<PAGE>

                                                                   EXHIBIT 10.12

                            BAKER HUGHES INCORPORATED
                          SUPPLEMENTAL RETIREMENT PLAN

                            (AS AMENDED AND RESTATED
                        EFFECTIVE AS OF JANUARY 1, 2003)

<PAGE>

                                                                   EXHIBIT 10.12

                            BAKER HUGHES INCORPORATED
                          SUPPLEMENTAL RETIREMENT PLAN

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                             PAGE
                                                                                                             ----
<S>                                                                                                          <C>
ARTICLE I         DEFINITIONS AND CONSTRUCTION............................................................     1
1.01     Definitions......................................................................................     1
1.02     Number and Gender................................................................................     4
1.03     Headings.........................................................................................     4

ARTICLE II        PARTICIPATION...........................................................................     5
2.01     Eligibility......................................................................................     5
2.02     Commencement of Participation....................................................................     5
2.03     Cessation of Participation Upon Plan Administrator Determination.................................     5
2.04     Suspension of Participation Due to Certain Distributions.........................................     5

ARTICLE III       PARTICIPANT DEFERRALS...................................................................     5
3.01     Amount of Participant Deferrals..................................................................     5
3.02     Participant Deferral Elections...................................................................     6
3.03     Period of Effectiveness of Participant Deferral Elections........................................     6
3.04     Changes to Participant Deferral Election.........................................................     6
3.05     Cancellation of Participant Deferral Election....................................................     6
3.06     Time and Form of Payment Specified in Participant Deferral Election..............................     7
3.07     Irrevocable Change of Election of Time and/or Form of Payment....................................     7
3.08     Suspension of Participant Deferrals Due to Withdrawal for Unforeseeable Financial Emergency......     7

ARTICLE IV        COMPANY DEFERRALS.......................................................................     7
4.01     Company Matching Deferrals.......................................................................     7
4.02     Company Base Thrift Deferrals....................................................................     7
4.03     Company Pension Deferrals........................................................................     8
4.04     Company Discretionary Deferrals..................................................................     8
4.05     Time and Form of Payment Elections for Company Deferrals.........................................     8

ARTICLE V         VALUATION OF ACCOUNTS...................................................................     8

ARTICLE VI        DEEMED INVESTMENT OF FUNDS..............................................................     8

ARTICLE VII       DETERMINATION OF VESTED INTEREST AND FORFEITURES........................................     9
7.01     Vested Interest..................................................................................     9
7.02     Forfeitures  ....................................................................................     9

ARTICLE VIII      ACCELERATED DISTRIBUTIONS...............................................................     9
8.01     Restrictions on In-Service Distributions and Loans...............................................     9
8.02     Emergency Benefit................................................................................     9

ARTICLE IX        TERMINATION BENEFITS....................................................................    10
9.01     Amount of Benefit................................................................................    10
9.02     Time of Payment..................................................................................    10
9.03     Alternative Forms of Benefit Payments............................................................    10
9.04     Accelerated Pay-Out of Certain Benefits..........................................................    11
9.05     Designation of Beneficiaries.....................................................................    11
9.06     Payment of Benefits..............................................................................    11
</TABLE>

                                       -i-

<PAGE>

                                                                   EXHIBIT 10.12

<TABLE>
<S>                                                                                                           <C>
9.07     Unclaimed Benefits...............................................................................    11
9.08     Plan Administrator Determination of Pay-Out of Certain Benefits..................................    12
9.09     Statutory Benefits...............................................................................    12

ARTICLE X         ADMINISTRATION OF THE PLAN..............................................................    12
10.01    Plan Administrator...............................................................................    12
10.02    Resignation and Removal..........................................................................    12
10.03    Records and Procedures...........................................................................    12
10.04    Self-Interest of Plan Administrator..............................................................    12
10.05    Compensation and Bonding.........................................................................    12
10.06    Plan Administrator Powers and Duties.............................................................    13
10.07    Reliance on Documents, Instruments, etc..........................................................    13
10.08    Claims Review Procedures; Claims Appeals Procedures..............................................    13
10.09    Company to Supply Information....................................................................    14
10.10    Indemnity .......................................................................................    14

ARTICLE XI        ADMINISTRATION OF FUNDS.................................................................    15
11.01    Payment of Expenses..............................................................................    15
11.02    Trust Fund Property..............................................................................    15

ARTICLE XII       ADOPTION OF PLAN BY OTHER EMPLOYERS.....................................................    15
12.01    Adoption Procedure...............................................................................    15
12.02    No Joint Venture Implied.........................................................................    16

ARTICLE XIII      NATURE OF THE PLAN AND ESTABLISHMENT OF THE TRUST.......................................    16
13.01    Nature of the Plan...............................................................................    16
13.02    Establishment of the Trust.......................................................................    16

ARTICLE XIV       MISCELLANEOUS...........................................................................    16
14.01    Plan Not Contract of Employment..................................................................    16
14.02    Alienation of Interest Forbidden.................................................................    17
14.03    Withholding  ....................................................................................    17
14.04    Amendment and Termination........................................................................    17
14.05    Severability ....................................................................................    17
14.06    Arbitration  ....................................................................................    17
14.07    Governing Law....................................................................................    17
</TABLE>

                                      -ii-

<PAGE>

                                                                   EXHIBIT 10.12

                            BAKER HUGHES INCORPORATED
                          SUPPLEMENTAL RETIREMENT PLAN

                            (AS AMENDED AND RESTATED
                           EFFECTIVE JANUARY 1, 2003)

                                   ARTICLE I
                          DEFINITIONS AND CONSTRUCTION

         1.01     DEFINITIONS. The words and phrases defined in this Article
shall have the meaning set out in the definition unless the context in which
the word or phrase appears reasonably requires a broader, narrower or different
meaning.

                  "ACCOUNT(S)" means all ledger accounts pertaining to a
         Participant or former Participant which are maintained by the Plan
         Administrator to reflect the Company's obligation to the Participant or
         former Participant under the Plan. The Plan Administrator shall
         establish the following subaccounts and any additional subaccounts that
         the Plan Administrator considers necessary to reflect the entire
         interest of the Participant or former Participant under the Plan. Each
         of the subaccounts listed below and any additional subaccounts
         established by the Plan Administrator shall reflect credits and debits
         made to such subaccounts for earnings, losses, distributions and
         forfeitures

                           (a)      Participant Deferral Account - the
                  Participant's or former Participant's deferrals, if any, made
                  pursuant to Section 3.01.

                           (b)      Company Matching Deferral Account - the
                  credits made on behalf of a Participant or former Participant
                  pursuant to Section 4.01.

                           (c)      Company Base Thrift Deferral Account - the
                  credits made on behalf of a Participant or former Participant,
                  if any, made pursuant to Section 4.02.

                           (d)      Company Pension Deferral Account - the
                  credits made on behalf of a Participant or former Participant,
                  if any, made pursuant to Section 4.03.

                           (e)      Company Discretionary Deferral Account - the
                  credits made on behalf of a Participant or former Participant,
                  if any, made pursuant to Section 4.04.

                  "AFFILIATE" means any entity which is a member of the same
         controlled group of corporations within the meaning of section 414(b)
         of the Code or which is a trade or business (whether or not
         incorporated) which is under common control (within the meaning of
         section 414(c) of the Code), which is a member of an affiliated service
         group (within the meaning of section 414(m) of the Code) with Baker
         Hughes.

                  "ANNUAL INCENTIVE PLAN" means Baker Hughes Incorporated 1995
         Employee Annual Incentive Compensation Plan, as amended from time to
         time, any guidelines issued pursuant to such plan, and any other
         incentive compensation plans adopted by the Company from time to time
         which are in replacement of or in addition to such plan.

                  "BAKER HUGHES" means Baker Hughes Incorporated, a Delaware
         corporation.

                  "BASE COMPENSATION" means a Participant's base salary or wages
         measured on an annual basis (as defined in section 3401(a) of the Code
         for purposes of federal income tax withholding) from the Company,
         modified by including any portion thereof that such Participant could
         have received in cash in lieu of (a) Participant Deferrals pursuant to
         Section 3.01 or (b) elective contributions made on his behalf by the
         Company pursuant to a qualified cash or deferred arrangement described
         in section 401(k) of the Code

                                       1

<PAGE>

                                                                   EXHIBIT 10.12

         and any elective contributions under a cafeteria plan described in
         section 125, and modified further by excluding any bonus; incentive
         compensation; commissions; expense reimbursements or other expense
         allowances; fringe benefits (cash and noncash); moving expenses;
         deferred compensation (other than (a) Participant Deferrals pursuant to
         Section 3.01 or (b) elective contributions to the Company's qualified
         cash or deferred arrangement described in section 401(k) of the Code);
         welfare benefits as defined in the Employee Retirement Income Security
         Act of 1974, as amended; overtime pay; special performance compensation
         amounts and severance compensation.

                  "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the
         meaning ascribed to the term in Rule 13d-3 of the General Rules and
         Regulations under the Exchange Act.

                  "BOARD" means the Board of Directors of Baker Hughes.

                  "BONUS" means each incentive bonus, if any, paid in cash by
         the Company to or for the benefit of an Employee for services rendered
         or labor performed while an Employee. Annual bonuses are generally paid
         with respect to a completed fiscal year by the Company to its employees
         pursuant to the Annual Incentive Plan. An Employee's Bonus shall be
         determined by including any portion thereof that such Employee could
         have received in cash in lieu of (a) any Participant Deferrals pursuant
         to Section 3.01 or (b) elective contributions made on his behalf by the
         Company pursuant to a qualified cash or deferred arrangement (as
         defined in section 401(k) of the Code) or pursuant to a plan maintained
         under section 125 of the Code.

                  "CODE" means the Internal Revenue Code of 1986, as amended
         from time to time.

                  "COMMITTEE" means the Administrative Committee or the
         Investment Committee that may be appointed by the Board as a Plan
         Administrator.

                  "COMPANY" means Baker Hughes or an Employer.

                  "COMPANY BASE THRIFT DEFERRALS" means credits to a
         Participant's Account pursuant to Section 4.02.

                  "COMPANY DEFERRALS" means, collectively or individually, any
         of the deferrals made by the Company pursuant to Sections 4.01, 4.02,
         4.03 and 4.04.

                  "COMPANY DISCRETIONARY DEFERRALS" means credits, if any, to a
         Participant's Account pursuant to Section 4.04.

                   "COMPANY MATCHING DEFERRALS" means credits to a Participant's
         Account pursuant to Section 4.01.

                  "COMPANY PENSION DEFERRALS" means credits to a Participant's
         Account pursuant to Section 4.03.

                   "DEFERRAL PERIOD" means the period of deferral selected by a
         Participant pursuant to Section 3.06 or Section 4.05.

                  "EFFECTIVE DATE" means January 1, 2003.

                  "ELIGIBLE EMPLOYEE" means any individual who, on the date he
         commences participation in the Plan, is employed by the Company on the
         active payroll and who is also an executive salary grade system
         employee (under the Company's then current payroll system categories),
         or any comparable executive designations in any system that replaces
         the executive salary grade system. Once an individual commences
         participation in the Plan, he may continue participation even if his
         payroll system status changes to a level that is below the executive
         salary grade system, provided that the individual continues to remain a
         member

                                       2

<PAGE>

                                                                   EXHIBIT 10.12

         of a select group of management or a highly compensated employee, as
         determined by the Plan Administrator.

                  "EMPLOYER" means any Affiliate that adopts the Plan pursuant
         to the provisions of Article XII.

                  "ENTRY DATE" means the first day of each Plan Year.

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
         amended from time to time, or any successor act.

                  "FUNDS" means the investment funds designated from time to
         time for the deemed investment of Accounts pursuant to Article VI.

                  "INELIGIBLE PENSION PLAN COMPENSATION" means with respect to
         each Participant and each payroll period, the amount of the
         Participant's compensation not taken into account under the Pension
         Plan benefit formula solely because (a) such Participant deferred such
         compensation as a Participant Deferral pursuant to Section 3.01 and/or
         (b) such compensation exceeded the maximum dollar limitation of section
         401(a)(17) of the Code.

                  "INELIGIBLE THRIFT PLAN COMPENSATION" means with respect to
         each Participant and each payroll period, the amount of such
         Participant's compensation for such payroll period that is not
         considered "Compensation" under the Thrift Plan for such payroll period
         solely because (a) such Participant deferred such compensation as a
         Participant Deferral pursuant to Section 3.01 and/or (b) such
         compensation exceeded the maximum dollar limitation of section
         401(a)(17) of the Code.

                  "PARTICIPANT" means each Eligible Employee who has met the
         eligibility requirements for participation in the Plan specified in
         Section 2.01.

                  "PARTICIPANT DEFERRAL" means any deferral made by a
         Participant pursuant to Section 3.01.

                  "PAY" means the sum of a Participant's Base Compensation and
         Bonus.

                  "PENSION PLAN" means the Baker Hughes Incorporated Pension
         Plan, as amended from time to time.

                  "PERSON" shall have the meaning ascribed to the term in
         Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and
         14(d) thereof, including a "group" as defined in Section 13(d) thereof,
         except that the term shall not include (a) the Company or any of its
         Affiliates, (b) a trustee or other fiduciary holding Company securities
         under an employee benefit plan of the Company or any of its Affiliates,
         (c) an underwriter temporarily holding securities pursuant to an
         offering of those securities or (d) 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.

                  "PLAN" means the Baker Hughes Incorporated Supplemental
         Retirement Plan, as amended from time to time.

                  "PLAN ADMINISTRATOR" means Baker Hughes, acting through its
         delegates. Such delegates shall include the Administrative Committee,
         the Investment Committee and any individual Plan Administrator
         appointed by the Board with respect to the employee benefit plans of
         Baker Hughes and its Affiliates, each of which shall have the duties
         and responsibilities assigned to it from time to time by the Board. As
         used in the Plan, the term "Plan Administrator" shall refer to the
         applicable delegate of Baker Hughes as determined pursuant to the
         actions of the Board.

                  "PLAN YEAR" means the twelve-consecutive month period
         commencing January 1 of each year.

                                       3

<PAGE>

                                                                   EXHIBIT 10.12

                  "RETIREMENT" means the Employee's voluntary termination of his
         employment when the Employee has attained at least 55 years of age and
         has at least ten (10) years of service with the Company.

                  "RETIREMENT DATE" means a Participant's or former
         Participant's "Retirement Date" as defined under the Thrift Plan.

                   "TERMINATION OF EMPLOYMENT" means, with respect to each
         Participant or former Participant, the termination of such
         Participant's or former Participant's employment with the Company and
         all Affiliates for any reason whatsoever.

                  "THRIFT PLAN" means the Baker Hughes Incorporated Thrift Plan,
         as amended from time to time.

                  "TRUST" means the trust, if any, established under the Trust
         Agreement.

                  "TRUST AGREEMENT" means the agreement, if any, entered into
         between the Company and the Trustee pursuant to Article XIII, as
         amended from time to time.

                  "TRUST FUND" means the funds and properties, if any, held
         pursuant to the provisions of the Trust Agreement, together with all
         income, profits, and increments thereto.

                  "TRUSTEE" means the trustee or trustees qualified and acting
         under the Trust Agreement at any time.

                  "UNFORESEEABLE FINANCIAL EMERGENCY" means an unexpected need
         of a Participant for cash that (a) arises from an illness, casualty
         loss, sudden financial reversal, or such other unforeseeable occurrence
         that is caused by an event beyond the control of such Participant, (b)
         would result in severe financial hardship to such Participant if his
         compensation deferral election was not canceled pursuant to Section
         3.08 and/or if a benefit payment pursuant to Section 8.02 was not
         permitted, and (c) is not reasonably satisfiable from other resources
         of such Participant. Cash needs arising from foreseeable events, such
         as the purchase of a house or education expenses for children, shall
         not be considered to be the result of an Unforeseeable Financial
         Emergency. Further, cash needs that may be relieved (a) through
         reimbursement or compensation by insurance or otherwise, (b) by
         liquidation of the Participant's assets, to the extent the liquidation
         of such assets would not itself cause severe financial hardship, or (c)
         by cessation of deferrals under the Plan shall not be considered to be
         Unforeseeable Financial Emergencies.

                  "VESTED INTEREST" means the portion of a Participant's or
         former Participant's Accounts which, pursuant to the Plan, is
         nonforfeitable.

         1.02     NUMBER AND GENDER. Wherever appropriate herein, words used in
the singular shall be considered to include the plural and words used in the
plural shall be considered to include the singular. The masculine gender, where
appearing in the Plan, shall be deemed to include the feminine gender.

         1.03     HEADINGS. The headings of Articles and Sections herein are
included solely for convenience, and if there is any conflict between such
headings and the text of the Plan, the text shall control.

                                       4

<PAGE>

                                                                   EXHIBIT 10.12

                                   ARTICLE II
                                  PARTICIPATION

         2.01     ELIGIBILITY.

                  (a)      Each Eligible Employee shall be eligible to become a
         Participant for a Plan Year by electing to make Participant Deferrals
         pursuant to Section 3.01(a).

                  (b)      Each Eligible Employee who is a participant in the
         Thrift Plan during a Plan Year shall be eligible to become a
         Participant for such Plan Year by electing to make Participant
         Deferrals pursuant to Section 3.01(b).

                  (c)      Each Eligible Employee who is a participant in the

         Thrift Plan during a Plan Year shall be a Participant for such Plan
         Year with respect to Company Deferrals pursuant to Section 4.02.

                  (d)      Each Eligible Employee who is a participant in the
         Pension Plan during a Plan Year shall be a Participant of the Plan for
         such Plan Year with respect to Company Deferrals pursuant to Section
         4.03.

         2.02     COMMENCEMENT OF PARTICIPATION. Prior to each Entry Date, the
Plan Administrator shall notify those Eligible Employees who are determined by
the Plan Administrator to be eligible to participate in the Plan as of such
Entry Date. Any such Eligible Employee may elect to make Participant Deferrals
beginning on such Entry Date by effecting, prior to such Entry Date and within
the time period prescribed by the Plan Administrator, the Participant Deferral
election in the form prescribed by the Plan Administrator. Notwithstanding any
provision herein to the contrary, an Eligible Employee who first becomes an
Eligible Employee on other than the first day of a Plan Year may elect to make
Participant Deferrals commencing on the date he first becomes an Eligible
Employee by effecting, prior to or within 30 days after the date he first
becomes an Eligible Employee and within the time period prescribed by the Plan
Administrator, the Participant Deferral election in the form prescribed by the
Plan Administrator.

         2.03     CESSATION OF PARTICIPATION UPON PLAN ADMINISTRATOR
DETERMINATION. Notwithstanding any provision herein to the contrary, an Eligible
Employee who has become a Participant of the Plan shall cease to be entitled to
make Participant Deferrals hereunder or receive credits under Article IV
effective as of any date designated by the Plan Administrator. Any such Plan
Administrator action shall be communicated to the affected individual prior to
the effective date of such action. Any such Eligible Employee may again become
entitled to make Participant Deferrals hereunder and to receive credits under
Article IV beginning on any subsequent Entry Date selected by the Plan
Administrator in its sole discretion.

         2.04     SUSPENSION OF PARTICIPATION DUE TO CERTAIN DISTRIBUTIONS. To
the extent and for the period of time specified in Section 3.08, a Participant's
participation in the Plan shall be suspended upon his making a withdrawal under
Section 8.02.

                                  ARTICLE III
                              PARTICIPANT DEFERRALS

         3.01     AMOUNT OF PARTICIPANT DEFERRALS.

                  (a)      A Participant meeting the eligibility requirements of
                           Section 2.01(a) may:

                           (i)      elect to defer an integral percentage of
                  from 1% to 60% of his Base Compensation for a Plan Year;
                  and/or

                           (ii)     elect to defer an integral percentage of
                  from 1% to 100% of his Bonus for a Plan Year.

                                       5

<PAGE>

                                                                   EXHIBIT 10.12

                  Notwithstanding the foregoing, with respect to an Eligible
         Employee who first becomes a Participant on a date other than an Entry
         Date, (i) any such Participant Deferrals pursuant to Section 3.01(a)(i)
         shall apply only for the portion of such Plan Year commencing with the
         date he first becomes a Participant and ending on the last day of such
         Plan Year, and (ii) any such Participant Deferral pursuant to Section
         3.01(a)(ii) shall become effective as of the first day of the following
         Plan Year.

                  (b)      If a Participant's "Before-Tax Contributions" under
         the Thrift Plan are reduced as a result of the limitations contained in
         sections 401(a)(17) and 402(g) of the Code and a Participant meets the
         eligibility requirements of Section 2.01(b), the Participant may elect
         for a Plan Year to defer an integral percentage of from 0% to 50% of
         the difference between his Base Compensation and the amount the
         Participant elected to defer in Section 3.01(a)(i). Notwithstanding the
         foregoing, any such Participant Deferrals pursuant to this Section
         3.01(b) shall be determined based upon the Participant's elections with
         respect to "Before-Tax Contributions" under the Thrift Plan in effect
         on the first day of such Plan Year (or on the first day the Participant
         became a "Participant" of the Thrift Plan during such Plan Year, if
         later).

         3.02     PARTICIPANT DEFERRAL ELECTIONS. Pay for a Plan Year that is
not deferred pursuant to an election under Sections 3.01(a) and (b) shall be
received by such Participant in cash. A Participant's election to defer an
amount of his Pay pursuant to this Section shall be made by effecting, in the
form prescribed by the Plan Administrator, a Participant Deferral election
pursuant to which the Participant authorizes the Company to reduce his Pay in
the elected amount and the Company, in consideration thereof, agrees to credit
an equal amount to his Participant Deferral Account maintained under the Plan.
The reduction in a Participant's Pay pursuant to his Participant Deferral
election shall be effected by Pay reductions each payroll period as determined
by the Plan Administrator following the effective date of such election. Such
Pay reductions shall be within the Plan Year to which the Participant Deferral
election relates, except that Pay reductions attributable to elections pursuant
to Section 3.01(a)(ii) may be made within a Plan Year if the Bonus to which the
Participant Deferral election relates is paid in the next following Plan Year.
Participant Deferrals made by a Participant shall be credited to his Participant
Deferral Account as of a date determined in accordance with procedures
established from time to time by the Plan Administrator; provided, however, that
such Participant Deferrals shall be credited to his Participant Deferral Account
no later than 30 days after the date upon which the Pay deferred would have been
received by such Participant in cash had he not elected to defer such amount
pursuant to Section 3.01.

         3.03     PERIOD OF EFFECTIVENESS OF PARTICIPANT DEFERRAL ELECTIONS. A
Participant Deferral election pursuant to Sections 3.01(a) and (b) shall become
effective as of the Entry Date (or later initial eligibility date, if
applicable) which is on or after the date the election is effected by the
Participant. With respect to an Eligible Employee who first becomes a
Participant on other than an Entry Date, any such Participant Deferrals pursuant
to Sections 3.01(a)(i) or 3.01(b) shall apply only for the portion of such Plan
Year commencing with the date he first becomes a Participant and ending on the
last day of such Plan Year. A Participant Deferral election pursuant to Section
3.01(a)(ii) shall become effective as of the first day of the Plan Year
following the date the election is effected by the Participant. A Participant
Deferral election shall remain in force and effect for the entire (or partial,
if applicable) Plan Year to which such election relates. A Participant Deferral
election shall be made for each Plan Year, or partial Plan Year, in which the
Participant is eligible to participate. Plan provisions to the contrary
notwithstanding, a Participant Deferral election shall be suspended during any
period of unpaid leave of absence from the Company.

         3.04     CHANGES TO PARTICIPANT DEFERRAL ELECTION. A Participant who
makes a Participant Deferral election may change his election for future
Participant Deferrals as of the Entry Date of any subsequent Plan Year, by
effecting such change in the annual election prior to the Entry Date of such
Plan Year, in the form and within the time period prescribed by the Plan
Administrator. Any such change shall be effective as of the Entry Date of such
Plan Year.

         3.05     CANCELLATION OF PARTICIPANT DEFERRAL ELECTION. A Participant
who has made a Participant Deferral election may cancel his election for future
Participant Deferrals, as of the Entry Date of any subsequent Plan Year, by
effecting such cancellation in the annual election prior to the Entry Date of
such Plan Year, in the form and within the time period prescribed by the Plan
Administrator. Any such change shall be effective as of the Entry Date of such
Plan Year. A Participant who so cancels his Participant Deferral election may
again make a new Participant Deferral election for a subsequent Plan Year, if he
satisfies the eligibility requirements set forth in

                                       6

<PAGE>

                                                                   EXHIBIT 10.12

Section 2.01, by effecting a new Participant Deferral election prior to the
Entry Date of such Plan Year, in the form and within the time period prescribed
by the Plan Administrator.

         3.06     TIME AND FORM OF PAYMENT SPECIFIED IN PARTICIPANT DEFERRAL
ELECTION. A Participant Deferral election shall indicate the applicable time and
form of payment, as provided in Sections 9.02 and 9.03, for the Pay deferred
under the election for such Plan Year and the net income (or net loss) allocated
with respect thereto. Such time and form of payment election for such Plan Year
shall also apply to any Company Deferrals for such Plan Year and the net income
(or net loss) allocated with respect thereto. Each Participant's Accounts shall
be divided into subaccounts to reflect the Participant's various elections
respecting time and form of payment. Notwithstanding the foregoing, with respect
to the portion of a Participant's Account attributable to the amount, if any,
credited to his Account on December 31, 1994, under the Plan as in effect
immediately prior to the January 1, 1995 restatement of the Plan, such portion
and the net income (or net loss) allocated with respect thereto shall be
allocated to a subaccount which shall be payable at the time and in the form
provided under the Plan as in effect immediately prior to such restatement. A
Participant may elect to have his Account or subaccount balance paid or commence
to be paid after the Participant's Termination of Employment (i) upon the
expiration of a specified term or (ii) upon such Termination of Employment (the
"DEFERRAL PERIOD"). The Plan Administrator is authorized to establish written
guidelines concerning limitations on the number of subaccounts respecting time
and form of payment that may be maintained under the Plan for any given
Participant. Any such written guidelines shall be deemed to be incorporated by
reference in the Plan. Once an election as to time and form of payment has been
made for a Plan Year, the election may not be changed by the Participant or
former Participant except as specified in Section 3.07.

         3.07     IRREVOCABLE CHANGE OF ELECTION OF TIME AND/OR FORM OF PAYMENT.
In accordance with procedures established by the Plan Administrator, a
Participant or former Participant may make a one-time irrevocable election to
change the time and/or form of payment he previously selected for all of the
amounts credited to his Account. Any such change election must be made no later
than 18 months before the date on which such amounts were scheduled to be paid
or commence to be paid under the Participant's or former Participant's original
election. In addition, any such change election may not provide for a payment or
commencement of payment that is earlier than 18 months after the date on which
the change election is made. For purposes of calculating the 18-month period,
such period will commence on the first day of the month immediately following
the month in which the election is made.

         3.08     SUSPENSION OF PARTICIPANT DEFERRALS DUE TO WITHDRAWAL FOR
UNFORESEEABLE FINANCIAL EMERGENCY. Upon written petition of a Participant, in
the event that the Plan Administrator determines in its sole discretion that
such Participant has suffered an Unforeseeable Financial Emergency or that such
Participant will, absent termination of such Participant's Participant Deferral
election then in effect, suffer an Unforeseeable Financial Emergency, then the
Participant Deferral election of such Participant then in effect, if any, shall
be terminated as soon as administratively practicable after such determination.
A Participant whose Participant Deferral election has been so terminated may
again make a new Participant Deferral election for a subsequent Plan Year that
commences at least twelve months after the effective date of such termination,
if he satisfies the eligibility requirements set forth in Section 2.01 and by
effecting a new Participant Deferral election for such Plan Year, in the form
and within the time period prescribed by the Plan Administrator.

                                   ARTICLE IV
                                COMPANY DEFERRALS

         4.01     COMPANY MATCHING DEFERRALS. For each payroll period, the
Company shall defer on a Participant's behalf an amount equal to 4% of the
Participant Deferrals made pursuant to Sections 3.01(a) and (b).

                  Company Matching Deferrals made on a Participant's behalf
pursuant to this Section 4.01 shall be credited to such Participant's Company
Matching Deferral Account as of the date the corresponding Participant Deferral
is credited to the Participant's Account.

         4.02     COMPANY BASE THRIFT DEFERRALS. For each payroll period, the
Company shall defer an amount on behalf of each Participant who is entitled to
an allocation of "Company Base Contributions" under the Thrift Plan for such
payroll period. The amount of each such Company Deferral shall be a percentage
of the Participant's

                                       7

<PAGE>

                                                                   EXHIBIT 10.12

Ineligible Thrift Plan Compensation, if any, for such payroll period, with such
percentage being equal to the percentage utilized under the Thrift Plan to
determine the Participant's "Company Base Contribution" for such payroll period
under the Thrift Plan. Company Base Thrift Deferrals on behalf of a Participant
pursuant to this Section 4.02 shall be credited to such Participant's Company
Base Thrift Deferral Account in accordance with the procedures established from
time to time by the Plan Administrator.

         4.03     COMPANY PENSION DEFERRALS. For each payroll period, the
Company shall defer an amount on behalf of each Participant equal to the
percentage of such Participant's Ineligible Pension Plan Compensation, if any,
for such payroll period. Company Pension Deferrals on behalf of a Participant
pursuant to this Section 4.03 shall be credited to such Participant's Company
Pension Deferral Account in accordance with the procedures established from time
to time by the Plan Administrator.

         4.04     COMPANY DISCRETIONARY DEFERRALS. As of any date selected by
the Company, the Company may credit a Participant's Company Discretionary
Deferral Account with Company Discretionary Deferrals in such amount, if any, as
the Company shall determine in its sole discretion. Such credits may be made on
behalf of some Participants but not others, and such credits may vary in amount
among individual Participants.

         4.05     TIME AND FORM OF PAYMENT ELECTIONS FOR COMPANY DEFERRALS. A
Participant who does not have a time and form of payment election in effect
pursuant to Section 3.06 for a given Plan Year shall make a time and form of
payment election, as provided in Sections 9.02 and 9.03, for Company Base Thrift
Deferrals, Company Pension Deferrals, and Company Discretionary Deferrals for
such Plan Year. Such election shall be made in accordance with the same
procedures as apply to Participant Deferral elections under Section 3.06. A
Participant who had made a time and form of payment election pursuant to this
Section 4.05 may change his election for future Company Base Thrift Deferrals,
Company Pension Deferrals, and Company Discretionary Deferrals as of the Entry
Date of any subsequent Plan Year, by effecting a new election prior to the Entry
Date of such Plan Year, in the form and within the time period prescribed by the
Plan Administrator. Each Participant's Accounts shall be divided into
subaccounts to reflect the Participant's various elections respecting time and
form of payment. Once an election as to time and form of payment has been made
for a Plan Year, the election may not be changed by the Participant or former
Participant except as specified in Section 3.07.

                                   ARTICLE V
                             VALUATION OF ACCOUNTS

         All amounts allocated to the Accounts of Participants shall be deemed
to be invested as of the date of such allocation, and the balance of each
Account shall reflect the result of daily pricing of the assets in which such
Account is deemed to be invested from the time of such allocation until the time
of distribution.

                                   ARTICLE VI
                           DEEMED INVESTMENT OF FUNDS

         Participant's and former Participant's Accounts shall be deemed to be
credited with earnings and losses. For the purpose of determining the earnings
or losses to be credited to the Participant's or former Participant's Accounts
under the Plan, the Plan Administrator shall assume that the Participant's or
former Participant's Accounts are invested in units or shares of the Funds in
the proportions selected by the Participant or former Participant in accordance
with procedures established by the Plan Administrator. This amount accrued by
the Plan Administrator as additional deferred compensation shall be a part of
the Company's obligation to the Participant or former Participant. The
determination of deemed earnings and losses on amounts deemed credited to the
Participant's or former Participant's Account shall in no way affect the ability
of the general creditors of the Company to reach the assets of the Company
(including any rabbi trust maintained in connection with the Plan) in the event
of the insolvency or bankruptcy of the Company or place the Participants or
former Participants in a secured position ahead of the general creditors of the
Company. Although a Participant's or former Participant's investment selections
made in accordance with the terms of the Plan and such procedures as may be
established by the Plan Administrator shall be relevant for purposes of
determining the Company's obligation to the Participant or former Participant
under the Plan, there is no requirement that any assets of the Company
(including those held in any rabbi trust) shall be invested in accordance with
the Participant's or former Participant's investment selections.

                                       8

<PAGE>

                                                                   EXHIBIT 10.12

         Each Participant or former Participant shall designate, in accordance
with the procedures established from time to time by the Plan Administrator, the
manner in which the amounts allocated to his Accounts shall be deemed to be
invested from among the Funds made available from time to time for such purpose
by the Plan Administrator. Such Participant or former Participant may designate
one of such Funds for the deemed investment of all such amounts allocated to his
Accounts or he may split the deemed investment of such amounts allocated to his
Accounts among such Funds in such increments as the Plan Administrator may
prescribe. If a Participant or former Participant fails to make a proper
designation, then his Accounts shall be deemed to be invested in the Fund or
Funds designated in a uniform and nondiscriminatory manner by the Plan
Administrator from time to time.

         A Participant may change his deemed investment designation for future
deferrals to be allocated to his Accounts. Any such change shall be made in
accordance with the procedures established by the Plan Administrator, and the
frequency of such changes may be limited by the Plan Administrator.

         A Participant or former Participant may elect to convert his deemed
investment designation with respect to the amounts already allocated to his
Accounts. Any such conversion shall be made in accordance with the procedures
established by the Plan Administrator, and the frequency of such conversions may
be limited by the Plan Administrator.

                                  ARTICLE VII
                DETERMINATION OF VESTED INTEREST AND FORFEITURES

         7.01     VESTED INTEREST. A Participant or former Participant shall
have a 100% Vested Interest in amounts credited to his Participant Deferral
Account and his Company Matching Deferral Account at all times. A Participant or
former Participant shall have a Vested Interest in the amounts credited to his
Company Base Thrift Deferral Account and Company Discretionary Deferral Account
equal to his nonforfeitable interest in his "Company Non-Matching Accounts"
under the Thrift Plan. A Participant or former Participant shall have a Vested
Interest in the amounts credited to his Company Pension Deferral Account equal
to his nonforfeitable interest in his account under the Pension Plan. Further, a
Participant or former Participant shall have a 100% Vested Interest in amounts
credited to his Company Base Thrift Deferral Account, Company Pension Deferral
Account, and Company Discretionary Deferral Account upon such Participant's or
former Participant's Termination of Employment after attainment of his
Retirement Date or by reason of death.

         7.02     FORFEITURES. A Participant or former Participant who incurs a
Termination of Employment with a Vested Interest in amounts credited to his
Company Base Thrift Deferral Account, Company Pension Deferral Account, and
Company Discretionary Deferral Account that is less than 100% (determined after
giving effect to any provision in Section 7.01 that may provide for an increase
in such Participant's Vested Interest upon a Termination of Employment) shall
forfeit to the Company the nonvested portion of amounts credited to his Company
Base Thrift Deferral Account, Company Pension Deferral Account, and Company
Discretionary Deferral Account as of the date of such Termination of Employment.

                                  ARTICLE VIII
                           ACCELERATED DISTRIBUTIONS

         8.01     RESTRICTIONS ON IN-SERVICE DISTRIBUTIONS AND LOANS. Except as
provided in Section 8.02, Participants shall not be permitted to make
withdrawals from the Plan prior to incurring a Termination of Employment.
Participants shall not, at any time, be permitted to borrow from the Trust Fund.
Following Termination of Employment, the amounts credited to a Participant's
Accounts shall be payable to such Participant in accordance with the provisions
of Article IX.

         8.02     EMERGENCY BENEFIT. In the event that the Plan Administrator,
upon written petition of a Participant who has not incurred a Termination of
Employment, determines in its sole discretion that such Participant has suffered
an Unforeseeable Financial Emergency, such Participant shall be entitled to a
distribution in an amount not to exceed the lesser of (a) the amount determined
by the Plan Administrator as necessary to meet

                                        9

<PAGE>

                                                                   EXHIBIT 10.12

such Participant's needs created by the Unforeseeable Financial Emergency or (b)
the then value of such Participant's Vested Interest in his Accounts. Such
benefit shall be paid in a single lump sum payment as soon as administratively
practicable after the Plan Administrator has made its determinations with
respect to the availability and amount of such benefit. If a Participant's
Accounts are deemed to be invested in more than one Fund, such benefit shall be
distributed pro rata from each Fund in which such Accounts are deemed to be
invested. If a Participant's Accounts contain more than one distribution
subaccount, such benefit shall be considered to have been distributed, first,
from the subaccount with respect to which the earliest distribution would be
made, then, from the subaccount with respect to which the next earliest
distribution would be made, and continuing in such manner until the amount of
such distribution has been satisfied.

                                   ARTICLE IX
                              TERMINATION BENEFITS

         9.01     AMOUNT OF BENEFIT. Upon the expiration of the Deferral Period,
the Participant (or, in the event of the death of the Participant while employed
by the Company or an Affiliate, the Participant's designated beneficiary) or
former Participant shall be entitled to a benefit equal in value to the
Participant's or former Participant's Vested Interest in the balance in his
Accounts as of the date the payment of such benefit is to commence pursuant to
Section 9.02 (adjusted for subsequent deemed investment gains or losses in the
case of benefits paid in the form of installments).

         9.02     TIME OF PAYMENT. Payment of a Participant's or former
Participant's benefit under Section 9.01 shall be made or shall commence, with
respect to such Participant's or former Participant's Accounts, or with respect
to such Participant's or former Participant's subaccounts established pursuant
to Section 3.06 and/or Section 4.05 separately and respectively, as follows. To
the extent that the Participant or former Participant elected to have his
Accounts or subaccounts paid upon his Termination of Employment, the
Participant's or former Participant's benefit shall be paid or commence to be
paid as soon as administratively practicable after the last day of the calendar
year coincident with or following the date the Participant or former Participant
incurs a Termination of Employment. To the extent that the Participant or former
Participant elected to have his Accounts or subaccounts paid after a specified
term, the Participant's or former Participant's benefit shall be paid or
commence to be paid as soon as administratively practicable after the expiration
of such specified term. With respect to any portion of a Participant's or former
Participant's benefit for which no time of payment election is in effect,
payment of such amount shall be made or commence as soon as administratively
practicable after the last day of the Plan Year during which the Participant or
former Participant incurs a Termination of Employment. A Participant's or former
Participant's benefit shall not, however, be paid or commence payment prior to
the date that all Participant Deferrals and Company Deferrals made pursuant to
the Plan have been allocated to such Participant's or former Participant's
Accounts.

         9.03     ALTERNATIVE FORMS OF BENEFIT PAYMENTS. A Participant's or
former Participant's benefit under Section 9.01 shall be paid, with respect to
such Participant's or former Participant's Accounts, or with respect to such
Participant's or former Participant's subaccounts established pursuant to
Section 3.06 and/or Section 4.05 separately and respectively, in one of the
following forms irrevocably elected by such Participant or former Participant
pursuant to Section 3.06 and/or Section 4.05:

                  (a)      A single lump sum payment; or

                  (b)      Any number (from two to 20 as designated by such
         Participant or former Participant) of annual installment payments and,
         in the event of such Participant's or former Participant's death prior
         to the receipt of all of the elected installment payments, the
         remaining installments shall be paid to such Participant's or former
         Participant's designated beneficiary as provided in Section 9.05. The
         amount of each annual installment shall be computed by dividing the
         Vested Interest in the unpaid balance in the Participant's or former
         Participant's Accounts as of the date of payment of such annual
         installment by the number of annual installments remaining.

                                       10

<PAGE>

                                                                   EXHIBIT 10.12

With respect to any portion of a Participant's or former Participant's benefit
for which no form of payment election is in effect, such amount shall be paid in
the form of 15 annual installment payments to such Participant or former
Participant or, in the event of such Participant's or former Participant's death
prior to his receipt of all such installments, to his designated beneficiary as
provided in Section 9.05; provided, however, that the Plan Administrator may, in
its sole discretion, elect to make such benefit payment in any other available
form. If a Participant or former Participant dies prior to the date the payment
of his benefit begins and if no form of payment election is in effect for any
portion of such Participant's or former Participant's benefit, such amount shall
be paid to the Participant's or former Participant's designated beneficiary in
the form described in the preceding sentence. If a Participant or former
Participant dies prior to the date the payment of his benefit begins with a form
of payment election in effect, then benefit payments shall be made to the
Participant's or former Participant's designated beneficiary in the form elected
by the Participant or former Participant.

         9.04     ACCELERATED PAY-OUT OF CERTAIN BENEFITS. Notwithstanding any
provision in Section 9.03 to the contrary, if a Participant's or former
Participant's benefit payments respecting any one subaccount established
pursuant to Section 3.06 or Section 4.05 are to be paid in a form other than a
single lump sum payment and the aggregate Vested Interest in the amount in such
subaccount at the time of commencement of such payments is less than $50,000,
then the Plan Administrator may, in its sole discretion, elect to cause such
Vested Interest in such subaccount to be paid in a single lump sum payment.

         9.05     DESIGNATION OF BENEFICIARIES.

                  (a)      Each Participant or former Participant shall have the
         right to designate the beneficiary or beneficiaries to receive payment
         of his benefit in the event of his death. Each such designation shall
         be made by executing the beneficiary designation form prescribed by the
         Plan Administrator and filing same with the Plan Administrator. Any
         such designation may be changed at any time by execution of a new
         designation in accordance with this Section.

                  (b)      If no such designation is on file with the Plan
         Administrator at the time of the death of the Participant or former
         Participant or such designation is not effective for any reason as
         determined by the Plan Administrator, then the designated beneficiary
         or beneficiaries to receive such benefit shall be as follows:

                           (i)      If a Participant or former Participant
                  leaves a surviving spouse, his benefit shall be paid to such
                  surviving spouse;

                           (ii)     If a Participant or former Participant
                  leaves no surviving spouse, his benefit shall be paid to such
                  Participant's or former Participant's executor or
                  administrator, or to his heirs at law if there is no
                  administration of such Participant's or former Participant's
                  estate.

         9.06     PAYMENT OF BENEFITS. To the extent the Trust Fund has
sufficient assets, the Trustee shall pay benefits to Participants or former
Participants or their respective beneficiaries, except to the extent the Company
pays the benefits directly and provides adequate evidence of such payment to the
Trustee. To the extent the Trustee does not or cannot pay benefits out of the
Trust Fund, the benefits shall be paid by the Company. Any benefit payments made
to a Participant, or former Participant, or for his benefit pursuant to any
provision of the Plan shall be debited to such Participant's or former
Participant's Accounts. All benefit payments shall be made in cash to the
fullest extent practicable.

         9.07     UNCLAIMED BENEFITS. In the case of a benefit payable on behalf
of a Participant or former Participant, if the Plan Administrator is unable,
after reasonable efforts, to locate the Participant, the former Participant or
the beneficiary to whom such benefit is payable, upon the Plan Administrator's
determination thereof, such benefit shall be forfeited to the Company.
Notwithstanding the foregoing, if subsequent to any such forfeiture the
Participant, the former Participant or beneficiary to whom such benefit is
payable makes a valid claim for such benefit, such forfeited benefit (without
any adjustment for earnings or loss) shall be restored to the Plan by the
Company and paid in accordance with the Plan.

                                     11

<PAGE>

                                                                   EXHIBIT 10.12

         9.08     PLAN ADMINISTRATOR DETERMINATION OF PAY-OUT OF CERTAIN
BENEFITS. Notwithstanding any provision in Section 3.06 to the contrary, the
form of payment of a Participant's or former Participant's benefits with respect
to the portion of his Account attributable to the amount, if any, credited to
his Account on December 31, 1994, under the Plan as in effect immediately prior
to the January 1, 1995 restatement of the Plan, and the net income (or net loss)
allocated with respect thereto may, in the sole discretion of the Plan
Administrator, be changed from the form elected by such Participant or former
Participant pursuant to the provisions of the Plan as in effect immediately
prior to the January 1, 1995 restatement of the Plan to one or more other forms
provided in Section 9.03. In making its determination as to the form(s) of
payment, the Plan Administrator may consider the age, family status, health,
financial status, or such other facts as it deems relevant respecting the
Participant or former Participant. The Participant or former Participant may,
but shall not be required to, express his preference to the Plan Administrator
as to such form(s) of payment, but the Plan Administrator shall be under no
obligation to follow such preference. Any such change shall be prior to the time
such portion becomes payable to such Participant or former Participant.

         9.09     STATUTORY BENEFITS. If any benefit obligations are required to
be paid under the Plan to a Participant or former Participant in conjunction
with severance of employment under the laws of the country where the Participant
or former Participant is employed or under federal, state or local law, the
benefits paid to a Participant or former Participant pursuant to the provisions
of the Plan will be deemed to be in satisfaction of any statutorily required
benefit obligations.

                                   ARTICLE X
                           ADMINISTRATION OF THE PLAN

         10.01    PLAN ADMINISTRATOR. Baker Hughes shall be the "Plan
Administrator" and the "named fiduciary" for purposes of ERISA and shall be
subject to service of process on behalf of the Plan.

         10.02    RESIGNATION AND REMOVAL. The members of a Committee serving as
Plan Administrator shall serve at the pleasure of the Board; they may be
officers, directors, or Employees of the Company or any other individuals. At
any time during his term of office, any member of a Committee or any individual
serving as Plan Administrator may resign by giving written notice to the Board,
such resignation to become effective upon the appointment of a substitute or, if
earlier, the lapse of thirty days after such notice is given as herein provided.
At any time during its term of office, and for any reason, any member of a
Committee or any individual serving as Plan Administrator may be removed by the
Board.

         10.03    RECORDS AND PROCEDURES. The Plan Administrator shall keep
appropriate records of its proceedings and the administration of the Plan and
shall make available for examination during business hours to any Participant,
former Participant or the beneficiary of any Participant or former Participant
such records as pertain to that individual's interest in the Plan. If a
Committee is performing duties as the Plan Administrator, the Committee shall
designate the individual or individuals who shall be authorized to sign for the
Plan Administrator and, upon such designation, the signature of such individual
or individuals shall bind the Plan Administrator.

         10.04    SELF-INTEREST OF PLAN ADMINISTRATOR. Neither the members of a
Committee nor any individual Plan Administrator shall have any right to vote or
decide upon any matter relating solely to himself under the Plan or to vote in
any case in which his individual right to claim any benefit under the Plan is
particularly involved. In any case in which any Committee member or individual
Plan Administrator is so disqualified to act, the other members of the Committee
shall decide the matter in which the Committee member or individual Plan
Administrator is disqualified.

         10.05    COMPENSATION AND BONDING. Neither the members of a Committee
nor any individual Plan Administrator shall receive compensation with respect to
their services on the Committee or as Plan Administrator. To the extent required
by applicable law, or required by the Company, neither the members of a
Committee nor any individual Plan Administrator shall furnish bond or security
for the performance of their duties hereunder.

                                       12

<PAGE>

                                                                   EXHIBIT 10.12

         10.06    PLAN ADMINISTRATOR POWERS AND DUTIES. The Plan Administrator
shall supervise the administration and enforcement of the Plan according to the
terms and provisions hereof and shall have all powers necessary to accomplish
these purposes, including, but not by way of limitation, the right, power, and
authority:

                  (a)      to make rules, regulations, and bylaws for the
         administration of the Plan that are not inconsistent with the terms and
         provisions hereof, and to enforce the terms of the Plan and the rules
         and regulations promulgated thereunder by the Plan Administrator;

                  (b)      to construe in its discretion all terms, provisions,
         conditions, and limitations of the Plan;

                  (c)      to correct any defect or to supply any omission or to
         reconcile any inconsistency that may appear in the Plan in such manner
         and to such extent as it shall deem in its discretion expedient to
         effectuate the purposes of the Plan;

                  (d)      to employ and compensate such accountants, attorneys,
         investment advisors, and other agents, employees, and independent
         contractors as the Plan Administrator may deem necessary or advisable
         for the proper and efficient administration of the Plan;

                  (e)      to determine in its discretion all questions relating
         to eligibility;

                  (f)      to determine whether and when a Participant has
         incurred a Termination of Employment, and the reason for such
         termination;

                  (g)      to make a determination in its discretion as to the
         right of any individual to a benefit under the Plan and to prescribe
         procedures to be followed by distributees in obtaining benefits
         hereunder;

                  (h)      to receive and review reports from the Trustee as to
         the financial condition of the Trust Fund, including its receipts and
         disbursements; and

                  (i)      to establish or designate Funds as deemed investment
         options as provided in Article VI.

         10.07    RELIANCE ON DOCUMENTS, INSTRUMENTS, ETC. The Plan
Administrator may rely on any certificate statement or other representation made
on behalf of the Company, any Employee or any Participant, which the Plan
Administrator in good faith believes to be genuine, and on any certificate,
statement, report or other representation made to it by any agent or any
attorney, accountant or other expert retained by it or the Company in connection
with the operation and administration of the Plan.

         10.08    CLAIMS REVIEW PROCEDURES; CLAIMS APPEALS PROCEDURES.

                  (a)      Claims Review Procedures. When a benefit is due, the
         Participant, or the person entitled to Benefits under Section 9.05,
         should submit a claim to the office designated by the Plan
         Administrator to receive claims. Under normal circumstances, the Plan
         Administrator will make a final decision as to a claim within 90 days
         after receipt of the claim. If the Plan Administrator notifies the
         claimant in writing during the initial 90-day period, it may extend the
         period up to 180 days after the initial receipt of the claim. The
         written notice must contain the circumstances necessitating the
         extension and the anticipated date for the final decision. If a claim
         is denied during the claims period, the Plan Administrator must notify
         the claimant in writing, and the written notice must set forth in a
         manner calculated to be understood by the claimant:

                  (1)      the specific reason or reasons for the denial;

                  (2)      specific reference to the Plan provisions on which
                  the denial is based;

                                     13

<PAGE>

                                                                   EXHIBIT 10.12

                  (3)      a description of any additional material or
                  information necessary for the claimant to perfect the claim
                  and an explanation of why such material or information is
                  necessary; and

                  (4)      an explanation of the Plan claims review procedures
                  and time limits, including a statement of the claimant's right
                  to bring a civil action under section 502(a) of ERISA.

         If a decision is not given to the Participant within the claims review
         period, the claim is treated as if it were denied on the last day of
         the claims review period.

                  (b)      Claims Appeals Procedures. For purposes of this
         section the Participant or the person entitled to Benefits under
         Section 10 is referred to as the "claimant." If a claimant's claim made
         pursuant to Section 10.08(a) is denied and he wants a review, he must
         apply to the Plan Administrator in writing. That application can
         include any arguments, written comments, documents, records, and other
         information relating to the claim for benefits. In addition, the
         claimant is entitled to receive on request and free of charge
         reasonable access to and copies of all information relevant to the
         claim. For this purpose, "relevant" means information that was relied
         on in making the benefit determination or that was submitted,
         considered or generated in the course of making the determination,
         without regard to whether it was relied on, and information that
         demonstrates compliance with the Plan's administrative procedures and
         safeguards for assuring and verifying that Plan provisions are applied
         consistently in making benefit determinations. The Plan Administrator
         must take into account all comments, documents, records, and other
         information submitted by the claimant relating to the claim, without
         regard to whether the information was submitted or considered in the
         initial benefit determination. The claimant may either represent
         himself or appoint a representative, either of whom has the right to
         inspect all documents pertaining to the claim and its denial. The Plan
         Administrator can schedule any meeting with the claimant or his
         representative that it finds necessary or appropriate to complete its
         review.

                  The request for review must be filed within 90 days after the
         denial. If it is not, the denial becomes final. If a timely request is
         made, the Plan Administrator must make its decision, under normal
         circumstances, within 60 days of the receipt of the request for review.
         However, if the Plan Administrator notifies the claimant prior to the
         expiration of the initial review period, it may extend the period of
         review up to 120 days following the initial receipt of the request for
         a review. All decisions of the Plan Administrator must be in writing
         and must include the specific reasons for its action, the Plan
         provisions on which its decision is based, and a statement that the
         claimant is entitled to receive, upon request and free of charge,
         reasonable access to, and copies of, all documents, records, and other
         information relevant to the claimant's claim for benefits, and a
         statement of the claimant's right to bring an action under section
         502(a) of ERISA If a decision is not given to the claimant within the
         review period, the claim is treated as if it were denied on the last
         day of the review period.

         10.09    COMPANY TO SUPPLY INFORMATION. The Company shall supply full
and timely information to the Plan Administrator, including, but not limited to,
information relating to each Participant's Base Compensation, Bonus, Ineligible
Thrift Plan Compensation, Ineligible Pension Plan Compensation, age, Retirement,
death, or other cause of Termination of Employment and such other pertinent
facts as the Plan Administrator may require. The Company shall advise the
Trustee of such of the foregoing facts as are deemed necessary for the Trustee
to carry out the Trustee's duties under the Plan and the Trust Agreement. When
making a determination in connection with the Plan, the Plan Administrator shall
be entitled to rely upon the aforesaid information furnished by the Company.

         10.10    INDEMNITY. To the extent permitted by applicable law, the
Company shall indemnify and save harmless the Board, each member of the
Committee, each delegate of the Committee or the Board and the Plan
Administrator against any and all expenses, liabilities and claims (including
legal fees incurred to investigate or defend against such liabilities and
claims) arising out of their discharge in good faith of responsibilities under
or incident to the Plan. Expenses and liabilities arising out of willful
misconduct shall not be covered under this indemnity. This indemnity shall not
preclude such further indemnities as may be available under insurance purchased
by the Company or provided by the Company under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, as such indemnities are
permitted under applicable law.

                                       14

<PAGE>

                                                                   EXHIBIT 10.12

                                   ARTICLE XI
                            ADMINISTRATION OF FUNDS

         11.01    PAYMENT OF EXPENSES. All expenses incident to the
administration of the Plan and Trust, including but not limited to, legal,
accounting, Trustee fees, and expenses of the Plan Administrator, may be paid by
the Company and, if not paid by the Company, shall be paid by the Trustee from
the Trust Fund, if any.

         11.02    TRUST FUND PROPERTY. All income, profits, recoveries,
contributions, forfeitures and any and all moneys, securities and properties of
any kind at any time received or held by the Trustee, if any, shall be held for
investment purposes as a commingled Trust Fund pursuant to the terms of the
Trust Agreement. The Plan Administrator shall maintain one or more Accounts in
the name of each Participant or former Participant, but the maintenance of an
Account designated as the Account of a Participant or former Participant shall
not mean that such Participant or former Participant shall have a greater or
lesser interest than that due him by operation of the Plan and shall not be
considered as segregating any funds or property from any other funds or property
contained in the commingled fund. No Participant or former Participant shall
have any title to any specific asset in the Trust Fund, if any.

                                  ARTICLE XII
                      ADOPTION OF PLAN BY OTHER EMPLOYERS

         12.01    ADOPTION PROCEDURE.

                  (a)      With the written approval of the Plan Administrator,
         any entity that is an Affiliate may adopt the Plan by appropriate
         action of its board of directors or noncorporate counterpart, as
         evidenced by a written instrument executed by an authorized officer of
         such entity or an executed adoption agreement (approved by the board of
         directors or noncorporate counterpart of the Affiliate), agreeing to be
         bound by all the terms, conditions and limitations of the Plan except
         those, if any, specifically described in the adoption instrument, and
         providing all information required by the Plan Administrator. The Plan
         Administrator and the adopting Affiliate may agree to incorporate
         specific provisions relating to the operation of the Plan that apply to
         the adopting Affiliate only and shall become, as to such adopting
         Affiliate and its employees, a part of the Plan.

                  (b)      The provisions of the Plan may be modified so as to
         increase the obligations of an adopting Affiliate only with the consent
         of such Affiliate, which consent shall be conclusively presumed to have
         been given by such Affiliate unless the Affiliate gives the Company
         written notice of its rejection of the amendment within 30 days after
         the adoption of the amendment.

                  (c)      The provisions of the Plan shall apply separately and
         equally to each adopting Affiliate and its employees in the same manner
         as is expressly provided for the Company and its employees, except that
         the power to appoint or otherwise affect the Plan Administrator and the
         power to amend or terminate the Plan shall be exercised by the Company.
         The Plan Administrator shall act as the agent for each Affiliate that
         adopts the Plan for all purposes of administration thereof.

                  (d)      Any adopting Affiliate may, by appropriate action of
         its board of directors or noncorporate counterpart, terminate its
         participation in the Plan. Moreover, the Plan Administrator may, in its
         discretion, terminate an Affiliate's participation in the Plan at any
         time.

                  (e)      The Plan will terminate with respect to any Affiliate
         that has adopted the Plan pursuant to this Section if the Affiliate
         ceases to be an Affiliate or revokes its adoption of the Plan by
         resolution of its board of directors or noncorporate counterpart
         evidenced by a written instrument executed by an authorized officer of
         the Affiliate. If the Plan terminates with respect to any Affiliate,
         the employees of that Affiliate will no longer be eligible to be
         Participants in the Plan.

                  (f)      For purposes of the Code and ERISA, the Plan as
         adopted by the Affiliates shall constitute a single plan rather than a
         separate plan of each Affiliate.

                                       15

<PAGE>

                                                                   EXHIBIT 10.12

         12.02    NO JOINT VENTURE IMPLIED. The document which evidences the
adoption of the Plan by an Affiliate shall become a part of the
Plan. However, neither the adoption of the Plan by an Affiliate nor any act
performed by it in relation to the Plan shall ever create a joint venture or
partnership relation between it and any other Affiliate.

                                  ARTICLE XIII
                               NATURE OF THE PLAN
                         AND ESTABLISHMENT OF THE TRUST

         13.01    NATURE OF THE PLAN. The Company intends and desires by the
adoption of the Plan to recognize the value to the Company of the past and
present services of employees covered by the Plan and to encourage and assure
their continued service with the Company by making more adequate provision for
their future retirement security. The establishment of the Plan is, in part,
made necessary by certain benefit limitations which are imposed on the Thrift
Plan and the Pension Plan by the Code. The Plan is intended to constitute an
unfunded, unsecured plan of deferred compensation for a select group of
management or highly compensated employees of the Company. Plan benefits herein
provided are a contractual obligation of the Company which shall be paid out of
the Company's general assets. Nevertheless, subject to the terms hereof and of
the Trust Agreement, the Company may transfer money or other property to the
Trustee to provide Plan benefits hereunder, and the Trustee shall pay Plan
benefits to Participants, former Participants and their beneficiaries out of the
Trust Fund. To the extent the Company transfers assets to the Trustee pursuant
to the Trust Agreement, the Plan Administrator may, but need not, establish
procedures for the Trustee to invest the Trust Fund in accordance with each
Participant's or former Participant's designated deemed investments pursuant to
Article VI respecting the portion of the Trust Fund assets equal to such
Participant's or former Participant's Accounts.

         13.02    ESTABLISHMENT OF THE TRUST. The Board, in its sole discretion,
may establish the Trust and direct Baker Hughes, for and on behalf of each
Company, to enter into the Trust Agreement. In such event, the Company shall
remain the owner of all assets in the Trust Fund and the assets shall be subject
to the claims of the Company's creditors if the Company ever becomes insolvent.
For purposes hereof, the Company shall be considered "insolvent" if (a) the
Company is unable to pay its debts as they become due or (b) the Company is
subject to a pending proceeding as a debtor under the United States Bankruptcy
Code (or any successor federal statute). The chief executive officer of the
Company and its board of directors shall have the duty to inform the Trustee in
writing if the Company becomes insolvent. Such notice given under the preceding
sentence by any party shall satisfy all of the parties' duty to give notice.
When so informed, the Trustee shall suspend payments to the Participants and
former Participants and hold the assets for the benefit of the Company's general
creditors. If the Company subsequently alleges that it is no longer insolvent or
if the Trustee receives a written allegation from a third party that the Company
is insolvent, the Trustee shall suspend payments to the Participants and former
Participants and hold the Trust Fund for the benefit of the Company's general
creditors, and shall determine in accordance with the Trust Agreement whether
the Company is insolvent. If the Trustee determines that the Company is not
insolvent, the Trustee shall resume payments to the Participants and former
Participants. No Participant, former Participant or beneficiary shall have any
preferred claim to, or any beneficial ownership interest in, any assets of the
Trust Fund, and, upon commencement of participation in the Plan, each
Participant and former Participant shall have agreed to waive his priority
credit position, if any, under applicable state law with respect to the assets
of the Trust Fund.

                                   ARTICLE XIV
                                  MISCELLANEOUS

         14.01    PLAN NOT CONTRACT OF EMPLOYMENT. The adoption and maintenance
of the Plan shall not be deemed to be a contract between the Company and any
individual or to be consideration for the employment of any individual. Nothing
herein contained shall be deemed to (a) give any individual the right to be
retained in the employ of the Company, (b) restrict the right of the Company to
discharge any individual at any time, (c) give the Company the right to require
any individual to remain in the employ of the Company, or (d) restrict any
individual's right to terminate his employment at any time.

                                       16

<PAGE>

                                                                   EXHIBIT 10.12

         14.02    ALIENATION OF INTEREST FORBIDDEN. The interest of a
Participant, former Participant or his beneficiary or beneficiaries hereunder
may not be sold, transferred, assigned, or encumbered in any manner, either
voluntarily or involuntarily, and any attempt so to anticipate, alienate, sell,
transfer, assign, pledge, encumber, or charge the same shall be null and void;
neither shall the benefits hereunder be liable for or subject to the debts,
contracts, liabilities, engagements or torts of any individual to whom such
benefits or funds are payable, nor shall they be an asset in bankruptcy or
subject to garnishment, attachment or other legal or equitable proceedings.

         14.03    WITHHOLDING. All credits to a Participant's or former
Participant's Accounts and payments provided for hereunder shall be subject to
applicable withholding and other deductions as shall be required of the Company
under any applicable local, state or federal law.

         14.04    AMENDMENT AND TERMINATION. The Board, may from time to time,
in its discretion, amend, in whole or in part, any or all of the provisions of
the Plan on behalf of any Company; provided, however, that no amendment may be
made that would impair the rights of a Participant or former Participant with
respect to amounts already credited to his Accounts. The Board may terminate the
Plan at any time. If the Plan is terminated, the balance credited to a
Participant's or former Participant's Account shall be paid to such Participant,
or former Participant, or his designated beneficiary in the manner specified by
the Plan Administrator, which may include the payment of a single lump sum
payment in full satisfaction of all of such Participant's, former Participant's
or beneficiary's benefits hereunder.

         14.05    SEVERABILITY. If any provision of the Plan shall be held
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining provisions hereof; instead, each provision shall be fully
severable and the Plan shall be construed and enforced as if said illegal or
invalid provision had never been included herein.

         14.06    ARBITRATION. Any controversy arising out of or relating to the
Plan, including without limitation, any and all disputes, claims (whether in
tort, contract, statutory or otherwise) or disagreements concerning the
interpretation or application of the provisions of the Plan, the Company's
employment of the Participant, or former Participant, and the termination of
that employment, shall be resolved by arbitration in accordance with the
Employee Benefit Plan Claims Arbitration Rules of the American Arbitration
Association (the "AAA") then in effect. No arbitration proceeding relating to
the Plan may be initiated by either the Company or the Participant, or former
Participant, unless the claims review and appeals procedures specified in
Section 10.08 have been exhausted. Within ten (10) business days of the
initiation of an arbitration hereunder, the Company and the Participant, or
former Participant, will each separately designate an arbitrator, and within
twenty (20) business days of selection, the appointed arbitrators will appoint a
neutral arbitrator from the panel of AAA National Panel of Employee Benefit Plan
Claims Arbitrators. The arbitrators shall issue their written decision
(including a statement of finding of facts) within thirty (30) days from the
date of the close of the arbitration hearing. The decision of the arbitrators
selected hereunder will be final and binding on both parties. This arbitration
provision is expressly made pursuant to and shall be governed by the Federal
Arbitration Act, 9 U.S.C. Sections 1-16 (or replacement or successor statute).
Pursuant to Section 9 of the Federal Arbitration Act, the Company and any
Participant agrees that any judgment of the United States District Court for the
District in which the headquarters of Baker Hughes is located at the time of
initiation of an arbitration hereunder shall be entered upon the award made
pursuant to the arbitration. Nothing in this Section 14.06 shall be construed
to, in any way, limit the scope and effect of Article X. In any arbitration
proceeding full effect shall be given to the rights, powers, and authorities of
the Plan Administrator under Article X.

         14.07    GOVERNING LAW. All provisions of the Plan shall be construed
in accordance with the laws of Texas, except to the extent preempted by federal
law and except to the extent that the conflicts of laws provisions of the State
of Texas would require the application of the relevant law of another
jurisdiction, in which event the relevant law of the State of Texas will
nonetheless apply, with venue for litigation being in Houston, Texas.

                                       17