employee
the dividends attributable to the Stock Award Shares as though such shares had
been issued and outstanding for the three years, without interest.
6. FORFEITURE RESTRICTIONS. The obligation of the Company to issue Stock
Award Shares is subject to the restrictions as described in this Paragraph 6
and shall hereinafter be referred to as the "FORFEITURE RESTRICTIONS." If an
employee, who is granted a Stock Award based upon underlying Option Shares
issued pursuant to the exercise of an option granted under the Stock Option
Plan, sells or otherwise transfers (other than by gift, devise or descent) such
underlying Option Shares within three years of the date of issuance of such
Option Shares, the right to receive the Stock Award Shares attributable to such
Option Shares shall be forfeited on a prorated basis of one such Stock Award
Share per five such Option Shares sold or otherwise transferred; provided that,
in the event such employee sells or otherwise transfers more than fifty percent
of such underlying Option Shares within three years of the date of issuance of
such Option Shares, the right to receive all such Stock Award Shares
attributable to such Option Shares shall be forfeited. Moreover, in the event
of termination of the employee's employment with the Company and its
subsidiaries for any reason other than retirement (such that the employee's age
plus years of service with the Company and its subsidiaries equals or exceeds
sixty-five), death or total and permanent disability within three years of the
date of issuance of underlying Option Shares, upon which the issuance of Stock
Award Shares are based, the right to receive all such Stock Award Shares shall
be forfeited. An employee shall be considered to be in the employment of an
employer as long as he remains an employee of the employer, whether active or
on an authorized leave of absence. Any question as to whether and when there
has been a termination of such employment, and the cause of such termination,
shall be determined by the Committee and its determination shall be final.
7. LAPSE OF FORFEITURE RESTRICTIONS. The Forfeiture Restrictions with respect
to the right to receive Stock Award Shares not otherwise forfeited pursuant to
the provisions of Paragraph 6 and issued to an employee based upon underlying
Option Shares issued pursuant to the exercise of an option granted under the
Stock Option Plan shall lapse and be of no further force and effect upon the
expiration of three years following the date of issuance of such Option Shares
or, if earlier, upon the termination of the employee's employment with the
Company and its subsidiaries by reason of retirement (such that the employee's
age plus years of service with the Company and its subsidiaries equals or
exceeds sixty-five), death or total and permanent disability.
8. SHARES RECEIVED IN REORGANIZATION OR STOCK SPLIT. The right to receive
stock or securities in exchange for the right to receive Stock Award Shares
pursuant to a plan of reorganization of the Company and the right to receive
any Stock Award Shares as a result of a stock split with respect to Stock Award
Shares shall also become subject to the Forfeiture Restrictions for all
purposes of the Plan. Notwithstanding the foregoing, if the Company is to be
merged into or consolidated with one or more corporations and the Company is
not to be the surviving corporation, if the Company is to be dissolved and
liquidated, or if substantially all of the assets and business of the Company
3
<PAGE> 4
are to be sold, the Committee may fix a date, prior to the effective time of
such merger, consolidation, dissolution and liquidation, or sale, on which date
all Forfeiture Restrictions with respect to the right to receive all Stock
Awards Shares shall lapse.
9. TERM OF PLAN. The Plan shall be effective as of October 27, 1993, provided
the Plan is approved by the stockholders of the Company. Unless sooner
terminated under the provisions of Paragraph 12, no further Stock Awards shall
be granted under Paragraph 5 after the issuance of the last underlying Option
Shares pursuant to the exercise of an option granted under the Stock Option
Plan, and the Plan shall terminate when the right to receive all Stock Award
Shares attributable to Option Shares issued or to be issued under the Stock
Option Plan (and dividends thereon) either have been forfeited to the Company
or the Forfeiture Restrictions thereon have lapsed and the Stock Award Shares
have been issued.
10. RIGHTS OF STOCKHOLDER. Upon the issuance of Stock Award Shares to an
employee, such employee shall have all of the rights of a stockholder of the
Company with respect to such Stock Award Shares, including the right to vote
such Stock Award Shares and the right to receive all dividends or other
distributions paid with respect to such Stock Award Shares.
11. WITHHOLDING OF TAX. To the extent the issuance of Stock Award Shares or
the lapse of Forfeiture Restrictions results in the receipt of compensation by
an employee, the employer is authorized to withhold from any other cash
compensation then or thereafter payable to such employee any tax required to be
withheld by reason of the receipt of compensation resulting from the issuance
of Stock Award Shares or the lapse of Forfeiture Restrictions. In the
alternative, the employer may, in its discretion, at the request of the
employee, satisfy any withholding requirements by retaining the number of
shares of Stock (for which Forfeiture Restrictions have lapsed) necessary to
satisfy any such withholding obligation.
12. AMENDMENT OR TERMINATION OF THE PLAN. The Board of Directors of the
Company in its discretion may terminate the Plan at any time with respect to
any Stock Awards which have not theretofore been granted. The Board of
Directors shall have the right to alter or amend the Plan or any part thereof
from time to time; provided, that no change may be made which would impair the
rights of an employee to whom Stock Awards have been granted or to whom Stock
Award Shares have theretofore been issued without the consent of such employee.
4
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.23
<SEQUENCE>14
<DESCRIPTION>AMENDMENT NO. 1999-1 TO 1993 EMP. STOCK BONUS PLAN
<TEXT>
<PAGE> 1
EXHIBIT 10.23
AMENDMENT NO. 1999-1 TO THE
1993 EMPLOYEE STOCK BONUS PLAN
This Amendment No. 1999-1 is made to the Baker Hughes
Incorporated 1993 Employee Stock Bonus Plan ("the Plan"). Capitalized terms used
but not defined herein shall have the meanings ascribed to them in the Plan.
WHEREAS, Baker Hughes Incorporated (the "Company") has
determined that it is in its best interest and that of its stockholders to amend
the Plan as set forth herein;
NOW, THEREFORE, the Plan is amended as follows:
1. Clauses (ii) and (iii) of the first sentence of Paragraph 5
of the Plan are amended in their entirety to read as follows:
"(ii) the occurrence of a Change in Control other than an
event described only in clause (iii) of the definition of
Change in Control set forth in Paragraph 5 of the Plan, and
(iii) the termination of the eligible employee's employment if
(a) such eligible employee's employment is terminated by the
Company without Cause prior to a Change in Control (whether or
not a Change in Control ever occurs) and such termination was
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, (b) such eligible employee
terminates his or her employment for Good Reason prior to a
Change in Control (whether or not a Change in Control ever
occurs) and the circumstance or event which constitutes Good
Reason occurs at the request or direction of the Person
described in clause (a), (c) such eligible employee's
employment is terminated by the Company without Cause or by
the eligible employee for Good Reason and such termination or
the circumstance or event which constitutes Good Reason is
otherwise in connection with or in anticipation of a Change in
Control (whether or not a Change in Control ever occurs) or
(d) such eligible
1
<PAGE> 2
employee's employment is terminated by the Company without
Cause or by the eligible employee for Good Reason, in either
case within 2 years following the occurrence of a Change in
Control described in clause (iii) of the definition of Change
in Control set forth in Paragraph 5 of the Plan."
2 The definition of Change in Control set forth in Paragraph 5
of the Plan is amended in its entirety to read as follows:
"A "Change in Control" shall be deemed to have
occurred if the event set forth in any one of the following
paragraphs shall have occurred:
(i) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person
any securities acquired directly from the Company or its
affiliates) representing 20% or more of the combined voting
power of the Company's then outstanding securities, excluding
any Person who becomes such a Beneficial Owner in connection
with a transaction described in clause (a) of paragraph (iii)
below; or
(ii) the following individuals cease for any reason
to constitute a majority of the number of directors then
serving: individuals who, on the date hereof, constitute the
Board of Directors of the Company and any new director (other
than a director whose initial assumption of office is in
connection with an actual or threatened election contest
relating to the election of directors of the Company) whose
appointment or election by the Board of Directors of the
Company or nomination for election by the Company's
stockholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved
or recommended; or
(iii) there is consummated a merger or consolidation
of the Company or any direct or indirect subsidiary of the
Company with any other corporation, other than (a) a merger or
consolidation which would result in the voting
2
<PAGE> 3
securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either
by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company or any subsidiary of the Company, at least 65% of
the combined voting power of the securities of the Company or
such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (b) a
merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not including in
the securities Beneficially Owned by such Person any
securities acquired directly from the Company or its
Affiliates other than in connection with the acquisition by
the Company or its Affiliates of a business) representing 20%
or more of the combined voting power of the Company's then
outstanding securities; or
(iv) there is consummated a merger or consolidation
of the Company or any direct or indirect subsidiary of the
Company with any other corporation, other than a merger or
consolidation immediately following which the individuals who
comprise the Board immediately prior thereto constitute at
least a majority of the board of directors of the Company, the
entity surviving such merger or consolidation or any parent
thereof (or a majority plus one member where such board
comprises an odd number of members); or
(v) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets,
other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, at
least 65% of the combined voting power of the voting
securities of which are owned by stockholders of the Company
in substantially the
3
<PAGE> 4
same proportions as their ownership of the Company immediately
prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall not
be deemed to have occurred by virtue of the consummation of
any transaction or series of integrated transactions
immediately following which the record holders of the common
stock of the Company immediately prior to such transaction or
series of transactions continue to have substantially the same
proportionate ownership in an entity which owns all or
substantially all of the assets of the Company immediately
following such transaction or series of transactions".
3 The second sentence of Paragraph 6 of the Plan is amended by
inserting immediately prior to the "." at the end thereof the following:
"other than an event described only in clause (iii) of the
definition of Change in Control set forth in Section 5 of the
Plan; and provided further, that the provisions of this
sentence shall be inapplicable to any sale of Option Shares by
an employee holding a Stock Award if such sale occurs at any
time following a Qualifying Termination."
4 Clause (ii) of Paragraph 7 of the Plan is amended in its
entirety to read as follows:
" (ii) the occurrence of a Change in Control other than an
event described only in clause (iii) of the definition of
Change in Control set forth in Section 5 of the Plan."
The effective date of this Amendment No. 1999-1 shall be
January 27, 1999; provided, however, that, in the event that (A) the Company is
party to a transaction which is otherwise intended to qualify for "pooling of
interests" accounting treatment, (B) such transaction constitutes a Change in
Control within the meaning of the Plan and (C) individuals who satisfy the
requirements in clauses (i) and (ii) below constitute at least two-thirds (2/3)
of the number of directors of the entity surviving such transaction or any
parent thereof: individuals who (i) immediately prior to such transaction
constitute the Board of Directors of the Company and (ii) on the date hereof
constitute the Board of Directors of the Company
4
<PAGE> 5
and any new director (other than a director whose initial assumption of office
is in connection with an actual or threatened election contest relating to the
election of directors of the Company) whose appointment or election by the Board
of Directors of the Company or nomination for election by the Company's
stockholders was approved or recommended, by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors on the date
hereof or whose appointment, election or nomination for election was previously
so approved or recommended then (a) this Amendment No. 1999-1 shall, to the
extent practicable, be interpreted so as to permit such accounting treatment,
and (b) to the extent that the application of clause (a) of this sentence does
not preserve the availability of such accounting treatment, then, to the extent
that any provision or combination of provisions of this Amendment No. 1999-1
disqualifies the transaction as a "pooling" transaction (including, if
applicable, this entire Amendment No. 1999-1), the Board of Directors of the
Company shall amend such provision or provisions if and to the extent necessary
(including declaring such provision or provisions to be null and void as of the
date hereof) so that such transaction may be accounted for as a "pooling of
interests." All determinations with respect to this paragraph shall be made by
the Company, based upon the advice of the accounting firm whose opinion with
respect to "pooling of interests" is required as a condition to the consummation
of such transaction. Except as herein modified, the Plan shall remain in full
force and effect.
BAKER HUGHES INCORPORATED
By:
-----------------------------------------
Name: G.S. Finley
Title: Senior Vice President
and Chief Administrative
Officer
5
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.24
<SEQUENCE>15
<DESCRIPTION>AMENDED DIRECTOR COMPENSATION DEFERRAL PLAN
<TEXT>
<PAGE> 1
EXHIBIT 10.24
BAKER HUGHES INCORPORATED
DIRECTOR COMPENSATION DEFERRAL PLAN
(As Amended and Restated)
1. Purposes of the Plan.
The Baker Hughes Incorporated Director Compensation Deferral Plan, as
amended and restated (the "Plan"), is intended to provide a means whereby
nonemployee directors of Baker Hughes Incorporated (the "Company") may defer
compensation otherwise payable and provide flexibility respecting the Company's
compensation policies.
2. Administration.
The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board"). The
Committee is authorized to interpret the Plan and may, from time to time, adopt
such rules and regulations, consistent with the provisions of the Plan, as it
may deem advisable to carry out the Plan. All determinations made by the
Committee shall be final. No member of the Committee shall have any right to
vote or decide upon any matter relating 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. The Vice President of Human Resources of the Company
shall, as the delegatee of the Committee, be responsible for the day-to-day
administration of the Plan, including accepting deferral elections, accounting
for deferrals and distributions under the Plan. All expenses incurred in
connection with the administration of the Plan shall be borne by the Company.
3. Participation in the Plan.
(a) Eligibility. All nonemployee directors of the Company ("Directors")
shall be eligible to participate in the Plan. An individual shall be considered
to be a Director until the close of business on the day preceding the earlier of
the first date the individual (1) becomes a common-law employee of the Company
or its subsidiaries or (2) ceases to be a member of the Board for any reason
whatsoever.
(b) Election to Participate. An eligible Director may elect to become a
participant in the Plan ("Participant") by electing to defer an integral
percentage (from 1% to 100%) of his (1) annual retainer and meeting fees
("Compensation") and/or (2) retirement benefits ("Retirement Income") pursuant
to the Company's Retirement Policy covering Directors.
(1) Compensation Deferrals. Deferral elections as to
Compensation shall be made with respect to each calendar year. Any such
election shall apply to
<PAGE> 2
the Participant's Compensation for the period commencing on January 1
of the applicable calendar year and ending upon the earlier of December
31 of such calendar year or the date during such calendar year that his
directorship is terminated for any reason. Notwithstanding the
foregoing, with respect to an individual who first becomes a Director
on other than the first day of a calendar year, any such election shall
apply to the Participant's Compensation during the calendar year in
which he first becomes a Director for the period commencing on the date
he first becomes a Director and ending upon the earlier of December 31
of such calendar year or the date during such calendar year that his
directorship is terminated for any reason.
(2) Retirement Income Deferrals. Deferral elections as to
Retirement Income may be made with respect to Retirement Income
attributable to all future calendar years of service as a Director.
(c) Time and Manner of Making Elections. Unless otherwise determined by
the Committee, any election by a Participant to defer Compensation under this
Plan must be made on or before the December 1 preceding the calendar year to
which the election relates; provided, however, that with respect to the first
calendar year an individual becomes a Director, any such deferral election with
respect to such first calendar year in which he becomes a Director must be made
by the Director within thirty (30) days of the date he first becomes a Director.
Unless otherwise determined by the Committee, any election by a Participant to
defer Retirement Income for all future years of service as a Director under this
Plan must be made by a Director prior to the January 1 of the first calendar
year to which such election relates. All elections shall be made in the form and
manner prescribed by the Committee. Amounts deferred by a Participant with
respect to any calendar year pursuant to any election as provided in this
Paragraph 3 shall be referred to herein as the Participant's "Deferred
Compensation" for such calendar year.
(d) Nature of Elections. Any election to defer Compensation which may
be made by a Participant with respect to any calendar year shall be irrevocable
once made. Any election to defer Compensation which may be made by a Participant
with respect to any calendar year, unless changed by the Participant prior to
the expiration of the time for making such election with respect to each
subsequent calendar year, shall be deemed to have been made with respect to each
subsequent calendar year, respectively. Any election to defer Retirement Income
which may be made by a Participant with respect to all calendar years which are
subject to such election shall be irrevocable once made.
(e) Election of Deferral Vehicles. At the time of making a deferral
election, a Participant shall select one or more deferral vehicles ("Deferral
Vehicles") for the Participant's Deferred Compensation respecting the applicable
calendar year or years as follows:
(1) Stock Option-Related Deferral Vehicles. The Participant's
Deferred Compensation shall be exchanged for nonemployee Director stock
<PAGE> 3
options ("Stock Options") granted (i) pursuant to Article IV of the
Baker Hughes Incorporated 1993 Stock Option Plan to the extent shares
are available for options under such plan or (ii) if permitted by the
Committee, pursuant to any other plan that would permit the grant of
options under this Plan. A Participant who elects a Stock
Option-Related Deferral Vehicle shall also elect whether to receive
such Stock Options priced at (x) the fair market value on the date of
grant ("Market-Priced Stock Options") or (y) a 50% discount to the fair
market value on the date of grant ("Discounted Stock Options"). To the
extent Market-Priced Stock Options are elected, as of the last day of
each calendar quarter, the Participant's aggregate Deferred
Compensation which would otherwise have been paid during such quarter
shall be increased by a multiplier of 4.4 and then divided by the fair
market value of the Company's common stock on the last day of such
quarter to determine the number of Market-Priced Stock Options to be
granted in exchange for the Deferred Compensation. To the extent
Discounted Stock Options are elected, as of the last day of each
calendar quarter, the Participant's aggregate Deferred Compensation
which would otherwise have been paid during such quarter shall be
divided by the discounted price of the Company's common stock on the
last day of such quarter to determine the number of Discounted Stock
Options to be granted in exchange for the Deferred Compensation.
(2) Cash-Based Deferral Vehicles. The Participant's Deferred
Compensation shall be credited to an account ("Account") established by
the Committee as of the date or dates the Deferred Compensation would
otherwise have been paid. A Participant who elects a Cash-Based
Deferral Vehicle shall also elect whether to receive prime-rate
interest equivalents ("Prime Rate Equivalents") or S&P 500 earnings
equivalents ("S&P 500 Equivalents") for the deferral period commencing
on the date or dates such Deferred Compensation is credited to the
Account and ending on the designated payment date. To the extent Prime
Rate Equivalents are elected, interest equivalents will be credited to
the Participant's Account as of the last day of each calendar month
based upon the average daily balance in the Account for the month and
the prime lending rate as declared by Citibank to be in effect from
time to time. To the extent S&P 500 Equivalents are elected, the
earnings (or loss) equivalents will be credited (or debited) to the
Participant's Account as of the last day of each calendar quarter based
upon the balance in the Account as of the last day of the quarter and
the returns realized by the Standard & Poors 500 common stocks for the
quarter. A Participant who elects a Cash-Based Deferral Vehicle shall
also elect a designated payment date ("Designated Date") for lump sum
payment of the Deferred Compensation as adjusted by the Prime Rate
Equivalents or S&P 500 Equivalents, whichever is applicable. Any
Designated Date respecting Deferred Compensation subject to Prime Rate
Equivalents shall be as of the last day of a calendar month, and any
Designated Date respecting Deferred Compensation subject to S&P 500
Equivalents shall be as of the last day of a calendar quarter. Any such
Designated Date so elected may be either during the Participant's
active tenure as a Director or after cessation of the Participant's
Director status for any
<PAGE> 4
reason and may be elected either by specifying a particular date or by
selecting a date that follows the occurrence of a specified event;
provided, however, that in no event shall a Designation Date be more
than 10 years from the date the Participant's status as a Director
ceases. A Participant may also elect multiple Designated Dates
respecting payment of Deferred Compensation with the consent of the
Committee. All Deferred Compensation and interest and earnings
equivalents credited to a Participant's Account shall be nonforfeitable
pending payment as of the Designated Date.
4. Stock Options Subject to Option Plan.
All Stock Options granted in exchange for Deferred Compensation under
this Plan shall be subject to all of the applicable terms and provisions of the
plan from which each such option is granted.
5. Payment of Amounts in Accounts.
(a) Payment Generally. Except as otherwise provided in this Paragraph
5, the Deferred Compensation and interest and earnings equivalents credited to a
Participant's Account with respect to a calendar year or years, as applicable,
shall be paid in cash to the Participant in one lump sum as of the Designated
Date elected by the Participant. In the absence of a valid election of a
Designated Date by the Participant, the Designated Date shall be deemed to be
the date of cessation of the Participant's status as a Director.
(b) Payment of Simultaneous Amounts. It is recognized that a
Participant may elect to defer Compensation and/or Retirement Income with
respect to more than one calendar year, so that Deferred Compensation and
interest and earnings equivalents are credited to the Participant's Account with
respect to more than one calendar year, and the payment of such amounts with
respect to more than one calendar year may, but need not, become payable to the
Participant as of the same Designated Date.
(c) Hardship. In the event of hardship of the Participant, as
determined in the sole discretion of the Committee, all or a portion of the cash
payments that would otherwise be made on a later Designation Date under the
Paragraph 5 shall be accelerated by being made as soon as practicable following
the Committee's determination of hardship, in one lump sum. For this purpose,
hardship shall mean any emergency or necessity affecting the Participant's
personal or family affairs having a significant financial effect.
(d) Disability. In the event of the disability of the Participant, as
determined in the sole discretion of the Committee, all cash payments that would
otherwise be made on a later Designation Date under this Paragraph 5 shall be
accelerated by being made as soon as practicable following the Committee's
determination of such disability, in one lump sum. For this purpose, disability
shall mean total and permanent disability which will prevent the Participant
from engaging in meaningful business activities.
<PAGE> 5
(e) Death. In the event of the death of the Participant, all of the
cash payments that would otherwise be made on a later Designation Date under
this Paragraph 5, shall be accelerated by being made as soon as practicable
following the death of the Participant. A Participant, by written instrument
filed with the Committee in such manner and form as it may prescribe, may
designate one or more beneficiaries to receive payment of the Participant's
Deferred Compensation and interest or earnings equivalents in the event of the
death of the Participant. Any such beneficiary designation may be changed from
time to time prior to the death of the Participant. In the absence of a
beneficiary designation on file with the Committee at the time of the
Participant's death, the Deferred Compensation and interest or earnings
equivalents remaining to be paid to the Participant shall be paid to the
executor or administrator of the Participant's estate.
(f) Change in Purpose. In the event of a major tax law change or other
reason, as determined in the sole discretion of the Committee, which makes the
continued deferral of amounts under the Plan undesirable, cash payments under
this Paragraph 5 shall be accelerated by being made as soon as practicable
following the Committee's determination to discontinue deferrals, in one lump
sum.
(g) Debiting of Plan Accounts. Once Deferred Compensation and interest
or earnings equivalents have been paid, such amounts shall be debited from the
Participant's Account and shall cease to exist.
6. Prohibition Against Assignment or Encumbrance.
No right, title, interest or benefit hereunder shall ever be liable for
or charged with any of the torts or obligations of a Participant or any person
claiming under a Participant, or be subject to seizure by any creditor of a
Participant or any person claiming under a Participant. Except as to the
selection of a "designated beneficiary" in the event of death, no Participant or
any person claiming under a Participant shall have the power to anticipate or
dispose of any right, title, interest or benefit hereunder in any manner until
the same shall have been actually distributed free and clear of the terms of the
Plan.
7. Nature of the Plan.
The Plan constitutes an unfunded, unsecured liability of the Company to
provide benefits in accordance with the provisions hereof. The Company, at its
election, may fund the payment of benefits under the Plan by setting aside and
investing, in an account on the Company's books, such funds as the Company may,
from time to time, determine. Neither the establishment of the Plan, the
crediting of amounts to Plan Accounts nor the setting aside of any funds shall
be deemed to create a trust. Legal and equitable title to any funds set aside
pursuant to the Plan shall remain in the Company, and neither the Participants
nor any persons claiming under the Participants shall have any security or other
interest in such funds. Any funds so set aside or acquired shall remain subject
to the claims of the creditors of the Company, present and future.
<PAGE> 6
8. Effective Date, Amendment and Termination of Plan.
The Plan shall be amended and restated effective as of November 1,
1998. The Committee shall have the right to alter or amend the Plan or any part
thereof, from time to time, except that no alteration or amendment may be made
which would impair the rights of Participants with respect to periods prior to
the date such alteration or amendment is effected without the consent of such
Participants. The Committee may terminate the Plan at any time with respect to
periods following the date such termination is effected.
9. Reorganization.
The Company shall not merge or consolidate with any other entity or
entities, liquidate, dissolve, reorganize, or sell substantially all of its
assets and business unless and until a succeeding or continuing entity or
entities agrees to assume and discharge the obligations of the Company under
this Agreement. Upon the occurrence of such an event, the term "Company" as used
in this Agreement shall be deemed to refer to such successor or survivor entity
or entities.
10. Laws Governing.
This Plan shall be construed in accordance with, and governed by, the
laws of the State of Texas.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.27
<SEQUENCE>16
<DESCRIPTION>AMEND.NO.1999-1 TO 1995 EMP.ANNUAL INCENTIVE PLAN
<TEXT>
<PAGE> 1
EXHIBIT 10.27
AMENDMENT NO. 1999-1 TO THE
1995 EMPLOYEE ANNUAL
INCENTIVE COMPENSATION PLAN
This Amendment No. 1999-1 is made to the Baker Hughes
Incorporated 1995 Employee Annual Incentive Compensation Plan ("the Plan").
Capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Plan.
WHEREAS, Baker Hughes Incorporated (the "Company") has
determined that it is in its best interest and that of its stockholders to amend
the plan as set forth herein;
NOW, THEREFORE, the Plan is amended as follows:
1. Article 2.1(e) of the Plan is amended in its entirety to
read as follows:
"(e) A "Change in Control" shall be deemed to have
occurred if the event set forth in any one of the
following paragraphs shall have occurred:
(i) any Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the
Company (not including in the securities beneficially
owned by such Person any securities acquired directly
from the Company or its affiliates) representing 20%
or more of the combined voting power of the Company's
then outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with a
transaction described in clause (1) of paragraph
(iii) below; or
(ii) the following individuals cease for any
reason to constitute a majority of the number of
directors then serving: individuals who, on the date
hereof, constitute the Board and any new director
(other than a director whose
<PAGE> 2
initial assumption of office is in connection with an
actual or threatened election contest relating to the
election of directors of the Company) whose
appointment or election by the Board or nomination
for election by the Company's stockholders was
approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in
office who either were directors on the date hereof
or whose appointment, election or nomination for
election was previously so approved or recommended;
or
(iii) there is consummated a merger or
consolidation of the Company or any direct or
indirect subsidiary of the Company with any other
corporation, other than (1) a merger or consolidation
which would result in the voting securities of the
Company outstanding immediately prior to such merger
or consolidation continuing to represent (either by
remaining outstanding or by being converted into
voting securities of the surviving entity or any
parent thereof), in combination with the ownership of
any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any
subsidiary of the Company, at least 65% of the
combined voting power of the securities of the
Company or such surviving entity or any parent
thereof outstanding immediately after such merger or
consolidation, or (2) a merger or consolidation
effected to implement a recapitalization of the
Company (or similar transaction) in which no Person
is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not
including in the securities Beneficially Owned by
such Person any securities acquired directly from the
Company or its Affiliates other than in connection
with the acquisition by the Company or its Affiliates
of a business) representing 20% or more of the
combined voting power of the Company's then
outstanding securities; or
<PAGE> 3
(iv) there is consummated a merger or
consolidation of the Company or any direct or
indirect subsidiary of the Company with any other
corporation, other than a merger or consolidation
immediately following which the individuals who
comprise the Board immediately prior thereto
constitute at least a majority of the board of
directors of the Company, the entity surviving such
merger or consolidation or any parent thereof (or a
majority plus one member where such board comprises
an odd number of members); or
(v) the stockholders of the Company approve
a plan of complete liquidation or dissolution of the
Company or there is consummated an agreement for the
sale or disposition by the Company of all or
substantially all of the Company's assets, other than
a sale or disposition by the Company of all or
substantially all of the Company's assets to an
entity, at least 65% of the combined voting power of
the voting securities of which are owned by
stockholders of the Company in substantially the same
proportions as their ownership of the Company
immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control"
shall not be deemed to have occurred by virtue of the
consummation of any transaction or series of
integrated transactions immediately following which
the record holders of the common stock of the Company
immediately prior to such transaction or series of
transactions continue to have substantially the same
proportionate ownership in an entity which owns all
or substantially all of the assets of the Company
immediately following such transaction or series of
transactions."
<PAGE> 4
2. Article 12 of the Plan is amended in its entirety to read
as follows:
"Article 12. Change in Control
12.1 Change in Control. Notwithstanding any provision
of the Plan to the contrary, no later than five (5) days
following the occurrence of a Change in Control other than an
event described only in clause (iii) of the definition of
Change in Control set forth in Article 2.1(e) of the Plan, (i)
Final Awards shall be computed for each Participant pursuant
to Article 5.4 hereof (assuming for this purpose that the
performance goals established pursuant to Article 5.2 herein
have been achieved to the extent required to earn the expected
value target Award Opportunity), and (ii) the Company shall
pay to each participant an amount equal to the Final Award so
determined multiplied by a fraction, the numerator of which is
the number of the Participant's months of participation
through the date of Change of Control (rounded up to the
nearest whole month), and the denominator of which is twelve
(12).
12.2 Termination of Employment Prior to Change in
Control or Following Certain Changes in Control.
Notwithstanding any provision of the Plan to the contrary, a
Participant shall be entitled to receive, no later than five
(5) days following the effective date of such Participant's
termination of employment, the payment described in the
previous Article 12.1 if (i) such Participant's employment is
terminated by the Company without Cause prior to a Change in
Control (whether or not a Change in Control ever occurs) and
such termination was 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,
(ii) such Participant terminates his or her employment for
Good Reason prior to a Change in Control (whether or not a
Change in Control ever occurs) and the circumstance or event
which constitutes Good
<PAGE> 5
Reason occurs at the request or direction of the Person
described in clause (i), (iii) such Participant's employment
is terminated by the Company without Cause or by the
Participant for Good Reason and such termination or the
circumstance or event which constitutes Good Reason is
otherwise in connection with or in anticipation of a Change in
Control (whether or not a Change in Control ever occurs) or
(iv) such Participant's employment is terminated by the
Company without Cause or by the Participant for Good Reason,
in either case within 2 years following the occurrence of a
Change in Control described in clause (iii) of the definition
of Change in Control set forth in Article 2.1(e) of the Plan."
The effective date of this Amendment No. 1999-1 shall be
January 27, 1999; provided, however, that, in the event that (A) the Company is
party to a transaction which is otherwise intended to qualify for "pooling of
interests" accounting treatment, (B) such transaction constitutes a Change in
Control within the meaning of the Plan and (C) individuals who satisfy the
requirements in clauses (i) and (ii) below constitute at least two-thirds (2/3)
of the number of directors of the entity surviving such transaction or any
parent thereof: individuals who (i) immediately prior to such transaction
constitute the Board and (ii) on the date hereof constitute the Board and any
new director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of directors of the Company) whose appointment or election by the Board
or nomination for election by the Company's stockholders was approved or
recommended, by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved or recommended
then (a) this Amendment No. 1999-1 shall, to the extent practicable, be
interpreted so as to permit such accounting treatment, and (b) to the extent
that the application of clause (a) of this sentence does not preserve the
availability of such accounting treatment, then, to the extent that any
provision or combination of provisions of this Amendment No. 1999-1 disqualifies
the transaction as a "pooling" transaction (including, if applicable, this
entire
<PAGE> 6
Amendment No. 1999-1), the Board shall amend such provision or provisions if and
to the extent necessary (including declaring such provision or provisions to be
null and void as of the date hereof) so that such transaction may be accounted
for as a "pooling of interests." All determinations with respect to this
paragraph shall be made by the Company, based upon the advice of the accounting
firm whose opinion with respect to "pooling of interests" is required as a
condition to the consummation of such transaction. Except as herein modified,
the Plan shall remain in full force and effect.
BAKER HUGHES INCORPORATED
By:
-----------------------------------------
Name: G.S. Finley
Title: Senior Vice President
and Chief Administrative
Officer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.30
<SEQUENCE>17
<DESCRIPTION>AMENDMENT NO. 1999-1 TO 1995 STOCK AWARD PLAN
<TEXT>
<PAGE> 1
EXHIBIT 10.30
AMENDMENT NO. 1999-1 TO THE
1995 STOCK AWARD PLAN
This Amendment No. 1999-1 is made to the Baker Hughes
Incorporated 1995 Stock Award Plan ("the Plan"). Capitalized terms used but not
defined herein shall have the meanings ascribed to them in the Plan.
WHEREAS, Baker Hughes Incorporated (the "Company") has
determined that it is in its best interest and that of its stockholders to amend
the Plan as set forth herein;
NOW, THEREFORE, the Plan is amended as follows:
1. Subparagraph (g) of Paragraph II of the Plan is
amended in its entirety to read as follows:
"(g) A "Change in Control" shall be deemed to have
occurred if the event set forth in any one of the following
paragraphs shall have occurred:
(1) any Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company
(not including in the securities beneficially owned by such
Person any securities acquired directly from the Company or
its affiliates) representing 20% or more of the combined
voting power of the Company's then outstanding securities,
excluding any Person who becomes such a Beneficial Owner in
connection with a transaction described in clause (i) of
paragraph (3) below; or
(2) the following individuals cease for any
reason to constitute a majority of the number of directors
then serving: individuals who, on the date hereof, constitute
the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual
or threatened election contest relating to the election of
directors of the Company) whose appointment or election by the
Board or nomination for election by the
1
<PAGE> 2
Company's stockholders was approved or recommended by a vote
of at least two-thirds (2/3) of the directors then still in
office who either were directors on the date hereof or whose
appointment, election or nomination for election was
previously so approved or recommended; or
(3) there is consummated a merger or
consolidation of the Company or any direct or indirect
subsidiary of the Company with any other corporation, other
than (i) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit
plan of the Company or any subsidiary of the Company, at least
65% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or
(ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not including in
the securities Beneficially Owned by such Person any
securities acquired directly from the Company or its
Affiliates other than in connection with the acquisition by
the Company or its Affiliates of a business) representing 20%
or more of the combined voting power of the Company's then
outstanding securities; or
(4) there is consummated a merger or
consolidation of the Company or any direct or indirect
subsidiary of the Company with any other corporation, other
than a merger or consolidation immediately following which the
individuals who comprise the Board immediately prior thereto
constitute at least a majority
2
<PAGE> 3
of the board of directors of the Company, the entity
surviving such merger or consolidation or any parent thereof
(or a majority plus one member where such board comprises an
odd number of members); or
(5) the stockholders of the Company approve
a plan of complete liquidation or dissolution of the Company
or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets, other than a sale or disposition by the
Company of all or substantially all of the Company's assets to
an entity, at least 65% of the combined voting power of the
voting securities of which are owned by stockholders of the
Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control"
shall not be deemed to have occurred by virtue of the
consummation