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                                                                   EXHIBIT 10.48

                           BAKER HUGHES INCORPORATED
                           PERFORMANCE UNIT AGREEMENT


                                      NAME
                                     GRANTEE


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<S>                                                         <C>
                DATE OF GRANT:

                RANK #1 OPPORTUNITY AMOUNT:                  $

                RANK #2 OPPORTUNITY AMOUNT:                  $

                EXPIRATION DATE:                             DECEMBER 31, 2004

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                            GRANT OF PERFORMANCE UNIT

         Pursuant to action taken by the Compensation Committee (the
"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 2002 Director and Officer Long-Term Incentive Plan (the
"Plan"), the above-named Grantee is hereby granted a Performance Unit to receive
shares of Restricted Stock of the Company's Common Stock, $1.00 par value per
share, on the terms and conditions set forth as follows:

         For the purposes of this Performance Unit Agreement, "Designated
Competitors" means BJ Services Company, Halliburton Company, Schlumberger
Limited, Smith International, Inc. and Weatherford International Ltd.
(collectively, the "Designated Competitors"). If a Designated Competitor merges
or consolidates with another company, is acquired or disposes of a significant
portion of its businesses as they exist on the date hereof or experiences and
extraordinary event, the Committee may, in its sole discretion, adjust the
Designated Competitors to address any such change.

         If the Company is first in its total shareholder return for the
two-year period ending December 31, 2004 as compared to the Designated
Competitors, the Company shall issue to Grantee that number of shares of
Restricted Stock that is equal to the "Rank #1 Opportunity Amount" dollar value
set forth above divided by the last sale price per share of the Common Stock on
the last trading day of the Common Stock in 2004, as listed in the New York
Stock Exchange Composite Transactions.

         If the Company is second in its total shareholder return for the
two-year period ending December 31, 2004 as compared to the Designated
Competitors, the Company shall issue to Grantee that number of shares of
Restricted Stock that is equal to the "Rank #2 Opportunity Amount" dollar value
set forth above divided by the last sale price per share of the Common Stock on
the last trading day of the Common Stock in 2004, as listed in the New York
Stock Exchange Composite Transactions.

         If the Company is not first or second in its total shareholder return
for the two-year period ending December 31, 2004 as compared to the Designated
Competitors, this Performance Unit award shall lapse and be forfeited.

         Pursuant to Article 3 of the Plan, the Committee shall have the
discretion to calculate two-year total return for the Company and each of the
Designated Competitors and to determine the formula to achieve such
calculations.

         Upon issuance of the Restricted Stock, the Restricted Stock shall vest
on December 31, 2005, subject to your continuing in the employment of the
Company through that date and subject to the terms of the Plan and this
Performance Unit Agreement. You may not sell any shares of the Restricted Stock
prior to December 31, 2005. You shall be entitled to any dividends or
distributions made with respect to any Restricted Stock issued to you hereunder
until the shares of the Restricted Stock vest, unless otherwise forfeited.


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         You agree that until the Restricted Stock vests, the Company may retain
possession of any certificates representing the shares of the Restricted Stock
and that such shares shall bear the following legend:

         "THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
         RESTRICTIONS AND LIMITATIONS CONTAINED IN THE PERFORMANCE UNIT
         AGREEMENT DATED JANUARY 29, 2003 (THE "AGREEMENT"), AND MAY NOT BE
         SOLD, TRANSFERRED, PLEDGED OR OTHERWISE HYPOTHECATED EXCEPT IN
         ACCORDANCE WITH THE AGREEMENT."

         By your acceptance of the Performance Unit granted hereby, you agree
that the Performance Unit is granted under and governed by the terms of the
Plan, this Performance Unit Agreement and the Terms and Conditions of Award
Agreements (dated January 29, 2003).

                                   BAKER HUGHES INCORPORATED

                                   /S/ MICHAEL E. WILEY

                                   Michael E. Wiley - Chairman, President & CEO




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                            BAKER HUGHES INCORPORATED

                              TERMS AND CONDITIONS
                                       OF
                                AWARD AGREEMENTS
                               (JANUARY 29, 2003)

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 as covered by Sections 1.2 through 1.6), or by
         the Company without Cause (as defined in the Plan) or by the Grantee
         for Good Reason (as defined in the Plan) within two years following a
         Change of Control (as defined in the Plan) that occurs after the Date
         of Grant, the Performance Unit, including any Restricted Stock issued
         with respect to the Performance Unit that has not vested, will wholly
         and completely terminate on the date of termination of employment.

         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, if such termination of
         employment occurs prior to a Change of Control that occurs after the
         Date of Grant or after the second anniversary of a Change of Control
         that occurs after the Date of Grant, the Performance Unit will wholly
         and completely terminate on the date of termination of employment, or
         if such termination occurs within two years following a Change of
         Control that occurs after the Date of Grant, the Performance Unit will
         wholly and completely terminate on the date thirty days following such
         termination of employment.

         1.3 Termination without Cause or for Good Reason in Connection with a
         Change in Control. Notwithstanding any other provision of the
         Performance Unit Agreement to the contrary, if a Change in Control of
         the Company occurs, the provisions of Article 14 of the Plan shall
         govern; and for the purposes of those provisions, the Company's total
         shareholder return for the two-year period ending December 31, 2004
         shall be deemed to be first as compared to the Designated Competitors.

         1.4 Divestiture of Business Unit. If the Company divests its ownership
         in a division of which Grantee is President (the "Unit") while the
         Grantee is President of the Unit, then the Performance Unit will be
         deemed to be fully vested on the effective date of the Divestiture
         (defined below) of the Unit. If and when the conditions of the
         Performance Unit are met for the Grantee to receive Restricted Stock,
         even if the conditions are met following the effective date of the
         Divestiture of the Unit, the Restricted Stock that the Grantee will
         receive shall be fully vested on the later to occur of (i) the
         effective date of the Divestiture and (ii) the date the Grantee is
         entitled to receive the shares of Restricted Stock under the
         Performance Unit. 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) that occurs after December 31, 2004, or long-term
         disability of the Grantee, as long-term disability is determined in the
         discretion of the Committee (as defined in the Plan), the Performance
         Unit shall immediately vest upon the Grantee's retirement or long-term
         disability. If and when the conditions of the Performance Unit are met
         for the Grantee to receive Restricted Stock, even if the conditions are
         met following the effective date of such retirement or disability, the
         Restricted Stock that the Grantee will receive shall be fully vested on
         the later to occur of (i) the retirement or disability date, as the
         case may be, and (ii) the date the Grantee is entitled to receive the
         shares of Restricted Stock under the Performance Unit


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         1.6 Death. Upon the death of the Grantee in active service, the
         Performance Unit shall immediately vest upon the Grantee's death. If
         and when the conditions of the Performance Unit are met for the Grantee
         to receive Restricted Stock, even if the conditions are met following
         the Grantee's death, the Restricted Stock that the Grantee's estate or
         heirs, as appropriate, will receive shall be fully vested on the later
         to occur of (i) the date of Grantee's death and (ii) the date the
         Grantee's estate or heirs, as appropriate, is entitled to receive the
         shares of Restricted Stock under the Performance Unit

2.       PROHIBITED ACTIVITY. Notwithstanding any other provision of this
         Performance Unit 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 receive Restricted Stock
         (whether by satisfying the conditions of the Performance Unit or the
         vesting of the Restricted Stock), 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 extend the restriction
         period on the Restricted Stock 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
         restriction of the Restricted will be decreased by the amount of time
         of the extension. 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.       TAX WITHHOLDING. To the extent the sale of Restricted Stock 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, including (without limitation) shares of
         the Restricted Stock sufficient to satisfy the withholding obligation
         based on the last per share sales price of the Company's Common Stock
         for the trading day immediately preceding the date that the withholding
         obligation arises, as reported in the New York Stock Exchange Composite
         Transactions.

4.       NONTRANSFERABILITY. The Performance Unit is not transferable by the
         Grantee otherwise than by will or by the laws of descent and
         distribution.

5.       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.

6.       MISCELLANEOUS. The Performance Unit 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.