<PAGE>

                                                                    Exhibit 10.6

[BANK]

BAKER HUGHES INCORPORATED
3900 ESSEX LANE SUITE
P.O. BOX 4740
HOUSTON, TX 77210-4740
ATTN: MR. DOUG DOTY

DATE: 30JUL03

RE: Interest Rate Swap Transaction

Dear Sir/Madam,

The purpose of this letter (this "Confirmation") is to confirm the terms and
conditions of the Swap Transaction entered into between us on the Trade Date
specified below.

The definitions and provisions contained in the 2000 ISDA Definitions, as
published by the International Swaps and Derivatives Association, Inc., are
incorporated into this Confirmation. In the event of any inconsistency between
those definitions and provisions and this Confirmation, this Confirmation will
govern.

Reference to "Party A" and "Party B" are for the purposes of this Confirmation
only.

1.   This Confirmation evidences a complete and binding agreement between

                                   ("PARTY A")

     BAKER HUGHES INCORPORATED ("PARTY B")

     as to the terms of the Swap Transaction to which this Confirmation relates.
     In addition, you and we agree to use all reasonable efforts promptly to
     negotiate, execute and deliver an agreement in the form of the ISDA Master
     Agreement (Multicurrency-Cross Border) (the "ISDA Form"), with such
     modifications as you and we in good faith agree. Upon the execution by you
     and us of such agreement, this Confirmation will supplement, form a part of
     and be subject to that agreement. All provisions contained in or
     incorporated by reference in that agreement upon its execution will govern
     this Confirmation except as expressly modified below. Until we execute and
     deliver that agreement, this Confirmation, together with all other
     documents referring to the ISDA Form (each a "Confirmation") confirming
     transactions (each a "Transaction") entered into between us
     (notwithstanding anything to the contrary in a Confirmation), shall
     supplement, form a part of, and be subject to an agreement in the form of
     the ISDA Form as if we had executed an agreement in such form (but without
     any Schedule except for the election of English Law as the governing law
     and the US Dollars as the Termination Currency) on the Trade Date of the
     first such Transaction between us. In the event of any inconsistency
     between the provisions of that agreement and this Confirmation, this
     Confirmation will prevail for the purposes of this Swap Transaction.

<PAGE>

2.   The terms of the particular Swap Transaction to which this Confirmation
     relates are as follows:-

     Notional Amount                     : USD 325,000,000.00

     Trade Date                          : 30JUL03

     Effective Date                      : 01AUG03

     Termination Date                    : 15JAN09
                                           SUBJECT TO ADJUSTMENT IN
                                           ACCORDANCE WITH THE
                                           MODIFIED FOLLOWING BUSINESS DAY
                                           CONVENTION

     FIXED AMOUNTS

     Fixed Rate Payer                    : PARTY A

     Fixed Rate Payer Payment Dates      : EACH JANUARY 15, AND JULY 15,
                                           COMMENCING JANUARY 15, 2004 AND
                                           ENDING JANUARY 15, 2009, SUBJECT
                                           TO ADJUSTMENT IN ACCORDANCE
                                           WITH THE MODIFIED FOLLOWING
                                           BUSINESS DAY CONVENTION, WITH
                                           NO ADJUSTMENT TO PERIOD END DATES.

     Fixed Rate (% Per Annum)            : 6.250000

     Fixed Rate Day Count Fraction       : 30/360

     FLOATING AMOUNTS

     Floating Rate Payer                 : PARTY B

     Floating Rate Payer Payment Dates   : EACH JANUARY 15, AND JULY 15,
                                           COMMENCING JANUARY 15, 2004 AND
                                           ENDING JANUARY 15, 2009, SUBJECT
                                           TO ADJUSTMENT IN ACCORDANCE WITH
                                           THE MODIFIED FOLLOWING BUSINESS
                                           DAY CONVENTION.

     Floating Rate for the Initial
     Calculation Period                  : 1.150000 %  (EXCLUSIVE OF SPREAD)

     Floating Rate Day Count Fraction    : ACTUAL/360

     Floating Rate Option                : USD-LIBOR-BBA

     Designated Maturity                 : 6 MONTHS

     Spread (%)                          : PLUS 2.4425

     Reset Dates                         : THE FIRST DAY OF EACH
                                           CALCULATION PERIOD

     Business Days                       : LONDON, NEW YORK

     Calculation Agent                   : PARTY A, UNLESS OTHERWISE
                                           STATED IN THE MASTER AGREEMENT

<PAGE>

3.   ACCOUNT DETAILS:

     Payments of PARTY A

     Correspondent Bank                  :
     Favour                              : [Bank Information]
     A/c                                 :
     Ref                                 :

     Payments of PARTY B

     PLEASE ADVISE UNDER SEPARATE COVER

4.   OFFICES

     PARTY A                             : LONDON BRANCH
     PARTY B                             : HOUSTON

5.   OTHER PROVISIONS

     (A) RELATIONSHIP BETWEEN THE PARTIES

     Each party will be deemed to represent to the other party on the date on
     which it enters into a Transaction that (absent a written agreement between
     the parties that expressly imposes affirmative obligations to the
     contrary for that Transaction):

     (i)  Non-Reliance. It is acting for its own account, and it has made its
          own independent decisions to enter into that Transaction and as to
          whether that Transaction is appropriate or proper for it based upon
          its own judgement and upon advice from such advisers as it has deemed
          necessary. It is not relying on any communication (written or oral) of
          the other party as investment advice or as a recommendation to enter
          into that Transaction; it being understood that information and
          explanation related to the terms and conditions of a Transaction shall
          not be considered investment advice or a recommendation to enter into
          that Transaction. No communication (written or oral) received from the
          other party shall be deemed to be an assurance or guarantee as to the
          expected results of that Transaction;

     (ii) Assessment and Understanding. It is capable of assessing the merits of
          and understanding (on its own behalf or through independent
          professional advise), and understands and accepts the terms,
          conditions and risks of that Transaction. It assumes the risks of that
          Transactions;

     (iii)Status of Parties. The other party is not acting as a fiduciary or an
          adviser to it in respect of that Transaction

<PAGE>

     (iv) Consultation. Discussions of termination or limitation of risk with
          respect to the Transaction and/or provision by a party of indicative
          valuations, financial analyses or other statements of valuation and
          risk based on market movements (i) are based only on the party's
          business and experience as a provider of financial services, (ii) are
          subject only to the duty of each party to act in good faith and to no
          other duty and (iii) do not constitute guarantees or assurances of
          financial results or commitments to terminate or otherwise limit
          exposure under the Transaction, it being understood that each party
          undertakes duties, liabilities or obligations under the Agreement or
          in respect of the Transaction only through written documentation
          expressly so undertaking and signed by its duly authorised officer;
          and

     (v)  Awareness. In so far as Party B is not acting as a dealer or a market
          professional in the relevant market, the transaction is entered in to
          in accordance with its authorised policies for purposes of hedging or
          managing its assets, liabilities and/or investments or in connection
          with a line of business (and not for speculation).

Please confirm that the foregoing correctly sets forth the terms of our
agreement by a return fax/telex to [Bank]        to the attention
of Derivatives Documentation Unit:
Fax Number
Telephone Number           [Bank Information]

Yours faithfully,

By: _____________________________         By: __________________________

Name:                                     Name:

Title:                                    Title:

By: /s/ H. Gene Shiels                    By:
   ------------------------------------      ------------------------------
   BAKER NOGMES INCORPORATION, HOUSTON

Name:  H. Gene Shiels                     Name:

Title: ASSISTANT TREASURER                Title:
<PAGE>

(ISDA MULTICURRENCY-CROSS BORDER)

                        SCHEDULE TO THE MASTER AGREEMENT
                            DATED AS OF JULY 30, 2003
                                     BETWEEN
                                 [BANK] ("BANK")
                                       AND
                        BAKER HUGHES INCORPORATED ("BHI")

            PART 1: TERMINATION PROVISIONS AND CERTAIN OTHER MATTERS

         (a)      "SPECIFIED ENTITY" means, in relation to Bank, for the purpose
                  of:

                  SECTION 5(a)(v),  not applicable;

                  SECTION 5(a)(vi),  not applicable;

                  SECTION 5(a)(vii),  not applicable; and

                  SECTION 5(b)(iv), not applicable;

                  and, in relation to BHI, for the purpose of:

                  SECTION 5(a)(v), not applicable;

                  SECTION 5(a)(vi),  not applicable;

                  SECTION 5(a)(vii),  not applicable; and

                  SECTION 5(b)(iv), not applicable.

         (b)      "SPECIFIED TRANSACTION" will have the meaning specified in
                  Section 14.

         (c)      The "CROSS-DEFAULT" provisions of Section 5(a)(vi) will apply
                  to Bank and BHI.

         If such provisions apply, "SPECIFIED INDEBTEDNESS" means in relation to
         Bank and BHI, subject to the Schedule, any obligation (whether present
         or future, contingent or otherwise, as principal or surety or
         otherwise) (i) in respect of borrowed money, other than an obligation
         for which payment is not being made because of an event similar to
         illegality or because the obligation to pay is being disputed in good
         faith, except that with respect to the Bank, such term will not include
         obligations in respect of deposits received in the ordinary course of
         its banking business; and (ii) any amount due and payable in respect of
         any Specified Transaction (except that, for this purpose only, the
         words "and any other entity" shall be substituted for the words "and
         the other party to this Agreement (or any Credit Support Provider of
         such other party or any applicable Specified Entity of such other
         party)" where they appear in the definition of Specified Transaction),
         and with respect to BHI shall include, without limitation, and without
         regard to the Threshold Amount the obligations of BHI under that
         certain Credit Agreement dated as of July 7, 2003 between Baker Hughes
         Incorporated as Borrower, and the Lenders identified therein, and Bank
         of America, N.A. as Administrative Agent, [Bank, Bank] and [Bank], as
         Syndication Agents, [Bank], as Documentation Agent, and [Bank], as
         Managing Agent and [Bank], as Sole Lead

                                       1

<PAGE>

         Arranger and Sole Book Manager as the same may be amended, modified or
         supplemented from time to time (the "Credit Agreement").

         Section 5(a)(vi) is amended by the insertion of the following words
         after the words "due and payable" on line 8:

                  "or, in the case of Specified Indebtedness in respect of any
                  Specified Transaction which has resulted in such Specified
                  Indebtedness becoming due and payable as a result of the early
                  termination of the relevant Specified Transaction".

         "THRESHOLD AMOUNT" means for Bank and BHI three percent (3%) of
         shareholder's equity, determined in accordance with generally accepted
         accounting principles in such party's country of incorporation or
         organization, consistently applied, as at the end of such party" most
         recently completed fiscal year. For purposes of this definition, any
         Specified Indebtedness denominated in a currency other than the
         currency in which the financial statements of such party are
         denominated shall be converted into USD.

         (d)      The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv)
shall be deleted in its entirety and replaced with the following language set
forth in this clause (d) of this Schedule.

                           "(1)     (A) such party ("A"), any Credit Support
                           Provider of A or any applicable Specified Entity of A
                           consolidates, amalgamates or mergers with or into, or
                           transfers all or substantially all of its assets to
                           another entity;

                                    (B) any person or entity acquires directly
                           or indirectly the beneficial ownership of equity
                           securities having the power to elect a majority of
                           the board of directors of A or otherwise acquires
                           directly or indirectly the power to control the
                           policy making decisions of A; or

                                    (C) A enters into any agreement providing
                           for the transactions described in Sections
                           5(b)(iv)(1)(A) or 5(b)(iv)(1)(B) of this Agreement;

                           (2)      such action does not constitute an event
                  described in Section 5(a)(viii) of this Agreement; and

                           (3)      Standard and Poor's Corporation or Moody's
                  Investor Services, Inc. (or any successors to such entities)
                  rates the creditworthiness of A (in the case of a transaction
                  by a Specified Entity of A that is not a Credit Support
                  Provider of A), or of the resulting, surviving or transferee
                  entity of A or the Credit Support Provider of A, as the case
                  may be (in the case of a transaction by A or the Credit
                  Support Provider of A, as the case may be), below BBB- or
                  Baa3, respectively; or"

         (e)      The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a)
will not apply to Bank or BHI.

         (f)      PAYMENTS ON EARLY TERMINATION. For the purpose of Section
6(e):

                  (i)      (a) Market Quotation will apply with respect to
                           Transactions other than FX Transactions and Currency
                           Option Transactions; and (b) Loss will apply with
                           respect to FX Transactions and Currency Option
                           Transactions.

                  (ii)     The Second Method will apply to all Transactions.

                                       2

<PAGE>

         (g)      "TERMINATION CURRENCY" means U. S. Dollar.


         (h)      ADDITIONAL TERMINATION EVENT. (i) The following shall
         constitute an Additional Termination Event (with any event specified in
         the following constituting an "IMPOSSIBILITY"):

                  Due to the occurrence of a natural or man-made disaster, armed
         conflict, act of terrorism, riot, labor disruption, act of State, or
         any other similar circumstance beyond its control after the date on
         which a Transaction is entered into, it becomes impossible (other than
         as a result of its own misconduct) for a party (which will be the
         Affected Party):

                           (1)      to perform any absolute or contingent
                  obligation, to make a payment or delivery or to receive a
                  payment or delivery in respect of a Transaction or to comply
                  with any other material provision of this Agreement relating
                  to such Transaction; or

                           (2)      to perform, or for any Credit Support
                  Provider of such party to perform, any contingent or other
                  obligation which the party or such Credit Support Provider has
                  under any Credit Support Document relating to a Transaction.

                  (ii)     The definition of "Affected Transactions" in Section
         14 of this Agreement is amended by adding the word "Impossibility"
         immediately before the word "Illegality" in the first line thereof.

                  (iii)    If an event or circumstance that would otherwise
         constitute or give rise to an Event of Default also constitutes an
         Impossibility, it will be treated as a Termination Event and will not
         constitute an Event of Default.

                           PART 2: TAX REPRESENTATIONS

         (a)      REPRESENTATIONS OF BANK.

                  (1)      Payer Tax Representation. For the purpose of Section
         3(e), Bank hereby makes the following representation.


                           It is not required by any applicable law, as modified
                  by the practice of any relevant governmental revenue
                  authority, of any Relevant Jurisdiction to make any deduction
                  or withholding for or on account of any Tax from any payment
                  (other than interest under Section 2(e), 6(d) (ii) or 6(e)) to
                  be made by it to BHI under this Agreement. In making this
                  representation, it may rely on:

                                    (a) the accuracy of any representations made
                           by BHI pursuant to Section 3(f);

                                    (b) the satisfaction of the agreement of BHI
                           contained in Section 4(a)(i) or 4(a) (iii) and the
                           accuracy and effectiveness of any document provided
                           by BHI pursuant to Section 4(a) (i) or 4(a) (iii);
                           and

                                    (c) the satisfaction of the agreement of BHI
                           contained in Section 4(d);

                                       3

<PAGE>

                           provided that it shall not be a breach of this
                           representation where reliance is placed on clause (b)
                           and BHI does not deliver a form or document under
                           Section 4(a) (iii) by reason of material prejudice to
                           its legal or commercial position.

                  (2)      Payee Tax Representations. For the purpose of Section
         3(f), Bank makes the representations specified below:


                  (i)      It is a resident of The Netherlands for the purpose
                           of the application of the existing tax treaties
                           between The Netherlands and those countries where
                           offices of Party B are located.

                  (ii)     With respect to its non-U.S. branches, it is fully
                           eligible for the benefits of the "Business Profits"
                           or "Industrial and Commercial Profits" provision, as
                           the case may be, the "Interest" provision or the
                           "Other Income" provision (if any) of the Specified
                           Treaty with respect to any payment described in such
                           provisions and received or to be received by it in
                           connection with this Agreement and no such payment is
                           attributable to a trade or business carried on by it
                           through a permanent establishment in the Specified
                           Jurisdiction. With respect to Party A, Specified
                           Treaty means the income tax treaty between the United
                           States and The Netherlands; Specified Jurisdiction
                           means the United States.

                  (iii)    With respect to its U.S. branches, each payment
                           received or to be received by it in connection with
                           this Agreement will be effectively connected with its
                           conduct of a trade or business in the United States.

         (b)      REPRESENTATIONS OF BHI.

                  (1)      Payer Tax Representation. For the purpose of Section
         3(e), BHI hereby makes the following representation:

                  It is not required by any applicable law, as modified by the
         practice of any relevant governmental revenue authority, of any
         Relevant Jurisdiction to make any deduction or withholding for or on
         account of any Tax from any payment (other than interest under Section
         2(e), 6(d) (ii) or 6(e)) to be made by it to Bank under this Agreement.
         In making this representation, it may rely on:

                           (a) the accuracy of any representation made by Bank
                  pursuant to Section 3(f);

                           (b) the satisfaction of the agreement of Bank
                  contained in Section 4(a) (i) or 4(a)(iii) and the accuracy
                  and effectiveness of any document provided by Bank pursuant to
                  Section 4(a) (i) or 4(a) (iii); and

                           (c) the satisfaction of the agreement of Bank
                  contained in Section 4(d);

                  provided that it shall not be a breach of this representation
                  where reliance is placed on clause (b) and Bank does not
                  deliver a form or document under Section 4(a) (iii) by reason
                  of material prejudice to its legal or commercial position.

                  (2)      Payee Tax Representation. For the purpose of Section
         3(f), BHI makes the representation specified below:

                                       4

<PAGE>

                           (i)      It is a corporation organized under the laws
                  of the State of Delaware.

                     PART 3: AGREEMENT TO DELIVER DOCUMENTS

         For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each
party agrees to deliver the following documents:

         (a)      Tax forms, documents or certificates to be delivered are:

<TABLE>
<CAPTION>
PARTY REQUIRED
  TO DELIVER                                                              DATE BY WHICH
   DOCUMENT             FORM / DOCUMENT / CERTIFICATE                    TO BE DELIVERED
--------------          -----------------------------                    ---------------
<S>                     <C>                                       <C>
 Bank and BHI                  As applicable,                     Promptly upon the earlier of (i)
                               IRS Form 1001                      reasonable demand by the other
                               IRS Form 4224                      party, or (ii) learning that the
                               IRS Form W-9                       form or document is required
                               IRS Form W-8
</TABLE>

         (b)      Other documents to be delivered are:

<TABLE>
<CAPTION>
PARTY REQUIRED                                                                              COVERED BY
  TO DELIVER                    FORM / DOCUMENT /                  DATE BY WHICH            SECTION 3(d)
   DOCUMENT                        CERTIFICATE                    TO BE DELIVERED         REPRESENTATIONS
--------------                  -----------------                 ---------------         ---------------
<S>                     <C>                                    <C>                        <C>
 Bank and BHI           Certified copies of all corporate      Upon execution and                Yes
                        authorizations and any other           delivery of this
                        documents with respect to the          Agreement, and
                        execution, delivery and performance    thereafter upon
                        of this Agreement                      reasonable demand by
                                                               the other party

 Bank and BHI           Certificate of authority and           Upon execution and                Yes
                        specimen signatures of individuals     delivery of this
                        executing this Agreement and           Agreement, and
                        Confirmations                          thereafter upon request
                                                               of the other party

 Bank and BHI           A copy of its most recent Annual       Promtly upon request               No
                        Report containing consolidated         from the other party
                        financial statements prepared in
                        accordance with accounting
                        principles that are generally
                        accepted for institutions of its
                        type in the jurisdiction of its
                        organization and certified by
                        independent public accountants
</TABLE>

                                       5

<PAGE>

<TABLE>
<S>                     <C>                                    <C>                                <C>
Bank and BHI            A copy of its most recent unaudited    Promptly upon request              No
                        interim consolidated financial         from the other party
                        statements prepared in accordance
                        with accounting principles that are
                        generally accepted for institutions
                        of its type in the jurisdiction of
                        its organization in each case
                        consistently applied.
</TABLE>

                              PART 4: MISCELLANEOUS

         (a)      ADDRESS FOR NOTICES. For the purpose of Section 12(a) of this
         Agreement:

         Any notice relating to a particular Transaction shall be delivered to
the address or facsimile or telex number specified in the Confirmation of such
Transaction. Any notice delivered for purposes of Sections 5 and 6 of this
Agreement shall be delivered to the following address:

         Address for notice or communications to Bank:

         (i)      For all purposes of this Agreement:

         [Bank's Contact Information]
         Attention:  Fixed Income Derivatives Documentation

         (ii)     With a copy to the Office through which Party A is acting for
         the purposes of the relevant Transaction at the address set out below:

         [Bank's Contact Information]

                  Address for notice or communications to BHI:

         Baker Hughes Incorporation
         Attention: Gene Shiels, Assistant Treasurer
         3900 Essex Lane
         Houston, Texas 77027-5177
         Facsimile No.: (713) 439-8678

         (b)      PROCESS AGENT. For the purpose of Section 13(c):

         Bank appoints as its Process Agent:  Not applicable.

         BHI appoints as its Process Agent:  Not applicable.

         (c)      OFFICES. The provisions of Section 10(a) will apply to this
         Agreement.

         (d)      MULTIBRANCH PARTY. For the purpose of Section 10 of this
         Agreement:

         Bank is a Multibranch Party and may act through the following Offices:
         Amsterdam, Chicago, London.

                                       6

<PAGE>

         BHI is not a Multibranch Party.

         (e)      CALCULATION AGENT. The Calculation Agent is Bank unless
         otherwise specified in a Confirmation in relation to the relevant
         Transaction.

         (f)      CREDIT SUPPORT DOCUMENT. Details of any Credit Support
         Document: not applicable.

         (g)      CREDIT SUPPORT PROVIDER. Credit Support Provider means, in
         relation to either party: not applicable.

         (h)      GOVERNING LAW. This Agreement will be governed by and
         construed in accordance with the laws of the State of New York (without
         reference to the choice of law doctrine).

         (i)      NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) will
         not apply to any Transaction.

         (j)      "AFFILIATE" will have the meaning specified in Section 14 of
         this Agreement.

                            PART 5: OTHER PROVISIONS

         (a)      SET-OFF. Add the following Section 6(f) to the Master
         Agreement:

                  Any amount (the "EARLY TERMINATION AMOUNT") payable to one
         party (the "PAYEE") by the other party (the "PAYER") under Section
         6(e), in circumstances where there is a Defaulting Party or one
         Affected Party in the case where a Termination Event under Section
         5(b)(iv) has occurred, will, at the option of the other party ("PARTY
         X") other than the Defaulting Party or the Affected Party (and without
         prior notice to the Defaulting Party or the Affected Party), be reduced
         by its set-off against any amount(s) (the "OTHER AGREEMENT AMOUNT")
         payable (whether at such time or in the future or upon the occurrence
         of a contingency) by the Payee to the Payer (irrespective of the
         currency, place of payment or booking office of the obligation) under
         any other agreement(s) between the Payee and the Payer or instrument(s)
         or undertaking(s) issued or executed by one party to, or in favor of,
         the other party (and the Other Agreement Amount will be discharged
         promptly and in all respects to the extent it is so set-off). Party X
         will give notice to the other party of any set-off effected under this
         Section 6(f).

                  For this purpose, either the Early Termination Amount or the
         Other Agreement Amount (or the relevant portion of such amounts) may be
         converted by Party X into the currency in which the other is
         denominated at the rate of exchange at which such party would be able,
         acting in a reasonable manner and in good faith, to purchase the
         relevant amount of such currency.

                  If an obligation is unascertained, Party X may in good faith
         estimate that obligation and set-off in respect of the estimate,
         subject to the relevant party accounting to the other when the
         obligation is ascertained.

                  Nothing in this Section 6(f) shall be effective to create a
         charge or other security interest. This Section 6(f) shall be without
         prejudice and in addition to any right of set-off, combination of
         accounts, lien or other right to which any party is at any time
         otherwise entitled (whether by operation of law, contract or
         otherwise).

                                       7

<PAGE>

         (b)      NETTING. Section 2(c) is hereby amended by inserting in the
fourth line thereof after the word "other" and before the comma "(A) if the
aggregate amount that would otherwise be payable by one party to the other party
equals the aggregate amount that would otherwise be payable to such party by the
other party," and inserting "(B)" in the fifth line thereof after the words
"and," and before the word "if."

         (c)      EXCHANGE OF CONFIRMATIONS. The parties hereby amend Section
9(e)(ii) by adding the following sentences at the end thereof:

         On or promptly following the date on which the parties reach agreement
         on the terms of a Transaction as contemplated by the first sentence of
         this clause (ii), Bank will send to BHI a Confirmation via facsimile
         transmission. BHI will promptly thereafter confirm the accuracy of (in
         the manner required by this clause (ii)), or request the correction of,
         such Confirmation (in the latter case, indicating how it believes the
         terms of such Confirmation should be correctly stated and such other
         terms which should be added to or deleted from such Confirmation so
         that it correctly reflects the parties agreement with respect to the
         Transaction referred to in the Confirmation). If any dispute arises as
         to whether an error exists in a Confirmation, the parties shall in good
         faith make reasonable efforts to resolve the dispute. If BHI fails to
         accept or dispute the Confirmation in the manner set forth above within
         three Local Business Days after it was received by BHI (on a business
         day), the Confirmation shall be deemed to correctly reflect the
         parties' agreement on the terms of the Transaction referred to therein
         absent manifest error. The requirement of this clause (ii) and
         elsewhere in this Agreement that the parties exchange Confirmations
         shall for all purposes be deemed satisfied by a Confirmation sent and
         an acknowledgment deemed given as provided herein.

         (d)      WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY HEREBY WAIVES ITS
RESPECTIVE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

         (e)      DAMAGES. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT IN ANY CONFIRMATION, OR ANY OTHER DOCUMENT IN CONNECTION THEREWITH, IN
NO EVENT SHALL EITHER BANK OR BHI BE LIABLE TO THE OTHER FOR ANY CONSEQUENTIAL,
SPECIAL, PUNITIVE, INDIRECT, OR EXEMPLARY DAMAGES, INCLUDING WITHOUT LIMITATION,
ANY DAMAGES FOR LOSS OF PROFITS, LOSS OF BUSINESS, OR LOSS OF OPPORTUNITY.

         (f)      RELATIONSHIP BETWEEN PARTIES. The following representations
shall be inserted as a new Section 3(g) of this Agreement.

                  "(g)     RELATIONSHIP BETWEEN PARTIES. Each party will be
         deemed to represent to the other party on the date on which it enters
         into a Transaction that (absent a written agreement between the parties
         that expressly imposes affirmative obligations to the contrary for that
         Transaction):

                           (i)      NON-RELIANCE. It is acting for its own
                  account, and it has made its own independent decisions to
                  enter into that Transaction and as to whether that Transaction
                  is appropriate or proper for it based upon its own judgment
                  and upon advice from such advisers as it has deemed necessary.
                  It is not relying on any communication (written or oral) of
                  the other party as investment advice or as a recommendation to
                  enter into that Transaction; it being understood that
                  information and explanations related to the terms and
                  conditions of a transaction shall not be considered investment
                  advice or a recommendation to enter into that Transaction. No
                  communication (written or oral) received from the other party
                  shall be deemed to be an assurance or guarantee as to the
                  expected results of that Transaction.

                                       8

<PAGE>

                           (ii)     ASSESSMENT AND UNDERSTANDING. It is capable
                  of assessing that merits of and understanding (on its own
                  behalf or through independent professional advice), and
                  understands and accepts, the terms, conditions and risks of
                  that Transaction. It is also capable of assuming, and assumes,
                  the risks of that Transaction.

                           (iii)    STATUS OF PARTIES. The other party is not
                  acting as a fiduciary for or an adviser to it in respect of
                  that Transaction.

                           (iv)     ELIGIBLE CONTRACT PARTICIPANT. it is an
                  "eligible contract participant" under, and as defined in,
                  Section 1a of the Commodity Exchange Act (7 USC 1a), amended
                  from time to time."

         (g)      NEGATIVE INTEREST RATES. (i) FLOATING AMOUNTS. "SWAP
         TRANSACTION" means, for the purposes of this provision concerning
         Negative Interest Rates, a rate exchange or swap transaction, including
         transactions involving a single currency or two or more currencies.
         Bank and BHI agree that, if with respect to a Calculation Period for a
         Swap Transaction either party is obligated to pay a Floating Amount
         that is a negative number (either due to a quoted negative Floating
         Rate or by operation of a Spread that is subtracted from the Floating
         Rate), the Floating Amount with respect to that party for that
         Calculation Period will be deemed to be zero, and the other party will
         pay to that party the absolute value of the negative Floating Amount as
         calculated, in addition to any amounts otherwise owed by the other
         party for that Calculation Period with respect to that Swap
         Transaction, on the Payment Date that the Floating Amount would have
         been due if it had been a positive number. Any amounts paid by the
         other party with respect to the absolute value of a negative Floating
         Amount will be paid to such account as the receiving party may
         designate (unless such other party gives timely notice of a reasonable
         objection to such designation) in the currency in which that Floating
         Amount would have been paid if it had been a positive number (and
         without regard to the currency) in which the other party is otherwise
         obligated to make payments.

                  (ii)     COMPOUNDING. Bank and BHI agree that, if with respect
         to one or more Compounding Periods for a Swap Transaction where
         "COMPOUNDING" or "FLAT COMPOUNDING" is specified to be applicable, the
         Compounding Period Amount, the Basic Compounding Period Amount or the
         Additional Compounding Period Amount is a negative number (either due
         to a quoted negative Floating Rate or by operation of a Spread that is
         subtracted from the Floating Rate), then the Floating Amount for the
         Calculation Period in which that Compounding Period or those
         compounding Periods occur will be either the sum of all the Compounding
         Period Amounts or the sum of all the Basic Compounding Period amounts
         and all the Additional Compounding Period Amounts in that Calculation
         Period (whether positive or negative). If such sum is positive, then
         the Floating Rate Payer with respect to the Floating Amount so
         calculated will pay that Floating Amount to the other party. If such
         sum is negative, the Floating Amount with respect to the party that
         would be obligated to pay that Floating Amount will be deemed to be
         zero, and the other party will pay to that party the absolute value of
         the negative Floating Amount as calculated, such payment to be made in
         accordance with (i) above.

         (h)      TERMINATION. If no Transactions (or any present or future
payment obligations, contingent or otherwise, thereunder) are outstanding under
this Agreement, either party may terminate this Agreement upon written notice to
the other party.

         (i)      ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, any Transaction, any Confirmation, or the breach or
alleged breach of this Agreement shall be settled by

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<PAGE>

arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment on the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof. In connection with any
such arbitration, unless the parties hereto otherwise agree, (i) the arbitration
shall be held in The City of New York before three arbitrators, (iii) each
arbitrator shall be unaffiliated with either party and shall be a knowledgeable
and informed participant in interest rate swaps, currency exchanges and
cross-currency interest rate swaps, and (iii) each party shall select one
arbitrator within seven days of the commencement of the arbitration, and the two
arbitrators selected by the parties shall select a third arbitrator within seven
days of the date of the selection of the second arbitrator.

         (j)      SEVERABILITY. If any provision (or any portion of any
provision) of this Agreement is held invalid or unenforceable, it shall be
modified or construed restrictively, to the extent possible, to comply with
applicable law, rather than voided, to give effect to the intent of the parties,
and if such modification or restrictive construction is not possible, it shall
be severed herefrom. In any event, all of the other provisions of this Agreement
shall be deemed valid and enforceable and shall remain in full force and effect
and shall not be adversely affected by the validity or unenforceability of such
provision (or portion).

         (k)      ADDITIONAL AGREEMENTS. Each party agrees, upon learning of the
occurrence of any event or commencement of any condition that constitutes (or
that with the giving of notice or passage of time or both would constitute) an
Event of Default or Termination Event with respect to the party, promptly to
give the other notice of such event or condition (or, in lieu of giving notice
of such event or condition in the case of an event or condition that with the
giving of notice or passage of time or both would constitute an Event of Default
or Termination Event with respect to the party, to cause such event or condition
to cease to exist before becoming an Event of Default or Termination Event).

         (l)      DEFINITIONS. This Agreement, each Confirmation, and each
Transaction are subject to the 2000 ISDA Definitions, 1998 ISDA FX and Currency
Option Definitions (the "FX DEFINITIONS"), as published by the International
Swaps and Derivatives Association, Inc., the Emerging Markets Traders
Association, and The Foreign Exchange Committee, as such definitions may be
hereinafter amended, and any other definitions specified in the relevant
Confirmation for such Transaction, as each of such definitions may be amended,
supplemented replaced, updated or modified from time to time (collectively, the
"DEFINITIONS"), each as published by the International Swaps and Derivatives
Association, Inc. ("ISDA"), and will be governed in all respects by the
Definitions (except that any references to "Swap Transactions" in the
Definitions will be deemed to be references to "Transactions"). The Definitions
are incorporated by reference in, and made part of this Agreement and the each
relevant Confirmation as if set forth in full in this Agreement and such
Confirmation. In the event of any inconsistency between the Definitions and any
other definitions incorporated into a Confirmation, the definitions incorporated
in the Confirmation will prevail for the purpose of the relevant Transaction. In
the event of any inconsistency between the provisions of this Agreement and the
Definitions, this Agreement will prevail. In the event of any inconsistency
between the provisions of any Confirmation, this Agreement and the applicable
Definitions, such Confirmation will prevail for the purpose of the relevant
Transaction.

         (m)      CONSENT TO RECORDING. Each party (i) consents to the recording
of the telephone conversations of trading, marketing and other relevant
personnel of the parties in connection with this Agreement or any potential
Transaction and (ii) agrees that such recording may be submitted in evidence to
any court or in any proceedings with respect to this Agreement or any
Transaction thereunder, provided that once a Confirmation of a Transaction has
been mutually signed by both parties, this clause (ii) shall have no further
effect with respect to such Transaction.

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<PAGE>

                      PART 6: FOREIGN EXCHANGE TRANSACTIONS

                  DEFINITIONS AND APPLICATIONS. (i) This Agreement is subject to
         the FX Definitions. In the event of any inconsistency between the FX
         Definitions and this Agreement, this Agreement will govern. Unless
         otherwise agreed in writing by the parties, each FX Transaction and
         Currency Option Transaction, whether now existing or hereafter entered
         into, between the parties shall be governed by this Agreement, as
         modified by this Schedule, notwithstanding Section 1(b) of this
         Agreement, the absence of any reference to this Agreement in the
         Confirmation in respect of any such FX Transaction or Currency Option
         Transaction, or the reference to any other governing terms or law in
         such Confirmation.

                  (ii)     Section 3.4 of the FX Definitions is amended by
         adding the following:

                           (c)      Non-Payment. If any Premium is not received
                  on the Premium Payment Date, the Seller may elect either: (i)
                  to accept a late payment of such Premium; (ii) to give written
                  notice of such non-payment and, if such payment shall not be
                  received within three (3) Local Business Days (as defined in
                  this Agreement) of such notice, treat the related Currency
                  Option Transaction as void; or (iii) if such payment shall not
                  be received within three (3) Local Business Days of such
                  notice, treat such non-payment as an Event of Default under
                  Section 5(a)(i) of this Agreement. If the Seller elects to act
                  under either clause (i) or (ii) of the preceding sentence, the
                  Buyer shall pay all out-of-pocket costs and actual damages
                  incurred in connection with such unpaid or late Premium or
                  void Currency Option Transaction, including, without
                  limitation, interest on such Premium in the same currency as
                  such Premium at the then prevailing market rate and any other
                  costs and expenses incurred by the Seller in covering its
                  obligations (including, without limitation, a delta hedge)
                  with respect to such Currency Option Transaction.

                           (d)      Discharge and Termination. Unless otherwise
                  agreed, any Call or any Put written by a party will
                  automatically be terminated and discharged, in whole or in
                  part, as applicable, against a Call or a Put, respectively,
                  written by the other party, such termination and discharge to
                  occur automatically upon the payment in full of the last
                  Premium payable in respect of such Currency Option
                  Transactions; provided that such termination and discharge may
                  only occur in respect of Currency Option Transactions:

                                    (i)     each being with respect to the same
                           Put Currency and the same Call Currency;

                                    (ii)    each having the same Expiration Date
                           and Expiration Time;

                                    (iii)   each being of the same style, i.e.,
                           either both being American style Currency Option
                           Transactions or both being European style Currency
                           Option Transactions;

                                    (iv)    each having the same Strike Price;

                                    (v)     neither of which shall have been
                           exercised by delivery of a Notice of Exercise; and

                                    (vi)    each having been transacted by the
                           same pair of offices of the Buyer and the Seller,

                                       11

<PAGE>

                  and upon the occurrence of such termination and discharge,
                  neither party shall have any further obligation to the other
                  party in respect of the relevant Currency Option Transactions
                  or, as the case may be, parts thereof so terminated and
                  discharged. In the case of a partial termination and discharge
                  (i.e., where the relevant Currency Option Transactions are for
                  different amounts of the Currency Pair), the remaining portion
                  of the Currency Option Transaction which is partially
                  discharged and terminated shall continue to be a Currency
                  Option Transaction for all purposes of this Agreement,
                  including this Section 3.4(d).

Accepted and agreed:

[Bank]                                     BAKER HUGHES INCORPORATED

By: ______________________________         By: /s/Douglas C. Doty
                                                  ------------------
Name:                                      Name: Douglas C. Doty
Title:                                     Title: Vice President and Treasurer
                                           Date: July 30, 2003
By: ______________________________
Name:
Title:

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