Exhibit 10.2

March 17, 2004

Via Hand Delivery
Mr. Andrew Szescila
6307 Prague Street
Houston, TX 77007

Dear Andy:

The purpose of this letter (the “Agreement”) is to set forth certain agreements
and understandings regarding, among other things:

•   Your agreement to certain obligations of cooperation, confidentiality, and
non-competition; and   •   Your agreement to provide consulting services and the
Company’s agreement to compensate you for those services.

When you and I have signed this letter, it will constitute a complete agreement
on all of these issues.

1.   AGREEMENTS:

A.   Cooperation and Assistance. You agree, acknowledge, and certify that:

(a)   you are aware that the Company is currently under investigation by the
Securities and Exchange Commission and the Department of Justice;   (b)   you
have (i) not engaged in, nor encouraged any individual, in any way, to engage in
the destruction or secreting of any information, in any form, including but not
limited to documents and emails, (“documentation”) that might be relevant to the
investigation referenced in 1 A (a) above; (ii) turned over all documentation in
response to prior requests; and (iii) responded, fully and truthfully, to all
questions related to or arising from the subject matter of such investigation
that have been posed to you by employees or representatives of the Company;

         
Initials: AJS MEW
    1  

 

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Exhibit 10.2

(c)   for a period of two years after the date of the termination of your
employment (the “Effective Date”), you will cooperate fully upon reasonable
request with the Company and its affiliates, past or present, in connection with
any internal investigation initiated by the Company, its affiliates, and any
successors in interest, as well as with any external investigation initiated by
the government or agency or instrumentality thereof;   (d)   for a period of two
years after the Effective Date, upon reasonable request of the Company, any
subsidiary of the Company, or any successor thereof, you will provide all
documentation and information related to any internal or external investigation
of the Company and its affiliates; and   (e)   two years after the Effective
Date, you will cooperate with the Company and its affiliates as described herein
at your option, upon payment of all reasonable expenses reasonably incurred,
with such agreement to cooperate not to be unreasonably withheld.

B.   Agreement Not to Compete in Order to Protect Confidential Information. You
already possess, and the Company agrees and promises that it will provide you
with additional, sensitive and Confidential Information (as hereinafter defined)
and trade secrets, all of which will be necessary for the performance of your
duties as a Consultant to the Company as provided herein. Accordingly, as a
promise ancillary to and in consideration for the Company’s promise to provide
you with sensitive and Confidential Information and trade secrets, you agree
that for a period of six months, commencing with the Effective Date, you will
not directly or indirectly serve as an employee, director, consultant, or
otherwise provide services, advice or assistance to any person, association, or
entity that is a Competitor of the Company, whether in operations, research,
marketing, engineering, process, finance or administration. For the purposes of
this Agreement, the term “Competitor of the Company” shall be construed broadly
to include without limitation any individual, entity, or enterprise that employs
engineers, geoscientists and field service personnel who apply knowledge and
technology to find, develop and produce oil and gas, as well as those
enterprises that provide products or services for the drilling, formation
evaluation, completion, or production of hydrocarbons. You agree that this
restriction in your ability to represent a Competitor of the Company is
necessary to protect the Confidential Information the Company has already
provided to you and promises hereunder to provide to you in the future.      
Because your agreement to refrain from competition for a period of six months
after the Effective Date is ancillary to the Company’s promise to provide you
with Confidential Information, that agreement will survive even if you cease to
provide consulting services at any time during that six-month period. Should the

         
Initials: AJS MEW
    2  

 

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Exhibit 10.2

    Company offer to extend this consulting services agreement for an additional
six-month period under the provisions of Section 2 of this Agreement, and should
you agree to such extension, the terms contained in Section 1B of this Agreement
will automatically be renewed through the extended period of the Consulting
Services agreement and for the additional six-month period that follows the
expiration of the extended Consulting Services agreement. Should the Consulting
Services agreement not be extended beyond the initial six-month period, the
terms of the agreement contained in this Section 1B will expire six months
following the Effective Date.       You recognize and agree that the
restrictions stated herein are reasonable in protecting the Confidential
Information, proprietary information, trade secrets, and technology of the
Company. Although the Company has attempted to place no more than reasonable
limitations on your subsequent employment opportunities consistent with the
Company’s interest in protecting its legitimate business interests, you may, at
some time in the future, feel that such limitations constitute a serious
impediment to your securing future employment. In such case, you agree to make a
written request to the Company for waiver or reformation of rights under
Section 1B of this letter before accepting employment in conflict with this
Section or any other section of this letter, such request to include the name
and address of the proposed employer and the location, position, and duties of
proposed employment. A waiver or reformation, unqualified or upon stated
conditions, may be granted by Company in its discretion.   C.   No Solicitation.
During the period commencing with your Effective Date and ending six months from
such date unless extended as set forth below, you shall not, directly or
indirectly,

(a)   interfere with the relationship of the Company or any Affiliate with, or
endeavor to entice away from the Company or any Affiliate, any individual or
entity who was or is a material customer or material supplier of, or who has
maintained a material business relationship with, the Company or its Affiliates;
  (b)   establish (or take preliminary steps to establish) a business with, or
cause or attempt to cause others to establish (or take preliminary steps to
establish) a business with, any employee or agent of the Company or any of its
Affiliates, if such business is or will compete with the Company or any of its
Affiliates; or   (c)   employ, engage as a consultant or adviser, or solicit the
employment, engagement as a consultant or adviser, of any employee or agent of
the Company or any of its Affiliates, or cause or attempt to cause any
individual or entity to do any of the foregoing.

         
Initials: AJS MEW
    3  

 

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Exhibit 10.2

    Should the Company offer to extend the Consulting Services agreement for an
additional six-month period under the provisions of Section 2 of this letter,
and should you agree to such extension, the terms contained in this Section 1C
will automatically be renewed for an additional 24-month period. Should the
Consulting Services agreement not be extended beyond the initial six-month
period, the terms contained in this Section 1B will expire six months following
the Effective Date.   D.   Confidential Information. “Confidential Information”
means sensitive or proprietary information that has been disclosed to you, or is
known by you, through your employment or as a consequence of your employment
with the Company, which is not generally known as common existing public
knowledge in the relevant trade or industry. Confidential Information includes,
but is not limited to, the following: information regarding customers,
employees, contractors, and the industry not generally known to the public;
strategies, methods, books, records, and documents; technical information
concerning products, equipment, services, and processes; procurement procedures,
pricing, and pricing techniques; information concerning past, current, and
prospective customers, investors, and business affiliates (such as contact name,
service provided, pricing, type and amount of services used, financial data,
and/or other such information); pricing strategies and price curves; positions;
plans or strategies for expansion or acquisitions; budgets; research; financial
and sales data; trading methodologies and terms; communications information;
evaluations, opinions, and interpretations of information and data; marketing a
merchandising techniques; electronic databases; models; specifications; computer
programs; contracts; bids or proposals; technologies and methods; training
methods and processes; organizational structure; personnel information; payments
or rates paid to consultants or other service providers; and other such
confidential or proprietary information.       You acknowledge that Company’s
business is highly competitive, that this Confidential Information constitutes a
valuable, special, and unique asset used by Company in its business, and that
protection of such Confidential Information against unauthorized disclosure and
use is of critical importance to Company. During the course of your employment
with the Company, you had access to and received Confidential Information. You
are obligated to keep confidential all such Confidential Information for a
period of not less than 12 months following the Effective Date of this
Agreement. Notwithstanding anything to the contrary contained in this Agreement,
the definition of Confidential Information shall not include that sub-set of
confidential information denoted as “trade-secrets” as that term is defined by
law, for which the Company reserves the protections and limitations provided at
law.

         
Initials: AJS MEW
    4  

 

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Exhibit 10.2

    As an exception to this confidentiality obligation you may disclose
Confidential or proprietary information and trade secrets (i) in connection with
enforcing your rights under any Plan relevant to the terms of this Agreement, or
if compelled by law (and in either case, you shall provide written notice to the
Company prior to the disclosure), or (ii) if the Company provides written
consent prior to the disclosure.

2.   CONSULTING SERVICES:       For a period of six months effective January 1,
2004, the Company agrees to retain you as a Consultant, and you hereby agree to
serve as a Consultant to the Company through June 30, 2004.       As a
Consultant, you agree to provide assistance and advice to the Company with
respect to the Company’s worldwide operations, with which you have experience by
reason of your employment by the Company. In connection with such assistance and
advice you agree that, if so requested by the Chief Executive Officer, you will
undertake reasonable travel upon reasonable notice at the expense of the Company
in accordance with the Company’s existing travel and reimbursement policies. You
acknowledge and agree that in the same manner that your employment relationship
prevented you from advising or otherwise working for a Competitor of the
Company, by your agreement to provide assistance and advice to the Company
during the period when you are serving as a Consultant in accordance with the
terms of Section 2 of this letter, you are similarly restricted in your ability
to advise or otherwise work for a Competitor of the Company. You agree that this
restriction in your ability to represent a Competitor of the Company is
necessary to protect the Confidential Information the Company has provided to
you in your confidential relationship as an officer of the Company.       If the
Company in its sole good-faith opinion determines that you have failed to
perform any service when requested or have engaged in any activity contrary to
the terms of this Agreement, no other monies or benefits otherwise payable to
you under the terms of this Agreement shall be due or owed.       In return for
your agreement to provide consulting services, the Company agrees to pay you
consulting fees in accordance with the following schedule: $67,623.54 per month
for the initial six-month period following the Effective Date. The Company
reserves the right to offer an extension of this Consulting Services agreement.
You have the right to accept or decline such extension if offered. Should the
Company exercise this option, the fee paid to you for the additional six months
of consulting services will be at the rate of $52,030.00 per month. Should you
accept an offered extension, the provisions of Section 1B hereof, pertaining to
your agreements, shall continue in effect during the extension period and for an
additional six-month period immediately following the expiration of the extended
consulting period.

         
Initials: AJS MEW
    5  

 

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Exhibit 10.2

3.   MISCELLANEOUS:

A:   Exclusive Rights and Benefits – This Agreement will be administered by the
Company’s Senior Labor Attorney, who will also resolve any issues regarding the
interpretation, implementation, or administration of the benefits described
above. However, this provision shall not be construed to limit your legal rights
if a disagreement exists to contest the decision of the Company’s Senior Labor
Attorney.   B:   Entire Agreement – This letter sets forth the entire agreement
between you and the Company with respect to each and every issue addressed in
this letter, and that entire, integrated agreement fully supersedes any and all
prior agreements or understandings, oral or written, between you and the Company
pertaining to the subject matter of this letter.   C:   Exclusive Choice of Law
and Arbitration Agreement – This letter constitutes an agreement that has been
executed and delivered in the State of Texas, and the validity, interpretation,
performance and enforcement of that agreement shall be governed by the laws of
that State.

    In the event of any dispute or controversy arising under the agreement set
forth in this letter, or concerning the substance, interpretation, performance,
or enforcement of this Agreement, or in any way relating to this Agreement
(including issues relating to the formation of the agreement and the validity of
this arbitration clause), you agree to resolve that dispute or controversy,
fully and completely, through the use of final, binding arbitration. You further
agree to hold knowledge of the existence of any dispute or controversy subject
to this agreement to arbitrate, completely confidential. You understand and
agree that this confidentiality obligation extends to information concerning the
fact of any request for arbitration, any ongoing arbitration, as well as all
matters discussed, discovered, or divulged, (whether voluntarily or by
compulsion) during the course of such arbitration proceeding. Any arbitration
conducted pursuant to this arbitration provision will be conducted in accordance
with the rules of the American Arbitration Association in accordance with its
rules governing employment disputes. Any arbitration proceeding resulting
hereunder will be conducted in Houston, Texas before an arbitrator selected by
you and the Company by mutual agreement, or through the American Arbitration
Association. This arbitration agreement does not limit or affect the right of
the Company to seek an injunction to maintain the status quo in the event that
the Company believes that you have violated any provision of Sections 1 or 2 of
this letter. Moreover, should it be determined by an arbiter that any agreement
or certification you have made under Section 1.A(a), (b), (c), or (d) of this
Agreement is unfulfilled or inaccurate you agree that the appropriate measure of
damages recoverable by the Company shall include, but not be limited to, the
total of

         
Initials: AJS MEW
    6  

 

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Exhibit 10.2

    all payments made under this agreement, and such other damages as the
arbitrator shall deem appropriate.

D:   Severability and Headings – The invalidity or unenforceability of a term or
provision of this Agreement shall not affect the validity or enforceability of
any other term or provision of this Agreement, which shall remain in full force
and effect. Any titles or headings in this Agreement are for convenience only
and shall have no bearing on any interpretation of this Agreement.   E:  
Confidentiality of Agreement – You agree that, because the agreement set forth
in this letter is a special arrangement, you will keep the terms of this letter
completely confidential and will not disclose, describe or characterize those
terms to anyone, including, but not limited to, current, former, or prospective
employee of the Company, or any representative of the news media, except as
specifically authorized by the Chairman and Chief Executive Officer of Baker
Hughes Incorporated. If any current, former, or prospective employee of the
Company, or member of the news media, asks about the terms and conditions of
your separation and consulting arrangement with the Company, you will respond by
stating that you reached a “satisfactory” arrangement with the Company. This
confidentiality provision does not prevent you from sharing information about
this Agreement with your spouse or your tax advisors provided that you inform
them of the obligation to keep the terms confidential.

Please initial each page and sign below.

EXECUTED in Houston, Texas this 18th day of March, 2004.

BAKER HUGHES INCORPORATED

     
By:
  /s/Michael E. Wiley

 

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  Michael E. Wiley

  Chairman, President, and Chief Executive Officer

EXECUTED in Houston, Texas this 18th day of March, 2004.

     
By:
  /s/Andrew J. Szescila

 

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  Andrew J. Szescila

         
Initials: AJS MEW
    7