Baker Hughes 2004 Annual Report Download - page 33

the฀voting฀securities฀of฀the฀Company฀outstanding฀immedi-
ately฀prior฀to฀such฀merger฀own,฀directly฀or฀indirectly,฀at฀
least฀50฀percent฀of฀the฀combined฀voting฀power฀of฀the฀vot-
ing฀securities฀of฀the฀Company,฀the฀surviving฀entity฀or฀the฀฀
parent฀of฀the฀surviving฀entity฀outstanding฀immediately฀after฀
such฀merger;฀
(iii)฀ any฀person,฀other฀than฀a฀Specified฀Owner฀(as฀defined฀in฀the฀
2004฀Change฀in฀Control฀Agreements),฀becomes฀a฀beneficial฀
owner,฀directly฀or฀indirectly,฀of฀securities฀of฀the฀Company฀
representing฀30฀percent฀or฀more฀of฀the฀combined฀voting฀
power฀of฀the฀Company’s฀then฀outstanding฀voting฀securities;฀
(iv)฀ a฀sale,฀transfer,฀lease฀or฀other฀disposition฀of฀all฀or฀substan-
tially฀all฀of฀the฀Company’s฀Assets฀(as฀defined฀in฀the฀2004฀
Change฀in฀Control฀Agreements)฀is฀consummated฀(an฀
“Asset฀Sale”),฀unless:
(a)฀ the฀individuals฀and฀entities฀who฀were฀the฀beneficial฀
owners฀of฀the฀voting฀securities฀of฀the฀Company฀immedi-
ately฀prior฀to฀such฀Asset฀Sale฀own,฀directly฀or฀indirectly,฀
50฀percent฀or฀more฀of฀the฀combined฀voting฀power฀of฀
the฀voting฀securities฀of฀the฀entity฀that฀acquires฀such฀
Assets฀in฀such฀Asset฀Sale฀or฀its฀parent฀immediately฀
after฀such฀Asset฀Sale฀in฀substantially฀the฀same฀propor-
tions฀as฀their฀ownership฀of฀the฀Company’s฀voting฀
securities฀immediately฀prior฀to฀such฀Asset฀Sale;฀or
(b)฀ the฀individuals฀who฀comprise฀the฀Board฀immediately฀
prior฀to฀such฀Asset฀Sale฀constitute฀a฀majority฀of฀the฀
board฀of฀directors฀or฀other฀governing฀body฀of฀either฀
the฀entity฀that฀acquired฀such฀Assets฀in฀such฀Asset฀Sale฀
or฀its฀parent฀(or฀a฀majority฀plus฀one฀member฀where฀
such฀board฀or฀other฀governing฀body฀is฀comprised฀of฀
an฀odd฀number฀of฀directors);฀or
(v)฀ the฀stockholders฀of฀the฀Company฀approve฀a฀plan฀of฀com-
plete฀liquidation฀or฀dissolution฀of฀the฀Company.
Severance฀Agreements
The฀Company฀also฀has฀severance฀agreements฀(“Prior฀Sev-
erance฀Agreements”)฀with฀G.฀Stephen฀Finley,฀James฀R.฀Clark,฀
Alan฀R.฀Crain,฀Jr.฀and฀Douglas฀J.฀Wall,฀as฀well฀as฀three฀other฀
officers฀of฀the฀Company.฀The฀Prior฀Severance฀Agreements฀
provide฀for฀payment฀of฀certain฀benefits฀to฀the฀Named฀Officers฀
as฀a฀result฀of฀termination฀of฀employment฀following,฀or฀in฀con-
nection฀with,฀a฀Change฀in฀Control฀(described฀below)฀of฀the฀
Company.฀The฀initial฀term฀of฀the฀Prior฀Severance฀Agreements฀
expired฀on฀December฀31,฀1999,฀except฀for฀the฀agreement฀of฀
Mr.฀Crain,฀which฀initially฀expired฀on฀December฀31,฀2001฀and฀
the฀agreement฀of฀Mr.฀Clark,฀which฀initially฀expired฀on฀Decem-
ber฀31,฀2002.฀Beginning฀on฀January฀1,฀1998฀for฀Mr.฀Finley฀and฀
Mr.฀Wall,฀January฀1,฀2002฀for฀Mr.฀Crain฀and฀January฀1,฀2003฀
for฀Mr.฀Clark฀and฀on฀each฀successive฀January฀1฀thereafter฀
(“Extension฀Date”),฀the฀term฀of฀the฀Prior฀Severance฀Agree-
ments฀was฀automatically฀renewed฀for฀an฀additional฀year,฀
unless฀notice฀of฀nonextension฀had฀been฀given฀by฀the฀Septem-
ber฀30th฀prior฀to฀the฀Extension฀Date.฀The฀term฀is฀automatically฀
extended฀for฀24฀months฀following฀a฀Change฀in฀Control฀(as฀
defined฀below).฀Mr.฀Wiley฀had฀a฀Prior฀Severance฀Agreement฀
that฀terminated฀upon฀his฀retirement.฀
Prior฀to฀September฀30,฀2004,฀the฀Company฀sent฀notice฀
of฀nonextension฀of฀the฀Prior฀Severance฀Agreements฀to฀the฀
Named฀Officers฀notifying฀each฀of฀them฀that฀their฀Prior฀Sever-
ance฀Agreement฀would฀be฀terminated฀as฀of฀December฀31,฀
2005฀and฀that฀each฀officer฀would฀then฀be฀covered฀by฀an฀indi-
vidual฀Change฀in฀Control฀Agreement฀as฀described฀above.
Pursuant฀to฀the฀Prior฀Severance฀Agreements,฀the฀Company฀
pays฀severance฀benefits฀to฀a฀Named฀Officer฀if฀the฀Named฀Offi-
cer’s฀employment฀is฀terminated฀following,฀or฀in฀connection฀
with,฀a฀Change฀in฀Control฀and฀during฀the฀term฀unless:
(i)฀ the฀Named฀Officer฀resigns฀without฀Good฀Reason฀(as฀defined฀
in฀the฀Prior฀Severance฀Agreements);
(ii)฀ the฀Company฀terminates฀the฀employment฀of฀the฀Named฀
Officer฀for฀Cause฀(as฀defined฀in฀the฀Prior฀Severance฀Agree-
ments);฀or
(iii)฀ the฀employment฀of฀the฀Named฀Officer฀is฀terminated฀by฀
reason฀of฀death฀or฀Disability฀(as฀defined฀in฀the฀Prior฀Sever-
ance฀Agreements).
If฀the฀Named฀Officer฀meets฀the฀criteria฀for฀payment฀of฀sev-
erance฀benefits฀due฀to฀termination฀of฀employment฀following,฀
or฀in฀connection฀with,฀a฀Change฀in฀Control฀during฀the฀term฀
as฀described฀above,฀in฀addition฀to฀any฀benefits฀he฀is฀due฀under฀
the฀Company’s฀employee฀benefit฀plans฀and฀equity฀and฀incen-
tive฀plans,฀he฀will฀receive฀the฀following฀benefits:
(a)฀ a฀lump฀sum฀payment฀equal฀to฀three฀(3)฀times฀the฀
Named฀Officer’s฀annual฀base฀salary฀in฀effect฀on฀the฀
date฀of฀termination฀of฀employment฀or,฀if฀higher,฀his฀
annual฀base฀salary฀in฀effect฀immediately฀prior฀to฀the฀
event฀or฀circumstance฀constituting฀Good฀Reason฀for฀
his฀resignation;
(b)฀ a฀lump฀sum฀payment฀equal฀to฀three฀(3)฀times฀the฀
average฀annual฀bonus฀earned฀by฀the฀Named฀Officer฀
during฀the฀three฀(3)฀fiscal฀years฀ending฀immediately฀
prior฀to฀the฀fiscal฀year฀in฀which฀his฀termination฀of฀
employment฀occurs฀or,฀if฀higher,฀immediately฀prior฀
to฀the฀fiscal฀year฀in฀which฀occurs฀the฀event฀or฀circum-
stance฀constituting฀Good฀Reason฀for฀resignation;฀pro-
vided,฀that฀if฀the฀Named฀Officer฀has฀not฀participated฀
in฀an฀annual฀bonus฀plan฀of฀the฀Company฀for฀the฀
entirety฀of฀the฀three-year฀period,฀then฀the฀average฀
bonus฀will฀be฀calculated฀using฀such฀lesser฀number฀of฀
bonuses฀as฀have฀been฀earned;
(c)฀ continuation฀of฀life,฀disability,฀accident฀and฀health฀
insurance฀benefits฀and฀all฀perquisites฀for฀an฀additional฀
three฀(3)฀years;
(d)฀ a฀lump฀sum฀payment฀equal฀to฀the฀sum฀of:฀
(1)฀ any฀unpaid฀incentive฀compensation฀that฀has฀been฀
allocated฀or฀awarded฀to฀the฀Named฀Officer฀for฀a฀
completed฀fiscal฀year฀or฀other฀measuring฀period฀
preceding฀the฀date฀of฀termination฀under฀the฀
Company’s฀1995฀Employee฀Annual฀Incentive฀
Compensation฀Plan,฀as฀amended,฀and฀that,฀as฀of฀
the฀date฀of฀termination,฀is฀contingent฀only฀upon฀
the฀continued฀employment฀of฀the฀Named฀Officer฀
to฀a฀subsequent฀date,฀and
Proxy฀Statement฀฀฀฀฀17