SEVERANCE AGREEMENT


          THIS AGREEMENT, dated as of December 3, 1997, is made by 
and between BAKER HUGHES INCORPORATED, a Delaware corporation (the 
"Company"), and DOUGLAS J. WALL (the "Executive").

          WHEREAS, the Company considers it essential to the best
interests of its stockholders to foster the continued employment of 
key management personnel; and

          WHEREAS, the Board recognizes that, as is the case with
many publicly held corporations, the possibility of a Change in 
Control exists and that such possibility, and the uncertainty and 
questions which it may raise among management, may result in the 
departure or distraction of management personnel to the detriment 
of the Company and its stockholders; and

          WHEREAS, the Board has determined that appropriate steps
should be taken to reinforce and encourage the continued attention 
and dedication of members of the Company's management, including 
the Executive, to their assigned duties without distraction in the 
face of potentially disturbing circumstances arising from the 
possibility of a Change in Control;

          NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the Company and the Executive 
hereby agree as follows:

          1.  Defined Terms.  The definitions of capitalized terms
used in this Agreement are provided in the last Section hereof.

          2.  Term of Agreement.  Subject to the provisions of
Section 12.2 hereof, the Term of this Agreement shall commence on 
the date hereof and shall continue in effect through December 31, 
1999; provided, however, that commencing on January 1, 1998 and 
each January 1 thereafter (an "Extension Date"), the Term shall 
automatically be extended for one additional year (i.e., resulting 
in a two-year Term on the Extension Date) unless, not later than 
September 30 of the year preceding the Extension Date, the Company 
or the Executive shall have given notice not to extend the Term; 
and further provided, however, that if a Change in Control shall 
have occurred during the Term, the Term shall expire no earlier 
than twenty-four (24) months beyond the month in which such Change 
in Control occurred.

          3.  Company's Covenants Summarized.  In order to induce
the Executive to remain in the employ of the Company and in 
consideration of the Executive's covenants set forth in Section 4 
hereof, the Company agrees, under the conditions described herein, 
to pay the Executive the Severance Payments and the other payments 
and benefits described herein.  Except as provided in Section 9.1 
hereof, no Severance Payments shall be payable under this Agreement 
unless there shall have been (or, under the terms of the second 
sentence of Section 6.1 hereof, there shall be deemed to have been) 
a termination of the Executive's employment with the Company 
following a Change in Control and during the Term.  This Agreement 
shall not be construed as creating an express or implied contract 
of employment and, except as otherwise agreed in writing between 
the Executive and the Company, the Executive shall not have any 
right to be retained in the employ of the Company.

          4.  The Executive's Covenants.  The Executive agrees
that, subject to the terms and conditions of this Agreement, in the 
event of a Potential Change in Control during the Term, the 
Executive will remain in the employ of the Company until the 
earliest of (i) a date which is six (6) months from the date of 
such Potential Change of Control, (ii) the date of a Change in 
Control, (iii) the date of termination by the Executive of the 
Executive's employment for Good Reason or by reason of death, Dis-
ability or Retirement, or (iv) the termination by the Company of 
the Executive's employment for any reason.

          5.  Compensation Other Than Severance Payments.

          5.1  Following a Change in Control and during the Term,
during any period that the Executive fails to perform the 
Executive's full-time duties with the Company as a result of 
incapacity due to physical or mental illness, the Company shall pay 
the Executive's full salary to the Executive at the rate in effect 
at the commencement of any such period, together with all com-
pensation and benefits payable to the Executive under the terms of 
any compensation or benefit plan, program or arrangement maintained 
by the Company during such period, until the Executive's employment 
is terminated by the Company for Disability.

          5.2  If the Executive's employment shall be terminated
for any reason following a Change in Control and during the Term, 
the Company shall pay the Executive's full salary to the Executive 
through the Date of Termination at the rate in effect immediately 
prior to the Date of Termination or, if higher, the rate in effect 
immediately prior to the first occurrence of an event or cir-
cumstance constituting Good Reason, together with all compensation 
and benefits payable to the Executive through the Date of Termina-
tion under the terms of the Company's compensation and benefit 
plans, programs or arrangements as in effect immediately prior to 
the Date of Termination or, if more favorable to the Executive, as 
in effect immediately prior to the first occurrence of an event or 
circumstance constituting Good Reason.

          5.3  If the Executive's employment shall be terminated
for any reason following a Change in Control and during the Term, 
the Company shall pay to the Executive the Executive's normal 
post-termination compensation and benefits as such payments become 
due.  Such post-termination compensation and benefits shall be 
determined under, and paid in accordance with, the Company's 
retirement, insurance and other compensation or benefit plans, 
programs and arrangements as in effect immediately prior to the 
Date of Termination or, if more favorable to the Executive, as in 
effect immediately prior to the occurrence of the first event or
circumstance constituting Good Reason.

          5.4 Upon the occurrence of a Change in Control all
options to acquire shares of Company stock, all shares of 
restricted Company stock and all other equity or phantom equity 
incentives held by the Executive under any plan of the Company 
(including, but not limited to, the Company's 1995 Stock Award Plan 
(and the Stock Matching Programs thereunder), 1993 Stock Option 
Plan, 1993 Stock Bonus Plan and 1991 Stock Bonus Plan) shall become 
immediately vested, exercisable and nonforfeitable and all 
conditions thereof (including, but not limited to, any required 
holding periods) shall be deemed to have been satisfied.

          6.     Severance Payments.

          6.1  If the Executive's employment is terminated
following a Change in Control and during the Term, other than (A) 
by the Company for Cause, (B) by reason of death or Disability, or 
(C) by the Executive without Good Reason, then, the Company shall 
pay the Executive the amounts, and provide the Executive the 
benefits, described in this Section 6.1 ("Severance Payments") and 
Section 6.2, in addition to any payments and benefits to which the 
Executive is entitled under Section 5 hereof.  For purposes of this 
Agreement, the Executive's employment shall be deemed to have been 
terminated following a Change in Control by the Company without 
Cause or by the Executive with Good Reason, if (i) the Executive's 
employment is terminated by the Company without Cause prior to a 
Change in Control (whether or not a Change in Control ever occurs) 
and such termination was at the request or direction of a Person 
who has entered into an agreement with the Company the consummation 
of which would constitute a Change in Control, (ii) the Executive 
terminates his employment for Good Reason prior to a Change in 
Control (whether or not a Change in Control ever occurs) and the 
circumstance or event which constitutes Good Reason occurs at the 
request or direction of such Person described in clause (i), or 
(iii) the Executive's employment is terminated by the Company 
without Cause or by the Executive for Good Reason and such termi-
nation or the circumstance or event which constitutes Good Reason 
is otherwise in connection with or in anticipation of a Change in 
Control (whether or not a Change in Control ever occurs).  For pur-
poses of any determination regarding the applicability of the 
immediately preceding sentence, any position taken by the Executive 
shall be presumed to be correct unless the Company establishes to 
the Committee by clear and convincing evidence that such position 
is not correct.

               (A)  In lieu of any further salary payments to
the Executive for periods subsequent to the Date of 
Termination and in lieu of any severance benefit otherwise 
payable to the Executive, the Company shall pay to the 
Executive a lump sum severance payment, in cash, equal to  
three times the sum of (i) the Executive's base salary as in 
effect immediately prior to the Date of Termination or, if 
higher, in effect immediately prior to the first occurrence of 
an event or circumstance constituting Good Reason, and (ii) the 
average annual bonus earned by the Executive pursuant to any annual 
bonus or incentive plan maintained by the Company in respect of the 
three fiscal years ending immediately prior to the fiscal year in 
which occurs the Date of Termination or, if higher, immediately 
prior to the fiscal year in which occurs the first event or 
circumstance constituting Good Reason; provided, that if the 
Executive has not participated in an annual bonus or incentive plan 
maintained by the Company for the entirety of such three-year 
period, the amount referred to in this clause (ii) shall be 
calculated using such lesser number of bonuses as have been 
actually earned by the Executive in respect of such lesser period.

               (B)  For the thirty-six (36) month period
immediately following the Date of Termination, the Company shall 
arrange to provide the Executive and his dependents life, 
disability, accident and health insurance benefits and perquisites 
(including, but not limited to, executive life insurance, club 
memberships, financial planning and tax preparation, annual 
physical examination and charitable contributions), in each case, 
substantially similar to those provided to the Executive and his 
dependents immediately prior to the Date of Termination or, if more 
favorable to the Executive, those provided to the Executive and his 
dependents immediately prior to the first occurrence of an event or 
circumstance constituting Good Reason, at no greater cost to the 
Executive than the cost to the Executive immediately prior to such 
date or occurrence; provided, however, that, unless the Executive 
consents to a different method (after taking into account the 
effect of such method on the calculation of "parachute payments" 
pursuant to Section 6.2 hereof), such health insurance benefits 
shall be provided through a third-party insurer.  Benefits other-
wise receivable by the Executive pursuant to this Section 6.1(B) 
shall be reduced to the extent benefits of the same type are 
received by or made available to the Executive during the thirty-
six (36) month period following the Executive's termination of 
employment (and any such benefits received by or made available to 
the Executive shall be reported to the Company by the Executive); 
provided, however, that the Company shall reimburse the Executive 
for the excess, if any, of the cost of such benefits to the 
Executive over such cost immediately prior to the Date of 
Termination or, if more favorable to the Executive, the first 
occurrence of an event or circumstance constituting Good Reason.

               (C)  Notwithstanding any provision of the Baker
Hughes Incorporated 1995 Employee Annual Incentive Compensation 
Plan (the "Annual Incentive Plan"), the Company shall pay to the 
Executive a lump sum amount, in cash, equal to the sum of (i) any 
unpaid incentive compensation which has been allocated or awarded 
to the Executive for a completed fiscal year or other measuring 
period preceding the Date of Termination under the Annual Incentive 
Plan and which, as of the Date of Termination, is contingent only 
upon the continued employment of the Executive to a subsequent 
date, and (ii) a pro rata portion to the Date of Termination of the 
aggregate value of all contingent incentive compensation awards to 
the Executive for all then uncompleted periods under the Annual 
Incentive Plan, calculated as to each such award by multiplying the 
award that the Executive would have earned on the last day of the 
performance award period, assuming the achievement, at the expected 
value target level, of the individual and corporate performance 
goals established with respect to such award, by the fraction 
obtained by dividing the number of full months and any fractional 
portion of a month during such performance award period through the 
Date of Termination by the total number of months contained in such 
performance award period; provided, however, that if such 
termination of employment occurs during the same year in which the 
Change in Control occurs, the pro-rata bonus payment referred to in 
clause (ii) above shall be offset by any payments received under 
the Annual Incentive Plan in connection with such Change in
Control.

            (D)  In addition to the retirement benefits to which
the Executive is entitled under the Company's Thrift Plan (the 
"Thrift Plan") and the Company's Supplemental Retirement Plan (the 
"SRP"), the Company shall pay the Executive a lump sum amount, in 
cash, equal to the present value of the employer-provided 
contributions, deferrals and allocations the Executive would have 
received had he continued to participate, after the Date of 
Termination, in the Thrift Plan and the SRP for three (3) 
additional years, assuming for this purpose that (i) the Executive 
earned compensation for purposes of the Thrift Plan and SRP during 
such three-year period the amount used to calculate the Executive's 
severance payment under subparagraph (A) of this Section 6.1, and 
(ii) the percentages of contributions, deferrals and allocations 
made under the Thrift Plan and the SRP by or on behalf of the 
Executive during such three-year period are the same percentages of 
contributions, deferrals and allocations in effect on the date of 
the Change in Control or the Date of Termination, whichever is more 
favorable to the Executive.

               (E)  If the Executive would have become entitled to
benefits under the Company's post-retirement health care or life 
insurance plans, as in effect immediately prior to the Date of 
Termination or, if more favorable to the Executive, as in effect 
immediately prior to the first occurrence of an event or 
circumstance constituting Good Reason, had the Executive's 
employment terminated at any time during the period of thirty-six 
(36) months after the Date of Termination, the Company shall 
provide such post-retirement health care or life insurance benefits 
to the Executive and the Executive's dependents commencing on the 
later of (i) the date on which such coverage would have first 
become available and (ii) the date on which benefits described in 
subsection (B) of this Section 6.1 terminate.

               (F)  The Company shall provide the Executive with
outplacement services suitable to the Executive's position for a 
period of three years or, if earlier, until the first acceptance by 
the Executive of an offer of employment.

                6.2 (A) Whether or not the Executive becomes entitled
to the Severance Payments, if any of the payments or benefits 
received or to be received by the Executive in connection with a 
Change in Control or the Executive's termination of employment 
(whether pursuant to the terms of this Agreement or any other plan, 
arrangement or agreement with the Company, any Person whose actions 
result in a Change in Control or any Person affiliated with the 
Company or such Person) (such payments or benefits, excluding the 
Gross-Up Payment, being hereinafter referred to as the "Total 
Payments") will be subject to the Excise Tax, the Company shall pay 
to the Executive an additional amount (the "Gross-Up Payment") such 
that the net amount retained by the Executive, after deduction of 
any Excise Tax on the Total Payments and any federal, state and 
local income and employment taxes and Excise Tax upon the Gross-Up 
Payment, shall be equal to the Total Payments.

               (B)  For purposes of determining whether any of the
Total Payments will be subject to the Excise Tax and the amount of 
such Excise Tax, (i) all of the Total Payments shall be treated as 
"parachute payments" (within the meaning of section 280G(b)(2) of 
the Code) unless, in the opinion of tax counsel ("Tax Counsel") 
reasonably acceptable to the Executive and selected by the account-
ing firm which was, immediately prior to the Change in Control, the 
Company's independent auditor (the "Auditor"), such payments or 
benefits (in whole or in part) do not constitute parachute pay-
ments, including by reason of section 280G(b)(4)(A) of the Code, 
(ii) all "excess parachute payments" within the meaning of section 
280G(b)(l) of the Code shall be treated as subject to the Excise 
Tax unless, in the opinion of Tax Counsel, such excess parachute 
payments (in whole or in part) represent reasonable compensation 
for services actually rendered (within the meaning of section 
280G(b)(4)(B) of the Code) in excess of the Base Amount allocable 
to such reasonable compensation, or are otherwise not subject to 
the Excise Tax, and (iii) the value of any noncash benefits or any 
deferred payment or benefit shall be determined by the Auditor in 
accordance with the principles of sections 280G(d)(3) and (4) of 
the Code.  For purposes of determining the amount of the Gross-Up 
Payment, the Executive shall be deemed to pay federal income tax at 
the highest marginal rate of federal income taxation in the 
calendar year in which the Gross-Up Payment is to be made and state 
and local income taxes at the highest marginal rate of taxation in 
the state and locality of the Executive's residence on the Date of 
Termination (or if there is no Date of Termination, then the date 
on which the Gross-Up Payment is calculated for purposes of this 
Section 6.2), net of the maximum reduction in federal income taxes 
which could be obtained from deduction of such state and local tax-
es.

               (C)  In the event that the Excise Tax is finally
determined to be less than the amount taken into account hereunder 
in calculating the Gross-Up Payment, the Executive shall repay to 
the Company, within five (5) business days following the time that 
the amount of such reduction in the Excise Tax is finally deter-
mined, the portion of the Gross-Up Payment attributable to such 
reduction (plus that portion of the Gross-Up Payment attributable 
to the Excise Tax and federal, state and local income and em-
ployment taxes imposed on the Gross-Up Payment being repaid by the 
Executive, to the extent that such repayment results in a reduction 
in the Excise Tax and a dollar-for-dollar reduction in the 
Executive's taxable income and wages for purposes of federal, state 
and local income and employment taxes, plus interest on the amount 
of such repayment at 120% of the rate provided in section 
1274(b)(2)(B) of the Code.  In the event that the Excise Tax is 
determined to exceed the amount taken into account hereunder in 
calculating the Gross-Up Payment (including by reason of any pay-
ment the existence or amount of which cannot be determined at the 
time of the Gross-Up Payment), the Company shall make an additional 
Gross-Up Payment in respect of such excess (plus any interest, 
penalties or additions payable by the Executive with respect to 
such excess) within five (5) business days following the time that 
the amount of such excess is finally determined.  The Executive and 
the Company shall each reasonably cooperate with the other in 
connection with any administrative or judicial proceedings concern-
ing the existence or amount of liability for Excise Tax with 
respect to the Total Payments.

          6.3  The payments provided in subsections (A), (C) and
(D) of Section 6.1 hereof and in Section 6.2 hereof shall be made 
not later than the fifth day following the Date of Termination; 
provided, however, that if the amounts of such payments cannot be 
finally determined on or before such day, the Company shall pay to 
the Executive on such day an estimate, as determined in good faith 
by the Executive or, in the case of payments under Section 6.2 
hereof, in accordance with Section 6.2 hereof, of the minimum 
amount of such payments to which the Executive is clearly entitled 
and shall pay the remainder of such payments (together with 
interest on the unpaid remainder (or on all such payments to the 
extent the Company fails to make such payments when due) at 120% of 
the rate provided in section 1274(b)(2)(B) of the Code) as soon as 
the amount thereof can be determined but in no event later than the 
thirtieth (30th) day after the Date of Termination.  In the event 
that the amount of the estimated payments exceeds the amount 
subsequently determined to have been due, such excess shall 
constitute a loan by the Company to the Executive, payable on the 
fifth (5th) business day after demand by the Company (together with 
interest at 120% of the rate provided in section 1274(b)(2)(B) of 
the Code), but only to the extent such amount has not been paid by 
the Executive pursuant to Section 6.2(C) above.  At the time that 
payments are made under this Agreement, the Company shall provide 
the Executive with a written statement setting forth the manner in 
which such payments were calculated and the basis for such 
calculations including, without limitation, any opinions or other 
advice the Company has received from Tax Counsel, the Auditor or 
other advisors or consultants (and any such opinions or advice 
which are in writing shall be attached to the statement).

          6.4  The Company also shall pay to the Executive all
legal fees and expenses incurred by the Executive in disputing in 
good faith any issue hereunder relating to the termination of the 
Executive's employment, in seeking in good faith to obtain or en-
force any benefit or right provided by this Agreement or in con-
nection with any tax audit or proceeding to the extent attributable 
to the application of section 4999 of the Code to any payment or 
benefit provided hereunder.  Such payments shall be made within 
five (5) business days after delivery of the Executive's written 
requests for payment accompanied with such evidence of fees and ex-
penses incurred as the Company reasonably may require.

          7.  Termination Procedures and Compensation During
              Dispute.

          7.1  Notice of Termination.  After a Change in Control
and during the Term, any purported termination of the Executive's 
employment (other than by reason of death) shall be communicated by 
written Notice of Termination from one party hereto to the other 
party hereto in accordance with Section 10 hereof.  For purposes of 
this Agreement, a "Notice of Termination" shall mean a notice which 
shall indicate the specific termination provision in this Agreement 
relied upon and shall set forth in reasonable detail the facts and 
circumstances claimed to provide a basis for termination of the 
Executive's employment under the provision so indicated.  Further, 
a Notice of Termination for Cause is required to include a copy of 
a resolution duly adopted by the affirmative vote of not less than 
three-quarters (3/4) of the entire membership of the Board at a 
meeting of the Board which was called and held for the purpose of 
considering such termination (after reasonable notice to the 
Executive and an opportunity for the Executive, together with the 
Executive's counsel, to be heard before the Board) finding that, in 
the good faith opinion of the Board, the Executive was guilty of 
conduct set forth in clause (i) or (ii) of the definition of Cause 
herein, and specifying the particulars thereof in detail.

          7.2  Date of Termination.  "Date of Termination," with
respect to any purported termination of the Executive's employment 
after a Change in Control and during the Term, shall mean (i) if 
the Executive's employment is terminated for Disability, thirty 
(30) days after Notice of Termination is given (provided that the 
Executive shall not have returned to the full-time performance of 
the Executive's duties during such thirty (30) day period), and 
(ii) if the Executive's employment is terminated for any other 
reason, the date specified in the Notice of Termination (which, in 
the case of a termination by the Company, shall not be less than 
thirty (30) days (except in the case of a termination for Cause) 
and, in the case of a termination by the Executive, shall not be 
less than fifteen (15) days nor more than sixty (60) days, 
respectively, from the date such Notice of Termination is given).

          7.3  Dispute Concerning Termination.  If within fifteen
(15) days after any Notice of Termination is given, or, if later, 
prior to the Date of Termination (as determined without regard to 
this Section 7.3), the party receiving such Notice of Termination 
notifies the other party that a dispute exists concerning the 
termination, the Date of Termination shall be extended until the 
earlier of (i) the date on which the Term ends or (ii) the date on 
which the dispute is finally resolved, either by mutual written 
agreement of the parties or by a final judgment, order or decree of 
an arbitrator or a court of competent jurisdiction (which is not 
appealable or with respect to which the time for appeal therefrom 
has expired and no appeal has been perfected); provided, however, 
that the Date of Termination shall be extended by a notice of 
dispute given by the Executive only if such notice is given in good 
faith and the Executive pursues the resolution of such dispute with 
reasonable diligence.

          7.4  Compensation During Dispute.  If a purported
termination occurs following a Change in Control and during the 
Term and the Date of Termination is extended in accordance with 
Section 7.3 hereof, the Company shall continue to pay the Executive 
the full compensation in effect when the notice giving rise to the 
dispute was given (including, but not limited to, salary) and 
continue the Executive as a participant in all compensation, 
benefit and insurance plans in which the Executive was 
participating when the notice giving rise to the dispute was given 
or those plans in which the Executive was participating immediately 
prior to the first occurrence of an event or circumstance giving 
rise to the Notice of Termination, if more favorable to the 
Executive, until the Date of Termination, as determined in 
accordance with Section 7.3 hereof.  Amounts paid under this 
Section 7.4 are in addition to all other amounts due under this 
Agreement (other than those due under Section 5.2 hereof) and shall 
not be offset against or reduce any other amounts due under this 
Agreement.

          8.  No Mitigation.  The Company agrees that, if the
Executive's employment with the Company terminates during the Term, 
the Executive is not required to seek other employment or to 
attempt in any way to reduce any amounts payable to the Executive 
by the Company pursuant to Sections 5, 6 or 7.4 hereof.  Further, 
the amount of any payment or benefit provided for in this Agreement 
(other than Section 6.1(B) hereof but including (but not limited 
to) Section 7.4 hereof) shall not be reduced by any compensation 
earned by the Executive as the result of employment by another 
employer, by retirement benefits, by offset against any amount 
claimed to be owed by the Executive to the Company, or otherwise.

          9.  Successors; Binding Agreement.

          9.1  In addition to any obligations imposed by law upon
any successor to the Company, the Company will require any 
successor (whether direct or indirect, by purchase, merger, 
consolidation or otherwise) to all or substantially all of the 
business and/or assets of the Company to expressly assume and agree 
to perform this Agreement in the same manner and to the same extent 
that the Company would be required to perform it if no such 
succession had taken place.  Failure of the Company to obtain such 
assumption and agreement prior to the effectiveness of any such 
succession shall be a breach of this Agreement and shall entitle 
the Executive to compensation from the Company in the same amount 
and on the same terms as the Executive would be entitled to 
hereunder if the Executive were to terminate the Executive's 
employment for Good Reason after a Change in Control, except that, 
for purposes of implementing the foregoing, the date on which any 
such succession becomes effective shall be deemed the Date of 
Termination.

          9.2  This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, 
executors, administrators, successors, heirs, distributees, 
devisees and legatees.  If the Executive shall die while any amount 
would still be payable to the Executive hereunder (other than 
amounts which, by their terms, terminate upon the death of the 
Executive) if the Executive had continued to live, all such 
amounts, unless otherwise provided herein, shall be paid in 
accordance with the terms of this Agreement to the executors, 
personal representatives or administrators of the Executive's 
estate.

          10.  Notices.  For the purpose of this Agreement, notices
and all other communications provided for in the Agreement shall be 
in writing and shall be deemed to have been duly given when 
delivered or mailed by United States registered mail, return 
receipt requested, postage prepaid, addressed, if to the Executive, 
to the address inserted below the Executive's signature on the 
final page hereof and, if to the Company, to the address set forth 
below, or to such other address as either party may have furnished 
to the other in writing in accordance herewith, except that notice 
of change of address shall be effective only upon actual receipt:

               To the Company:

               3900 Essex Lane
               Suite 1200
               Houston, Texas  77027

               Attention:  General Counsel

          11.  Miscellaneous.  Except as otherwise specifically 
provided in Section 12.2 below, no provision of this Agreement may 
be modified, waived or discharged unless such waiver, modification 
or discharge is agreed to in writing and signed by the Executive 
and such officer as may be specifically designated by the Board.  
No waiver by either party hereto at any time of any breach by the 
other party hereto of, or of any lack of compliance with, any 
condition or provision of this Agreement to be performed by such 
other party shall be deemed a waiver of similar or dissimilar 
provisions or conditions at the same or at any prior or subsequent 
time.  This Agreement supersedes any other agreements or 
representations, oral or otherwise, express or implied, with 
respect to the subject matter hereof which have been made by either 
party; provided, however, that this Agreement shall supersede any 
agreement setting forth the terms and conditions of the Executive's 
employment with the Company only in the event that the Executive's 
employment with the Company is terminated on or following a Change 
in Control, by the Company other than for Cause or by the Executive 
other than for Good Reason; and provided further that all 
agreements otherwise superseded by this Agreement shall be 
automatically reinstated with full force and effect to the extent 
this Agreement is terminated or otherwise rendered inapplicable or 
amended in accordance with Section 12.2 hereof.  The validity, 
interpretation, construction and performance of this Agreement 
shall be governed by the laws of the State of Texas.  All 
references to sections of the Exchange Act or the Code shall be 
deemed also to refer to any successor provisions to such sections. 
 Any payments provided for hereunder shall be paid net of any 
applicable withholding required under federal, state or local law 
and any additional withholding to which the Executive has agreed.  
The obligations of the Company and the Executive under this 
Agreement which by their nature may require either partial or total 
performance after the expiration of the Term (including, without 
limitation, those under Sections 6 and 7 hereof) shall survive such 
expiration.

          12.  Validity; Pooling.

          12.1 Validity.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or 
enforceability of any other provision of this Agreement, which 
shall remain in full force and effect.

          12.2  Pooling.  In the event that (A) the Company is
party to a transaction which is otherwise intended to qualify for 
"pooling of interests" accounting treatment, (B) such transaction 
constitutes a Change in Control within the meaning of Section 
15(G)(III) and (C) individuals who satisfy the requirements in 
clauses (i) and (ii) below constitute more than two-thirds (2/3) of 
the number of directors of the entity surviving such transaction 
and the parent thereof, if any: individuals who (i) immediately 
prior to such transaction constitute the Board and (ii) on the date 
hereof constitute the Board and any new director (other than a 
director whose initial assumption of office is in connection with 
an actual or threatened election contest relating to the election 
of directors of the Company) whose appointment or election by the 
Board or nomination for election by the Company's stockholders was 
approved or recommended, by a vote of at least two-thirds (2/3) of 
the directors then still in office who either were directors on the 
date hereof or whose appointment, election or nomination for 
election was previously so approved or recommended then (a) this 
Agreement shall, to the extent practicable, be interpreted so as to 
permit such accounting treatment, and (b) to the extent that the 
application of clause (a) of this Section 12.2 does not preserve 
the availability of such accounting treatment, then, to the extent 
that any provision or combination of provisions of the Agreement 
disqualifies the transaction as a "pooling" transaction (including, 
if applicable, the entire Agreement), the Board shall have the 
right, by sending written notice to the Executive prior to the 
Change in Control, to unilaterally amend (without the consent of 
the Executive) such provision or provisions if and to the extent 
necessary (including declaring such provision or provisions to be 
null and void as of the date hereof) so that such transaction may 
be accounted for as a "pooling of interests."  All determinations 
under this Section 12.2 shall be made by the Board prior to the 
Change in Control, based upon the advice of the accounting firm 
whose opinion with respect to "pooling of interests" is required as 
a condition to the consummation of such transaction.

          13.  Counterparts.  This Agreement may be executed in
several counterparts, each of which shall be deemed to be an 
original but all of which together will constitute one and the same 
instrument.

          14.  Settlement of Disputes; Arbitration.

          14.1 All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Committee and 
shall be in writing.  Any denial by the Committee of a claim for 
benefits under this Agreement shall be delivered to the Executive 
in writing within thirty (30) days after written notice of the 
claim is provided to the Company in accordance with Section 10 and 
shall set forth the specific reasons for the denial and the 
specific provisions of this Agreement relied upon.  The Committee 
shall afford a reasonable opportunity to the Executive for a review 
of the decision denying a claim and shall further allow the 
Executive to appeal to the Committee a decision of the Committee 
within sixty (60) days after notification by the Committee that the 
Executive's claim has been denied.

          14.2  Any further dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by 
arbitration in Houston, Texas in accordance with the rules of the 
American Arbitration Association then in effect; provided, however, 
that the evidentiary standards set forth in this Agreement shall 
apply.  Judgment may be entered on the arbitrator's award in any 
court having jurisdiction.  Notwithstanding any provision of this 
Agreement to the contrary, the Executive shall be entitled to seek 
specific performance of the Executive's right to be paid until the 
Date of Termination during the pendency of any dispute or 
controversy arising under or in connection with this Agreement.

          15.  Definitions.  For purposes of this Agreement, the
following terms shall have the meanings indicated below:

          (A)  "Affiliate" shall have the meaning set forth in Rule
12b-2 promulgated under Section 12 of the Exchange Act.

          (B)  "Auditor" shall have the meaning set forth in
Section 6.2 hereof.

          (C)  "Base Amount" shall have the meaning set forth in
section 280G(b)(3)of the Code.

          (D)  Beneficial Owner" shall have the meaning set forth
in Rule 13d-3 under the Exchange Act.

          (E)  "Board" shall mean the Board of Directors of the
Company.

          (F)  "Cause" for termination by the Company of the
Executive's employment shall mean (i) the willful and continued 
failure by the Executive to substantially perform the Executive's 
duties with the Company (other than any such failure resulting from 
the Executive's incapacity due to physical or mental illness or any 
such actual or anticipated failure after the issuance of a Notice 
of Termination for Good Reason by the Executive pursuant to Section 
7.1 hereof) after a written demand for substantial performance is 
delivered to the Executive by the Board, which demand specifically 
identifies the manner in which the Board believes that the 
Executive has not substantially performed the Executive's duties, 
or (ii) the willful engaging by the Executive in conduct which is 
demonstrably and materially injurious to the Company or its 
subsidiaries, monetarily or otherwise.  For purposes of clauses (i) 
and (ii) of this definition, (x) no act, or failure to act, on the 
Executive's part shall be deemed "willful" unless done, or omitted 
to be done, by the Executive not in good faith and without 
reasonable belief that the Executive's act, or failure to act, was 
in the best interest of the Company and (y) in the event of a 
dispute concerning the application of this provision, no claim by 
the Company that Cause exists shall be given effect unless the 
Company establishes to the Committee by clear and convincing 
evidence that Cause exists.

           (G)  A "Change in Control" shall be deemed to have
occurred if the event set forth in any one of the following 
paragraphs shall have occurred:

               (I)  any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including 
in the securities beneficially owned by such Person any securities 
acquired directly from the Company or its affiliates) representing 
20% or more of the combined voting power of the Company's then 
outstanding securities, excluding any Person who becomes such a 
Beneficial Owner in connection with a transaction described in 
clause (i) of paragraph (III) below; or 

                (II) the following individuals cease for any reason
to constitute a majority of the number of directors then serving: 
individuals who, on the date hereof, constitute the Board and any 
new director (other than a director whose initial assumption of 
office is in connection with an actual or threatened election 
contest relating to the election of directors of the Company) whose 
appointment or election by the Board or nomination for election by 
the Company's stockholders was approved or recommended by a vote of 
at least two-thirds (2/3) of the directors then still in office who 
either were directors on the date hereof or whose appointment, 
election or nomination for election was previously so approved or 
recommended; or

                (III)  there is consummated a merger or
consolidation of the Company or any direct or indirect subsidiary 
of the Company with any other corporation, other than (i) a merger 
or consolidation which would result in the voting securities of 
the Company outstanding immediately prior to such merger or 
consolidation continuing to represent (either by remaining 
outstanding or by being converted into voting securities of the 
surviving entity or any parent thereof), in combination with the 
ownership of any trustee or other fiduciary holding securities 
under an employee benefit plan of the Company or any subsidiary of 
the Company, at least 65% of the combined voting power of the 
securities of the Company or such surviving entity or any parent 
thereof outstanding immediately after such merger or consolidation, 
or (ii) a merger or consolidation effected to implement a 
recapitalization of the Company (or similar transaction) in which 
no Person is or becomes the Beneficial Owner, directly or 
indirectly, of securities of the Company (not including in the 
securities Beneficially Owned by such Person any securities 
acquired directly from the Company or its Affiliates other than in 
connection with the acquisition by the Company or its Affiliates of 
a business) representing 20% or more of the combined voting power 
of the Company's then outstanding securities; or 

                (IV) the stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company or there is 
consummated an agreement for the sale or disposition by the Company 
of all or substantially all of the Company's assets, other than a 
sale or disposition by the Company of all or substantially all of 
the Company's assets to an entity, at least 65% of the combined 
voting power of the voting securities of which are owned by 
stockholders of the Company in substantially the same proportions 
as their ownership of the Company immediately prior to such sale.

Notwithstanding the foregoing, a "Change in Control" shall not be 
deemed to have occurred by virtue of the consummation of any 
transaction or series of integrated transactions immediately 
following which the record holders of the common stock of the 
Company immediately prior to such transaction or series of 
transactions continue to have substantially the same proportionate 
ownership in an entity which owns all or substantially all of the 
assets of the Company immediately following such transaction or 
series of transactions.

          (H)  "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.

          (I)  "Committee" shall mean (i) the individuals (not
fewer than three in number) who, on the date six months before a 
Change in Control, constitute the Compensation Committee of the 
Board, plus (ii) in the event that fewer than three individuals are 
available from the group specified in clause (i) above for any 
reason, such individuals as may be appointed by the individual or 
individuals so available (including for this purpose any individual 
or individuals previously so appointed under this clause (ii)); 
provided, however, that the maximum number of individuals 
constituting the Committee shall not exceed six (6).

          (J)  "Company" shall mean Baker Hughes Incorporated and,
except in determining under Section 15(G) hereof whether or not any 
Change in Control of the Company has occurred, shall include any 
successor to its business and/or assets which assumes and agrees to 
perform this Agreement by operation of law, or otherwise.

           (K)  "Date of Termination" shall have the meaning set
forth in Section 7.2 hereof.

           (L)  "Disability" shall be deemed the reason for the
termination by the Company of the Executive's employment, if, as a 
result of the Executive's incapacity due to physical or mental 
illness, the Executive shall have been absent from the full-time 
performance of the Executive's duties with the Company for a period 
of six (6) consecutive months, the Company shall have given the 
Executive a Notice of Termination for Disability, and, within 
thirty (30) days after such Notice of Termination is given, the 
Executive shall not have returned to the full-time performance of 
the Executive's duties.

           (M)  "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended from time to time.

           (N)  "Excise Tax" shall mean any excise tax imposed
under section 4999 of the Code.	

           (O)  "Executive" shall mean the individual named in the
first paragraph of this Agreement.

           (P)  "Extension Date" shall have the meaning set forth
in Section 2 hereof.

           (Q)  "Good Reason" for termination by the Executive of
the Executive's employment shall mean the occurrence (without the 
Executive's express written consent) after any Change in Control, 
or prior to a Change in Control under the circumstances described 
in clauses (ii) and (iii) of the second sentence of Section 6.1 
hereof (treating all references in paragraphs (I) through (VII) 
below to a "Change in Control" as references to a "Potential Change 
in Control"), of any one of the following acts by the Company, or 
failures by the Company to act, unless, in the case of any act or 
failure to act described in paragraph (I), (V), (VI) or (VII) 
below, such act or failure to act is corrected prior to the Date of 
Termination specified in the Notice of Termination given in respect 
thereof:

               (I)  the assignment to the Executive of any duties
inconsistent with the Executive's status as a senior executive 
officer of the Company or a substantial adverse alteration in the 
nature or status of the Executive's responsibilities from those in 
effect immediately prior to the Change in Control;

                (II)  a reduction by the Company in the Executive's
annual base salary as in effect on the date hereof or as the same 
may be increased from time to time except for across-the-board 
salary reductions similarly affecting all senior executives of the 
Company and all senior executives of any Person in control of the 
Company;

               (III)  the relocation of the Executive's principal
place of employment to a location more than 50 miles from the 
Executive's principal place of employment immediately prior to the 
Change in Control or the Company's requiring the Executive to be 
based anywhere other than such principal place of employment (or 
permitted relocation thereof) except for required travel on the 
Company's business to an extent substantially consistent with the 
Executive's present business travel obligations;

                 (IV)  the failure by the Company to pay to the
Executive any portion of the Executive's current compensation 
except pursuant to an across-the-board compensation deferral 
similarly affecting all senior executives of the Company and all 
senior executives of any Person in control of the Company, or to 
pay to the Executive any portion of an installment of deferred 
compensation under any deferred compensation program of the 
Company, within seven (7) days of the date such compensation is 
due;

                (V)  the failure by the Company to continue in
effect any compensation plan in which the Executive participates 
immediately prior to the Change in Control which is material to the 
Executive's total compensation, including but not limited to the 
Company's 1993 Stock Option Plan, 1993 Employee Stock Bonus Plan, 
1991 Employee Stock Bonus Plan, 1995 Stock Award Plan (and the 
1995, 1996 and 1997 Stock Matching Programs thereunder and any 
subsequent Stock Matching Programs in which the Executive 
participates), 1987 Convertible Debenture Plan and 1995 Employee 
Annual Incentive Compensation Plan or any substitute plans adopted 
prior to the Change in Control, unless an equitable arrangement 
(embodied in an ongoing substitute or alternative plan) has been 
made with respect to such plan, or the failure by the Company to 
continue the Executive's participation therein (or in such 
substitute or alternative plan) on a basis not materially less fa-
vorable, both in terms of the amount or timing of payment of bene-
fits provided and the level of the Executive's participation 
relative to other participants, as existed immediately prior to the 
Change in Control;

                (VI)  the failure by the Company to continue to
provide the Executive with benefits substantially similar to those 
enjoyed by the Executive under any of the Company's pension, 
savings, life insurance, medical, health and accident, or 
disability plans in which the Executive was participating 
immediately prior to the Change in Control (except for across the 
board changes similarly affecting all senior executives of the 
Company and all senior executives of any Person in control of the 
Company), the taking of any other action by the Company which would 
directly or indirectly materially reduce any of such benefits or 
deprive the Executive of any material fringe benefit or perquisite 
enjoyed by the Executive at the time of the Change in Control, or 
the failure by the Company to provide the Executive with the number 
of paid vacation days to which the Executive is entitled on the 
basis of years of service with the Company in accordance with the 
Company's normal vacation policy in effect at the time of the 
Change in Control; or

                (VII)  any purported termination of the Executive's
employment which is not effected pursuant to a Notice of 
Termination satisfying the requirements of Section 7.1 hereof; for 
purposes of this Agreement, no such purported termination shall be 
effective.

          The Executive's right to terminate the Executive's em-
ployment for Good Reason shall not be affected by the Executive's 
incapacity due to physical or mental illness.  The Executive's 
continued employment shall not constitute consent to, or a waiver 
of rights with respect to, any act or failure to act constituting 
Good Reason hereunder.

          For purposes of any determination regarding the existence
of Good Reason, any claim by the Executive that Good Reason exists 
shall be presumed to be correct unless the Company establishes to 
the Committee by clear and convincing evidence that Good Reason 
does not exist.

          (R)  "Gross-Up Payment" shall have the meaning set forth
in Section 6.2 hereof.

          (S)  "Notice of Termination" shall have the meaning set
forth in Section 7.1 hereof.

          (T)  "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) 
and 14(d) thereof, except that such term shall not include (i) the 
Company or any of its subsidiaries, (ii) a trustee or other 
fiduciary holding securities under an employee benefit plan of the 
Company or any of its Affiliates, (iii) an underwriter temporarily 
holding securities pursuant to an offering of such securities, 
or (iv) a corporation owned, directly or indirectly, by the 
stockholders of the Company in substantially the same proportions 
as their ownership of stock of the Company.

           (U)  "Potential Change in Control" shall be deemed to
have occurred if the event set forth in any one of the following 
paragraphs shall have occurred:

                (I)  the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in 
Control; 

                (II)  the Company or any Person publicly announces
an intention to take or to consider taking actions which, if 
consummated, would constitute a Change in Control; 

                (III)  any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 
15% or more of either the then outstanding shares of common stock 
of the Company or the combined voting power of the Company's 
then outstanding securities (not including in the securities 
beneficially owned by such Person any securities acquired directly 
from the Company or its affiliates); or

                 (IV)  the Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control 
has occurred.  

           (V)  "Retirement" shall, for purposes of Section 4
hereof, be deemed the reason for the termination by the Executive 
of the Executive's employment if such employment is terminated 
after completion of ten (10) years of service with the Company and 
attainment of age fifty-five (55).

           (W) "Severance Payments" shall have the meaning set
forth in Section 6.1 hereof.

           (X) "SRP" shall have the meaning set forth in Section
6.1 hereof.

           (Y)  "Tax Counsel" shall have the meaning set forth in
Section 6.2 hereof.

           (Z)  "Term" shall mean the period of time described in
Section 2 hereof (including any extension, continuation or 
termination described therein).

           (AA)  "Thrift Plan" shall have the meaning set forth in
Section 6.1 hereof.

           (BB)  "Total Payments" shall mean those payments so
described in Section 6.2 hereof.

           IN WITNESS WHEREOF, the parties hereto have executed 
this Agreement as of the date above first written.

                               BAKER HUGHES INCORPORATED


                               By:  /s/ John F. Maher
                                  ------------------------------
                                  John F. Maher
                                  Chairman - Compensation Committee
                                  of the Board of Directors

                               EXECUTIVE:
                               ----------
                                   /s/ Douglas J. Wall
                               ------------------------------
                                    DOUGLAS J. WALL

                               Address:
                               114 North Taylor Pt. Dr.
                               The Woodlands, Texas 77382
                               ------------------------------
                               (Please print carefully)