Baker Hughes 2007 Annual Report Download - page 74

E-6 Baker Hughes Incorporated
4.2 Adjustments in Authorized Shares. The existence of
outstanding Awards shall not affect in any manner the right or
power of the Company or its stockholders to make or autho-
rize any or all adjustments, recapitalizations, reorganizations or
other changes in the capital stock of the Company or its busi-
ness or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stock
(whether or not such issue is prior to, on a parity with or
junior to the Shares) or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets
or business or any other corporate act or proceeding of any
kind, whether or not of a character similar to that of the acts
or proceedings enumerated above.
If there shall be any change in the Shares of the Company
or the capitalization of the Company through merger, consoli-
dation, reorganization, recapitalization, stock dividend, stock
split, reverse stock split, split up, spin-off, combination of
shares, exchange of shares, dividend in kind or other like
change in capital structure or distribution (other than normal
cash dividends) to stockholders of the Company, the Board, in
its sole discretion, to prevent dilution or enlargement of Partic-
ipants’ rights under this Plan, shall adjust, in an equitable man-
ner, as applicable, the number and kind of Shares that may be
issued under this Plan, the number and kind of Shares subject
to outstanding Awards, the exercise price applicable to out-
standing Awards, the Awards Limitations, the Fair Market
Value of the Shares and other value determinations applicable
to outstanding Awards. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation,
reorganization or liquidation, the Board shall be authorized to
issue or assume Awards by means of substitution of new
Awards, as appropriate, for previously issued Awards or to
assume previously issued Awards as part of such adjustment.
In the event of a corporate merger, consolidation, acquisition
of property or stock, separation, reorganization or liquidation,
the Board shall be authorized (a) to assume under the Plan
previously issued compensatory awards, or to substitute new
Awards for previously issued compensatory awards, including
Awards, as part of such adjustment or (b) to cancel Awards
that are Options or SARs and give the Participants who are the
holders of such Awards notice and opportunity to exercise for
30 days prior to such cancellation.
Appropriate adjustments may also be made by the Board
in the terms of any Awards under this Plan to reflect such
changes or distributions and to modify any other terms of out-
standing Awards on an equitable basis, including modifications
of performance goals and changes in the length of Perfor-
mance Periods.
In addition, other than with respect to Options, Stock
Appreciation Rights and other Awards intended to constitute
Performance-Based Awards, the Board is authorized to make
adjustments to the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring
events affecting the Company or the financial statements of
the Company, or in response to changes in applicable laws,
regulations or accounting principles. The determination of the
Board as to the foregoing adjustments, if any, shall be conclu-
sive and binding on Participants under this Plan.
Article 5. Eligibility and Participation.
5.1 Eligibility. Persons eligible to participate in this Plan
include all Employees and Directors.
5.2 Actual Participation. Subject to the provisions of this
Plan, the Committee may, from time to time, select from all
eligible Employees those to whom Awards shall be granted
and shall determine the nature and amount of each Award,
subject to the provisions of this Plan. The Board may, from
time to time, select from all eligible Directors those to whom
Awards shall be granted and shall determine the nature and
amount of each Award, subject to the provisions of this Plan.
Article 6. Stock Options.
6.1 Grant of Options. Subject to the terms and provisions
of this Plan, Options may be granted to Participants in such
number, upon the terms and at any time, and from time to
time, as the Committee (or the Board with respect to Awards
granted to Directors) shall determine.
6.2 Award Agreement. Each Option grant shall be
evidenced by an Award Agreement that shall specify the
Option Price, the duration of the Option, the number of
Shares to which the Option pertains, and other provisions as
the Committee (or the Board with respect to Awards granted
to Directors) shall determine that are not inconsistent with
the terms of this Plan. The Award Agreement also shall specify
whether the Option is intended to be an ISO or a NQSO. Not-
withstanding its designation as an ISO in the Award Agree-
ment, to the extent the limitations of Code Section 422 are
exceeded, with respect to such excess portion, the Option shall
become a NQSO. Employees may be awarded ISOs (except
those who have not yet commenced employment with the
Company or any of its Affiliates may not receive ISOs) and
NQSOs, whereas Directors may only be awarded NQSOs.
6.3 Option Price. The Committee (or the Board with
respect to Awards granted to Directors) shall determine the
Option Price for each grant of an Option under this Plan.
The Option Price shall not be less than the Fair Market Value
of the Shares on the date of grant.
6.4 Duration of Options. Each Option granted to a Par-
ticipant shall expire at the time the Committee (or the Board
with respect to Awards granted to Directors) shall determine
at the time of grant; provided that no Option shall be exercis-
able later than the tenth anniversary date of its grant.
6.5 Exercise of Options. Options granted under this
Article 6 shall be exercisable at the times and be subject to
the restrictions and conditions as the Committee (or the Board
with respect to Awards granted to Directors) shall in each
instance approve, which need not be the same for each grant
or for each Participant.
6.6 Payment. Options granted under this Article 6 shall
be exercised in the form and manner as the Committee (or the
Board with respect to Awards to Directors) shall determine
from time to time.
The Option Price upon exercise of any Option shall be pay-
able to the Company in full either (a) in cash or its equivalent;
(b) by tendering previously acquired Shares having an aggre-
gate Fair Market Value at the time of exercise equal to the
total Option Price (provided that the Shares that are tendered