exv10w1



 




Exhibit 10.1


INDEMNIFICATION AGREEMENT




     INDEMNIFICATION AGREEMENT, made and executed effective October 25, 2004
(this “Agreement”), by and between BAKER HUGHES INCORPORATED, a Delaware
corporation (the “Company”), and Chad C. Deaton, an individual resident of the
State of Texas (the “Indemnitee”).



     WHEREAS, the Company is aware that, in order to induce highly competent
persons to serve the Company as directors or officers or in other capacities,
the Company must provide such persons with adequate protection through
insurance and indemnification against inordinate risks of claims and actions
against them arising out of their service to and activities on behalf of the
Company;



     WHEREAS, the Company recognizes that the increasing difficulty in
obtaining directors’ and officers’ liability insurance, the increasing cost of
such insurance and the general reductions in coverage of such insurance have
made attracting and retaining such persons more difficult;



     WHEREAS, the Company recognizes the substantial increase in corporate
litigation in general, subjecting directors and officers to expensive
litigation risks at the same time as the availability and coverage of liability
insurance has been severely limited;



     WHEREAS, the Board of Directors of the Company has determined that it is
in the best interests of the Company’s stockholders that the Company act to
assure such persons that there will be increased certainty of such protection
in the future;



     WHEREAS, it is reasonable, prudent and necessary for the Company to
contractually obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will continue to serve the Company
free from undue concern that they will not be so indemnified; and



     WHEREAS, the Indemnitee is willing to serve, continue to serve and take on
additional service for or on behalf of the Company or any of its direct or
indirect wholly-owned subsidiaries on the condition that he/she be so
indemnified.



     NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and
the Indemnitee do hereby agree as follows:




	1.	 	Definitions. For purposes of this Agreement:






     (a) “Change in Control” shall mean a change in control of the
Company occurring after the date hereof of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A (or in response to any similar item on any
similar schedule or form) promulgated under



 









 






the Securities Exchange Act of 1934, as amended (the “Act”),
whether or not the Company is then subject to such reporting
requirement; provided, however, that, without limitation, a Change
in Control shall include the following: (i) the acquisition
(other than from the Company) by any person, entity or “group”
within the meaning of Section 13(d)(3) or 14(d)(2) of the Act
(excluding, for this purpose, the Company or its subsidiaries, any
employee benefit plan of the Company or its subsidiaries which
acquires beneficial ownership of voting securities of the Company
and any qualified institutional investor who meets the
requirements of Rule 13d-1(b)(1) promulgated under the Act) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Act), directly or indirectly, of 30% or more of the
combined voting power of the Company’s then outstanding
securities, excluding any person, entity or group that becomes a
beneficial owner in connection with a transaction described in
clause (iii)(A) below; (ii) individuals who, as of the date
hereof, constitute the Board of Directors of the Company (the
“Incumbent Board”) ceasing for any reason to constitute at least a
majority of the Board of Directors; provided that, any person
becoming a director subsequent to the date hereof whose
appointment or election by the Board of Directors of the Company
or nomination for election by the Company’s stockholders was
approved or recommended by a vote of at least 2/3 of the directors
then comprising the Incumbent Board or whose appointment, election
or nomination for election was previously so approved or
recommended (other than an election or nomination of an individual
whose initial assumption of office is in connection with an actual
or threatened election contest relating to the election of the
directors of the Company) shall be, for purposes of this
Agreement, considered as though such person were a member of the
Incumbent Board; (iii) the consummation of a merger or
consolidation of the Company or any direct or indirect subsidiary
of the Company with any other corporation, (A) with respect to
which persons who were the stockholders of the Company immediately
prior to such merger or consolidation, in combination with the
ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any “affiliate”
(within the meaning of Rule 12b-2 of the General Rules and
Regulations of the Act), do not, immediately thereafter, own at
least 50% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof
outstanding, or (B) which is effected to implement a
recapitalization of the Company (or similar transaction) in which
no person, entity or group becomes the beneficial owner, directly
or indirectly, of securities of the Company (not including in the
securities beneficially owned by this person, entity or group any
securities acquired directly from the Company or its affiliates
other than in connection with the acquisition by the Company or
its affiliates of a business) representing 30% or more of the
combined voting power of the Company’s then outstanding
securities; (iv) the consummation of a merger or consolidation of
the Company or any direct or indirect subsidiary of the Company
with any other corporation, other than a merger or consolidation
immediately following which the individuals who comprise the
Incumbent Board constitute at least a majority of the Board of
Directors of the Company, the entity surviving such merger or any
parent thereof (or a majority plus one member



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where such board comprises and odd number of members); or (v)
the stockholders of the Company approving a plan of complete
liquidation or dissolution of the Company or the consummation of
an agreement for the sale or disposition by the Company of all or
substantially all of the assets of the Company, other than (A) a
sale or disposition of all or substantially all of the assets of
the Company to an entity, at least 50% of the combined voting
power of the voting securities of which are owned by the
stockholders of the Company in substantially the same proportions
as their ownership of the Company immediately prior to such sale
(B) or where the individuals who comprise the Incumbent Board
constitute at least a majority of the board of directors of such
entity or any parent thereof (or a majority plus one member where
such board is comprised of an odd number of members).
Notwithstanding the foregoing, a “Change in Control” shall not be
deemed to have occurred by virtue of the consummation of any
transaction or series of integrated transactions immediately
following which the record holders of the common stock of the
Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate
ownership in an entity that owns all or substantially all of the
assets of the Company immediately following such transaction or
series of transactions.




     (b) “Disinterested Director” shall mean a director of the
Company who is not or was not a party to the action, suit,
investigation or proceeding in respect of which indemnification is
being sought by the Indemnitee.




     (c) “Expenses” shall include all attorneys’ fees, retainers,
court costs, transcript costs, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other
disbursements or expenses incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating or
being or preparing to be a witness in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative in nature.




     (d) “Independent Counsel” shall mean a law firm or a member
of a law firm that neither is presently nor in the past five years
has been retained to represent (i) the Company or the Indemnitee
in any matter material to either such party or (ii) any other
party to the action, suit, investigation or proceeding giving rise
to a claim for indemnification hereunder. Notwithstanding the
foregoing, the term “Independent Counsel” shall not include any
person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing
either the Company or the Indemnitee in an action to determine the
Indemnitee’s right to indemnification under this Agreement.



     2. Service by the Indemnitee. The Indemnitee agrees to serve as a
director or officer of the Company and will discharge his/her duties and
responsibilities to the best of his/her ability so long as the Indemnitee is
duly elected or qualified in accordance with the provisions of the Restated
Certificate of Incorporation, as amended (the “Certificate”), and the Bylaws,
as amended (the “Bylaws”), of the Company and the General Corporation Law of
the State of



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Delaware, as amended (the “DGCL”), or until his/her earlier death,
retirement, resignation or removal. The Indemnitee may at any time and for any
reason resign from such position (subject to any other obligation, whether
contractual or imposed by operation of law), in which event this Agreement
shall continue in full force and effect after such resignation. Nothing in
this Agreement shall confer upon the Indemnitee the right to continue in the
employ of the Company or as a director of the Company, or affect the right of
the Company to terminate, in the Company’s sole discretion (with or without
cause) and at any time, the Indemnitee’s employment, in each case, subject to
any contractual rights of the Indemnitee created or existing otherwise than
under this Agreement.




     3. Indemnification. The Company shall indemnify the Indemnitee and
advance Expenses to the Indemnitee as provided in this Agreement to the fullest
extent permitted by the Certificate, the Bylaws in effect as of the date hereof
and the DGCL or other applicable law in effect on the date hereof and to any
greater extent that the DGCL or applicable law may in the future from time to
time permit. Without diminishing the scope of the indemnification provided by
this Section 3, the rights of indemnification of the Indemnitee provided
hereunder shall include, but shall not be limited to, those rights hereinafter
set forth, except that no indemnification shall be paid to the Indemnitee:




     (a) on account of any action, suit or proceeding in which
judgment is rendered against the Indemnitee for disgorgement of
profits made from the purchase or sale by the Indemnitee of
securities of the Company pursuant to the provisions of Section
16(b) of the Act or similar provisions of any federal, state or
local statutory law;




     (b) on account of conduct of the Indemnitee which is finally
adjudged by a court of competent jurisdiction to have been
knowingly fraudulent or to constitute willful misconduct;




     (c) in any circumstance where such indemnification is
expressly prohibited by applicable law;




     (d) with respect to liability for which payment is actually
made to the Indemnitee under a valid and collectible insurance
policy or under a valid and enforceable indemnity clause, Bylaw or
agreement (other than this Agreement), except in respect of any
liability in excess of payment under such insurance, clause, Bylaw
or agreement;




     (e) if a final decision by a court having jurisdiction in the
matter shall determine that such indemnification is not lawful
(and, in this respect, both the Company and the Indemnitee have
been advised that it is the position of the Securities and
Exchange Commission that indemnification for liabilities arising
under the federal securities laws is against public policy and is,
therefore, unenforceable, and that claims for indemnification
should be submitted to the appropriate court for adjudication); or



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     (f) in connection with any action, suit or proceeding by the
Indemnitee against the Company or any of its direct or indirect
wholly-owned subsidiaries or the directors, officers, employees or
other Indemnitees of the Company or any of its direct or indirect
wholly-owned subsidiaries, (i) unless such indemnification is
expressly required to be made by law, (ii) unless the action, suit
or proceeding was previously authorized by a majority of the Board
of Directors of the Company, (iii) unless such indemnification is
provided by the Company, in its sole discretion, pursuant to the
powers vested in the Company under applicable law or (iv) except
as provided in Sections 12 and 14 hereof.



     4. Actions or Proceedings Other Than an Action by or in the Right of the
Company. The Indemnitee shall be entitled to the indemnification rights
provided in this Section 4 if the Indemnitee was or is a party or is threatened
to be a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative in nature,
other than an action by or in the right of the Company, by reason of the fact
that the Indemnitee is or was a director, officer or employee, agent or
fiduciary of the Company, or any of its direct or indirect wholly-owned
subsidiaries, or is or was serving at the request of the Company, or any of its
direct or indirect wholly-owned subsidiaries, as a director, officer or
employee of any other entity, including, but not limited to, another
corporation, partnership, limited liability company, employee benefit plan,
joint venture, trust or other enterprise, or by reason of any act or omission
by him/her in such capacity. Pursuant to this Section 4, the Indemnitee shall
be indemnified against all Expenses, judgments, penalties (including excise and
similar taxes), fines and amounts paid in settlement which were actually and
reasonably incurred by the Indemnitee in connection with such action, suit or
proceeding (including, but not limited to, the investigation, defense or appeal
thereof), if the Indemnitee acted in good faith and in a manner the Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his/her conduct was unlawful.



     5. Actions by or in the Right of the Company. The Indemnitee shall be
entitled to the indemnification rights provided in this Section 5 if the
Indemnitee was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding brought by or in
the right of the Company to procure a judgment in its favor by reason of the
fact that the Indemnitee is or was a director, officer or employee, agent or
fiduciary of the Company, or any of its direct or indirect wholly-owned
subsidiaries, or is or was serving at the request of the Company, or any of its
direct or indirect wholly-owned subsidiaries, as a director, officer or
employee of another entity, including, but not limited to, another corporation,
partnership, limited liability company, employee benefit plan, joint venture,
trust or other enterprise, or by reason of any act or omission by him/her in
any such capacity. Pursuant to this Section 5, the Indemnitee shall be
indemnified against all Expenses actually and reasonably incurred by him/her in
connection with the defense or settlement of such action, suit or proceeding
(including, but not limited to the investigation, defense or appeal thereof),
if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably
believed to be in or not opposed to the best interests of the Company;
provided, however, that no such indemnification shall be made in respect of any
claim, issue or matter as to which the Indemnitee shall have been adjudged to
be liable to the Company, unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which such action, suit or
proceeding was brought shall



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determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, the Indemnitee is fairly and
reasonably entitled to indemnity for such Expenses which such court shall deem
proper.




     6. Good Faith Definition. For purposes of this Agreement, the Indemnitee
shall be deemed to have acted in good faith and in a manner the Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, or, with respect to any criminal action or proceeding, to have had no
reasonable cause to believe the Indemnitee’s conduct was unlawful, if such
action was based on any of the following: (a) the records or books of the
account of the Company or other enterprise, including financial statements; (b)
information supplied to the Indemnitee by the officers of the Company or other
enterprise in the course of his/her duties; (c) the advice of legal counsel for
the Company or other enterprise; or (d) information or records given in reports
made to the Company or other enterprise by an independent certified public
accountant or by an appraiser or other expert selected with reasonable care by
the Company or other enterprise.



     7. Indemnification for Expenses of Successful Party. Notwithstanding the
other provisions of this Agreement, to the extent that the Indemnitee has
served on behalf of the Company, or any of its direct or indirect wholly-owned
subsidiaries, as a witness or other participant in any class action or
proceeding, or has been successful, on the merits or otherwise, in defense of
any action, suit or proceeding referred to in Sections 4 and 5 hereof, or in
defense of any claim, issue or matter therein, including, but not limited to,
the dismissal of any action without prejudice, the Indemnitee shall be
indemnified against all Expenses actually and reasonably incurred by the
Indemnitee in connection therewith.



     8. Partial Indemnification. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred by the Indemnitee in connection with the
investigation, defense, appeal or settlement of such suit, action,
investigation or proceeding described in Sections 4 and 5 hereof, but is not
entitled to indemnification for the total amount thereof, the Company shall
nevertheless indemnify the Indemnitee for the portion of such Expenses,
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by the Indemnitee to which the Indemnitee is entitled.



     9. Procedure for Determination of Entitlement to Indemnification. (a) To
obtain indemnification under this Agreement, the Indemnitee shall submit to the
Company a written request, including documentation and information which is
reasonably available to the Indemnitee and is reasonably necessary to determine
whether and to what extent the Indemnitee is entitled to indemnification. The
Secretary of the Company shall, promptly upon receipt of a request for
indemnification, advise the Board of Directors in writing that the Indemnitee
has requested indemnification. Any Expenses incurred by the Indemnitee in
connection with the Indemnitee’s request for indemnification hereunder shall be
borne by the Company. The Company hereby indemnifies and agrees to hold the
Indemnitee harmless for any Expenses incurred by the Indemnitee under the
immediately preceding sentence irrespective of the outcome of the determination
of the Indemnitee’s entitlement to indemnification.



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     (b) Upon written request by the Indemnitee for indemnification pursuant to
Sections 4 and 5 hereof, the entitlement of the Indemnitee to indemnification
pursuant to the terms of this Agreement shall be determined by the following
person or persons, who shall be empowered to make such determination: (i) if a
Change in Control shall have occurred, by Independent Counsel (unless the
Indemnitee shall request in writing that such determination be made by the
Board of Directors (or a committee thereof) in the manner provided for in
clause (b)(ii) of this Section 9) in a written opinion to the Board of
Directors, a copy of which shall be delivered to the Indemnitee; (ii) if a
Change in Control shall not have occurred, (A) by the Board of Directors of the
Company, by a majority vote of a quorum consisting of Disinterested Directors,
or (B) if a quorum consisting of Disinterested Directors is not obtainable, or
if a majority vote of a quorum consisting of Disinterested Directors so
directs, by Independent Counsel in a written opinion to the Board of Directors,
a copy of which shall be delivered to the Indemnitee; or (iii) in any event, by
the stockholders pursuant to the Bylaws of the Company. The Independent
Counsel shall be selected by the Board of Directors and approved by the
Indemnitee. Upon failure of the Board of Directors to so select, or upon
failure of the Indemnitee to so approve, the Independent Counsel shall be
selected by the Chancellor of the State of Delaware or such other person as the
Chancellor shall designate to make such selection. Such determination of
entitlement to indemnification shall be made not later than 45 days after
receipt by the Company of a written request for indemnification. If the person
making such determination shall determine that the Indemnitee is entitled to
indemnification as to part (but not all) of the application for
indemnification, such person shall reasonably prorate such part of
indemnification among such claims, issues or matters. If it is so determined
that Indemnitee is entitled to indemnification, payment to Indemnitee shall be
made within 10 days after such determination.



     10. Presumptions and Effect of Certain Proceedings. (a) In making a
determination with respect to entitlement to indemnification, the Indemnitee
shall be presumed to be entitled to indemnification hereunder and the Company
shall have the burden of proof in the making of any determination contrary to
such presumption.



     (b) If the Board of Directors, or such other person or persons empowered
pursuant to Section 9 to make the determination of whether the Indemnitee is
entitled to indemnification, shall have failed to make a determination as to
entitlement to indemnification within 45 days after receipt by the Company of
such request, the requisite determination of entitlement to indemnification
shall be deemed to have been made and the Indemnitee shall be absolutely
entitled to such indemnification, absent actual and material fraud in the
request for indemnification or a prohibition of indemnification under
applicable law. The termination of any action, suit, investigation or
proceeding described in Sections 4 or 5 hereof by judgment, order, settlement
or conviction, or upon a plea of nolo contendere or its equivalent, shall not,
of itself: (i) create a presumption that the Indemnitee did not act in good
faith and in a manner which he/she reasonably believed to be in or not opposed
to the best interests of the Company, or, with respect to any criminal action
or proceeding, that the Indemnitee has reasonable cause to believe that the
Indemnitee’s conduct was unlawful; or (ii) otherwise adversely affect the
rights of the Indemnitee to indemnification, except as may be provided herein.



     11. Advancement of Expenses. Subject to applicable law, all reasonable
Expenses actually incurred by the Indemnitee in connection with any threatened
or pending action, suit or proceeding shall be paid by the Company in advance
of the final disposition of such action, suit



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or proceeding, if so requested by the Indemnitee, within 20 days after the
receipt by the Company of a statement or statements from the Indemnitee
requesting such advance or advances. The Indemnitee may submit such statements
from time to time. The Indemnitee’s entitlement to such Expenses shall include
those incurred in connection with any proceeding by the Indemnitee seeking an
adjudication or award in arbitration pursuant to this Agreement. Such
statement or statements shall reasonably evidence the Expenses incurred by the
Indemnitee in connection therewith and shall include or be accompanied by a
written affirmation by the Indemnitee of the Indemnitee’s good faith belief
that the Indemnitee has met the standard of conduct necessary for
indemnification under this Agreement and an undertaking by or on behalf of the
Indemnitee to repay such amount if it is ultimately determined that the
Indemnitee is not entitled to be indemnified against such Expenses by the
Company pursuant to this Agreement or otherwise. Each written undertaking to
pay amounts advanced must be an unlimited general obligation but need not be
secured, and shall be accepted without reference to financial ability to make
repayment.




     12. Remedies of the Indemnitee in Cases of Determination not to Indemnify
or to Advance Expenses. In the event that a determination is made that the
Indemnitee is not entitled to indemnification hereunder or if the payment has
not been timely made following a determination of entitlement to
indemnification pursuant to Sections 9 and 10, or if Expenses are not advanced
pursuant to Section 11, the Indemnitee shall be entitled to a final
adjudication in an appropriate court of the State of Delaware or any other
court of competent jurisdiction of the Indemnitee’s entitlement to such
indemnification or advance. Alternatively, the Indemnitee may, at the
Indemnitee’s option, seek an award in arbitration to be conducted by a single
arbitrator chosen by the Indemnitee and approved by the Company, which approval
shall not be unreasonably withheld or delayed. If the Indemnitee and the
Company do not agree upon an arbitrator within 30 days following notice to the
Company by the Indemnitee that it seeks an award in arbitration, the arbitrator
will be chosen pursuant to the rules of the American Arbitration Association
(the “AAA”). The arbitration will be conducted pursuant to the rules of the
AAA and an award shall be made within 60 days following the filing of the
demand for arbitration. The arbitration shall be held in Houston, Harris
County, Texas. The Company shall not oppose the Indemnitee’s right to seek any
such adjudication or award in arbitration or any other claim. Such judicial
proceeding or arbitration shall be made de novo, and the Indemnitee shall not
be prejudiced by reason of a determination (if so made) that the Indemnitee is
not entitled to indemnification. If a determination is made or deemed to have
been made pursuant to the terms of Section 9 or Section 10 hereof that the
Indemnitee is entitled to indemnification, the Company shall be bound by such
determination and shall be precluded from asserting that such determination has
not been made or that the procedure by which such determination was made is not
valid, binding and enforceable. The Company further agrees to stipulate in any
such court or before any such arbitrator that the Company is bound by all the
provisions of this Agreement and is precluded from making any assertions to the
contrary. If the court or arbitrator shall determine that the Indemnitee is
entitled to any indemnification hereunder, the Company shall pay all reasonable
Expenses actually incurred by the Indemnitee in connection with such
adjudication or award in arbitration (including, but not limited to, any
appellate proceedings).



     13. Notification and Defense of Claim. Promptly after receipt by the
Indemnitee of notice of the commencement of any action, suit or proceeding, the
Indemnitee will, if a claim in respect thereof is to be made against the
Company under this Agreement, notify the Company in



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writing of the commencement thereof. The omission by the Indemnitee to so
notify the Company will not relieve the Company from any liability that it may
have to the Indemnitee under this Agreement or otherwise, except to the extent
that the Company may suffer material prejudice by reason of such failure.
Notwithstanding any other provision of this Agreement, with respect to any such
action, suit or proceeding as to which the Indemnitee gives notice to the
Company of the commencement thereof:





     (a) The Company will be entitled to participate therein at
its own expense.




     (b) Except as otherwise provided in this Section 13(b), to
the extent that it may wish, the Company, jointly with any other
indemnifying party similarly notified, shall be entitled to assume
the defense thereof with counsel reasonably satisfactory to the
Indemnitee. After notice from the Company to the Indemnitee of
its election to so assume the defense thereof, the Company shall
not be liable to the Indemnitee under this Agreement for any legal
or other Expenses subsequently incurred by the Indemnitee in
connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. The Indemnitee
shall have the right to employ the Indemnitee’s own counsel in
such action, suit or proceeding, but the fees and Expenses of such
counsel incurred after notice from the Company of its assumption
of the defense thereof shall be at the expense of the Indemnitee
unless (i) the employment of counsel by the Indemnitee has been
authorized by the Company, (ii) the Indemnitee shall have
reasonably concluded that there may be a conflict of interest
between the Company and the Indemnitee in the conduct of the
defense of such action and such determination by the Indemnitee
shall be supported by an opinion of counsel, which opinion shall
be reasonably acceptable to the Company, or (iii) the Company
shall not in fact have employed counsel to assume the defense of
the action, in each of which cases the fees and Expenses of
counsel shall be at the expense of the Company. The Company shall
not be entitled to assume the defense of any action, suit or
proceeding brought by or on behalf of the Company or as to which
the Indemnitee shall have reached the conclusion provided for in
clause (ii) above.




     (c) The Company shall not be liable to indemnify the
Indemnitee under this Agreement for any amounts paid in settlement
of any action, suit or proceeding affected without its written
consent, which consent shall not be unreasonably withheld. The
Company shall not be required to obtain the consent of the
Indemnitee to settle any action, suit or proceeding which the
Company has undertaken to defend if the Company assumes full and
sole responsibility for such settlement and such settlement grants
the Indemnitee a complete and unqualified release in respect of
any potential liability.



     14. Other Right to Indemnification. The indemnification and advancement
of Expenses provided by this Agreement are cumulative, and not exclusive, and
are in addition to any other rights to which the Indemnitee may now or in the
future be entitled under any provision of the Bylaws or Certificate of the
Company, the Certificate or Bylaws or other



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governing documents of any direct or indirect wholly-owned subsidiary of
the Company, any vote of the stockholders or Disinterested Directors, any
provision of law or otherwise. Except as required by applicable law, the
Company shall not adopt any amendment to its Bylaws or Certificate the effect
of which would be to deny, diminish or encumber the Indemnitee’s right to
indemnification under this Agreement.




     15. Director and Officer Liability Insurance. The Company shall, from time
to time, make the good faith determination whether or not it is practicable for
the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors of the
Company, and any direct or indirect wholly-owned subsidiary of the Company,
with coverage for losses from wrongful acts, or to ensure the Company’s
performance of its indemnification obligations under this Agreement. Among
other considerations, the Company will weigh the costs of obtaining such
insurance coverage against the protection afforded by such coverage.
Notwithstanding the foregoing, the Company shall have no obligation to obtain
or maintain such insurance if the Company determines in good faith that such
insurance is not necessary or is not reasonably available, if the premium costs
for such insurance are disproportionate to the amount of coverage provided, if
the coverage provided by such insurance is limited by exclusions so as to
provide an insufficient benefit or if the Indemnitee is covered by similar
insurance maintained by a direct or indirect wholly-owned subsidiary of the
Company. However, the Company’s decision whether or not to adopt and maintain
such insurance shall not affect in any way its obligations to indemnify its
officers and directors under this Agreement or otherwise. In all policies of
director and officer liability insurance, the Indemnitee shall be named as an
insured in such a manner as to provide the Indemnitee the same rights and
benefits as are accorded to the most favorably insured of the Company’s
directors, if the Indemnitee is a director; or of the Company’s officers, if
the Indemnitee is not a director of the Company, but is an officer. The
Company agrees that the provisions of this Agreement shall remain in effect
regardless of whether liability or other insurance coverage is at any time
obtained or retained by the Company; except that any payments made to, or on
behalf of, the Indemnitee under an insurance policy shall reduce the
obligations of the Company hereunder.



     16. Spousal Indemnification. The Company will indemnify the Indemnitee’s
spouse to whom the Indemnitee is legally married at any time the Indemnitee is
covered under the indemnification provided in this Agreement (even if the
Indemnitee did not remain married to him or her during the entire period of
coverage) against any pending or threatened action, suit, proceeding or
investigation for the same period, to the same extent and subject to the same
standards, limitations, obligations and conditions under which the Indemnitee
is provided indemnification herein, if the Indemnitee’s spouse (or former
spouse) becomes involved in a pending or threatened action, suit, proceeding or
investigation solely by reason of his or her status as the Indemnitee’s spouse,
including, without limitation, any pending or threatened action, suit,
proceeding or investigation that seeks damages recoverable from marital
community property, jointly-owned property or property purported to have been
transferred from the Indemnitee to his/her spouse (or former spouse). The
Indemnitee’s spouse or former spouse also may be entitled to advancement of
Expenses to the same extent that the Indemnitee is entitled to advancement of
Expenses herein. The Company may maintain insurance to cover its obligation
hereunder with respect to the Indemnitee’s spouse (or former spouse) or set
aside assets in a trust or escrow funds for that purpose.



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     17. Intent. This Agreement is intended to be broader than any statutory
indemnification rights applicable in the State of Delaware and shall be in
addition to any other rights the Indemnitee may have under the Company’s
Certificate, Bylaws, applicable law or otherwise. To the extent that a change
in applicable law (whether by statute or judicial decision) permits greater
indemnification by agreement than would be afforded currently under the
Company’s Certificate, Bylaws, applicable law or this Agreement, it is the
intent of the parties that the Indemnitee enjoy by this Agreement the greater
benefits so afforded by such change.



     18. Attorney’s Fees and Other Expenses to Enforce Agreement. In the event
that the Indemnitee is subject to or intervenes in any proceeding in which the
validity or enforceability of this Agreement is at issue or seeks an
adjudication or award in arbitration to enforce the Indemnitee’s rights under,
or to recover damages for breach of, this Agreement the Indemnitee, if he/she
prevails in whole or in part in such action, shall be entitled to recover from
the Company and shall be indemnified by the Company against any actual expenses
for attorneys’ fees and disbursements reasonably incurred by the Indemnitee.



     19. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of the Indemnitee, who shall execute all documents required and
shall do all acts that may be necessary to secure such rights and to enable the
Company effectively to bring suit to enforce such rights.



     20. Effective Date. The provisions of this Agreement shall cover claims,
actions, suits or proceedings whether now pending or hereafter commenced and
shall be retroactive to cover acts or omissions or alleged acts or omissions
which heretofore have taken place. The Company shall be liable under this
Agreement, pursuant to Sections 4 and 5 hereof, for all acts of the Indemnitee
while serving as a director and/or officer, notwithstanding the termination of
the Indemnitee’s service, if such act was performed or omitted to be performed
during the term of the Indemnitee’s service to the Company.



     21. Duration of Agreement. This Agreement shall continue until and
terminate upon the later of: (a) ten years after the Indemnitee has ceased to
occupy any of the positions or have any relationships described in Sections 4
and 5 of this Agreement and (b) the final termination of all pending or
threatened actions, suits, proceedings or investigations to which the
Indemnitee may be subject by reason of the fact that he/she is or was a
director, officer, employee, agent or fiduciary of the Company, or any direct
or indirect wholly-owned subsidiary of the Company, or is or was serving at the
request of the Company as a director, officer, employee of any other entity,
including, but not limited to, another corporation, partnership, limited
liability company, employee benefit plan, joint venture, trust or other
enterprise, or by reason of any act or omission by the Indemnitee in any such
capacity. The indemnification provided under this Agreement shall continue as
to the Indemnitee even though he/she may have ceased to be a director or
officer of the Company, or any direct or indirect wholly-owned subsidiary of
the Company. This Agreement shall be binding upon the Company and its
successors and assigns, including, without limitation, any corporation or other
entity which may have acquired all or substantially all of the Company’s assets
or business or into which the Company may be consolidated or merged, and shall
inure to the benefit of the Indemnitee and his/her spouse, successors, assigns,
heirs, devisees, executors, administrators or other legal representations. The
Company shall require any successor or assignee (whether direct or



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indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by written
agreement in form and substance reasonably satisfactory to the Company and the
Indemnitee, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession or assignment had taken place.




     22. Disclosure of Payments. Except as expressly required by any federal
securities laws or other federal or state law, neither party hereto shall
disclose any payments under this Agreement unless prior approval of the other
party is obtained.



     23. Severability. If any provision or provisions of this Agreement shall
be held invalid, illegal or unenforceable for any reason whatsoever, (a) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including, but not limited to, all portions of any Sections of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby and (b) to
the fullest extent possible, the provisions of this Agreement (including, but
not limited to, all portions of any paragraph of this Agreement containing any
such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent manifest by the provision held invalid, illegal or
unenforceable.



     24. Counterparts. This Agreement may be executed by one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute one and the same agreement. Only
one such counterpart signed by the party against whom enforceability is sought
shall be required to be produced to evidence the existence of this Agreement.



     25. Captions. The captions and headings used in this Agreement are
inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.



     26. Entire Agreement, Modification and Waiver. This Agreement constitutes
the entire agreement and understanding of the parties hereto regarding the
subject matter hereof, and no supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both parties hereto.
No waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provisions hereof (whether or not similar) nor
shall such waiver constitute a continuing waiver. No supplement, modification
or amendment to this Agreement shall limit or restrict any right of the
Indemnitee under this Agreement in respect of any act or omission of the
Indemnitee prior to the effective date of such supplement, modification or
amendment unless expressly provided therein.



     27. Notices. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given if
(a) delivered by hand with receipt acknowledged by the party to whom said
notice or other communication shall have been directed, (b) mailed by certified
or registered mail, return receipt requested with postage prepaid, on the date
shown on the return receipt or (c) delivered by facsimile transmission on the
date shown on the facsimile machine report:



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	 	(a)
	 	If to the Indemnitee to:
	 
	 	 	 	 
	

	 	 	 	13914 I.O. Court
	

	 	 	 	Willis, Texas 77318
	 
	 	 	 	 
	

	 	(b)
	 	If to the Company, to:
	 
	 	 	 	 
	

	 	 	 	Baker Hughes Incorporated
	

	 	 	 	Attn: General Counsel
	

	 	 	 	3900 Essex Lane, Suite 1200
	

	 	 	 	Houston, Texas 77027-5177
	

	 	 	 	Facsimile: (713) 439-8472






or to such other address as may be furnished to the Indemnitee by the Company
or to the Company by the Indemnitee, as the case may be.




     28. Governing Law. The parties hereto agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware, applied without giving effect to any conflicts of law
principles.



     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.


	 	 	 	 	 
	 	BAKER HUGHES INCORPORATED

 	 
	 	By  	/s/ H. John Riley, Jr.
 	 
	 	 	        H. John Riley, Jr. 	 
	 	 	        Lead Director and Chairman

        of the Compensation Committee 	 
	 



	 	 	 	 	 
	 	INDEMNITEE:

 	 
	 	By  	                                           /s/ Chad C. Deaton
 	 





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