EXHIBIT 10.46
BAKER HUGHES INCORPORATED
STOCK OPTION AGREEMENT
NAME
GRANTEE
<Table>
Date of Grant: JULY 24, 2002
Total Number of Shares Granted: GRANT
Exercise Price per Share: $24.94
Expiration Date: JULY 24, 2012
Term of Award; Vesting Schedule: 3 YEARS, WITH VESTING OF 33 1/3% ON THE ANNIVERSARY DATE OF THE
DATE OF GRANT IN EACH OF THE YEARS 2003, 2004, AND 2005.
Other Terms of Award: TERMS AND CONDITIONS ARE LOCATED ON THE BHI INTRANET.
</Table>
GRANT OF OPTION
Pursuant to action taken by the Compensation Committee of the Board of Directors
of Baker Hughes Incorporated, a Delaware corporation (the "Company"), for the
purposes of administration of the BAKER HUGHES INCORPORATED [<PLAN NAME>] (the
"Plan"), the above-named Grantee is hereby granted [<a nonqualified/an
incentive>] stock option to purchase the above number of shares of the Company's
$1 par value per share common stock at the exercise price stated above for each
share subject to this option, with the exercise price payable at the time of
exercise. This option may not be exercised after the Expiration Date.
By your acceptance of the option, you agree that the option is granted under and
governed by the terms of the Plan, this Stock Option Agreement and the Terms and
Conditions of Option Agreements (dated July 24, 2002).
BAKER HUGHES INCORPORATED
/S/ MICHAEL E. WILEY
Michael E. Wiley - Chairman,
President & CEO
EXHIBIT 10.46
BAKER HUGHES INCORPORATED
TERMS AND CONDITIONS
OF
OPTION AGREEMENTS
(JULY 24, 2002)
These Terms and Conditions are applicable to options granted pursuant
to the Baker Hughes Incorporated 2002 Employee Long-Term Incentive Plan (the
"Plan").
1. TERMINATION OF EMPLOYMENT. The following provisions will apply in the
event of Grantee's termination of employment:
1.1 Termination Generally. If Grantee's employment is terminated
for any reason other than
(i) a termination covered by Sections 1.2 through 1.6, or
(ii) a termination, within two years following a Change in
Control (as defined in the Plan) that occurs after the
Date of Grant, either (A) by the Company without Cause
(as defined in the Plan) or (B) by the Grantee for Good
Reason (as defined in the Plan),
the option will wholly and completely terminate on the date of
termination of employment, to the extent it is not then exercisable;
however, to the extent the option is exercisable, Grantee shall have
three months from the date of termination of employment to exercise the
option (but in no event later than the Expiration Date).
1.2 Termination for Cause. If Grantee's employment is terminated for
cause, including (without limitation) fraud, theft, embezzlement
committed against the Company or any of its affiliated companies or a
customer of the Company, or for conflict of interest, unethical
conduct, dishonesty affecting the assets, properties or business of the
Company or any of its affiliated companies, willful misconduct, or
continued material dereliction of duties, the option will wholly and
completely terminate on the date of termination of employment if such
termination occurs (i) prior to a Change of Control that occurs after
the Date of Grant or (ii) after the second anniversary of a Change of
Control that occurs after the Date of Grant. If Grantee's employment is
terminated for Cause (as defined in the Plan), the option will wholly
and completely terminate on the date thirty days following such
termination (but not later than the Expiration Date) if such
termination occurs within two years following a Change of Control that
occurs after the Date of Grant.
1.3 Termination without Cause or for Good Reason in Connection with a
Change in Control. Notwithstanding any other provision of this Stock
Option Agreement to the contrary, if a Change in Control of the Company
occurs, the provisions of Article 14 of the Plan shall govern.
1.4 Divestiture of Business Unit. If the Company divests its ownership
in a business unit that employs the Grantee, then the option will be
deemed to be fully vested on the effective date of the Divestiture of
the business unit. The Grantee will have three years in which to
exercise the option. A "Divestiture" includes the disposition of any
business unit of the Company and its subsidiaries to an entity that the
Company does not consolidate in its financial statements, whether the
disposition is structured as a sale or transfer of stock, a merger, a
consolidation or a sale or transfer of assets, or a combination
thereof, provided that a "Divestiture" shall not include a disposition
that constitutes a Change in Control.
1.5 Retirement or Disability. In the event of the retirement (such that
the Grantee's age plus years of service with the Company equals or
exceeds 65) or long-term disability of the Grantee, as long-term
disability is determined in the discretion of the Committee (as defined
in the Plan), all granted but unvested options shall immediately vest
upon the Grantee's retirement or long-term disability. The Grantee
shall have three years from the date of termination of employment due
to retirement or long-term disability to exercise the option (but not
later than the Expiration Date).
EXHIBIT 10.46
1.6 Death. Upon the death of the Grantee in active service, all granted
but unvested options shall immediately vest upon the Grantee's death
and otherwise shall be exercisable for a period of one year following
Grantee's death (but in no event later than the Expiration Date).
2. PROHIBITED ACTIVITY. Notwithstanding any other provision of this Stock
Option Agreement, if Grantee engages in a "Prohibited Activity," as
described below, while employed by the Company or any of its affiliates
or within two years after Grantee's employment termination date, then
Grantee's right to exercise any portion of the option, to the extent
still outstanding at that time, shall immediately thereupon wholly and
completely terminate. If an allegation of a Prohibited Activity by
Grantee is made to the Committee, the Committee, in its discretion, may
suspend the exercisability of the option for up to two months to permit
the investigation of such allegation. If it is determined that no
Prohibited Activity was engaged in by Grantee, the period of
exercisability of the option will be increased by the amount of time of
the suspension; however, in no event will the option be exercisable
more than ten years from the date of grant. A "Prohibited Activity"
shall be deemed to have occurred, as determined by the Committee in its
sole and absolute discretion, if Grantee:
(i) divulges any non-public, confidential or proprietary
information of the Company or of its past, present or
future affiliates (collectively, the "Baker Hughes
Group"), but excluding information that (a) becomes
generally available to the public other than as a
result of Grantee's public use, disclosure, or fault,
or (b) becomes available to Grantee on a
non-confidential basis after Grantee's employment
termination date from a source other than a member of
the Baker Hughes Group prior to the public use or
disclosure by Grantee, provided that such source is not
bound by a confidentiality agreement or otherwise
prohibited from transmitting the information by a
contractual, legal or fiduciary obligation; or
(ii) directly or indirectly, consults or becomes affiliated
with, conducts, participates or engages in, or becomes
employed by, any business that is competitive with the
business of any member of the Baker Hughes Group,
wherever from time to time conducted throughout the
world, including situations where Grantee solicits or
participates in or assists in any way in the
solicitation or recruitment, directly or indirectly, of
any employees of any member of the Baker Hughes Group.
3. CASHLESS EXERCISE. Cashless exercise, in accordance with the terms of
the Plan, shall be available to Grantee for the shares subject to the
option.
4. TAX WITHHOLDING. To the extent the exercise of the option results in
taxable income to Grantee, the Company is authorized to withhold from
any remuneration payable to Grantee any tax required to be withheld by
reason of such taxable income.
5. NONTRANSFERABILITY. The option is not transferable by the Grantee
otherwise than by will or by the laws of descent and distribution, and
is exercisable during the Grantee's lifetime only by the Grantee.
6. LIMIT OF LIABILITY. Under no circumstances will the Company be liable
for any indirect, incidental, consequential or special damages
(including lost profits) of any form incurred by any person, whether or
not foreseeable and regardless of the form of the act in which such a
claim may be brought, with respect to the Plan or the Company's role as
Plan sponsor.
7. MISCELLANEOUS. The option is granted under and is subject to all of the
provisions of the Plan, including amendments to the Plan, if any. In
the event of a conflict between these Terms and Conditions and the Plan
provisions, the Plan provisions will control. Capitalized terms that
are not defined herein shall have the meaning ascribed to such terms in
the Plan.
EXHIBIT 10.46
BAKER HUGHES INCORPORATED
TERMS AND CONDITIONS
OF
OPTION AGREEMENTS
(JULY 24, 2002)
These Terms and Conditions are applicable to options granted pursuant
to the Baker Hughes Incorporated 2002 Director & Officer Long-Term Incentive
Plan (the "Plan").
1. TERMINATION OF EMPLOYMENT. The following provisions will apply in the
event of Grantee's termination of employment:
1.1 Termination Generally. If Grantee's employment is terminated for
any reason other than
(i) a termination covered by Sections 1.2 through 1.6, or
(ii) a termination, within two years following a Change in
Control (as defined in the Plan) that occurs after the
Date of Grant, either (A) by the Company without Cause
(as defined in the Plan) or (B) by the Grantee for Good
Reason (as defined in the Plan),
the option will wholly and completely terminate on the date of
termination of employment, to the extent it is not then exercisable;
however, to the extent the option is exercisable, Grantee shall have
three months from the date of termination of employment to exercise the
option (but in no event later than the Expiration Date).
1.2 Termination for Cause. If Grantee's employment is terminated for
cause, including (without limitation) fraud, theft, embezzlement
committed against the Company or any of its affiliated companies or a
customer of the Company, or for conflict of interest, unethical
conduct, dishonesty affecting the assets, properties or business of the
Company or any of its affiliated companies, willful misconduct, or
continued material dereliction of duties, the option will wholly and
completely terminate on the date of termination of employment if such
termination occurs (i) prior to a Change of Control that occurs after
the Date of Grant or (ii) after the second anniversary of a Change of
Control that occurs after the Date of Grant. If Grantee's employment is
terminated for Cause (as defined in the Plan), the option will wholly
and completely terminate on the date thirty days following such
termination (but not later than the Expiration Date) if such
termination occurs within two years following a Change of Control that
occurs after the Date of Grant.
1.3 Termination without Cause or for Good Reason in Connection with a
Change in Control. Notwithstanding any other provision of this Stock
Option Agreement to the contrary, if a Change in Control of the Company
occurs, the provisions of Article 14 of the Plan shall govern.
1.4 Divestiture of Business Unit. If the Company divests its ownership
in a business unit that employs the Grantee, then the option will be
deemed to be fully vested on the effective date of the Divestiture of
the business unit. The Grantee will have three years in which to
exercise the option. A "Divestiture" includes the disposition of any
business unit of the Company and its subsidiaries to an entity that the
Company does not consolidate in its financial statements, whether the
disposition is structured as a sale or transfer of stock, a merger, a
consolidation or a sale or transfer of assets, or a combination
thereof, provided that a "Divestiture" shall not include a disposition
that constitutes a Change in Control.
1.5 Retirement or Disability. In the event of the retirement (such that
the Grantee's age plus years of service with the Company equals or
exceeds 65) or long-term disability of the Grantee, as long-term
disability is determined in the discretion of the Committee (as defined
in the Plan), all granted but unvested options shall immediately vest
upon the Grantee's retirement or long-term disability. The Grantee
shall have three years from the date of termination of employment due
to retirement or long-term disability to exercise the option (but not
later than the Expiration Date).
EXHIBIT 10.46
1.6 Death. Upon the death of the Grantee in active service, all granted
but unvested options shall immediately vest upon the Grantee's death
and otherwise shall be exercisable for a period of one year following
Grantee's death (but in no event later than the Expiration Date).
2. PROHIBITED ACTIVITY. Notwithstanding any other provision of this Stock
Option Agreement, if Grantee engages in a "Prohibited Activity," as
described below, while employed by the Company or any of its affiliates
or within two years after Grantee's employment termination date, then
Grantee's right to exercise any portion of the option, to the extent
still outstanding at that time, shall immediately thereupon wholly and
completely terminate. If an allegation of a Prohibited Activity by
Grantee is made to the Committee, the Committee, in its discretion, may
suspend the exercisability of the option for up to two months to permit
the investigation of such allegation. If it is determined that no
Prohibited Activity was engaged in by Grantee, the period of
exercisability of the option will be increased by the amount of time of
the suspension; however, in no event will the option be exercisable
more than ten years from the date of grant. A "Prohibited Activity"
shall be deemed to have occurred, as determined by the Committee in its
sole and absolute discretion, if Grantee:
(i) divulges any non-public, confidential or proprietary
information of the Company or of its past, present or
future affiliates (collectively, the "Baker Hughes
Group"), but excluding information that (a) becomes
generally available to the public other than as a
result of Grantee's public use, disclosure, or fault,
or (b) becomes available to Grantee on a
non-confidential basis after Grantee's employment
termination date from a source other than a member of
the Baker Hughes Group prior to the public use or
disclosure by Grantee, provided that such source is not
bound by a confidentiality agreement or otherwise
prohibited from transmitting the information by a
contractual, legal or fiduciary obligation; or
(ii) directly or indirectly, consults or becomes affiliated
with, conducts, participates or engages in, or becomes
employed by, any business that is competitive with the
business of any member of the Baker Hughes Group,
wherever from time to time conducted throughout the
world, including situations where Grantee solicits or
participates in or assists in any way in the
solicitation or recruitment, directly or indirectly, of
any employees of any member of the Baker Hughes Group.
3. CASHLESS EXERCISE. Cashless exercise, in accordance with the terms of
the Plan, shall be available to Grantee for the shares subject to the
option.
4. TAX WITHHOLDING. To the extent the exercise of the option results in
taxable income to Grantee, the Company is authorized to withhold from
any remuneration payable to Grantee any tax required to be withheld by
reason of such taxable income.
5. NONTRANSFERABILITY. The option is not transferable by the Grantee
otherwise than by will or by the laws of descent and distribution, and
is exercisable during the Grantee's lifetime only by the Grantee.
6. LIMIT OF LIABILITY. Under no circumstances will the Company be liable
for any indirect, incidental, consequential or special damages
(including lost profits) of any form incurred by any person, whether or
not foreseeable and regardless of the form of the act in which such a
claim may be brought, with respect to the Plan or the Company's role as
Plan sponsor.
7. MISCELLANEOUS. The option is granted under and is subject to all of the
provisions of the Plan, including amendments to the Plan, if any. In
the event of a conflict between these Terms and Conditions and the Plan
provisions, the Plan provisions will control. Capitalized terms that
are not defined herein shall have the meaning ascribed to such terms in
the Plan.