Document:

exv10wxly

 

Exhibit (10)(1)

DEFINED CONTRIBUTION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

The objective of the Defined Contribution Supplemental Executive Retirement Plan is to attract and
motivate top level executives, including those recruited in mid- or late-career. This Supplemental
DC Plan is designed to provide additional retirement income to supplement that provided under the
applicable Qualified Plans.

This Supplemental DC Plan is effective April 1, 2006 for employees hired into or promoted to a
Covered Executive Position on or after April 1, 2006 and includes amendments through December 1,
2007. This Supplemental DC Plan replaces any Cash Balance SERP benefit credited to any Employee
from July 1, 2003 to April 1, 2006. An amount equal to the accrued Cash Balance SERP has been
transferred to this Plan and placed as a contribution to the Participant Account.

SECTION I. DEFINITIONS

Whenever used in this Supplemental DC Plan, the following terms shall have the respective meanings
set forth below, unless the context clearly indicates otherwise.

	 	 	 
	Account or Account
Balance

	 	The notional amount credited to a Participant or beneficiary in
accordance with the provisions of this Supplemental DC Plan.
	 
	 	 
	Code

	 	The Internal Revenue Code of 1986, as amended.
	 
	 	 
	Company

	 	CMS Energy Corporation and its subsidiaries which are directly
or indirectly owned 80% or greater. For purposes of
determining a Separation from Service from the Company, the
Company shall include CMS Energy Corporation and all persons
or entities that would be considered a single employer under
Code Section 414(b) or Section 414(c), using for such purposes
a “50 percent” standard, instead of an “80 percent” standard,
under such provisions.
	 
	 	 
	Company Contribution

	 	The amount, which is a notional amount, contributed by the
Employer on behalf of a Participant in accordance with Section
III of this Supplemental DC Plan.
	 
	 	 
	Compensation

	 	A Participant’s regular salary from an Employer, before any
adjustment for deferrals under any deferred compensation plan
of the Company, any reductions for contributions to the Savings
Plan, any reductions under any welfare benefit plan or
deductions for taxes or other withholdings, but excluding any
bonus, imputed income, incentive or other premium pay.
	 
	 	 
	Covered Executive
Position

	 	A position with a Company where the Employee is classified as a
Salary Grade 24 or above.
	 
	 	 
	DB SERP

	 	The Defined Benefit Supplemental Executive Retirement Plan.
The DB SERP Plan is closed for new participants as of April 1,
2006.

 

 

	 	 	 
	Employee

	 	Any person, employed by the Company as an exempt salaried
employee at Salary Grade 24 or above, and on the payroll and
employment records system as an employee, (excluding
consultants, advisors and independent contractors).
	 
	 	 
	Employer

	 	The entity within the Company that employs the Participant.
	 
	 	 
	Incentive
Compensation

	 	An amount paid to a Participant in a Plan Year under the terms
of the Annual Employee Incentive Compensation Plan or the
Annual Officer Incentive Compensation Plan.
	 
	 	 
	Participant

	 	Any Employee who meets or met the eligibility requirements of
the Plan and for whom Contributions are made or were previously
made under the Plan which have not been distributed.
	 
	 	 
	Payment Event

	 	The time when the Participant may receive the benefits deferred
under the Plan as described in Section VI.1.
	 
	 	 
	Payment Term

	 	The form and duration of any payment to a Participant or
beneficiary as described in Section VI.2.
	 
	 	 
	Plan or
Supplemental DC
Plan

	 	The Defined Contribution Supplemental Executive Retirement Plan.
	 
	 	 
	Plan Administrator

	 	The Benefit Administration Committee as selected by the Chief
Executive Officer and Chief Financial Officer of the Company to
manage the plan.
	 
	 	 
	Plan Record Keeper

	 	The person(s) or entity named as such by the Plan Administrator.
	 
	 	 
	Plan Year

	 	January 1 to December 31 of a calendar year.
	 
	 	 
	Qualified Plan

	 	A pension plan providing benefits for a broad group of
employees and meeting the requirements for a qualified plan
under the Code.
	 
	 	 
	Savings Plan

	 	The Savings Plan for Employees of Consumers Energy and other
CMS Energy Companies.
	 
	 	 
	Separation from
Service

	 	If an Employee retires or otherwise has a separation from
service from the Company as defined under Code Section 409A and
any applicable regulations. The Plan Administrator will
determine, consistent with the requirements of Code Section
409A and any applicable regulations, to what extent a person on
a leave of absence, including on paid sick leave pursuant to
Company policy, has incurred a Separation from Service.
	 
	 	 
	Threshold Limit

	 	The amount as determined from time to time by the Secretary of
the Treasury above which annual compensation is disregarded for
Qualified Plans. As of January 1, 2007, the Threshold Limit is
$225,000.

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SECTION II. ELIGIBILITY AND ENROLLMENT

Each Employee in a Covered Executive Position who is not a participant in the DB SERP is a
Participant in this Plan as of the date of hire or promotion to a Covered Executive Position.
Enrollment is automatic upon eligibility to participate.

SECTION III. COMPANY CONTRIBUTION

This Supplemental DC Plan is a defined contribution non-qualified deferred compensation plan. The
benefit provided for under this Supplemental DC Plan is equal to the Company Contribution to the
Participant Account as well as the gains or losses attributable to the performance of the
investments selected by the Participant. The Company Contribution will be credited to the
Participant Account not less frequently than annually and shall be determined based upon the
Participant’s classification as of the date the Company Contribution is credited to the Participant
Account. The Company Contribution shall be based upon the Participant’s salary grade and
Compensation as follows:

	 	1.	 	A Participant in Salary Grades 24 through E-2 will receive a Company Contribution equal
to 5% of Compensation in excess of the Threshold Limit and 5% of any Incentive Compensation
paid to the Participant during the Plan Year.
	 
	 	2.	 	A Participant in Salary Grades E-3 through E-5 will receive a Company Contribution
equal to 5% of Compensation up to the Threshold Limit, plus 10% of Compensation in excess
of the Threshold Limit and 10% of any Incentive Compensation paid to the Participant during
the Plan Year.
	 
	 	3.	 	A Participant in Salary Grades E-6 and higher will receive a Company Contribution equal
to 10% of Compensation up to the Threshold Limit, plus 15% of Compensation in excess of the
Threshold Limit and 15% of any Incentive Compensation paid to the Participant during the
Plan Year.

Any reference to Incentive Compensation paid to a Participant during a Plan Year includes amounts
that would have been paid but for the election of the Participant to defer any amount of Incentive
Compensation.

SECTION IV. INVESTMENTS

	 	1.	 	Designation of Investments. The Participant shall specify the proportions of the
Company Contribution to be treated as if invested among the various options available as
investment funds under this Supplemental DC Plan. A Participant who already has deferred
amounts under a nonqualified deferred compensation plan of the Company will automatically
have his or her existing investment profile apply to the Company Contribution.

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All determinations of the available investments by the Plan Administrator are final and
binding upon the Participants. If a Participant fails to make an investment election, then
such amounts shall be accounted for as if contributed to a Lifestyle Fund (as that term is
defined in the Savings Plan) with a date that is applicable to the Participant’s age 65,
rounded up, or such other investments as determined by the Plan Administrator.

	 	2.	 	Changes in Investment Elections. All investment elections may be changed prospectively
at the Participant’s election at any time prior to the payment of the benefit subject to
any applicable restrictions imposed by the Plan Administrator, the Plan Record Keeper or by
any laws and regulations.
	 
	 	3.	 	Determination of Investment Earnings. All gains and losses will be based upon the
performance of the investments selected by the Participant from the date any Company
Contribution is first credited to the Participant Account. If the Company elects to fund
the Accounts for its convenience as described in Section VIII.5, then investment
performance will be based on the balance in the Participant Account pursuant to the
customary procedures of the Plan Record Keeper.

V. VESTING AND RECOUPMANT

	 	1.	 	Vesting. A Participant will be fully vested in this Supplemental DC Plan only upon
completion of five full years of service as a Participant in this Supplemental DC Plan and
attainment of age 62. During the first five years of participation, the Participant’s
vested percentage is 0%. Upon completing five full years as a Participant in this
Supplemental DC Plan, the Account Balance will vest linearly from the date of plan
eligibility to age 62; ratably each year such that at age 62 the benefit is 100 percent
vested. As an example, an Employee hired or promoted on June 1, 2007 at age 52 will not
receive any vesting credit until June 1, 2012 at age 57. At that time the Participant will
be 50% vested, as there are 10 years from the date of inclusion in the Plan to age 62, so
the Participant vests 10% for each year in the Plan. At age 62 the Participant is 100%
vested. An Employee first hired at age 57 or older will be 100% vested upon five years of
participation in this Supplemental DC Plan. In determining the percentage of vesting, the
Participant’s age will be counted using whole years only without rounding and without
regard to the number of months past the Participant’s last birthday. Notwithstanding the
above, if a Participant incurs a “disability”, as that term is defined under Code Section
409A and any relevant regulations, then such Participant shall vest in the entire Account
Balance as of the disability date. The Account Balance will vest in full upon the death of
a Participant.
	 
	 	 	 	As the Company Contributions vest, the Participant’s Account Balance will be reduced by an
amount equal to the employee’s share of any applicable FICA and FUTA taxes in accordance
with the applicable regulations under Code Section 409A. To the extent

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	 	 	 	required by law, the Participant will be imputed with income for the value of the taxes paid
through the reduction of the Account Balance.

		2.	 	Recoupment. Any Company Contributions are also subject to recoupment under the CMS
Energy Recoupment Policy Relating to Financial Restatements.

VI. PAYMENT OPTIONS

	 	1.	 	Payment Events. This Supplemental DC Plan provides for payment of benefits upon
Separation from Service or as otherwise specified in this Plan document.
	 
	 	2.	 	Payment Term. Each newly hired or promoted Participant will receive his or her payment
in a single sum in the later of (i) January of the year following the year of Separation
from Service or if later, (ii) the first day of the seventh month following Separation from
Service.
	 
	 	3.	 	Changes in Payment Options. Subsequent changes to the original Payment Term which
would accelerate the receipt of benefits from the Plan are not permitted, except that the
Plan Administrator may at its sole discretion elect to accelerate payments to the extent
permitted by Code Section 409A and applicable regulations. A subsequent election by a
Participant to change the Payment Term can be made when both of the following conditions
are satisfied:
	 
	 	 	 	(a) any such election may not take effect until at least 12 months after the date on which
the election is made; and
	 
	 	 	 	(b) the payment(s) with respect to which such election is made is deferred for a period of
not less than 5 years from the date such payment would otherwise have been made or, in the
case of installment payments, 5 years from the date the first installment was scheduled to
be paid.
	 
	 	 	 	When making a subsequent election, the Participant may elect to receive either a single sum
or a series of annual installment payments over a period from two (2) years to fifteen (15)
years. If installment payments are elected, each installment payment shall be equal to a
fractional amount of the original balance in the Account the numerator of which is one and
the denominator of which is the number of installment payments remaining. For example, a
series of five installment payments will result in a benefit equal to one fifth of the
Account Balance for the first installment, one fourth of the Account Balance for the second
installment, one third of the Account Balance for the third installment one half of the
Account Balance for the fourth year and in the fifth installment the Account Balance is paid
in full. Each installment, because of gains and losses may not be identical to the prior
installment.

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	 	4.	 	Payment Upon the Death of the Participant. In the event of the death of a Participant
prior to the start of any payments under the Plan, the Participant’s named beneficiary or
beneficiaries shall receive the entire Account Balance under the Plan within 90 days
following the death of the Participant. In the event of the death of a Participant after
commencing payment of benefits, the Participant’s named beneficiary or beneficiaries shall
receive the remaining Account Balance in a single sum within 90 days following the death of
the Participant. If the Participant fails to name a beneficiary, the Account Balance will
be paid in a single sum to his or her estate within 90 days following the death of the
Participant. In no event may any recipient designate a year of payment for an amount
payable upon the death of the Participant.

VII. NON-ALIENATION OF BENEFITS

Except as may be required by a domestic relations order as described in Code Section 414(p)(1)(B),
in no event shall the Plan Administrator pay or assign over any part of the interest of a
Participant under the Plan, or his or her beneficiary or beneficiaries, which is payable,
distributable or credited to his or her Account, to any assignee or creditor of such Participant or
his or her beneficiary or beneficiaries. Prior to the time of distribution, a Participant, his or
her beneficiary or beneficiaries or legal representative shall have no right by way of anticipation
or otherwise to assign or otherwise dispose of any interest which may be payable, distributable or
credited to the Account of the Participant or his or her beneficiary or beneficiaries under the
Plan, and every attempted assignment or other disposition of such interest in the Plan shall not be
merely voidable but absolutely void.

VIII. ADMINISTRATION OF PLAN

	 	1.	 	Plan Administrator. The Plan Administrator shall have authority to take necessary
actions to implement the Plan and is granted full discretionary authority to apply the
terms of the Plan, make administrative rulings, interpret the Plan and make any other
determinations with respect to all aspects of the Plan. Any Participant with a claim under
the Plan must make a written request within 60 days to the Plan Administrator for a
determination on the claim. If the claim involves a benefit or issue relevant to an
individual who has been appointed to the Benefit Administration Committee, the individual
so affected shall not participate in any determination on such issue. The Plan
Administrator may hire such experts, accountants, or attorneys as it deems necessary to
make a decision and may rely on the opinion of such persons in making a determination. The
Plan Administrator shall notify the Participant of its determination in writing within 60
days of the claim unless the Plan Administrator advises the Participant that it requires
additional time (not to exceed 90 days) to complete its investigation.. The Participant
may, within 60 days from the date the determination was mailed to the Participant, request
a redetermination of the matter, and provide any additional information for the Plan
Administrator to consider in its redetermination. The Plan Administrator will issue its
opinion within 60 days of the request for redetermination unless the Plan administrator

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	 	 	 	advised the Participant that it requires additional time (not to exceed 90 days) to complete
its redetermination of the matter.

	 	2.	 	Administrative Expenses. Any administrative expenses, costs, charges or fees, to the
extent not paid by the Company are to be charged to the Participant Accounts in accordance
with the Plan Record Keeper’s normal procedures.
	 
	 	3.	 	Amendment or Termination of the Plan. The Company may amend or terminate the Plan at
anytime. Upon termination, any vested Account Balance will remain in the Plan and be paid
out in accordance with the Payment Term. While the Account Balance will continue to be
subject to investment gains and losses, no further Company Contributions will be made to
the Plan. The Plan Administrator is authorized to make any amendments that are deemed
necessary or desirable to comply with any applicable laws, regulations or orders or as may
be advised by counsel or to clarify the terms and operation of the Plan. Notwithstanding
the above, no termination of the Plan will accelerate any benefits under the Plan unless
such termination is consistent in all manners with the requirements of Section 409A of the
Internal Revenue Code and any applicable regulations, with respect to when a terminated
plan may accelerate payment to a Participant.
	 
	 	4.	 	Naming a Beneficiary. A Participant may at any time file a beneficiary designation
with the Plan Record Keeper. Only one such beneficiary designation, the most recent
received by the Plan Record Keeper, is effective at any time. No beneficiary designation
is effective until it is received by the Plan Record Keeper. If a Participant fails to
name a beneficiary, any benefit payable under the Plan will be paid to the Participant’s
estate. A Participant must name a separate beneficiary for each non qualified plan.
	 
	 	5.	 	Funding. This is an unfunded nonqualified deferred compensation plan. To the extent
the Company elects to place funds with a trustee to pay its future obligations under this
Plan such amounts are placed for the convenience of the Company, remain the property of the
Company and the Participant shall have no right to such funds until properly paid in
accordance with the provisions of this Plan. For administrative ease and convenience, such
amounts may be referred to as Participant Accounts, but as such are a notional account only
and are not the property of the Participant. Such amounts are subject to the claims of the
creditors of the Company.

	 	 	 	 	 	 	 
	ATTEST:

	 	 
	 	CMS ENERGY CORPORATION
	 	 
	 
	 	 	 	 	 	 
	/s/

	 	 	 	/s/	 	 
	 

	 	 	 	 	 	 
	Vice President and Secretary

	 	 	 	Chief Executive Officer, CMS Energy and
Consumers Energy	 	 

Date: ________________________________

7exv10w17

 

Exhibit 10.17

BAKER HUGHES INCORPORATED

EXECUTIVE SEVERANCE PLAN

(As Amended and Restated

Effective January 1, 2005)

 

 

BAKER HUGHES INCORPORATED

EXECUTIVE SEVERANCE PLAN

(As Amended and Restated Effective January 1, 2005)

     WHEREAS, Baker Hughes Incorporated, a corporation organized and existing under the laws of the
State of Delaware (the “Company”), recognizes that one of its most valuable assets is its key
management executives;

     WHEREAS, the Company would like to provide severance benefits in the event that a key
management executive is involuntarily terminated in certain circumstances;

     WHEREAS, the Company previously established the Baker Hughes Incorporated Executive Severance
Plan (the “Plan”) to provide for the payment of severance pay in appropriate circumstances; and

     WHEREAS, the Plan is a constituent benefit program maintained under the Baker Hughes
Incorporated Welfare Benefits Plan;

     WHEREAS, the Company desires to amend and restate the Plan;

     NOW, THEREFORE, the Company adopts the amendment and restatement of the Program effective
January 1, 2005, except insofar as a later effective date is specified.

 

 

BAKER HUGHES INCORPORATED

EXECUTIVE SEVERANCE PLAN

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 
	 
	1.	 	ESTABLISHMENT, OBJECTIVE AND DURATION	 	 	1	 
	 	 	1.1	 	Establishment	 	 	1	 
	 	 	1.2	 	Objective	 	 	1	 
	 
	 	1.3	 	Duration	 	 	 	 	1	 
	2.	 	DEFINITIONS	 	 	1	 
	 	 	2.1	 	Capitalized Terms	 	 	1	 
	 	 	2.2	 	Number and Gender	 	 	4	 
	 	 	2.3	 	Headings	 	 	4	 
	3.	 	ELIGIBILITY	 	 	5	 
	4.	 	BENEFITS	 	 	5	 
	 
	 	 	 	(a)	 	Base Compensation	 	 	5	 
	 
	 	 	 	(b)	 	Outplacement	 	 	5	 
	5.	 	OTHER BENEFIT PROGRAMS; PERQUISITES; COMPANY PROPERTY; EXPENSE ACCOUNT	 	 	6	 
	 	 	5.1	 	Other Benefit Programs	 	 	6	 
	 	 	5.2	 	Perquisites; Company Property; Expense Account	 	 	6	 
	 
	 	 	 	(a)	 	Perquisites	 	 	6	 
	 
	 	 	 	(b)	 	Company Property	 	 	6	 
	 
	 	 	 	(c)	 	Expense Account	 	 	6	 
	6.	 	TIME OF BENEFITS PAYMENTS	 	 	7	 
	7.	 	WITHHOLDING	 	 	7	 
	8.	 	REDUCTION FOR OTHER SEVERANCE BENEFITS; NON-EXCLUSIVITY OF RIGHTS; STATUTORY
SEVERANCE	 	 	7	 
	 	 	8.1	 	Reduction for Other Severance Benefits	 	 	7	 
	 	 	8.2	 	Non-Exclusivity of Rights	 	 	7	 
	 	 	8.3	 	Statutory Severance	 	 	7	 
	9.	 	DEATH OF PARTICIPANT	 	 	8	 
	10.	 	NON-SOLICITATION; CONFIDENTIAL INFORMATION	 	 	8	 
	 	 	10.1	 	Non-Solicitation	 	 	8	 

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TABLE
OF CONTENTS
(continued)

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 
	 
	 	 	10.2	 	Confidential Information	 	 	8	 
	11.	 	UNFUNDED ARRANGEMENT	 	 	8	 
	12.	 	ADMINISTRATION OF THE PLAN	 	 	9	 
	 	 	12.1	 	Plan Administrator	 	 	9	 
	 	 	12.2	 	Records and Procedures	 	 	9	 
	 	 	12.3	 	Self-Interest of Plan Administrator	 	 	9	 
	 	 	12.4	 	Compensation and Bonding	 	 	9	 
	 	 	12.5	 	Plan Administrator Powers and Duties	 	 	9	 
	 	 	12.6	 	Reliance Upon Documents, Instruments, etc	 	 	10	 
	13.	 	AMENDMENT AND TERMINATION	 	 	10	 
	14.	 	CLAIMS REVIEW PROCEDURES; CLAIMS APPEALS PROCEDURES	 	 	10	 
	 	 	14.1	 	Claims Review Procedures	 	 	10	 
	 	 	14.2	 	Claims Appeals Procedures	 	 	11	 
	15.	 	PARTICIPATION IN THE PLAN BY AFFILIATES	 	 	12	 
	 	 	15.1	 	Adoption Procedure	 	 	12	 
	 	 	15.2	 	No Joint Venture Implied	 	 	13	 
	16.	 	DISPUTED PAYMENTS AND FAILURES TO PAY	 	 	13	 
	17.	 	MISCELLANEOUS	 	 	13	 
	 	 	17.1	 	Plan Not an Employment Contract	 	 	13	 
	 	 	17.2	 	Alienation Prohibited	 	 	14	 
	 	 	17.3	 	Severability	 	 	14	 
	 	 	17.4	 	Binding Effect	 	 	14	 
	 	 	17.5	 	Arbitration	 	 	14	 
	 	 	17.6	 	Governing Law	 	 	14	 
	Exhibit A	 	Schedule	 	of Benefits	 	 	16	 

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BAKER HUGHES INCORPORATED

EXECUTIVE SEVERANCE PLAN

1. ESTABLISHMENT, OBJECTIVE AND DURATION

     1.1 Establishment. Baker Hughes Incorporated, a Delaware corporation, previously established
a severance plan for certain designated employees to be known as the “Baker Hughes Incorporated
Executive Severance Plan” (the “Plan”).

     1.2 Objective. The Plan is designed to attract and retain certain designated employees of the
Company (defined below) and to provide replacement income if their employment is terminated because
of Involuntary Terminations.

     1.3 Duration. The Plan, as it may be amended by the Board (defined below) from time to time,
shall remain in effect until the Board terminates the Plan.

2. DEFINITIONS

     2.1 Capitalized Terms. Whenever used in this Plan, the following capitalized terms in this
Section 2.1 shall have the meanings set forth below:

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

     “Baker Hughes” means Baker Hughes Incorporated, a Delaware corporation.

     “Base Compensation” means a Participant’s base salary or wages measured on an annual
basis (as defined in section 3401(a) of the Code for purposes of federal income tax
withholding) from the Company, modified by including any portion thereof that such
Participant could have received in cash in lieu of (i) any deferrals made by the Participant
pursuant to the Baker Hughes Incorporated Supplemental Retirement Plan or (ii) elective
contributions made on his behalf by the Company pursuant to a qualified cash or deferred
arrangement described in section 401(k) of the Code and any elective contributions under a
cafeteria plan described in section 125, and modified further by excluding any bonus,
incentive compensation, commissions, expense reimbursements or other expense allowances,
fringe benefits (cash and noncash), moving expenses, deferred compensation (other than
elective contributions to the Company’s qualified cash or deferred arrangement described in
section 401(k) of the Code), welfare benefits as defined in ERISA, overtime pay, special
performance compensation amounts and severance compensation.

     “Benefits” means the severance benefits a Participant is entitled to receive pursuant
to Section 4 hereof. Other benefits as specified in Section 5 are not considered severance
benefits for purposes of the Plan.

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     “Board” means the Board of Directors of Baker Hughes.

     “Cause” means (i) the willful and continued failure by the Participant to substantially
perform the Participant’s duties with the Company (other than any such failure resulting
from the Participant’s incapacity due to physical or mental illness) after a written demand
for substantial performance is delivered to the Participant by the Board (or by a delegate
appointed by the Board), which demand specifically identifies the manner in which the Board
believes that the Participant has not substantially performed the Participant’s duties, or
(ii) the willful engaging by the Participant in conduct which is demonstrably and materially
injurious to the Company or any of its Affiliates, monetarily or otherwise. For purposes of
Sections (i) and (ii) of this definition, (A) no act, or failure to act, on the
Participant’s part shall be deemed “willful” if done, or omitted to be done, by the
Participant in good faith and with reasonable belief that the act, or failure to act, was in
the best interest of the Company and (B) in the event of a dispute concerning the
application of this provision, no claim by the Company that Cause exists shall be given
effect unless the Company establishes to the Board by clear and convincing evidence that
Cause exists.

     “Code” means the Internal Revenue Code of 1986, as amended, or any successor act.

     “Committee” means the Administrative Committee appointed by the Board.

     “Company” means Baker Hughes or an Affiliate that adopts the Plan pursuant to the
provisions of Section 15.

     “Confidential Information” means any information, ideas, processes, methods, designs,
devices, inventions, data, techniques, models and other information developed or used by the
Company or any of its Affiliates and not generally known in the relevant trade or industry
relating to the Company’s or any Affiliate’s products, services, businesses, operations,
employees, customers or suppliers, whether in tangible or intangible form, which gives the
Company or any of its Affiliates a competitive advantage, including, without limitation,
(i) trade secrets; (ii) information relating to existing or contemplated products, services,
technology, designs, processes, formulae, research or product developments; (iii)
information relating to business plans or strategies, sales or marketing methods, methods of
doing business, prices of sales or services, customer lists, customer usages and/or
requirements, supplier information (including the prices of supplies); and (iv) any other
confidential information which either the Company or any of its Affiliates may reasonably
have the right to protect by patent, copyright or by keeping it secret and confidential.
Confidential Information also includes any of the foregoing information of third parties
which the Company is obligated to maintain as confidential. Confidential Information does
not include (i) information that is or becomes generally available to the public other than
as a result of disclosure by the Participant or by any individual or entity to which the
Participant delivered such information; (ii) information that becomes available to the
Participant from a source that is not bound by a confidentiality agreement with the Company
or an

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Affiliate; or (iii) information approved for release by written authorization of the
Company.

     “Continuous Service” means a Participant’s service for the Company and Affiliates
commencing on his most recent date of hire by the Company or an Affiliate and ending on the
date of the complete severance of the Participant’s employment relationship with the Company
or an Affiliate without a contemporaneous transfer to the employ of the Company or any
Affiliate. For this purpose, a Participant will not be treated as having a new date of hire
if he is directly transferred from the employ of the Company or an Affiliate to the employ
of an Affiliate or the Company.

     “Employment Termination Date” means the date on which the employment relationship
between the Participant and the Company is terminated due to an Involuntary Termination.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any
successor act.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor
act.

     “FICA” means the Federal Insurance Contributions Act, as amended, or any successor act.

     “Grandfathered Participant” means an individual who is not classified as executive
grade under the Company’s payroll system but who has been designated by the Committee as
being eligible to participate in the Plan. The Committee shall specify whether a particular
Grandfathered Participant is to be treated in the same manner as a Level 3/Salary Grade E2
Participant or a Level 4/Salary Grade E3 Participant for purposes of the Plan.

     “Involuntary Termination” means the complete severance of a Participant’s employment
relationship with the Company (i) because the Participant’s position is eliminated, (ii)
because the Participant and the Company agree to the Participant’s resignation of his
position at the request of the Company, (iii) which occurs in conjunction with, and during
the period that begins 90 days before and ends 180 days after, an acquisition, merger,
spin-off, reorganization (either business or personnel), facility closing or a
discontinuance of the operations of the divisions in which the Participant is employed or
(iv) for any other reason which is deemed an Involuntary Termination by the Plan
Administrator. An Involuntary Termination does not include (i) a termination for Cause,
(ii) a transfer of employment from one Company to another Company or a transfer of
employment to a venture or entity in which the Company or an Affiliate has any equity
interest, (iii) a temporary absence, such as a Family and Medical Leave Act leave or a
temporary layoff in which a Participant retains entitlement to re-employment, (iv) the
Participant’s death, disability or Retirement or (v) a voluntary termination by the
Participant.

-3-

 

     “Participant” means an individual who is (i) employed in the services of the Company,
(ii) (a) classified as executive grade under the Company’s payroll system categories or (b)
classified by the Committee as being a Grandfathered Participant, and (iii) eligible to
participate in the Plan under Section 3.

     “Plan” means the Baker Hughes Incorporated Executive Severance Plan, as amended from
time to time.

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

     “Release Agreement” means the agreement which a Participant is required to execute and
deliver in order to receive the Benefits. The Vice President, Human Resources of Baker
Hughes or his designee may adopt more than one form of the Release Agreement to comply with
or take into account the laws of different jurisdictions or to take into account individual
circumstances.

     “Retirement” means the Participant’s voluntary termination of his employment after the
Participant has attained at least 55 years of age and has at least ten Years of Service.

     “Section 409A” means section 409A of the Code and the Department of Treasury rules and
regulations issued thereunder.

     “Separation From Service” has the meaning ascribed to that term in Section 409A.

     “Specified Employee” means a person who is, as of the date of the person’s Separation
From Service, a “specified employee” within the meaning of Section 409A, taking into account
the elections made and procedures established in resolutions adopted by the Administrative
Committee of Baker Hughes.

     “Year of Service” means 365 days of Continuous Service.

     2.2 Number and Gender. As used in the Plan, unless the context otherwise expressly requires
to the contrary, references to the singular include the plural, and vice versa; references to the
masculine include the feminine and neuter; references to “including” mean “including (without
limitation)”; and references to Sections and clauses mean the sections and clauses of the Plan.

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

-4-

 

3. ELIGIBILITY

     To be eligible to receive Benefits under the Plan, an individual must (i) be classified as (a)
executive grade under the Company’s payroll system categories on the Employment Termination Date or
(b) a Grandfathered Participant on the Employment Termination Date, (ii) incur an Involuntary
Termination and (iii) execute and deliver to the Plan Administrator a Release Agreement provided to
the Participant by the Plan Administrator by the deadline specified by the Plan Administrator. An
individual who is classified by the Company as an independent contractor is not eligible to
participate in the Plan (even if he is subsequently reclassified by the Internal Revenue Service or
a court as a common law employee of the Company and the Company acquiesces to the
reclassification).

4. BENEFITS

     The Company shall provide a Participant who has satisfied the eligibility requirements of
Section 3 the Benefits described below. No Benefits will be deemed to have accrued prior to a
Participant’s Employment Termination Date, and no rights to Benefits will be deemed to have vested
until the occurrence of an Involuntary Termination.

     Further details of the Benefits described in this Section 4 are provided in Exhibit A.
Subject to the provisions of Section 13, the Plan Administrator may, from time to time, modify the
Benefits to reflect changes in the compensation grade system or for changes in the Benefits
approved by the Board.

     (a) Base Compensation. The Company will pay the Participant a cash severance
benefit based on the Participant’s Base Compensation at the Employment Termination Date,
with the amount of the Base Compensation benefit determined in accordance with the relevant
provisions of Exhibit A. The amount of the Participant’s cash severance benefit will depend
upon the Company’s classification of the Participant for compensation purposes in the
Company’s salary grade system. Notwithstanding the measurement of Base Compensation on an
annual basis, a Participant’s Base Compensation for the month in which the Participant’s
Employment Termination Date occurs will be used in determining the Base Compensation
benefit. A Participant’s Base Compensation severance benefit will be paid in a single sum
cash payment in accordance with the provisions of Section 6.

     (b) Outplacement. Each Participant shall be entitled to outplacement
assistance at the expense of the Company determined in accordance with the relevant
provisions of Exhibit A and this Section 4(c). No cash will be paid in lieu of outplacement
fees and costs. All fees for outplacement assistance shall be paid by the Company directly
to the provider of the outplacement assistance services. The in-kind outplacement
assistance services that are provided pursuant to this Section 4(c) shall not be provided
beyond the last day of the Participant’s second taxable year following the Participant’s
taxable year in which the Participant incurs a Separation From Service.

     Notwithstanding the foregoing, the Company shall provide a Participant who is employed
primarily outside of the United States such Benefits as the Plan Administrator determines taking

-5-

 

into consideration any prohibitions or restrictions and any statutorily mandated severance
benefits applicable to the Participant, with the intent of providing such Participant Benefits that
are generally comparable to the Benefits provided to Participants who are employed primarily in the
United States. It is the express intent of the Company that any Benefits paid to such a
Participant will be in lieu of any statutorily-mandated severance benefits (or other employment
termination related benefits), including, but not limited to, gratuities and similar benefits.

5. OTHER BENEFIT PROGRAMS; PERQUISITES; COMPANY PROPERTY; EXPENSE ACCOUNT

5.1 Other Benefit Programs.

     The Company will pay the Participant, or cause the Participant to be paid, any other
compensation and employee benefits to which he is entitled in accordance with the terms of
the applicable compensation and employee benefit arrangements. Nothing in this Section 5.1
shall be construed to mean that a Participant is entitled to any benefits under any
particular compensation or employee benefit arrangement.

5.2 Perquisites; Company Property; Expense Account.

     (a) Perquisites. A Participant’s perquisites and perquisite allowance shall
terminate effective as of the Participant’s Employment Termination Date. To the extent that
the aggregate fair market value of the club memberships to be purchased does not exceed the
amount of the dollar limitation in effect under section 402(g)(1) of the Code at the time of
the Participant’s Separation From Service, a Participant may, at his option, purchase any of
his club memberships held in the Company’s name at the fair market value and on the terms
mutually agreed by the Participant and the Plan Administrator. The Plan Administrator will
determine the fair market value of any such membership.

     (b) Company Property. No later than the Participant’s Employment Termination
Date (unless the Plan Administrator agrees otherwise in writing), the Participant shall
return to the Company any company-owned property, including, but not limited to, credit
cards, documents, files, computers, cellular telephones, personal digital assistants and any
other company property of any kind or nature, in Participant’s possession as of his
Employment Termination Date.

     (c) Expense Account. Within 30 days after the Participant’s Employment
Termination Date and in accordance with the Company’s then current expense reimbursement
policy, the Participant will prepare and submit a final expense account reimbursement
request for expenses incurred prior to his Employment Termination Date. The Company shall
reimburse eligible expenses promptly but in no event later than the last day of the
Participant’s taxable year following the taxable year in which the Participant incurred the
expense. The Participant’s right to reimbursement pursuant to this Section 5.2(c) shall not
be subject to liquidation or exchange for another benefit.

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6. TIME OF BENEFITS PAYMENTS

     If the Participant is not a Specified Employee and the Participant has timely signed and
delivered to the Plan Administrator the Release Agreement furnished to the Participant by the
deadline established by the Plan Administrator, the Company shall pay the Participant the cash
Benefits described in clause (a) of Section 4 in a single sum cash payment after the Participant’s
Separation From Service as soon as administratively practicable following the date that the
Participant’s Release Agreement is no longer revocable but no later than 90 days following the date
of the Participant’s Separation From Service. A Participant will not be permitted to specify the
year in which his payment will be made. If the Participant is a Specified Employee and the
Participant has timely signed and delivered to the Plan Administrator the Release Agreement
furnished to the Participant by the deadline established by the Plan Administrator, the Company
shall pay the Participant the cash Benefits described in clause (a) of Section 4 and clause (a) of
Section 5 in a single sum cash payment on the date that is six months after the Participant’s
Separation From Service.

7. WITHHOLDING

     The Company may withhold from any Benefits paid under the Plan all foreign, federal, and state
and local income taxes required to be withheld, and all FICA and other employment taxes required to
be withheld; provided that no taxes shall be withheld before Benefits are otherwise scheduled to be
paid under the Plan.

8. REDUCTION FOR OTHER SEVERANCE BENEFITS; NON-EXCLUSIVITY OF RIGHTS; STATUTORY SEVERANCE

     8.1 Reduction for Other Severance Benefits. The amount of the Benefits to which a Participant
is otherwise entitled under the Plan shall be reduced by the amount, if any, of any other severance
payments payable to the Participant by the Company under any other plan, program or individual
contractual arrangement; provided, however, that there shall be no such reduction to the extent
that such reduction would result in an acceleration of payment of nonqualified deferred
compensation that is prohibited under Section 409A.

     8.2 Non-Exclusivity of Rights. Nothing in the Plan shall prevent or limit the Participant’s
continuing or future participation in any benefit, bonus, incentive or other plan or program
provided by the Company for which the Participant may qualify, nor shall anything herein limit or
reduce such rights as the Participant may have under any agreements with the Company or any of its
subsidiaries, except as otherwise provided in Section 8.1. Amounts which are vested benefits or
which the Participant is otherwise entitled to receive under any plan or program of the Company or
any of its Affiliates shall be payable in accordance with such plan or program.

     8.3 Statutory Severance. If any benefits obligations are required to be paid to a Participant
in conjunction with severance of employment under the laws of the country where the Participant is
employed or under federal, state or local law, the Benefits paid to the Participant will be deemed
to be in satisfaction of any statutorily required benefit obligations to the extent

-7-

 

that doing so would not result in an acceleration of payment of nonqualified deferred
compensation that is prohibited under Section 409A.

9. DEATH OF PARTICIPANT

     If a Participant dies after his Employment Termination Date but before the Participant
receives full payment of the Benefits to which he is entitled, any unpaid Benefits will be paid to
the Participant’s surviving spouse, or if the Participant does not have a surviving spouse, to the
Participant’s estate. Such payment shall be made within 30 days after the death of the
Participant.

10. NON-SOLICITATION; CONFIDENTIAL INFORMATION

     In consideration for the payment of the Benefits to the Participant, the Participant shall not
engage in any of the activities described in this Section 10.

     10.1 Non-Solicitation. During the period commencing with the Participant’s Employment
Termination Date and ending on the first anniversary of such date, the Participant shall not,
directly or indirectly,

     (a) interfere with the relationship of the Company or any Affiliate with, or endeavor
to entice away from the Company or any Affiliate, any individual or entity who was or is a
material customer or material supplier of, or maintained a material business relationship
with the Company or its Affiliates;

     (b) establish (or take preliminary steps to establish) a business with, or cause or
attempt to cause others to establish (or take preliminary steps to establish) a business
with, any employee or agent of the Company or any of its Affiliates, if such business is or
will compete with the Company or any of its Affiliates; or

     (c) employ, engage as a consultant or adviser, or solicit the employment, engagement as
a consultant or adviser, of any employee or agent of the Company or any of its Affiliates,
or cause or attempt to cause any individual or entity to do any of the foregoing.

     10.2 Confidential Information. During the course of the Participant’s employment with the
Company, the Participant may have had access to or received Confidential Information. Each
Participant is obligated to keep confidential all such Confidential Information, except that any
Participant may disclose the Confidential Information (i) in connection with enforcing his rights
under the Plan or if compelled by law, and in either case, the Participant shall provide written
notice to the Company prior to the disclosure or (ii) if the Company provides written consent prior
to the disclosure.

11. UNFUNDED ARRANGEMENT

     The Plan is only a general corporate commitment of the Company, and each Participant must rely
upon the general credit of the Company for the fulfillment of its obligations hereunder. Under all
circumstances, the rights of Participants to any asset held by the Company will be no

-8-

 

greater than the rights expressed in the Plan. Nothing contained in the Plan shall constitute
a guarantee by the Company that the assets of the Company will be sufficient to pay any Benefit
under the Plan or would place the Participant in a secured position ahead of general creditors of
the Company. The Participants are only unsecured creditors of the Company with respect to their
Benefits, and the Plan constitutes a mere promise by the Company to make Benefit payments in the
future. No specific assets of the Company have been or shall be set aside, or shall in any way be
transferred to a trust or shall be pledged in any way for the performance of the Company’s
obligations under the Plan which would remove such assets from being subject to the general
creditors of the Company.

12. ADMINISTRATION OF THE PLAN

     12.1 Plan Administrator. Baker Hughes shall be the “plan administrator” and the “named
fiduciary” for purposes of ERISA. The Plan shall be administered by the Plan Administrator.

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

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

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

     12.5 Plan Administrator Powers and Duties. The Plan Administrator shall supervise the
administration and enforcement of the Plan according to the terms and provisions hereof and shall
have all powers necessary to accomplish these purposes, including, but not by way of limitation,
the right, power, and authority:

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

-9-

 

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

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

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

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

     (f) to determine whether and when a Participant has incurred an Involuntary
Termination; and

     (g) to make a determination in its discretion as to the right of any individual to a
Benefit under the Plan and to prescribe procedures to be followed by Participants, former
Participants or beneficiaries in obtaining Benefits hereunder.

     12.6 Reliance Upon Documents, Instruments, etc. The Plan Administrator may rely upon any
certificate, statement or other representation made by or on behalf of the Company, any employee or
any Participant, which the Plan Administrator in good faith believes to be genuine, and on any
certificate, statement, report or other representation made to it by any agent or any attorney,
accountant or other expert retained by it or the Company in connection with the operation and
administration of the Plan.

13. AMENDMENT AND TERMINATION

     The Board shall have the right to amend or terminate the Plan, in whole or in part, for any
reason; provided, however, no amendment or termination of the Plan after a Participant’s Employment
Termination Date shall affect the Benefits payable to the Participant.

14. CLAIMS REVIEW PROCEDURES; CLAIMS APPEALS PROCEDURES

     14.1 Claims Review Procedures. When a Benefit is due, the Participant (or the person entitled
to Benefits under Section 9) should submit a claim to the office designated by the Plan
Administrator to receive claims. Under normal circumstances, the Plan Administrator will make a
final decision as to a claim within 60 days after receipt of the claim. If the Plan Administrator
notifies the claimant in writing during the initial 60-day period, it may extend the period up to
120 days after the initial receipt of the claim. The written notice must contain the circumstances
necessitating the extension and the anticipated date for the final decision. If a claim is denied
during the claims period, the Plan Administrator must notify the claimant in writing, and the
written notice must set forth in a manner calculated to be understood by the claimant:

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

-10-

 

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

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

     (d) an explanation of the Plan claims review procedures and time limits, including a
statement of the claimant’s right to bring a civil action under section 502(a) of ERISA
following an adverse benefit determination on review.

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

     14.2 Claims Appeals Procedures. For purposes of this section the Participant or the person
entitled to Benefits under Section 9 are referred to as the “claimant”). If the claim of the
claimant made pursuant to Section 14.1 is denied and he wants a review, he must apply to the Plan
Administrator in writing. That application can include any arguments, written comments, documents,
records, and other information relating to the claim for benefits. In addition, the claimant is
entitled to receive on request and free of charge reasonable access to and copies of all
information relevant to the claim. For this purpose, “relevant” means information that was relied
on in making the benefit determination or that was submitted, considered or generated in the course
of making the determination, without regard to whether it was relied on, and information that
demonstrates compliance with the Plan’s administrative procedures and safeguards for assuring and
verifying that Plan provisions are applied consistently in making benefit determinations. The Plan
Administrator must take into account all comments, documents, records, and other information
submitted by the claimant relating to the claim, without regard to whether the information was
submitted or considered in the initial benefit determination. The claimant may either represent
himself or appoint a representative, either of whom has the right to inspect all documents
pertaining to the claim and its denial. The Plan Administrator can schedule any meeting with the
claimant or his representative that it finds necessary or appropriate to complete its review.

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

     Within 60 days of receipt by a claimant of a notice denying a claim under the preceding
paragraph, the claimant or his or her duly authorized representative may request in writing a full

-11-

 

and fair review of the claim by the Plan Administrator. The Plan Administrator may extend the
60-day period where the nature of the benefit involved or other attendant circumstances make such
extension appropriate. In connection with such review, the claimant or his or her duly authorized
representative may review pertinent documents and may submit issues and comments in writing. The
Plan Administrator shall make a decision promptly, and not later than 60 days after the Plan’s
receipt of a request for review, unless special circumstances (such as the need to hold a hearing)
require an extension of time for processing, in which case a decision shall be rendered as soon as
possible, but not later than 120 days after receipt of a request for review. The decision on
review shall be in writing and shall include specific reasons for the decision, written in a manner
calculated to be understood by the claimant, and specific references to the pertinent Plan
provisions on which the decision is based.

15. PARTICIPATION IN THE PLAN BY AFFILIATES

     15.1 Adoption Procedure.

     (a) Except to the extent that an Affiliate specifically determines otherwise by
appropriate action of its board of directors or noncorporate counterpart, as evidenced by a
written instrument executed by an authorized officer of such entity (approved by the board
of directors or noncorporate counterpart of the Affiliate), each Affiliate shall participate
in the Plan and shall be bound by all the terms, conditions and limitations of the Plan. The
Plan Administrator and the Affiliate may agree to incorporate specific provisions relating
to the operation of the Plan that apply to the Affiliate.

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

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

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

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

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     (f) The Plan as maintained by the Affiliates shall constitute a single plan rather than
a separate plan of each Affiliate.

     15.2 No Joint Venture Implied. The document which evidences the adoption of the Plan by an
Affiliate shall become a part of the Plan. However, neither the adoption of the Plan by an
Affiliate nor any act performed by it in relation to the Plan shall ever create a joint venture or
partnership relation between it and any other Affiliate.

16. DISPUTED PAYMENTS AND FAILURES TO PAY

     If the Company fails to make a payment in whole or in part by of the payment deadline
specified in the Plan, either intentionally or unintentionally, other than with the consent of the
Participant, the Participant shall make prompt and reasonable good faith efforts to collect the
remaining portion of the payment. The Company shall pay any such unpaid benefits due to the
Participant, together with interest on the unpaid benefits from the date of the payment deadline
specified in the Plan at the annual rate of 120 percent of the rate specified in section
1274(b)(2)(8) of the Code within ten business days of discovering that the additional monies are
due and payable.

     The Company shall hold harmless and indemnify the Participant on a fully grossed-up after tax
basis from and against (i) any and all taxes imposed under Section 409A by any taxing authority as
a result of the Company’s failure to comply with this Section 16, and (ii) all expenses (including
reasonable attorneys’, accountants’, and experts’ fees and expenses) incurred by the Participant
due to a tax audit or litigation addressing the existence or amount of a tax liability described in
clause (i); and (iii) the amount of additional taxes imposed upon the Participant due to the
Company’s payment of the initial taxes and expenses described in clauses (i) and (ii).

     The Company shall make a payment to reimburse the Participant in an amount equal to all
federal, state and local taxes imposed upon the Participant that are described in clauses (i) and
(iii) of the foregoing paragraph of this Section 16 above, including the amount of additional taxes
imposed upon the Participant due to the Company’s payment of the initial taxes on such amounts, by
the end of the Participant’s taxable year next following the Participant’s taxable year in which
the Participant remits the related taxes to the taxing authority. The Company shall make a payment
to reimburse the Participant in an amount equal to all expenses and other amounts incurred due to a
tax audit or litigation addressing the existence or amount of a tax liability pursuant to clause
(ii) of the foregoing paragraph of this Section 16 above, by the end of Participant’s taxable year
following the Participant’s taxable year in which the taxes that are the subject of the audit or
litigation are remitted to the taxing authority, or where as a result of such audit or litigation
no taxes are remitted, the end of the Participant’s taxable year following the Participant’s
taxable year in which the audit is completed or there is a final and nonappealable settlement or
other resolution of the litigation.

17. MISCELLANEOUS

     17.1 Plan Not an Employment Contract. The adoption and maintenance of the Plan is not a
contract between the Company and its employees that gives any employee the right to be

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retained in its employment. Likewise, it is not intended to interfere with the rights of the
Company to terminate an employee’s employment at any time with or without notice and with or
without cause or to interfere with an employee’s right to terminate his employment at any time.

     17.2 Alienation Prohibited. No Benefits hereunder shall be subject to anticipation or
assignment by a Participant, to attachment by, interference with, or control of any creditor of a
Participant, or to being taken or reached by any legal or equitable process in satisfaction of any
debt or liability of a Participant prior to its actual receipt by the Participant. Any attempted
conveyance, transfer, assignment, mortgage, pledge, or encumbrance of the Benefits hereunder prior
to payment thereof shall be void.

     17.3 Severability. Each provision of this Agreement may be severed. If any provision is
determined to be invalid or unenforceable, that determination shall not affect the validity or
enforceability of any other provision.

     17.4 Binding Effect. This Agreement shall be binding upon any successor of the Company.

     17.5 Arbitration. Any controversy arising out of or relating to the Plan, including without
limitation, any and all disputes, claims (whether in tort, contract, statutory or otherwise) or
disagreements concerning the interpretation or application of the provisions of the Plan, Company’s
employment of Participant and the termination of that employment, shall be resolved by arbitration
in accordance with the Employee Benefit Plan Claims Arbitration Rules of the American Arbitration
Association (the “AAA”) then in effect. No arbitration proceeding relating to the Plan may be
initiated by either the Company or the Participant unless the claims review and appeals procedures
specified in Section 14 have been exhausted. Within ten business days of the initiation of an
arbitration hereunder, the Company and the Participant will each separately designate an
arbitrator, and within 20 business days of selection, the appointed arbitrators will appoint a
neutral arbitrator from the AAA National Panel of Employee Benefit Plan Claims Arbitrators. The
arbitrators shall issue their written decision (including a statement of finding of facts) within
30 days from the date of the close of the arbitration hearing. The decision of the arbitrators
selected hereunder will be final and binding on both parties. This arbitration provision is
expressly made pursuant to and shall be governed by the Federal Arbitration Act, 9 U.S.C. Sections
1-16 (or replacement or successor statute). Pursuant to Section 9 of the Federal Arbitration Act,
the Company and any Participant agrees that any judgment of the United States District Court for
the District in which the headquarters of Baker Hughes is located at the time of initiation of an
arbitration hereunder shall be entered upon the award made pursuant to the arbitration. Nothing in
this Section 17.5 shall be construed to, in any way, limit the scope and effect of Section 12. In
any arbitration proceeding full effect shall be given to the rights, powers, and authorities of the
Plan Administrator under Section 12.

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

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     IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly
authorized officer this 7th day of February, 2008.

	 	 	 	 	 
	 	BAKER HUGHES INCORPORATED

 	 
	 	By:  	Didier Charreton 	 
	 	 	Title: 	Vice President, Human Resources 	 
	 	 	 	 
	 

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BAKER HUGHES INCORPORATED

EXECUTIVE SEVERANCE PLAN

Exhibit A

Schedule of Benefits

	 	 	 
	Severance Benefits	 	Details of Benefit
	 
	 	 
	1. Base Compensation
	 	 
	          Level 1/Ungraded (UG)

	 	18 months of Base Compensation*
	          Level 2/Salary Grade E1

	 	12 months of Base Compensation*
	          Level 3/Salary Grade E2

	 	9 months of Base Compensation* 
	          Level 4/Salary Grade E3

	 	6 months of Base Compensation*
	 
	 	 
	 	 	*  Using the Participant’s Base
Compensation for the month in
which the Participant’s Employment
Termination Date occurs.

	 	 	 
	2. Outplacement

	 	Subject to Section 4(c) of the
Plan, outplacement services will
be provided for the greater of 12
months or until such time as the
value of the outplacement services
reaches the maximum of $10,000.
The 12-month period commences with
the first day of the month
following the month in which the
Participant’s Employment
Termination Date occurs.

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