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                                                                     EXHIBIT 4.4

                            BAKER HUGHES INCORPORATED

                2002 DIRECTOR & OFFICER LONG-TERM INCENTIVE PLAN
                         (EFFECTIVE AS OF MARCH 6, 2002)

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                                TABLE OF CONTENTS

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<S>           <C>                                                                   <C>
ARTICLE 1.    ESTABLISHMENT, OBJECTIVES AND DURATION..............................   1
ARTICLE 2.    DEFINITIONS AND CONSTRUCTION........................................   1
ARTICLE 3.    ADMINISTRATION......................................................   6
ARTICLE 4.    SHARES SUBJECT TO PLAN AND MAXIMUM AWARDS...........................   7
ARTICLE 5.    ELIGIBILITY AND PARTICIPATION.......................................   9
ARTICLE 6.    STOCK OPTIONS.......................................................   9
ARTICLE 7.    STOCK APPRECIATION RIGHTS...........................................  11
ARTICLE 8.    RESTRICTED STOCK AND RESTRICTED STOCK UNITS.........................  12
ARTICLE 9.    PERFORMANCE UNITS, PERFORMANCE SHARES AND CASH-BASED AWARDS;
               STOCK AWARDS.......................................................  13
ARTICLE 10.   PERFORMANCE MEASURES................................................  14
ARTICLE 11.   BENEFICIARY DESIGNATION.............................................  15
ARTICLE 12.   DEFERRALS...........................................................  16
ARTICLE 13.   RIGHTS OF EMPLOYEES/DIRECTORS.......................................  16
ARTICLE 14.   ACCELERATION........................................................  16
ARTICLE 15.   AMENDMENT, MODIFICATION, SUSPENSION AND TERMINATION.................  17
ARTICLE 16.   WITHHOLDING.........................................................  17
ARTICLE 17.   SUCCESSORS..........................................................  17
ARTICLE 18.   GENERAL PROVISIONS..................................................  17
</Table>

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                            BAKER HUGHES INCORPORATED

                2002 DIRECTOR & OFFICER LONG-TERM INCENTIVE PLAN

ARTICLE 1. ESTABLISHMENT, OBJECTIVES AND DURATION.

                  1.1 ESTABLISHMENT. Baker Hughes Incorporated, a Delaware
         corporation (the "Company"), hereby establishes an incentive
         compensation plan to be known as the "Baker Hughes Incorporated 2002
         Long-Term Incentive Plan" (this "Plan"), to reward certain directors,
         corporate officers and key employees of the Company by enabling them to
         acquire shares of common stock of the Company and to receive other
         compensation based on common stock of the Company or certain
         performance measures. This Plan permits the grant of Nonqualified Stock
         Options, Incentive Stock Options, Stock Appreciation Rights, Restricted
         Stock, Restricted Stock Units, Performance Shares, Performance Units,
         Stock Awards and Cash-Based Awards (as this Plan defines each of those
         terms below).

                           Subject to approval by the Company's stockholders,
         this Plan shall become effective as of March 6, 2002 (the "Effective
         Date") and shall remain in effect as provided in Section 1.3.

                  1.2 OBJECTIVES. This Plan is designed to attract and retain
         key employees of the Company and its Affiliates (defined below), to
         attract and retain qualified directors of the Company, to encourage the
         sense of proprietorship of those employees and directors and to
         stimulate the active interest of these persons in the development and
         financial success of the Company and its Affiliates. These objectives
         are to be accomplished by making Awards (defined below) under this Plan
         and thereby providing Participants (defined below) with a proprietary
         interest in the growth and performance of the Company and its
         Affiliates.

                  1.3 DURATION. This Plan shall commence as of the Effective
         Date and shall remain in effect, subject to the right of the Board of
         Directors to amend or terminate this Plan at any time pursuant to
         Article 15, until all Shares subject to it shall have been purchased or
         acquired according to this Plan's provisions. However, in no event may
         an Award be granted under this Plan on or after the tenth anniversary
         of the Effective Date.

ARTICLE 2. DEFINITIONS AND CONSTRUCTION.

                  2.1 Whenever used in this Plan, the following capitalized
         terms in this Section 2.1 shall have the meanings set forth below, and
         when the meaning is intended, the initial letter of the word shall be
         capitalized:

                           "AFFILIATE" shall have the meaning ascribed to such
                  term in Rule 12b-2 of the General Rules and Regulations of the
                  Exchange Act.

                           "AWARD" means, individually or collectively, a grant
                  under this Plan to Employees of Nonqualified Stock Options,
                  Incentive Stock Options, Stock Appreciation Rights, Restricted
                  Stock, Restricted Stock Units, Performance Shares, Performance
                  Units, Cash-Based Awards or Stock Awards and to Directors of
                  Nonqualified Stock Options, Restricted Stock, Restricted Stock
                  Units or Stock Awards.

                           "AWARD AGREEMENT" means either (a) an agreement that
                  the Company and a Participant enters into that sets forth the
                  terms and provisions applicable to an Award granted under this
                  Plan or (b) a statement that the Company issues to a
                  Participant describing the terms and provisions of the Award.

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

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                           "BOARD" or "BOARD OF DIRECTORS" means the Board of
                  Directors of the Company.

                           "CASH-BASED AWARD" means an Award granted to a
                  Participant as described in Article 9.

                           "CAUSE" for termination by the Company of the
                  Employee's employment means (a) the willful and continued
                  failure by the Employee to substantially perform the
                  Employee's duties with the Company (other than any such
                  failure resulting from the Employee's incapacity due to
                  physical or mental illness or any such actual or anticipated
                  failure after the issuance of a notice of termination for Good
                  Reason by the Employee) after a written demand for substantial
                  performance is delivered to the Employee by the Committee,
                  which demand specifically identifies the manner in which the
                  Committee believes that the Employee has not substantially
                  performed the Employee's duties, or (b) the willful engaging
                  by the Employee in conduct which is demonstrably and
                  materially injurious to the Company or its subsidiaries,
                  monetarily or otherwise. For purposes of Sections (a) and (b)
                  of this definition, (i) no act, or failure to act, on the
                  Employee's part shall be deemed "willful" unless done, or
                  omitted to be done, by the Employee not in good faith and
                  without reasonable belief that the Employee's act, or failure
                  to act, was in the best interest of the Company and (ii) 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 Committee
                  by clear and convincing evidence that Cause exists.

                           A "CHANGE IN CONTROL" of the Company shall be deemed
                  to have occurred as of the first day that any one or more of
                  the following conditions shall have been satisfied:

                                    (a) Any Person is or becomes a Beneficial
                           Owner, directly or indirectly, of securities of the
                           Company (not including in the securities beneficially
                           owned by this Person any securities acquired directly
                           from the Company or its Affiliates) representing 30%
                           or more of the combined voting power of the Company's
                           then outstanding securities, excluding any Person who
                           becomes, as described in this Section (a), a
                           Beneficial Owner in connection with a transaction
                           described in Section (c)(i) of this definition below;
                           or

                                    (b) The following individuals cease for any
                           reason to constitute a majority of the number of
                           Directors then serving: individuals who, on the
                           Effective Date, constitute the Board of Directors of
                           the Company and any new Director (other than a
                           Director whose initial assumption of office is in
                           connection with an actual or threatened election
                           contest relating to the election of Directors of the
                           Company) 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 still in office who either were
                           Directors on the date hereof or whose appointment,
                           election or nomination for election was previously so
                           approved or recommended; or

                                    (c) There is consummated a merger or
                           consolidation of the Company or any direct or
                           indirect subsidiary of the Company with any other
                           corporation, other than (i) a merger or consolidation
                           that would result in the voting securities of the
                           Company outstanding immediately prior to such merger
                           or consolidation continuing to represent (either by
                           remaining outstanding or by being converted into
                           voting securities of the surviving entity or any
                           parent thereof), in combination with the ownership of
                           any trustee or other fiduciary holding securities
                           under an employee benefit plan of the Company or any
                           Affiliate, at least 55% of the combined voting power
                           of the securities of the Company or such surviving
                           entity or any parent thereof outstanding immediately
                           after such merger or consolidation or (ii) a merger
                           or consolidation effected to implement a
                           recapitalization of the Company (or similar
                           transaction) in which no Person is or becomes the
                           Beneficial Owner, directly or indirectly, of
                           securities of the Company (not including in the
                           securities Beneficially Owned by this Person 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; or

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                                    (d) There is consummated 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 Board immediately prior thereto
                           constitute at least a majority of the board of
                           directors of the entity surviving such merger or any
                           parent thereof (or a majority plus one member where
                           such board is comprised of an odd number of members);
                           or

                                    (e) The stockholders of the Company approve
                           a plan of complete liquidation or dissolution of the
                           Company or there is consummated an agreement for the
                           sale or disposition by the Company of all or
                           substantially all of the Company's assets, other than
                           (i) a sale or disposition by the Company of all or
                           substantially all of the Company's assets to an
                           entity, at least 55% of the combined voting power of
                           the voting securities of which are owned by
                           stockholders of the Company in substantially the same
                           proportions as their ownership of the Company
                           immediately prior to such sale, or (ii) where the
                           individuals who comprise the Board immediately prior
                           thereto 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.

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

                           "COMMITTEE" means the Compensation Committee of the
                  Board or such other committee of the Board or the entire Board
                  as the Board designates to administer Awards to Employees, as
                  specified in Article 3.

                           "COMPANY" shall have the meaning ascribed to that
                  term in Section 1.1.

                           "DIRECTOR" means any individual who is a member of
                  the Board of Directors of the Company; provided that any
                  Director the Company employs shall be considered an Employee
                  under this Plan.

                           "EFFECTIVE DATE" shall have the meaning ascribed to
                  that term in Section 1.1.

                           "EMPLOYEE" means (i) any employee of the Company or
                  any of its Affiliates or (ii) an individual who has agreed to
                  become an Employee of the Company or any of its Affiliates and
                  is expected to become an Employee within the following 6
                  months.

                           "ERISA" means the Employee Retirement Income Security
                  Act of 1974, as amended from time to time.

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

                           "FAIR MARKET VALUE" means the value per Share as
                  determined by the Committee, based on the composite
                  transactions in Shares as reported by The Wall Street Journal,
                  and shall be equal to the per share price of the last sale of
                  Shares on the trading day prior to the date on which value is
                  being determined.

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                           "FISCAL YEAR" means the year commencing January 1 and
                  ending December 31.

                           "FREESTANDING SAR" means an SAR that is granted
                  independently of any Option, as described in Article 7.

                           "GOOD REASON" for termination by the Employee of the
                  Employee's employment means the occurrence (without the
                  Employee's express written consent) after any Change in
                  Control, or prior to a Change in Control under the
                  circumstances described in clauses (b) and (c) of Section 14.2
                  hereof, of any one of the following acts by the Company, or
                  failures by the Company to act, unless, in the case of any act
                  or failure to act described in paragraph (a), (e), (f) or (g)
                  below, such act or failure to act is corrected prior to the
                  effective date of the Employee's termination for Good Reason;

                           (a) the assignment to the Employee of any duties
                  inconsistent with the status of the Employee's position with
                  the Company or a substantial adverse alteration in the nature
                  or status of the Employee's responsibilities from those in
                  effect immediately prior to the Change in Control;

                           (b) a reduction by the Company in the Employee's
                  annual base salary as in effect on the date hereof or as the
                  same may be increased from time to time except for
                  across-the-board salary reductions similarly affecting all
                  individuals having a similar level of authority and
                  responsibility with the Company and all individuals having a
                  similar level of authority and responsibility with any Person
                  in control of the Company;

                           (c) the relocation of the Employee's principal place
                  of employment to a location more than 50 miles from the
                  Employee's principal place of employment immediately prior to
                  the Change in Control or the Company's requiring the Employee
                  to be based anywhere other than such principal place of
                  employment (or permitted relocation thereof) except for
                  required travel on the Company's business to an extent
                  substantially consistent with the Employee's present business
                  travel obligations;

                           (d) the failure by the Company to pay to the Employee
                  any portion of the Employee's current compensation except
                  pursuant to an across-the-board compensation deferral
                  similarly affecting all individuals having a similar level of
                  authority and responsibility with the Company and all
                  individuals having a similar level of authority and
                  responsibility with any Person in control of the Company, or
                  to pay to the Employee any portion of an installment of
                  deferred compensation under any deferred compensation program
                  of the Company, within 7 days of the date such compensation is
                  due;

                           (e) the failure by the Company to continue in effect
                  any compensation plan in which the Employee participates
                  immediately prior to the Change in Control which is material
                  to the Employee's total compensation, unless an equitable
                  arrangement (embodied in an ongoing substitute or alternative
                  plan) has been made with respect to such plan, or the failure
                  by the Company to continue the Employee's participation
                  therein (or in such substitute or alternative plan) on a basis
                  not materially less favorable, both in terms of the amount or
                  timing of payment of benefits provided and the level of the
                  Employee's participation relative to other participants, as
                  existed immediately prior to the Change in Control;

                           (f) the failure by the Company to continue to provide
                  the Employee with benefits substantially similar to those
                  enjoyed by the Employee under any of the Company's pension,
                  savings, life insurance, medical, health and accident, or
                  disability plans in which the Employee was participating
                  immediately prior to the Change in Control (except for across
                  the board changes similarly affecting all individuals having a
                  similar level of authority and responsibility with the Company
                  and all individuals having a similar level of authority and
                  responsibility with any Person in control of the Company), the
                  taking of any other action by the Company which would directly
                  or indirectly materially reduce any of such benefits or
                  deprive the Employee of any material fringe benefit or
                  perquisite enjoyed by the Employee at the time of the Change
                  in Control, or the failure

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                  by the Company to provide the Employee with the number of paid
                  vacation days to which the Employee is entitled on the basis
                  of years of service with the Company in accordance with the
                  Company's normal vacation policy in effect at the time of the
                  Change in Control; or

                           (g) if the Employee is party to an individual
                  employment, severance, or similar agreement with the Company,
                  any purported termination of the Employee's employment which
                  is not effected pursuant to the notice of termination or other
                  procedures specified therein satisfying the requirements
                  thereof; for purposes of this Plan, no such purported
                  termination shall be effective.

                           The Employee's right to terminate the Employee's
                  employment for Good Reason shall not be affected by the
                  Employee's incapacity due to physical or mental illness. The
                  Employee's continued employment shall not constitute consent
                  to, or a waiver of rights with respect to, any act or failure
                  to act constituting Good Reason hereunder.

                           For purposes of any determination regarding the
                  existence of Good Reason, any claim by the Employee that Good
                  Reason exists shall be presumed to be correct unless the
                  Company establishes to the Committee by clear and convincing
                  evidence that Good Reason does not exist.

                           "INCENTIVE STOCK OPTION" or "ISO" means an option to
                  purchase Shares granted under Article 6 and that is designated
                  as an incentive stock option and that is intended to meet the
                  requirements of Code Section 422, or any successor provision.
                  Incentive Stock Options may only be granted to Participants
                  who are officers and key employees of the Company.

                           "NONQUALIFIED STOCK OPTION" or "NQSO" means an Option
                  that is not intended to meet the requirements of Code Section
                  422, or that otherwise does not meet such requirements.

                           "OPTION" means an Incentive Stock Option or a
                  Nonqualified Stock Option, as described in Article 6.

                           "OPTION PRICE" means the price at which a Participant
                  may purchase a Share pursuant to an Option.

                           "PARTICIPANT" means an Employee or Director who has
                  been selected to receive an Award or who has an outstanding
                  Award granted under this Plan.

                           "PERFORMANCE-BASED AWARD" means a Performance Share,
                  a Performance Unit, a Cash-Based Award or a Stock Award
                  granted to a Participant, as described in Article 9, of which
                  the fulfillment of performance goals determines the degree of
                  payout or vesting.

                           "PERFORMANCE PERIOD" means the period of time during
                  which the performance goals must be met to determine the
                  degree of payout or vesting with respect to certain
                  Performance-Based Awards.

                           "PERFORMANCE SHARE" means an Award granted to a
                  Participant, as described in Article 9.

                           "PERFORMANCE UNIT" means an Award granted to a
                  Participant, as described in Article 9.

                           "PERIOD OF RESTRICTION" means the period during which
                  the transfer of Shares of Restricted Stock is limited in some
                  way (based on the passage of time, the achievement of
                  performance goals or upon the occurrence of other events as
                  determined by the Committee (or the Board with respect to
                  Awards granted to Directors), at its discretion) and the
                  Shares are subject to a substantial risk of forfeiture, as
                  provided in Article 8.

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

                           "RESTRICTED STOCK" means an Award granted to a
                  Participant pursuant to Article 8.

                           "RESTRICTED STOCK UNIT" means an Award granted to a
                  Participant, as described in Article 8.

                           "SHARES" means the common stock of the Company, $1.00
                  par value per share.

                           "STOCK APPRECIATION RIGHT" or "SAR" means an Award,
                  granted alone or in connection with a related Option,
                  designated as an SAR, pursuant to the terms of Article 7.

                           "STOCK AWARD" means an Award granted pursuant to the
                  terms of Section 9.6.

                           "TANDEM SAR" means an SAR that is granted in
                  connection with a related Option pursuant to Article 7, the
                  exercise of which shall require forfeiture of the right to
                  purchase a Share under the related Option (and when a Share is
                  purchased under the Option, the Tandem SAR shall similarly be
                  canceled).

                  2.2 As used in this 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 Articles mean the sections
         and articles of this Plan.

ARTICLE 3. ADMINISTRATION.

                  3.1 GENERAL. Subject to the terms and conditions of this Plan,
         the Committee shall administer this Plan or, in the absence of the
         Committee, the Board shall administer this Plan. The Board shall
         appoint the members of the Committee, from time to time, who shall
         serve at the discretion of the Board. The Committee shall have full and
         exclusive power and authority to administer this Plan and to take all
         actions that this Plan specifically contemplates or are necessary or
         appropriate in connection with the administration of this Plan;
         provided that the Board shall administer this Plan with respect to
         Awards granted to Directors.

                  3.2 AUTHORITY OF THE COMMITTEE. Insofar as this Plan relates
         to Awards to Employees, the Committee shall also have full and
         exclusive power to interpret this Plan and to adopt such rules,
         regulations and guidelines for carrying out this Plan as it may deem
         necessary or proper, all of which powers shall be exercised in the best
         interests of the Company and in keeping with the objectives of this
         Plan. The Committee shall have full power to select Employees who shall
         participate in this Plan, determine the sizes and types of Awards to
         Employees and determine the terms and conditions of Awards to Employees
         in a manner consistent with this Plan. The Committee may, in its
         discretion, provide for the extension of the exercisability of an Award
         to an Employee, accelerate the vesting or exercisability of an Award to
         an Employee, eliminate or make less restrictive any restrictions
         contained in an Award to an Employee, waive any restriction or other
         provision of this Plan (insofar as such provision relates to Awards to
         Employees) or an Award to an Employee or otherwise amend or modify an
         Award to an Employee in any manner that is either (i) not adverse to
         the Participant to whom the Award to an Employee was granted or (ii) to
         which the Participant consents. The Committee may make an Award to an
         individual who it expects to become an Employee of the Company or any
         of its Affiliates within the next 6 months, with the Award being
         subject to the individual's actually becoming an Employee within that
         time period and subject to other terms and conditions as the Committee
         may establish. The Committee may correct any defect or supply any
         omission or reconcile any inconsistency in this Plan or in any

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         Award to an Employee in the manner and to the extent the Committee
         deems necessary or desirable to further this Plan's objectives.
         Further, the Committee shall make all other determinations that may be
         necessary or advisable for the administration of this Plan. As
         permitted by law and the terms of this Plan, the Committee may delegate
         its authority as identified in Section 3.3.

                  3.3 DELEGATION OF AUTHORITY. The Committee may delegate to the
         Chief Executive Officer and to other senior officers of the Company its
         duties under this Plan pursuant to such conditions or limitations as
         the Committee may establish. The Committee may engage or authorize the
         engagement of a third-party administrator to carry out administrative
         functions under this Plan.

                  3.4 DECISIONS BINDING. All determinations and decisions made
         by the Committee and the Board pursuant to the provisions of this Plan
         and all related orders and resolutions of the Committee and the Board
         shall be final, conclusive and binding on all persons, including the
         Company, its stockholders, Directors, Employees, Participants and the
         estates and beneficiaries of Directors, Employees and Participants.

                           Under no circumstances shall the Company incur
         liability for any indirect, incidental, consequential or special
         damages (including lost profits) of any form incurred by any person,
         whether or not foreseeable and regardless of the form of the act in
         which such a claim may be brought, with respect to this Plan or the
         Company's role as Plan sponsor.

ARTICLE 4. SHARES SUBJECT TO PLAN AND MAXIMUM AWARDS.

                  4.1 NUMBER OF SHARES AVAILABLE FOR AWARDS. Subject to
         adjustment as provided in Section 4.2, the number of Shares hereby
         reserved for issuance to Participants under this Plan shall be 7
         million, no more than 3 million of which may be granted in the form of
         Awards other than in the form of Options. These Shares may consist of
         authorized but unissued Shares or previously issued Shares reacquired
         by the Company. The number of Shares that are the subject of Awards
         under this Plan that are forfeited or terminated, expire unexercised,
         are settled in cash in lieu of Shares or in a manner such that all or
         some of the Shares covered by an Award are not issued to a Participant
         or are exchanged for Awards that do not involve Shares shall again
         immediately become available to be issued pursuant to Awards granted
         under this Plan. Shares approved pursuant to the Long Term Incentive
         Plan of Baker Hughes Incorporated, as amended, the Baker Hughes
         Incorporated 1993 Stock Option Plan, as amended, and the Baker Hughes
         Incorporated 1998 Employee Stock Option Plan, as amended, that, upon
         shareholder approval of this Plan, have not been awarded under such
         plans, including Shares that are canceled, terminated, expired
         unexercised, settled in cash in lieu of Shares or in a manner such that
         all or some of the Shares covered thereby are not issued to a
         participant or are exchanged for a consideration that does not involve
         Shares, and Shares that are so canceled, terminated, expired
         unexercised, settled in cash in lieu of Shares or in a manner such that
         all or some of the Shares covered thereby are not issued to a
         participant or are exchanged for a consideration that does not involve
         Shares, will immediately become available for Awards under this Plan.
         The Shares described in the foregoing sentence shall be included in the
         7 million Shares reserved for issuance under this Plan. The Committee
         shall determine the appropriate methodology for calculating the number
         of Shares issued pursuant to this Plan. The following rules ("Award
         Limitations") shall apply to grants of such Awards under this Plan:

                           (a) OPTIONS. The maximum aggregate number of Shares
                  that may be granted in the form of Options pursuant to any
                  Award granted in any one Fiscal Year to any one Employee shall
                  be 3,000,000.

                           (b) SARS. The maximum aggregate number of Shares that
                  may be granted in the form of Stock Appreciation Rights
                  pursuant to any Award granted in any one Fiscal Year to any
                  one Employee shall be 3,000,000.

                           (c) RESTRICTED STOCK/UNITS. The maximum aggregate
                  grant with respect to Awards of Restricted Stock/Units granted
                  in any one Fiscal Year to any one Employee shall be 1,000,000.

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                           (d) PERFORMANCE SHARES/PERFORMANCE UNITS AND
                  CASH-BASED AWARDS. The maximum aggregate grant with respect to
                  Awards of Performance Shares made in any one Fiscal Year to
                  any one Employee shall be equal to the value of 1,000,000
                  Shares, determined as of the date of grant. The maximum
                  aggregate amount awarded or credited with respect to
                  Cash-Based Awards or Performance Units to any one Employee in
                  any one Fiscal Year may not exceed in value $10,000,000,
                  determined as of the date of grant.

                           (e) DIRECTOR AWARDS. The maximum aggregate grant with
                  respect to Awards of Options, Stock Awards or Restricted
                  Stock/Units granted in any one Fiscal Year to any one Director
                  shall be 10,000 Shares/Units.

                  4.2 ADJUSTMENTS IN AUTHORIZED SHARES. The existence of
         outstanding Awards shall not affect in any manner the right or power of
         the Company or its stockholders to make or authorize any or all
         adjustments, recapitalizations, reorganizations or other changes in the
         capital stock of the Company or its business or any merger or
         consolidation of the Company, or any issue of bonds, debentures,
         preferred or prior preference stock (whether or not such issue is prior
         to, on a parity with or junior to the Shares) or the dissolution or
         liquidation of the Company, or any sale or transfer of all or any part
         of its assets or business or any other corporate act or proceeding of
         any kind, whether or not of a character similar to that of the acts or
         proceedings enumerated above.

                           If there shall be any change in the Shares of the
         Company or the capitalization of the Company through merger,
         consolidation, reorganization, recapitalization, stock dividend, stock
         split, reverse stock split, split up, spin-off, combination of shares,
         exchange of shares, dividend in kind or other like change in capital
         structure or distribution (other than normal cash dividends) to
         stockholders of the Company, the Board, in its sole discretion, to
         prevent dilution or enlargement of Participants' rights under this
         Plan, shall adjust, in an equitable manner, as applicable, the number
         and kind of Shares that may be issued under this Plan, the number and
         kind of Shares subject to outstanding Awards, the exercise price
         applicable to outstanding Awards, the Awards Limitations, the Fair
         Market Value of the Shares and other value determinations applicable to
         outstanding Awards. In the event of a corporate merger, consolidation,
         acquisition of property or stock, separation, reorganization or
         liquidation, the Board shall be authorized to issue or assume Awards by
         means of substitution of new Awards, as appropriate, for previously
         issued Awards or to assume previously issued Awards as part of such
         adjustment. In the event of a corporate merger, consolidation,
         acquisition of property or stock, separation, reorganization or
         liquidation, the Board shall be authorized (a) to assume under the Plan
         previously issued compensatory awards, or to substitute new Awards for
         previously issued compensatory awards, including Awards, as part of
         such adjustment or (b) to cancel Awards that are Options or SARs and
         give the Participants who are the holders of such Awards notice and
         opportunity to exercise for 30 days prior to such cancellation.

                           Appropriate adjustments may also be made by the Board
         in the terms of any Awards under this Plan to reflect such changes or
         distributions and to modify any other terms of outstanding Awards on an
         equitable basis, including modifications of performance goals and
         changes in the length of Performance Periods.

                           In addition, other than with respect to Options,
         Stock Appreciation Rights and other Awards intended to constitute
         Performance-Based Awards, the Board is authorized to make adjustments
         to the terms and conditions of, and the criteria included in, Awards in
         recognition of unusual or nonrecurring events affecting the Company or
         the financial statements of the Company, or in response to changes in
         applicable laws, regulations or accounting principles. The
         determination of the Board as to the foregoing adjustments, if any,
         shall be conclusive and binding on Participants under this Plan.

                                       8
<PAGE>

ARTICLE 5. ELIGIBILITY AND PARTICIPATION.

                  5.1 ELIGIBILITY. Persons eligible to participate in this Plan
         include all Employees and Directors.

                  5.2 ACTUAL PARTICIPATION. Subject to the provisions of this
         Plan, the Committee may, from time to time, select from all eligible
         Employees those to whom Awards shall be granted and shall determine the
         nature and amount of each Award, subject to the provisions of this
         Plan. The Board may, from time to time, select from all eligible
         Directors those to whom Awards shall be granted and shall determine the
         nature and amount of each Award, subject to the provisions of this
         Plan.

ARTICLE 6. STOCK OPTIONS.

                  6.1 GRANT OF OPTIONS. Subject to the terms and provisions of
         this Plan, Options may be granted to Participants in such number, upon
         the terms and at any time, and from time to time, as the Committee (or
         the Board with respect to Awards granted to Directors) shall determine.

                  6.2 AWARD AGREEMENT. Each Option grant shall be evidenced by
         an Award Agreement that shall specify the Option Price, the duration of
         the Option, the number of Shares to which the Option pertains, and
         other provisions as the Committee (or the Board with respect to Awards
         granted to Directors) shall determine that are not inconsistent with
         the terms of this Plan. The Award Agreement also shall specify whether
         the Option is intended to be an ISO or a NQSO. Notwithstanding its
         designation as an ISO in the Award Agreement, to the extent the
         limitations of Code Section 422 are exceeded, with respect to such
         excess portion, the Option shall become a NQSO. Employees may be
         awarded ISOs (except those who have not yet commenced employment with
         the Company or any of its Affiliates may not receive ISOs) and NQSOs,
         whereas Directors may only be awarded NQSOs.

                  6.3 OPTION PRICE. The Committee (or the Board with respect to
         Awards granted to Directors) shall determine the Option Price for each
         grant of an Option under this Plan. The Option Price shall not be less
         than the Fair Market Value of the Shares on the date of grant.

                  6.4 DURATION OF OPTIONS. Each Option granted to a Participant
         shall expire at the time the Committee (or the Board with respect to
         Awards granted to Directors) shall determine at the time of grant;
         provided that no Option shall be exercisable later than the tenth
         anniversary date of its grant.

                  6.5 EXERCISE OF OPTIONS. Options granted under this Article 6
         shall be exercisable at the times and be subject to the restrictions
         and conditions as the Committee (or the Board with respect to Awards
         granted to Directors) shall in each instance approve, which need not be
         the same for each grant or for each Participant.

                  6.6 PAYMENT. Options granted under this Article 6 shall be
         exercised in the form and manner as the Committee (or the Board with
         respect to Awards to Directors) shall determine from time to time.

                           The Option Price upon exercise of any Option shall be
         payable to the Company in full either (a) in cash or its equivalent;
         (b) by tendering previously acquired Shares having an aggregate Fair
         Market Value at the time of exercise equal to the total Option Price
         (provided that the Shares that are tendered must have been held by the
         Participant for at least 6 months prior to their tender to satisfy the
         Option Price); (c) by a combination of (a) and (b); or (d) any other
         method approved by the Committee (or the Board with respect to Awards
         granted to Directors) in its sole discretion at the time of grant and
         as set forth in the Award Agreement. An Award Agreement evidencing an
         Option may, in the discretion of the Committee (or the Board with
         respect to Awards granted to Directors), provide for a "cashless
         exercise" of an Option by establishing procedures whereby the
         Participant, by a properly executed written notice, directs (1) an
         immediate sale or margin loan respecting all or a part of the Shares to
         which he is entitled upon exercise pursuant to an extension of credit
         by the Company to the Participant of the Option Price, (2) the delivery
         of the Shares from the Company directly to a brokerage firm and (3) the
         delivery of the Option Price from sale or margin loan proceeds from the
         brokerage firm directly to the Company.

                                       9
<PAGE>

                           Subject to any governing rules or regulations and
         Section 18.10, after the exercise of the Option and full payment of the
         Option Price in the form and manner as the Committee (or Board with
         respect to Awards granted to Directors) shall determine, the
         Participant may pay the required fee and request a Share certificate
         based upon the number of Shares purchased under the Option through the
         third-party administrator designated by the Committee (or the Board
         with respect to Awards granted to Directors) to have this
         administrative duty. In addition, the Company may, at its option, issue
         or cause to be issued Share certificates.

                           Unless otherwise determined by the Committee (or the
         Board with respect to Awards granted to Directors), all payments under
         all of the methods indicated above shall be paid in United States
         dollars.

                  6.7 RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee (or
         the Board with respect to Awards granted to Directors) may impose such
         restrictions on any Shares acquired pursuant to the exercise of an
         Option granted under this Article 6 as it may deem advisable, including
         restrictions under applicable federal securities laws, under the
         requirements of any stock exchange or market upon which such Shares are
         then listed or traded and under any blue sky or state securities laws
         applicable to such Shares.

                  6.8 TERMINATION OF EMPLOYMENT/DIRECTORSHIP.

                           (a) Each Participant's Award Agreement shall set
                  forth the extent to which the Participant shall have the right
                  to exercise the Option following termination of the
                  Participant's employment or directorship with the Company or
                  its Affiliates. Such provisions shall be determined in the
                  sole discretion of the Committee (or the Board with respect to
                  Awards granted to Directors), shall be included in the Award
                  Agreement entered into with each Participant, need not be
                  uniform among all Options issued pursuant to this Article 6
                  and may reflect distinctions based on the reasons for
                  termination.

                           (b) TERMS FOR DIRECTOR OPTIONS.

                                    (i) Each Option granted to a Director (a
                           "Director Option") shall have a term of 10 years from
                           the date of grant, notwithstanding any earlier
                           termination of the status of the holder as a Director
                           (the "Option Expiration Date").

                                    (ii) The purchase price of each Share
                           subject to a Director Option shall be equal to the
                           Fair Market Value of a Share on the date of grant.

                                    (iii) All Director Options shall vest and
                           become exercisable on the first anniversary of the
                           date of grant.

                                    (iv) a Director's directorship shall
                           terminate at the close of business on the day
                           preceding the day he ceases to be a member of the
                           Board for any reason whatsoever. When a Director's
                           directorship is terminated, each of his Director
                           Options and all rights thereunder shall expire in
                           accordance with the following (but in no event later
                           than the Option Expiration Date):

                                    (A) Director Options granted within 1 year
                                    preceding termination:

                                             (1) At the time the Director's
                                    directorship is terminated, unless

                                             (2) Such termination occurs in
                                    connection with, or within 2 years
                                    following, a Change in Control, in which
                                    case, 30 days following his termination.

                                    (B) Director Options granted prior to 1-year
                                    preceding termination:

                                       10
<PAGE>

                                             (1) 1 year after termination if due
                                    to the Director's death (a Director's Option
                                    may be exercised by the Director's estate or
                                    by the person or persons who acquire the
                                    right to exercise his option by bequest or
                                    inheritance with respect to any or all of
                                    the Shares remaining subject to his Director
                                    Option at the time of his death); or

                                             (2) 3 years after termination if as
                                    a result of resignation or removal from the
                                    Board because of disability or in accordance
                                    with the provisions of the Company's Bylaws
                                    regarding termination of director's terms of
                                    office; or

                                             (3) 3 months after termination if,
                                    for any reason other than specified above.

                           (c) AGREEMENTS. Any Award of Director Options shall
                  be embodied in an Award Agreement, which shall contain the
                  terms, conditions and limitations set forth above and shall be
                  signed by an authorized officer for and on behalf of the
                  Company.

                  6.9 TRANSFERABILITY OF OPTIONS.

                           (a) INCENTIVE STOCK OPTIONS. No ISO granted under
                  this Plan may be sold, transferred, pledged, assigned or
                  otherwise alienated or hypothecated, other than by will or by
                  the laws of descent and distribution. Further, all ISOs
                  granted to a Participant under this Plan shall be exercisable
                  during his or her lifetime only by the Participant, and after
                  that time, by the Participant's heirs or estate.

                           (b) NONQUALIFIED STOCK OPTIONS. Except as otherwise
                  provided in a Participant's Award Agreement, no NQSO granted
                  under this Article 6 may be sold, transferred, pledged,
                  assigned, or otherwise alienated or hypothecated, other than
                  by will or by the laws of descent and distribution. Further,
                  except as otherwise provided in a Participant's Award
                  Agreement, all NQSOs granted to a Participant under this
                  Article 6 shall be exercisable during his or her lifetime only
                  by such Participant.

                           Any attempted assignment of an Option in violation of
                  this Section 6.9 shall be null and void.

                  6.10 NOTIFICATION OF DISQUALIFYING DISPOSITION. If any
         Participant shall make any disposition of Shares issued pursuant to the
         exercise of an ISO under the circumstances described in Code Section
         421(b) (relating to certain disqualifying dispositions), such
         Participant shall notify the Company of such disposition within 10 days
         thereof.

ARTICLE 7. STOCK APPRECIATION RIGHTS.

                  7.1 GRANT OF SARS. Subject to the terms and conditions of this
         Plan, SARs may be granted to an Employee at any time, and from time to
         time, as the Committee shall determine. The Committee may grant
         Freestanding SARs, Tandem SARs or any combination of these forms of
         SAR.

                           Subject to the terms and conditions of this Plan, the
         Committee shall have complete discretion in determining the number of
         SARs granted to each Employee and, consistent with the provisions of
         this Plan, in determining the terms and conditions pertaining to such
         SARs.

                           The grant price of a Freestanding SAR shall not be
         less than the Fair Market Value of a Share on the date of grant of the
         SAR. The grant price of Tandem SARs shall equal the Option Price of the
         related Option.

                  7.2 SAR AGREEMENT. Each SAR grant shall be evidenced by an
         Award Agreement that shall specify the grant price, the term of the SAR
         and such other provisions as the Committee shall determine.

                                       11
<PAGE>

                  7.3 TERM OF SARS. The term of an SAR granted under this Plan
         shall be determined by the Committee, in its sole discretion; provided
         that no SAR shall be exercisable later than the tenth anniversary date
         of its grant.

                  7.4 EXERCISE OF FREESTANDING SARS. Freestanding SARs may be
         exercised upon whatever terms and conditions the Committee, in its sole
         discretion, imposes upon them.

                  7.5 EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for
         all or part of the Shares subject to the related Option upon the
         surrender of the right to exercise the equivalent portion of the
         related Option. A Tandem SAR may be exercised only with respect to the
         Shares for which its related Option is then exercisable.

                  7.6 PAYMENT OF SAR AMOUNT. Upon the exercise of an SAR, an
         Employee shall be entitled to receive payment from the Company in an
         amount determined by multiplying:

                           (a) The difference between the Fair Market Value of a
                  Share on the date of exercise over the grant price by

                           (b) The number of Shares with respect to which the
                  SAR is exercised.

                           At the discretion of the Committee, the payment upon
         SAR exercise may be in cash, in Shares of equivalent value, in some
         combination thereof or in any other manner approved by the Committee in
         its sole discretion. The Committee's determination regarding the form
         of SAR payout may be set forth in the Award Agreement pertaining to the
         grant of the SAR.

                  7.7 TERMINATION OF EMPLOYMENT. Each Award Agreement shall set
         forth the extent to which the Employee shall have the right to exercise
         the SAR following termination of the Employee's employment with the
         Company or its Affiliates. Such provisions shall be determined in the
         sole discretion of the Committee, shall be included in the Award
         Agreement entered into with Employees, need not be uniform among all
         SARs issued pursuant to this Plan and may reflect distinctions based on
         the reasons for termination.

                  7.8 NONTRANSFERABILITY OF SARS. Except as otherwise provided
         in an Employee's Award Agreement, no SAR granted under this Plan may be
         sold, transferred, pledged, assigned or otherwise alienated or
         hypothecated, other than by will or by the laws of descent and
         distribution. Further, except as otherwise provided in an Employee's
         Award Agreement, all SARs granted to an Employee under this Plan shall
         be exercisable during his or her lifetime only by the Employee, and
         after that time, by the Employee's heirs or estate. Any attempted
         assignment of an SAR in violation of this Section 7.8 shall be null and
         void.

ARTICLE 8. RESTRICTED STOCK AND RESTRICTED STOCK UNITS.

                  8.1 GRANT OF RESTRICTED STOCK/UNITS. Subject to the terms and
         provisions of this Plan, the Committee (or the Board with respect to
         Awards granted to Directors), at any time, and from time to time, may
         grant Shares of Restricted Stock and Restricted Stock Units to
         Participants in such amounts as the Committee (or the Board with
         respect to Awards granted to Directors) shall determine. Restricted
         Stock Units shall be similar to Restricted Stock, except that no Shares
         are actually awarded to the Participant until a later date, unless the
         payout is otherwise made in cash.

                  8.2 RESTRICTED STOCK AGREEMENT. Each Restricted Stock or
         Restricted Stock Unit grant shall be evidenced by an Award Agreement
         that shall specify the Period(s) of Restriction, the number of Shares
         of Restricted Stock (or the number of Restricted Stock Units) granted
         and such other provisions as the Committee (or the Board with respect
         to Awards granted to Directors) shall determine.

                  8.3 TRANSFERABILITY. Except as provided in this Article 8, the
         Shares of Restricted Stock or Restricted Stock Units granted herein may
         not be sold, transferred, pledged, assigned or otherwise alienated or

                                       12
<PAGE>

         hypothecated until the end of the applicable Period of Restriction
         established by the Committee (or the Board with respect to Awards
         granted to Directors) and specified in the Award Agreement, or upon
         earlier satisfaction of any other conditions, as specified by the
         Committee (or the Board with respect to Awards granted to Directors) in
         its sole discretion and set forth in the Award Agreement. All rights
         with respect to the Restricted Stock or Restricted Stock Units granted
         to a Participant under this Plan shall be available during his or her
         lifetime only to the Participant, and after that time, to the
         Participant's heirs or estate. Any attempted assignment of Restricted
         Stock or Restricted Stock Units in violation of this Section 8.3 shall
         be null and void.

                  8.4 OTHER RESTRICTIONS. The Committee (or the Board with
         respect to Awards granted to Directors) shall impose other conditions
         or restrictions on any Shares of Restricted Stock or Restricted Stock
         Units granted pursuant to this Plan as it may deem advisable, including
         a requirement that Participants pay a stipulated purchase price for
         each Share of Restricted Stock or each Restricted Stock Unit,
         restrictions based upon the achievement of specific performance goals,
         time-based restrictions on vesting following the attainment of the
         performance goals, time-based restrictions or restrictions under
         applicable federal or state securities laws.

                           To the extent deemed appropriate by the Committee (or
         the Board with respect to Awards granted to Directors), the designated
         third-party administrator may retain the certificates representing
         Shares of Restricted Stock in its possession until such time as all
         conditions and restrictions applicable to such Shares have been
         satisfied or lapse.

                           Except as otherwise provided in this Article 8,
         Shares of Restricted Stock covered by each Restricted Stock Award shall
         become freely transferable by the Participant after all conditions and
         restrictions applicable to such Shares have been satisfied or lapse.

                  8.5 VOTING RIGHTS. To the extent permitted by the Committee
         (or the Board with respect to Awards granted to Directors) or required
         by law, Participants holding Shares of Restricted Stock granted
         hereunder may be granted the right to exercise full voting rights with
         respect to those Shares during the Period of Restriction. A Participant
         shall have no voting rights with respect to any Restricted Stock Units
         granted hereunder.

                  8.6 DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of
         Restriction, Participants holding Shares of Restricted Stock or
         Restricted Stock Units granted hereunder may, if the Committee (or the
         Board with respect to Awards granted to Directors) so determines, be
         credited with dividends paid with respect to the underlying Shares
         while they are so held in a manner determined by the Committee (or the
         Board with respect to Awards granted to Directors) in its sole
         discretion. The Committee (or the Board with respect to Awards granted
         to Directors) may apply any restrictions to the dividends that it deems
         appropriate.

                  8.7 TERMINATION OF EMPLOYMENT/DIRECTORSHIP. Each Award
         Agreement shall set forth the extent to which the Participant shall
         have the right to receive unvested Restricted Stock and/or Restricted
         Stock Units following termination of the Participant's employment or
         directorship with the Company or its Affiliates. Such provisions shall
         be determined in the sole discretion of the Committee (or the Board
         with respect to Awards granted to Directors), shall be included in the
         Award Agreement entered into with each Participant, need not be uniform
         among all Shares of Restricted Stock or Restricted Stock Units issued
         pursuant to this Plan and may reflect distinctions based on the reasons
         for termination.

ARTICLE 9. PERFORMANCE UNITS, PERFORMANCE SHARES AND CASH-BASED AWARDS; STOCK
AWARDS.

                  9.1 GRANT OF PERFORMANCE UNITS/SHARES AND CASH-BASED AWARDS.
         Subject to the terms of this Plan, Performance Units, Performance
         Shares and/or Cash-Based Awards may be granted to Employees in such
         amounts and upon such terms, and at any time and from time to time, as
         the Committee shall determine.

                  9.2 VALUE OF PERFORMANCE UNITS/SHARES AND CASH-BASED AWARDS.
         Each Performance Unit shall have an initial value that the Committee
         shall establish at the time of grant. Each Performance Share shall have
         an initial value equal to the Fair Market Value of a Share on the date
         of grant. Each Cash-Based Award

                                       13
<PAGE>

         shall have a value as the Committee may determine. The Committee shall
         set performance goals in its discretion that, depending on the extent
         to which they are met, shall determine the number and value of
         Performance Units/Shares and Cash-Based Awards which shall be paid out
         to the Employee.

                  9.3 EARNING OF PERFORMANCE UNITS/SHARES AND CASH-BASED AWARDS.
         Subject to the terms of this Plan, after the applicable Performance
         Period has ended, the holder of Performance Units/Shares and Cash-Based
         Awards shall be entitled to receive payout on the number and value of
         Performance Units/Shares and Cash-Based Awards the Employee earned over
         the Performance Period, to be determined as a function of the extent to
         which the corresponding performance goals have been achieved.

                  9.4 FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES AND
         CASH-BASED AWARDS. Payment of earned Performance Units/Shares and
         Cash-Based Awards shall be as the Committee determines and as set forth
         in the Award Agreement. Subject to the terms of this Plan, the
         Committee, in its sole discretion, may pay earned Performance
         Units/Shares and Cash-Based Awards in the form of cash or in Shares (or
         in a combination thereof) that have an aggregate Fair Market Value
         equal to the value of the earned Performance Units/Shares and
         Cash-Based Awards at the close of the applicable Performance Period.
         Such Shares may be granted subject to any restrictions deemed
         appropriate by the Committee.

                           At the discretion of the Committee, Employees holding
         Performance Units/Shares may be entitled to receive dividend units with
         respect to dividends declared with respect to the Shares. Such
         dividends may be subject to the same accrual, forfeiture and payout
         restrictions as apply to dividends earned with respect to Shares of
         Restricted Stock, as set forth in Section 8.6, as determined by the
         Committee.

                  9.5 NONTRANSFERABILITY. Except as otherwise provided in an
         Employee's Award Agreement, Performance Units/Shares and Cash-Based
         Awards may not be sold, transferred, pledged, assigned or otherwise
         alienated or hypothecated, other than by will or by the laws of descent
         and distribution. Further, except as otherwise provided in an
         Employee's Award Agreement, an Employee's rights under this Plan shall
         be exercisable during the Employee's lifetime only by the Employee, and
         after that time, by the Employee's heirs or estate. Any attempted
         assignment of Performance Units/Shares or Cash-Based Awards in
         violation of this Section 9.5 shall be null and void.

                  9.6 STOCK AWARDS. Employees or Directors may be granted Stock
         Awards. The Committee (or the Board with respect to Awards granted to
         Directors) may grant other types of equity-based or equity-related
         Awards (including the grant or offer for sale of unrestricted Shares)
         in such amounts and subject to such terms and conditions, as the
         Committee (or the Board with respect to Awards granted to Directors)
         shall determine. Such Awards may entail the transfer of actual Shares
         to Participants or payment in cash or otherwise of amounts based on the
         value of Shares and may include Awards designed to comply with or take
         advantage of the applicable local laws of jurisdictions other than the
         United States.

ARTICLE 10. PERFORMANCE MEASURES.

                  Performance measures, the attainment of which may determine
the degree of payout or vesting with respect to certain Performance-Based
Awards, shall be chosen from among:

                  (a) Net earnings;

                  (b) Earnings per share;

                  (c) Net sales growth;

                  (d) Net income (before or after taxes);

                  (e) Net operating profit;

                                       14
<PAGE>

                  (f) Return measures (including return on assets, equity, net
         capital employed or sales);

                  (g) Cash flow (including operating cash flow and free cash
         flow);

                  (h) Cash flow return on investments, which equals net cash
         flows divided by owner's equity;

                  (i) Earnings before or after taxes, interest, depreciation
         and/or amortization;

                  (j) Internal rate of return or increase in net present value;

                  (k) Dividend payments to parent;

                  (l) Gross revenues;

                  (m) Gross margins;

                  (n) Operating margin;

                  (o) Share price (including growth measures and total
         shareholder return);

                  (p) Expense targets;

                  (q) Working capital targets relating to inventory or accounts
         receivable;

                  (r) Planning accuracy (as measured by comparing planned
         results to actual results);

                  (s) Comparisons to various stock market indices;

                  (t) Comparisons to the performance of other companies; and

                  (u) Baker Value Added.

                  The Committee may, in its sole discretion, adopt other
performance measures including any combination of the foregoing.

                  The Committee may provide in any such Performance-Based Award
that any evaluation of performance may exclude any of the following events that
occurs during a Performance Period: (a) asset write-downs; (b) litigation or
claim judgments or settlements; (c) the effect of changes in tax laws,
accounting principles or other laws or provisions affecting reported results;
(d) accruals for reorganization and restructuring programs; (e) extraordinary
nonrecurring items as described in Accounting Principles Board Opinion No. 30 or
in management's discussion and analysis of financial condition and results of
operations appearing in the Company's annual report to stockholders for the
applicable year; (f) acquisitions or divestitures and (g) foreign exchange gains
and losses.

ARTICLE 11. BENEFICIARY DESIGNATION.

                  Each Participant under this Plan may, from time to time, name
any beneficiary or beneficiaries (who may be named contingently or successively)
to whom any benefit under this Plan is to be paid in case of his or her death
before he or she receives any or all of such benefit. Each such designation
shall revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company and shall be effective only when filed by the
Participant in writing with the Company during the Participant's lifetime. In
the absence of any such designation, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.

                                       15
<PAGE>

ARTICLE 12. DEFERRALS.

                  The Committee (or the Board with respect to Awards granted to
Directors) may permit or require a Participant to defer such Participant's
receipt of the payment of cash or the delivery of Shares that would otherwise be
due to such Participant by virtue of the exercise of an Option or SAR, the lapse
or waiver of restrictions with respect to Restricted Stock/Units or the
satisfaction of any requirements or goals with respect to Performance
Units/Shares, Cash-Based Awards and Stock Awards. If any such deferral election
is required or permitted, the Committee (or the Board with respect to Awards
granted to Directors) shall, in its sole discretion, establish rules and
procedures for such payment deferrals.

ARTICLE 13. RIGHTS OF EMPLOYEES/DIRECTORS.

                  13.1 EMPLOYMENT. Nothing in this Plan shall interfere with or
         limit in any way the right of the Company to terminate any
         Participant's employment at any time, nor confer upon any Participant
         any right to continue in the employ of the Company.

                           Except as specifically provided otherwise in a
         written agreement with the Company, neither the Award nor any benefits
         arising under this Plan shall constitute part of a Participant's
         employment contract with the Company or any Affiliate. Any termination
         of this Plan pursuant to Section 15.1 shall not give rise to liability
         on the part of the Company or any Affiliate for severance payments.

                  13.2 PARTICIPATION. No Employee or Director shall have the
         right to be selected to receive an Award under this Plan or, having
         been so selected, to be selected to receive a future Award.

                  13.3 RIGHTS AS A STOCKHOLDER. A Participant shall have none of
         the rights of a stockholder with respect to Shares covered by any Award
         until the Participant becomes the record holder of such shares.

ARTICLE 14. ACCELERATION.

                  14.1 CHANGE IN CONTROL. Notwithstanding any provision of this
         Plan to the contrary, in the event of an occurrence of a Change in
         Control other than an event described only in Section (c) of the
         definition of Change in Control, (a) all Awards granted pursuant to
         this Plan shall become fully vested, (b) if either an Option or SAR or
         similar Award, the Award shall become immediately exercisable and (c)
         all conditions or restrictions applicable to an Award shall be deemed
         satisfied or shall lapse.

                  14.2 TERMINATION. Notwithstanding any provision of this Plan
         to the contrary, all conditions or restrictions on outstanding Awards
         held by an Employee shall be deemed satisfied or shall lapse, all
         outstanding Awards held by an Employee shall become fully vested and,
         if either an Option or SAR or similar Award, immediately exercisable as
         of the effective date of termination of such Employee's employment if
         (a) such Employee's employment is terminated by the Company without
         Cause prior to a Change in Control (whether or not a Change in Control
         ever occurs) and such termination was at the request or direction of a
         Person who has entered into an agreement with the Company the
         consummation of which would constitute a Change in Control, (b) such
         Employee terminates his or her employment for Good Reason prior to a
         Change in Control (whether or not a Change in Control ever occurs) and
         the circumstance or event which constitutes Good Reason occurs at the
         request or direction of the Person described in clause (a), (c) such
         Employee's employment is terminated by the Company without Cause or by
         the Employee for Good Reason and such termination or the circumstance
         or event which constitutes Good Reason is otherwise in connection with
         or in anticipation of a Change in Control (whether or not a Change in
         Control ever occurs) or (d) such Employee's employment is terminated by
         the Company without Cause or by the Employee for Good Reason, in either
         case within 2 years following the occurrence of a Change in Control
         described in Section (c) of the definition of Change in Control.

                                       16
<PAGE>

ARTICLE 15. AMENDMENT, MODIFICATION, SUSPENSION AND TERMINATION.

                  15.1 AMENDMENT, MODIFICATION, SUSPENSION AND TERMINATION.
         Subject to the terms of this Plan, the Board may at any time and from
         time to time alter, amend, modify, suspend or terminate this Plan in
         whole or in part, except that no amendment, modification, suspension or
         termination that would adversely affect in any material way the rights
         of any Participant under any Award previously granted to such
         Participant under this Plan shall be made without the written consent
         of such Participant or to the extent stockholder approval is otherwise
         required by applicable legal requirements. Without the prior approval
         of the Company's stockholders, Options issued under this Plan will not
         be repriced, replaced, or regranted through cancellation, or by
         lowering the Option Price of a previously granted Award.

                  15.2 ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN
         UNUSUAL OR NONRECURRING EVENTS. The Board may make adjustments in the
         terms and conditions of, and the criteria included in, Awards in
         recognition of unusual or nonrecurring events (including the events
         described in Section 4.2) affecting the Company or the financial
         statements of the Company or of changes in applicable laws, regulations
         or accounting principles, whenever the Board determines that such
         adjustments are appropriate to prevent unintended dilution or
         enlargement of the benefits or potential benefits intended to be made
         available under this Plan.

ARTICLE 16. WITHHOLDING.

                  16.1 TAX WITHHOLDING. The Company shall have the power and the
         right to deduct or withhold, or require a Participant to remit to the
         Company, the minimum statutory amount to satisfy federal, state and
         local taxes, domestic or foreign, required by law or regulation to be
         withheld with respect to any taxable event arising as a result of this
         Plan.

                  16.2 SHARE WITHHOLDING. With respect to withholding required
         upon the exercise of Options or SARs, upon the lapse of restrictions on
         Restricted Stock and Restricted Stock Units, or upon any other taxable
         event arising as a result of Awards granted hereunder, Participants may
         elect to satisfy the withholding requirement, in whole or in part, by
         having the Company withhold Shares having a Fair Market Value on the
         date the tax is to be determined equal to the minimum statutory total
         tax that could be imposed on the transaction. All such elections shall
         be irrevocable, made in writing and signed by the Participant and shall
         be subject to any restrictions or limitations that the Committee (or
         the Board with respect to Awards granted to Directors), in its sole
         discretion, deems appropriate.

ARTICLE 17. SUCCESSORS.

                  All obligations of the Company under this Plan with respect to
Awards granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
merger, consolidation or otherwise, of all or substantially all of the business
and/or assets of the Company.

ARTICLE 18. GENERAL PROVISIONS.

                  18.1 RESTRICTIONS AND LEGEND. No Shares or other form of
         payment shall be issued with respect to any Award unless the Company
         shall be satisfied based on the advice of its counsel that such
         issuance will be in compliance with applicable federal and state
         securities laws. Certificates evidencing Shares delivered under this
         Plan (to the extent that such shares are so evidenced) may be subject
         to such restrictions as the Committee (or the Board with respect to
         Awards granted to Directors) may deem advisable under the rules,
         regulations and other requirements of the Securities and Exchange
         Commission, any securities exchange or transaction reporting system
         upon which the Shares are then listed or to which they are admitted for
         quotation and any applicable federal or state securities law. The
         Committee (or the Board with respect to Awards granted to Directors)
         may cause a legend or legends to be placed upon such certificates (if
         any) to make appropriate reference to such restrictions.

                                       17
<PAGE>

                           The Committee (or the Board with respect to Awards
         granted to Directors) may require each person receiving Shares pursuant
         to an Award under this Plan to represent to and agree with the Company
         in writing that the Participant is acquiring the Shares without a view
         to distribution thereof. In addition to any other legend required by
         this Plan, the certificates for such Shares may include any legend
         which the Committee (or the Board with respect to Awards granted to
         Directors) deems appropriate to reflect any restrictions on transfer of
         such Shares.

                  18.2 SEVERABILITY. If any provision of this Plan shall be held
         illegal or invalid for any reason, the illegality or invalidity shall
         not affect the remaining parts of this Plan, and this Plan shall be
         construed and enforced as if the illegal or invalid provision had not
         been included.

                  18.3 REQUIREMENTS OF LAW. The granting of Awards and the
         issuance of Shares under this Plan shall be subject to all applicable
         laws, rules and regulations and to such approvals by any governmental
         agencies or national securities exchanges as may be required. The
         Company shall receive the consideration required by law for the
         issuance of Awards under this Plan.

                  18.4 SECURITIES LAW COMPLIANCE. All transactions under this
         Plan are intended to comply with all applicable conditions of Rule
         16b-3 or its successor under the Exchange Act, unless determined
         otherwise by the Board. To the extent any provision of this Plan or
         action by the Board fails to so comply, it shall be deemed null and
         void, to the extent permitted by law and deemed advisable by the Board.

                  18.5 LISTING. The Company may use reasonable endeavors to
         register Shares allotted pursuant to the exercise of an Award with the
         Securities and Exchange Commission or to effect compliance with the
         registration, qualification and listing requirements of any national
         securities laws, stock exchange or automated quotation system.

                  18.6 DELIVERY OF TITLE. The Company shall have no obligation
         to issue or deliver evidence of title for Shares under this Plan prior
         to:

                           (a) Obtaining any approvals from governmental
                  agencies that the Company determines are necessary or
                  advisable; and

                           (b) Completion of any registration or other
                  qualification of the Shares under any applicable national or
                  foreign law or ruling of any governmental body that the
                  Company determines to be necessary or advisable.

                  18.7 INABILITY TO OBTAIN AUTHORITY. The inability of the
         Company to obtain authority from any regulatory body having
         jurisdiction, which authority is deemed by the Company's counsel to be
         necessary to the lawful issuance and sale of any Shares hereunder,
         shall relieve the Company of any liability in respect of the failure to
         issue or sell such Shares as to which such requisite authority shall
         not have been obtained.

                  18.8 INVESTMENT REPRESENTATIONS. As a condition to the
         exercise of an Award, the Company may require the person exercising
         such Award to represent and warrant at the time of any such exercise
         that the Shares are being purchased only for investment and without any
         present intention to sell or distribute such Shares if, in the opinion
         of counsel for the Company, such a representation is required.

                  18.9 EMPLOYEES BASED OUTSIDE OF THE UNITED STATES.
         Notwithstanding any provision of this Plan to the contrary, in order to
         comply with the laws in other countries in which the Company and its
         Affiliates operate or have Employees, the Committee, in its sole
         discretion, shall have the power and authority to:

                           (a) Determine which Affiliates shall be covered by
                  this Plan;

                           (b) Determine which Employees employed outside the
                  United States are eligible to participate in this Plan;

                                       18
<PAGE>

                           (c) Modify the terms and conditions of any Award
                  granted to Employees who are employed outside the United
                  States to comply with applicable foreign laws;

                           (d) Establish subplans and modify exercise procedures
                  and other terms and procedures to the extent such actions may
                  be necessary or advisable. Any subplans and modifications to
                  Plan terms and procedures established under this Section 18.9
                  by the Committee shall be attached to this Plan document as
                  Appendices; and

                           (e) Take any action, before or after an Award is
                  made, that it deems advisable to obtain approval or comply
                  with any necessary local government regulatory exemptions or
                  approvals.

                  Notwithstanding the above, the Committee may not take any
         actions hereunder, and no Awards shall be granted, that would violate
         the Exchange Act, the Code, any securities law or governing statute or
         any other applicable law.

                  18.10 UNCERTIFICATED SHARES. To the extent that this Plan
         provides for issuance of certificates to reflect the transfer of
         Shares, the transfer of such Shares may be effected on a
         noncertificated basis, to the extent not prohibited by applicable law
         or the rules of any stock exchange.

                  18.11 UNFUNDED PLAN. Participants shall have no right, title
         or interest whatsoever in or to any investments that the Company may
         make to aid it in meeting its obligations under this Plan. Nothing
         contained in this Plan, and no action taken pursuant to its provisions,
         shall create or be construed to create a trust of any kind, or a
         fiduciary relationship between the Company and any Participant,
         beneficiary, legal representative or any other person. To the extent
         that any Person acquires a right to receive payments from the Company
         under this Plan, such right shall be no greater than the right of an
         unsecured general creditor of the Company. All payments to be made
         hereunder shall be paid from the general funds of the Company and no
         special or separate fund shall be established and no segregation of
         assets shall be made to assure payment of such amounts, except as
         expressly set forth in this Plan. This Plan is not intended to be
         subject to ERISA.

                  18.12 NO FRACTIONAL SHARES. No fractional Shares shall be
         issued or delivered pursuant to this Plan or any Award. The Committee
         (or the Board with respect to Awards granted to Directors) shall
         determine whether cash, Awards or other property shall be issued or
         paid in lieu of fractional Shares or whether such fractional Shares or
         any rights thereto shall be forfeited or otherwise eliminated.

                  18.13 GOVERNING LAW. This Plan and each Award Agreement shall
         be governed by the laws of the State of Texas, excluding any conflicts
         or choice of law rule or principle that might otherwise refer
         construction or interpretation of this Plan to the substantive law of
         another jurisdiction. Unless otherwise provided in the Award Agreement,
         recipients of an Award under this Plan are deemed to submit to the
         exclusive jurisdiction and venue of the federal or state courts of
         Harris County, Texas to resolve any and all issues that may arise out
         of or relate to this Plan or any related Award Agreement.

                                       19<PAGE>

                                                                     EXHIBIT 4.4

                            BAKER HUGHES INCORPORATED

                       DIRECTOR COMPENSATION DEFERRAL PLAN
                            (AS AMENDED AND RESTATED
                         EFFECTIVE AS OF JULY 24, 2002)

<PAGE>

                                TABLE OF CONTENTS

<Table>
<S>                                                                                                          <C>
1.     PURPOSES OF THE PLAN; DEFINITIONS; INTERPRETATION AND CONSTRUCTION...................................   1
       1.1    General.......................................................................................   1
       1.2    Definitions...................................................................................   1
       1.3    Interpretation and Construction...............................................................   3

2.     ADMINISTRATION.......................................................................................   3

3.     PARTICIPATION IN THE PLAN............................................................................   4
       3.1    Eligibility...................................................................................   4
       3.2    Election to Participate.......................................................................   4

4.     DEFERRAL ELECTIONS...................................................................................   4
       4.1    Compensation Deferrals........................................................................   4
       4.2    Retirement Income Deferrals...................................................................   4

5.     ELECTION OF DEFERRAL VEHICLES........................................................................   4
       5.1    Stock Option-Related Deferral Vehicles........................................................   4
       5.2    Cash-Based Deferral Vehicles..................................................................   5

6.     SHARES AVAILABLE FOR STOCK OPTIONS...................................................................   5
       6.1    Number of Shares Available for Stock Options..................................................   5
       6.2    Adjustments in Authorized Shares..............................................................   6

7.     STOCK OPTIONS........................................................................................   6
       7.1    Calculation of Exercise Price.................................................................   6
       7.2    Terms and Conditions of Options...............................................................   6

8.     PAYMENT OF AMOUNTS IN ACCOUNTS.......................................................................   8
       8.1    Payment Generally.............................................................................   8
       8.2    Payment of Simultaneous Amounts...............................................................   8
       8.3    Hardship......................................................................................   8
       8.4    Disability....................................................................................   9
       8.5    Death.........................................................................................   9
       8.6    Change in Purpose.............................................................................   9
       8.7    Debiting of Plan Accounts.....................................................................   9

9.     PROHIBITION AGAINST ASSIGNMENT OR ENCUMBRANCE........................................................   9

10.    EFFECTIVE DATE, AMENDMENT AND TERMINATION OF THE PLAN................................................   9

11.    NATURE OF THE PLAN...................................................................................   9

12.    REORGANIZATION.......................................................................................  10

13.    ACCELERATION.........................................................................................  10

14.    MISCELLANEOUS........................................................................................  10
       14.1   Severability..................................................................................  10
       14.2   Requirements of Law...........................................................................  10
       14.3   Securities Law Compliance.....................................................................  10
       14.4   Governing Law.................................................................................  10
</Table>

                                        i
<PAGE>

                            BAKER HUGHES INCORPORATED

                       DIRECTOR COMPENSATION DEFERRAL PLAN
                            (AS AMENDED AND RESTATED
                            EFFECTIVE JULY 24, 2002)

1.       PURPOSES OF THE PLAN; DEFINITIONS; INTERPRETATION AND CONSTRUCTION.

         1.1 GENERAL. The Baker Hughes Incorporated Director Compensation
         Deferral Plan, as amended and restated (the "PLAN"), is intended to
         provide a means whereby non-employee directors of Baker Hughes
         Incorporated, a Delaware corporation (the "COMPANY") may defer
         compensation otherwise payable and provide flexibility respecting the
         Company's compensation policies.

         1.2 DEFINITIONS. Whenever used in this Plan, the following capitalized
         terms shall have the meanings set forth below, and when the meaning is
         intended, the initial letter of the word shall be capitalized.

                  "ACCOUNT" means the account established by the Committee for
         each Participant in accordance with Section 5.2.

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

                  "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors
         of the Company.

                  "CHANGE IN CONTROL" of the Company shall be deemed to have
         occurred as of the first day that any one or more of the following
         conditions shall have been satisfied:

                           (A) Any Person is or becomes a Beneficial Owner,
                  directly or indirectly, of securities of the Company (not
                  including in the securities beneficially owned by this Person
                  any securities acquired directly from the Company or its
                  affiliates) representing 30% or more of the combined voting
                  power of the Company's then outstanding securities, excluding
                  any Person who becomes, as described in this Section (A), a
                  Beneficial Owner in connection with a transaction described in
                  Section (C)(1) of this definition below; or

                           (B) The following individuals cease for any reason to
                  constitute a majority of the number of Directors then serving:
                  individuals who, on the Effective Date, constitute the Board
                  of Directors of the Company and any new Director (other than a
                  Director whose initial assumption of office is in connection
                  with an actual or threatened election contest relating to the
                  election of Directors of the Company) 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 still in office who either were Directors on
                  the date hereof or whose appointment, election or nomination
                  for election was previously so approved or recommended; or

                           (C) There is consummated a merger or consolidation of
                  the Company or any direct or indirect subsidiary of the
                  Company with any other corporation, other than (1) a merger or
                  consolidation that would result in the voting securities of
                  the Company outstanding immediately prior to such merger or
                  consolidation continuing to represent (either by remaining
                  outstanding or by being converted into voting securities of
                  the surviving entity or any parent thereof), in combination
                  with the ownership of any trustee or other fiduciary holding
                  securities under an employee benefit plan of the Company or
                  any Affiliate, at least 55% of the combined voting power of
                  the securities of the Company or such surviving entity or any
                  parent thereof outstanding immediately after such merger or
                  consolidation or (2) a merger or consolidation effected to
                  implement a recapitalization of the Company (or similar
                  transaction) in which no Person is or becomes the Beneficial
                  Owner, directly or indirectly, of securities of the Company
                  (not including

                                       1
<PAGE>

                  in the securities Beneficially Owned by this Person 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; or

                           (D) There is consummated 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 Board immediately prior thereto constitute at
                  least a majority of the board of directors of the entity
                  surviving such merger or any parent thereof (or a majority
                  plus one member where such board is comprised of an odd number
                  of members); or

                           (E) The stockholders of the Company approve a plan of
                  complete liquidation or dissolution of the Company or there is
                  consummated an agreement for the sale or disposition by the
                  Company of all or substantially all of the Company's assets,
                  other than (i) a sale or disposition by the Company of all or
                  substantially all of the Company's assets to an entity, at
                  least 55% of the combined voting power of the voting
                  securities of which are owned by stockholders of the Company
                  in substantially the same proportions as their ownership of
                  the Company immediately prior to such sale, or (ii) where the
                  individuals who comprise the Board immediately prior thereto
                  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.

                  "COMMITTEE" means the Compensation Committee of the Board or
         such other committee of the Board or the entire Board as the Board
         designates to administer the terms and provisions of this Plan, as
         specified in Section 2.

                  "COMMON STOCK" means the Company's common stock, $1.00 par
         value.

                  "COMPENSATION" means a Director's annual retainer.

                  "DEFERRAL VEHICLES" has the meaning specified in Section 5.

                  "DEFERRED COMPENSATION" means the Compensation and Retirement
         Income deferred by a Participant with respect to any calendar year
         pursuant to an election as provided in Section 4.

                  "DESIGNATED DATE" means the designated payment date selected
         by a Participant at the time of the deferral election is made, and with
         the consent of the Committee, a Participant may elect multiple
         Designated Dates with respect to Deferred Compensation. Designated
         Dates are further described in clause 5.2 and Section 8.

                  "DIRECTORS" means all non-employee directors of the Company.

                  "DISCOUNTED STOCK OPTIONS" means the Stock Options described
         in Section 5.1(b).

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
         amended.

                  "FAIR MARKET VALUE" means the price per share of Common Stock,
         based on the composite transactions in the Common Stock as reported by
         The Wall Street Journal, and shall be equal to the per

                                       2
<PAGE>

         share price of the last sale of Common Stock on the trading day prior
         to the date of grant of the Stock Option.

                  "MARKET-PRICED STOCK OPTIONS" means the Stock Options
         described in Section 5.1(a).

                  "OPTION EXPIRATION DATE" has the meaning specified in Section
         7.2.

                  "PARTICIPANT" means an eligible Director who elects to become
         a participant in the Plan.

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

                  "PRIME RATE EQUIVALENTS" has the meaning specified in Section
         5.2.

                  "RETIREMENT INCOME" means retirement benefits pursuant to the
         Company's Director Retirement Policy.

                  "S&P 500 EQUIVALENTS" has the meaning specified in Section
         5.2.

                  "SHARES" means the shares of Common Stock reserved for
         issuance under this Plan.

                  "STOCK OPTION" or "STOCK OPTIONS" are the stock options issued
         to Participants in exchange for Deferred Compensation pursuant to
         Section 7, or if permitted by the Committee, pursuant to any other plan
         that would permit the grant of options under this Plan.

                  "STOCK OPTION PRICE" means the price at which a Participant
         may purchase a Share pursuant to a Stock Option.

         1.3 INTERPRETATION AND CONSTRUCTION. As used in this 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 mean
         the sections of this Plan.

2.       ADMINISTRATION.

                  The Plan shall be administered by the Committee. The Committee
         is authorized to interpret the Plan and may, from time to time, adopt
         such rules and regulations, consistent with the provisions of the Plan,
         as it may deem advisable to carry out the Plan. All determinations made
         by the Committee shall be final. No member of the Committee shall have
         any right to vote or decide upon any matter relating 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. The Committee may
         delegate to the Vice President of Human Resources or other officer of
         the Company its duties for the day-to-day administration of the Plan,
         including accepting deferral elections and accounting for deferrals and
         distributions under the Plan. All expenses incurred in connection with
         the administration of the Plan shall be borne by the Company.

                  All determinations and decisions made by the Committee and the
         Board pursuant to the provisions of this Plan and all related orders
         and resolutions of the Committee and the Board shall be final,
         conclusive and binding on all Persons, including the Company, its
         stockholders, Directors, Participants and the estates and beneficiaries
         of Directors and Participants.

                                       3
<PAGE>

3.       PARTICIPATION IN THE PLAN.

         3.1 ELIGIBILITY. Directors shall be eligible to participate in the
         Plan. An individual shall be considered to be a Director until the
         close of business on the day preceding the earlier of the first date
         the individual (1) becomes a common-law employee of the Company or its
         subsidiaries or (2) ceases to be a member of the Board for any reason
         whatsoever.

         3.2 ELECTION TO PARTICIPATE. An eligible Director may elect to become a
         Participant by electing to defer an integral percentage (from 1% to
         100%) of his Compensation. All elections shall be made in the form and
         manner prescribed by the Committee.

4.       DEFERRAL ELECTIONS.

         4.1      COMPENSATION DEFERRALS.

                         (a) Compensation deferral elections shall be made with
                  respect to each calendar year. Unless otherwise determined by
                  the Committee, any election by a Participant to defer
                  Compensation under this Plan must be made on or before the
                  DECEMBER 1ST preceding the calendar year to which the election
                  relates. Any such election shall apply to the Participant's
                  Compensation for the period commencing on January 1st of the
                  applicable calendar year and ending upon the earlier of
                  December 31st of such calendar year or the date during such
                  calendar year that his directorship is terminated for any
                  reason.

                         If a directorship commences during a calendar year, any
                  deferral election with respect to the first year of the
                  directorship must be made by the Director WITHIN THIRTY (30)
                  DAYS of the date he or she first becomes a Director. Any such
                  deferral election will apply commencing on the date he or she
                  first becomes a Director to the Participant's Compensation
                  during the calendar year in which he or she first becomes a
                  Director.

                         (b) Any election to defer Compensation which may be
                  made by a Participant shall be irrevocable once made with
                  respect to the calendar year. Any election to defer
                  Compensation made by a Participant with respect to any
                  calendar year shall be deemed to have been made with respect
                  to each subsequent calendar year, unless the Participant
                  changes such election prior to the expiration of the time for
                  making the election with respect to the subsequent calendar
                  year.

         4.2 RETIREMENT INCOME DEFERRALS. Deferrals of Retirement Income were
         allowed prior to January 1, 2002. Amounts attributable to such
         deferrals shall be paid in accordance with the Participants' Retirement
         Income deferral elections made hereunder prior to January 1, 2002.

5.       ELECTION OF DEFERRAL VEHICLES.

         At the time of making a deferral election, a Participant shall select
         one or more deferral vehicles ("DEFERRAL VEHICLES") for the
         Participant's Deferred Compensation respecting the applicable calendar
         year or years as described in Sections 5.1 and 5.2.

         5.1 STOCK OPTION-RELATED DEFERRAL VEHICLES. The Participant's Deferred
         Compensation shall be exchanged for Stock Options. All Stock Options
         granted in exchange for Deferred Compensation under this Plan shall be
         subject to all of the applicable terms and provisions of this Plan or
         such other plan from which the Stock Option is granted.

                  A Participant who elects a Stock Option-Related Deferral
         Vehicle shall also elect whether to receive such Stock Options priced
         in accordance with the following subsection (a) or (b):

                  (a) "MARKET-PRICED STOCK OPTIONS." If Market-Priced Stock
         Options are elected, the amount of the Participant's aggregate Deferred
         Compensation as of the last day of each calendar quarter which would
         otherwise have been paid during such quarter shall be multiplied by 4.4
         and then divided by

                                       4
<PAGE>

         the Fair Market Value of the Company's Common Stock on the last day of
         the quarter to determine the number of Market-Priced Stock Options to
         be granted in exchange for the Deferred Compensation.

                  OR

                  (b) "DISCOUNTED STOCK OPTIONS." If Discounted Stock Options
         are elected, the Participant's aggregate Deferred Compensation as of
         the last day of each calendar quarter which would otherwise have been
         paid during such quarter shall be divided by the discounted price of
         the Company's Common Stock on the last day of such quarter to determine
         the number of Discounted Stock Options to be granted in exchange for
         the Deferred Compensation. The discounted price is a 50% discount to
         the Fair Market Value of the Company's Common Stock on the last day of
         the quarter.

         5.2 CASH-BASED DEFERRAL VEHICLES. The Participant's Deferred
         Compensation shall be credited to an Account established by the
         Committee as of the date or dates the Deferred Compensation would
         otherwise have been paid. A Participant who elects a Cash-Based
         Deferral Vehicle shall also elect whether to receive Prime Rate
         Equivalents or S&P 500 Equivalents for the deferral period that
         commences on the date or dates such Deferred Compensation is credited
         to the Account and ending on the Designated Date. All Deferred
         Compensation and interest and earnings equivalents credited to an
         Account shall be nonforfeitable pending payment as of the Designated
         Date.

                  (a) Prime Rate Equivalents. To the extent Prime Rate
         Equivalents are elected, interest equivalents will be credited to the
         Participant's Account as of the last day of each calendar month based
         upon the average daily balance in the Account for the month and the
         prime lending rate as declared by Citibank, or such other lending
         institution selected by the Committee, to be in effect from time to
         time.

                  (b) S&P 500 Equivalents. To the extent S&P 500 Equivalents are
         elected, the earnings (or loss) equivalents will be credited (or
         debited) to the Participant's Account as of the last day of each
         calendar quarter based upon the balance in the Account as of the last
         day of the quarter and the returns realized by the Standard & Poor's
         500 Index for the quarter.

                  (c) Designated Date.

                           (1) Any Designated Date respecting Deferred
                           Compensation subject to Prime Rate Equivalents shall
                           be as of the last day of a calendar month.

                           (2) Any Designated Date respecting Deferred
                           Compensation subject to S&P 500 Equivalents shall be
                           as of the last day of a calendar quarter.

                           (3) Any such Designated Date so elected may be either
                           during the Participant's active tenure as a Director
                           or after cessation of the Participant's directorship
                           for any reason and may be elected either by
                           specifying a particular date or by selecting a date
                           that follows the occurrence of a specified event;
                           provided, however, that in no event shall a
                           Designated Date be more than 10 years from the date
                           the Participant's directorship terminates.

6.       SHARES AVAILABLE FOR STOCK OPTIONS.

         6.1 NUMBER OF SHARES AVAILABLE FOR STOCK OPTIONS. Subject to adjustment
         as provided in Section 6.2, the number of Shares of Common Stock
         reserved for issuance to Participants under this Plan shall be up to
         500,000. These Shares may consist of authorized but unissued Shares or
         previously issued Shares reacquired by the Company as treasury shares.
         The number of Shares that are the subject of Stock Options under this
         Plan that are forfeited or terminated or expire unexercised shall again
         immediately become available to be issued as Stock Options under this
         Plan. Shares approved pursuant to the Long Term Incentive Plan of Baker
         Hughes Incorporated, as amended, and the Baker Hughes Incorporated 1998
         Employee Stock Option Plan, as amended, that have not been awarded
         under such plans, including Shares that are canceled, terminated,
         expired unexercised, settled in cash in lieu of Shares or in a manner
         such that

                                       5
<PAGE>

         all or some of the Shares covered thereby are not issued to a
         participant or are exchanged for a consideration that does not involve
         Shares, and Shares that are so canceled, terminated, expired
         unexercised, settled in cash in lieu of Shares or in a manner such that
         all or some of the Shares covered thereby are not issued to a
         participant or are exchanged for a consideration that does not involve
         Shares, will immediately become available for Stock Options under this
         Plan. The Shares described in the foregoing sentence shall be included
         in the up to 500,000 Shares reserved for issuance under this Plan. The
         Committee shall determine the appropriate methodology for calculating
         the number of Shares issued pursuant to this Plan.

         6.2 ADJUSTMENTS IN AUTHORIZED SHARES. The existence of outstanding
         Stock Options shall not affect in any manner the right or power of the
         Company or its stockholders to make or authorize any or all
         adjustments, recapitalizations, reorganizations or other changes in the
         capital stock of the Company or its business or any merger or
         consolidation of the Company, or any issue of bonds, debentures,
         preferred or prior preference stock (whether or not such issue is prior
         to, on a parity with or junior to the Shares) or the dissolution or
         liquidation of the Company, or any sale or transfer of all or any part
         of its assets or business or any other corporate act or proceeding of
         any kind, whether or not of a character similar to that of the acts or
         proceedings enumerated above.

                  If there shall be any change in the Shares of the Company or
         the capitalization of the Company through merger, consolidation,
         reorganization, recapitalization, stock dividend, stock split, reverse
         stock split, split up, spin-off, combination of shares, exchange of
         shares, dividend in kind or other like change in capital structure or
         distribution (other than normal cash dividends) to stockholders of the
         Company, the Board, in its sole discretion, to prevent dilution or
         enlargement of Participants' rights under this Plan, shall adjust, in
         an equitable manner, as applicable, the number and kind of Shares that
         may be issued under this Plan, the number and kind of Shares subject to
         outstanding Stock Options and other value determinations applicable to
         outstanding Stock Options. In the event of a corporate merger,
         consolidation, acquisition of property or stock, separation,
         reorganization or liquidation, the Board shall be authorized to issue
         or assume Stock Options by means of substitution of new Stock Options,
         as appropriate, for previously issued Stock Options.

7.       STOCK OPTIONS

         7.1 CALCULATION OF EXERCISE PRICE. The exercise price to be paid for
         each share of Common Stock deliverable upon exercise of each Stock
         Option granted shall be equal to the Fair Market Value per share of
         Common Stock at the time of grant as determined by the Committee,
         provided, that the exercise price of each Stock Option may, in the
         discretion of the Committee, be discounted from Fair Market Value, in
         accordance with the provisions of Section 5.1. The exercise price for
         each Stock Option shall be subject to adjustment as provided in Section
         6.2.

         7.2 TERMS AND CONDITIONS OF OPTIONS. Stock Options shall be in such
         form as the Committee may from time to time approve and shall be
         subject to the following terms and conditions:

                  (a) EXERCISE PERIODS FOR STOCK OPTIONS. All Stock Options
                  shall vest and become exercisable on the first anniversary of
                  the date of grant. Each Stock Option shall be exercisable from
                  time to time, in whole or in part, at any time after one year
                  from the date of grant and prior to the date which is 10 years
                  after the date of grant, subject to the provisions of clause
                  (b) of this Section 7.2 (the "OPTION EXPIRATION DATE").

                  (b) EXERCISE PERIODS IN THE EVENT OF DIRECTORSHIP TERMINATION.
                  A Director's directorship shall terminate at the close of
                  business on the day preceding the day he or she ceases to be a
                  member of the Board for any reason whatsoever. When a
                  Director's directorship terminates, each of his or her Stock
                  Options and all rights thereunder shall expire three (3) years
                  after the Director's directorship terminates for any reason.
                  Any Stock Options unexercised at the time of the Director's
                  death (including the Director's death which results in
                  termination of his or her directorship or the Director's death
                  during the 3-year period after his or her directorship

                                       6
<PAGE>

                  terminates) may be exercised by the Director's estate or by
                  the Person or Persons who acquire the right to exercise his or
                  her Stock Option by bequest or inheritance.

                  (c) TRANSFERABILITY OF STOCK OPTIONS. Except as otherwise
                  provided in the Stock Option agreement, no Stock Option may be
                  sold, transferred, pledged, assigned, or otherwise alienated
                  or hypothecated, other than by will or by the laws of descent
                  and distribution. Further, except as otherwise provided in the
                  Stock Option agreement, all Stock Options granted under this
                  Plan shall be exercisable during his or her lifetime only by
                  the Participant. Any attempted assignment of a Stock Option in
                  violation of this Section shall be null and void.

                  (d) PAYMENT OF STOCK OPTION PRICE. Stock Options granted under
                  this Plan shall be exercised in the form and manner as the
                  Committee shall determine from time to time.

                           Upon the exercise of any Stock Option, the Stock
                  Option Price shall be payable to the Company in full either
                  (i) in cash or its equivalent; (ii) by tendering previously
                  acquired Shares having an aggregate fair market value at the
                  time of exercise equal to the total Stock Option Price
                  (provided that the Shares that are tendered must have been
                  held by the Participant for at least 6 months prior to their
                  tender to satisfy the Stock Option Price); (iii) by a
                  combination of (i) and (ii); or (iv) any other method approved
                  by the Committee in its sole discretion at the time of grant
                  and as set forth in the Stock Option.

                           Subject to any governing rules or regulations, after
                  the exercise of the Stock Option and full payment of the Stock
                  Option Price in the form and manner as the Committee shall
                  determine, the Director may pay the required fee and request a
                  Share certificate based upon the number of Shares purchased
                  under the Stock Option through the third-party administrator
                  designated by the Committee to have this administrative duty.
                  In addition, the Company may, at its option, issue or cause to
                  be issued Share certificates.

                           Unless otherwise determined by the Committee, all
                  payments under all of the methods indicated above shall be
                  paid in United States dollars.

                  (e) LISTING AND REGISTRATION OF SHARES. Each Stock Option
                  shall be subject to the requirement that if at any time the
                  Committee determines, in its discretion, that the listing,
                  registration or qualification under the regulations of any
                  securities exchange or under any state or federal law of the
                  Shares subject to the Stock Option, or the consent or approval
                  of any governmental regulatory body, is necessary or desirable
                  as a condition of, or in connection with, the issue or
                  purchase of the Shares under such Stock Option, the Stock
                  Option may not be exercised in whole or in part unless such
                  listing, registration, qualification, consent or approval
                  shall have been effected or obtained and the same shall have
                  been free of any conditions not acceptable to the Committee.

                  (f) AMENDMENT. The Committee may, with the consent of the
                  Person or Persons entitled to exercise any outstanding Stock
                  Option, amend such Stock Option; provided, however, that any
                  such amendment shall be subject to stockholder approval when
                  required.

                  (g) INVESTMENT REPRESENTATIONS. As a condition to the exercise
                  of a Stock Option, the Company may require the Person
                  exercising such Stock Option to represent and warrant at the
                  time of any such exercise that the Shares are being purchased
                  only for investment and without any present intention to sell
                  or distribute such Shares if, in the opinion of counsel for
                  the Company, such a representation is required.

                  (h) UNCERTIFICATED SHARES. To the extent that this Plan
                  provides for issuance of certificates to reflect the transfer
                  of Shares, the transfer of such Shares may be effected on a
                  noncertificated basis, to the extent not prohibited by
                  applicable law or the rules of any stock exchange.

                                       7
<PAGE>

                  (i) NO FRACTIONAL SHARES. No fractional Shares shall be issued
                  or delivered pursuant to this Plan or any Stock Option
                  agreement. The Committee shall determine whether cash or other
                  property shall be issued or paid in lieu of fractional Shares
                  or whether such fractional Shares or any rights thereto shall
                  be forfeited or otherwise eliminated.

                  (j) OTHER PROVISIONS.

                           (i) The Person or Persons entitled to exercise, or
                           who have exercised, a Stock Option shall not be
                           entitled to any rights as a stockholder of the
                           Company with respect to any Shares subject to such
                           Stock Option until he or she shall have become the
                           holder of record of such Shares.

                           (ii) No Stock Option shall be construed as limiting
                           any right which either the Company's stockholders or
                           the Board of Directors may have to remove at any time
                           from the Board of Directors, with or without cause,
                           any Person to whom such Stock Option has been
                           granted.

                           (iii) Notwithstanding any provision of the Plan or
                           the terms of any Stock Option agreement, the Company
                           shall not be required to issue any Shares hereunder
                           if such issuance would, in the judgment of the
                           Committee, constitute a violation of any state or
                           federal law or of the rules or regulations of any
                           governmental regulatory body.

                           (iv) Notwithstanding any provision of the Plan, the
                           Committee may not exercise any discretion with
                           respect to this Section 7 which would be inconsistent
                           with the intent that the Plan meet the requirements
                           of Rule 16b-3 promulgated by the Securities Exchange
                           Commission under the Exchange Act.

8.       PAYMENT OF AMOUNTS IN ACCOUNTS.

         8.1 PAYMENT GENERALLY. Except as otherwise provided in this Section 8,
         the Deferred Compensation and interest and earnings equivalents
         credited to a Participant's Account with respect to a calendar year or
         years, as applicable, shall be paid in cash to the Participant in one
         lump sum as of the Designated Date elected by the Participant. In the
         absence of a valid election of a Designated Date by the Participant,
         the Designated Date shall be deemed to be the date of cessation of the
         Participant's status as a Director.

         8.2 PAYMENT OF SIMULTANEOUS AMOUNTS. It is recognized that a
         Participant may elect to defer Compensation with respect to more than
         one calendar year, so that Deferred Compensation and interest and
         earnings equivalents are credited to the Participant's Account with
         respect to more than one calendar year, and the payment of such amounts
         with respect to more than one calendar year may, but need not, become
         payable to the Participant as of the same Designated Date.

         8.3 HARDSHIP. In the event of hardship of the Participant, as
         determined in the sole discretion of the Committee, all or a portion of
         the cash payments that would otherwise be made on a later Designation
         Date under this Section 8 shall be accelerated by being made as soon as
         practicable, following the Committee's determination of hardship, in
         one lump sum. For this purpose, hardship shall mean a severe financial
         hardship of the Participant resulting from a sudden and unexpected
         illness or accident of the Participant or of a dependent (as defined in
         section 152(a) of the Code) of the Participant, loss of the
         Participant's property due to casualty, or any similar extraordinary
         and unforeseeable circumstance arising as a result of events beyond the
         control of the Participant. The circumstances that will constitute a
         hardship will depend upon the facts of each case, but, in any case,
         payment may not be made to the extent that the hardship is or may be
         relieved through reimbursement or compensation by insurance or
         otherwise or by liquidation of the Participant's assets, to the extent
         the liquidation of such assets will not itself cause severe financial
         hardship. Such foreseeable needs for funds as the desire to send a
         Participant's child to college or purchase a home will not be
         considered to be a hardship. No hardship distribution can exceed the
         lesser of the amount deemed credited to the Participant's Account or
         the amount reasonably needed to satisfy the

                                       8
<PAGE>

         emergency need. Whether a hardship exists and the amount reasonably
         needed to satisfy the emergency need will be determined by the
         Committee.

         8.4 DISABILITY. In the event of the disability of the Participant, as
         determined in the sole discretion of the Committee, all cash payments
         that would otherwise be made on a later Designation Date under this
         Section 8 shall be accelerated by being made as soon as practicable,
         following the Committee's determination of such disability, in one lump
         sum. For this purpose, disability shall mean total and permanent
         disability that will prevent the Participant from engaging in
         meaningful business activities.

         8.5 DEATH. In the event of the death of the Participant, all of the
         cash payments that would otherwise be made on later Designation Date
         under this Section 8, shall be accelerated by being made as soon as
         practicable following the death of the Participant. A Participant, by
         written instrument filed with the Committee in such manner and form as
         it may prescribe, may designate one or more beneficiaries to receive
         payment of the Participant's Deferred Compensation and interest or
         earnings equivalents in the event of the death of the Participant. Any
         such beneficiary designation may be changed from time to time prior to
         the death of the Participant. In the absence of a beneficiary
         designation on file with the Committee at the time of the Participant's
         death, the Deferred Compensation and interest or earnings equivalents
         remaining to be paid to the Participant shall be paid to the executor
         or administrator of the Participant's estate.

         8.6 CHANGE IN PURPOSE. In the event of a major tax law change or other
         reason, as determined in the sole discretion of the Committee, which
         makes the continued deferral of amounts under the Plan undesirable,
         cash payments under this Section 8 shall be accelerated by being made
         as soon as practicable following the Committee's determination to
         discontinue deferrals, in one lump sum.

         8.7 DEBITING OF PLAN ACCOUNTS. Once Deferred Compensation and interest
         or earnings equivalents have been paid, such amounts shall be debited
         from the Participant's Account, and the Company shall no longer be
         accountable for such paid amounts.

9.       PROHIBITION AGAINST ASSIGNMENT OR ENCUMBRANCE.

                  No right, title, interest or benefit hereunder shall ever be
         liable for or charged with any of the torts or obligations of a
         Participant or any Person claiming under a Participant, or be subject
         to seizure by any creditor of a Participant or any Person claiming
         under a Participant. Except as to the selection of a "designated
         beneficiary" in the event of death, no Participant or any Person
         claiming under a Participant shall have the power to anticipate or
         dispose of any right, title, interest or benefit hereunder in any
         manner until the same shall have been actually distributed free and
         clear of the terms of the Plan.

10.      EFFECTIVE DATE, AMENDMENT AND TERMINATION OF THE PLAN.

                  The Plan shall be amended and restated effective as of July
         24, 2002. Subject to the terms of this Plan, the Committee may at any
         time and from time to time alter, amend, modify, suspend or terminate
         this Plan in whole or in part, except that no amendment, modification,
         suspension or termination that would adversely affect in any material
         way the rights of any Participant under any Stock Option previously
         granted to such Participant under this Plan shall be made without the
         written consent of such Participant or to the extent stockholder
         approval is otherwise required by applicable legal requirements. The
         Committee may terminate the Plan at any time with respect to periods
         following the date such termination is effected.

11.      NATURE OF THE PLAN.

                  The Plan constitutes an unfunded, unsecured liability of the
         Company to provide benefits in accordance with the provisions hereof.
         The Company, at its election, may fund the payment of benefits under
         the Plan by setting aside and investing, in an account on the Company's
         books, such funds as the Company may, from time to time, determine.
         Neither the establishment of the Plan, the crediting of amounts to
         Accounts nor the setting aside of any funds shall be deemed to create a
         trust. Legal and equitable title to any funds set aside pursuant to the
         Plan shall remain in the Company, and neither the Participants nor any
         Persons claiming under the Participants shall have any security or
         other interest in such

                                       9
<PAGE>

         funds. Any funds so set aside or acquired shall remain subject to the
         claims of the creditors of the Company, present and future. This Plan
         is not intended to be subject to Employee Retirement Income Security
         Act of 1974, as amended.

12.      REORGANIZATION.

                  The Company shall not merge or consolidate with any other
         entity or entities, liquidate, dissolve, reorganize, or sell
         substantially all of its assets and business unless and until a
         succeeding or continuing entity or entities agrees to assume and
         discharge the obligations of the Company under this Agreement. Upon the
         occurrence of such an event, the term "Company" as used in this
         Agreement shall be deemed to refer to such successor or survivor entity
         or entities.

13.      ACCELERATION.

                  Notwithstanding any provision of this Plan to the contrary, in
         the event of an occurrence of a Change in Control other than an event
         described only in Section (C) of the definition of Change in Control,
         all Stock Options granted pursuant to this Plan shall become fully
         vested and shall become immediately exercisable.

14.      MISCELLANEOUS.

         14.1 SEVERABILITY. If any provision of this Plan shall be held illegal
         or invalid for any reason, the illegality or invalidity shall not
         affect the remaining parts of this Plan, and this Plan shall be
         construed and enforced as if the illegal or invalid provision had not
         been included.

         14.2 REQUIREMENTS OF LAW. The issuance of Shares under this Plan shall
         be subject to all applicable laws, rules and regulations and to such
         approvals by any governmental agencies or national securities exchanges
         as may be required. The Company shall receive the consideration
         required by law for the issuance of Shares under this Plan.

         14.3 SECURITIES LAW COMPLIANCE. All transactions under this Plan are
         intended to comply with all applicable conditions of Rule 16b-3 or its
         successor under the Exchange Act, unless determined otherwise by the
         Board. To the extent any provision of this Plan or action by the Board
         fails to so comply, it shall be deemed null and void, to the extent
         permitted by law and deemed advisable by the Board.

         14.4 GOVERNING LAW. This Plan shall be governed by the laws of the
         State of Texas, excluding any conflicts or choice of law rule or
         principle that might otherwise refer construction or interpretation of
         this Plan to the substantive law of another jurisdiction.

                                       10

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