Baker Hughes 2007 Annual Report Download - page 75

2007 Proxy Statement E-7
must have been held by the Participant for at least 6 months
prior to their tender to satisfy the Option Price); (c) by a com-
bination of (a) and (b); or (d) any other method approved by
the Committee (or the Board with respect to Awards granted
to Directors) in its sole discretion at the time of grant and as
set forth in the Award Agreement. An Award Agreement
evidencing an Option may, in the discretion of the Committee
(or the Board with respect to Awards granted to Directors),
provide for a “cashless exercise” of an Option by establishing
procedures whereby the Participant, by a properly executed
written notice, directs (1) an immediate sale or margin loan
respecting all or a part of the Shares to which he is entitled
upon exercise pursuant to an extension of credit by the Com-
pany to the Participant of the Option Price, (2) the delivery of
the Shares 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.
Subject to any governing rules or regulations and Section
18.10, after the exercise of the Option and full payment of the
Option Price in the form and manner as the Committee (or
Board with respect to Awards granted to Directors) shall deter-
mine, the Participant may pay the required fee and request a
Share certificate based upon the number of Shares purchased
under the Option through the third-party administrator desig-
nated by the Committee (or the Board with respect to Awards
granted to Directors) to have this administrative duty. In addi-
tion, the Company may, at its option, issue or cause to be
issued Share certificates.
Unless otherwise determined by the Committee (or the
Board with respect to Awards granted to Directors), all pay-
ments under all of the methods indicated above shall be paid
in United States dollars.
6.7 Restrictions on Share Transferability. The Commit-
tee (or the Board with respect to Awards granted to Directors)
may impose such restrictions on any Shares acquired pursuant
to the exercise of an Option granted under this Article 6 as it
may deem advisable, including restrictions under applicable
federal securities laws, under the requirements of any stock
exchange or market upon which such Shares are then listed or
traded and under any blue sky or state securities laws applica-
ble to such Shares.
6.8 Termination of Employment/Directorship.
(a) Each Participant’s Award Agreement shall set forth the
extent to which the Participant shall have the right to
exercise the Option following termination of the Partici-
pant’s employment or directorship with the Company
or its Affiliates. Such provisions shall be determined in
the sole discretion of the Committee (or the Board with
respect to Awards granted to Directors), shall be
included in the Award Agreement entered into with
each Participant, need not be uniform among all
Options issued pursuant to this Article 6 and may reflect
distinctions based on the reasons for termination.
(b) Terms for Director Options.
(i) Each Option granted to a Director (a “Director
Option”) shall have a term of 10 years from the
date of grant, notwithstanding any earlier termina-
tion of the status of the holder as a Director (the
“Option Expiration Date”).
(ii) The purchase price of each Share subject to a
Director Option shall be equal to the Fair Market
Value of a Share on the date of grant.
(iii) All Director Options shall vest and become exercis-
able on the first anniversary of the date of grant.
(iv) A Director’s directorship shall terminate at the close
of business on the day preceding the day he ceases
to be a member of the Board for any reason what-
soever. When a Director’s directorship is termi-
nated, each of his Director Options and all rights
thereunder shall expire in accordance with the fol-
lowing (but in no event later than the Option Expi-
ration Date):
(A) Director Options granted within 1 year preced-
ing termination:
(1) At the time the Director’s directorship is
terminated, unless
(2) Such termination occurs in connection
with, or within 2 years following, a
Change in Control, in which case, 30 days
following his termination.
(B) Director Options granted prior to 1-year pre-
ceding termination:
(1) 1 year after termination if due to the
Director’s death (a Director’s Option may
be exercised by the 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 Director
Option at the time of his death); or
(2) 3 years after termination if as a result of
resignation or removal from the Board
because of disability or in accordance with
the provisions of the Company’s Bylaws
regarding termination of director’s terms of
office; or
(3) 3 months after termination if, for any rea-
son other than specified above.
(c) Agreements. Any Award of Director Options shall
be embodied in an Award Agreement, which shall
contain the terms, conditions and limitations set
forth above and shall be signed by an authorized
officer for and on behalf of the Company.
6.9 Transferability of Options.
(a) Incentive Stock Options. No ISO granted under this
Plan may be sold, transferred, pledged, assigned or oth-
erwise alienated or hypothecated, other than by will or
by the laws of descent and distribution. Further, all ISOs
granted to a Participant under this Plan shall be exercis-
able during his or her lifetime only by the Participant,
and after that time, by the Participant’s heirs or estate.