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                                                                   Exhibit 10.4

                            INDEMNIFICATION AGREEMENT

         INDEMNIFICATION AGREEMENT, made and executed as of this 3rd day of
December, 2003 (this "Agreement"), by and between BAKER HUGHES INCORPORATED, a
Delaware corporation (the "Company"), and _____________________, an individual
resident of the State of Texas (the "Indemnitee").

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

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

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

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

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

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

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

         1.       DEFINITIONS. For purposes of this Agreement:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

         10.      PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS. (a) In making
a determination with respect to entitlement to indemnification, the Indemnitee
shall be presumed to be entitled to indemnification hereunder and the Company
shall have the burden of proof in the making of any determination contrary to
such presumption.

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

         11.      ADVANCEMENT OF EXPENSES. Subject to applicable law, all
reasonable Expenses actually incurred by the Indemnitee in connection with any
threatened or pending action, suit

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

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

         13.      NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by
the Indemnitee of notice of the commencement of any action, suit or proceeding,
the Indemnitee will, if a claim in respect thereof is to be made against the
Company under this Agreement, notify the Company in

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

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

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

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

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

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

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

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

                                       10
<PAGE>

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

         18.      ATTORNEY'S FEES AND OTHER EXPENSES TO ENFORCE AGREEMENT. In
the event that the Indemnitee is subject to or intervenes in any proceeding in
which the validity or enforceability of this Agreement is at issue or seeks an
adjudication or award in arbitration to enforce the Indemnitee's rights under,
or to recover damages for breach of, this Agreement the Indemnitee, if he/she
prevails in whole or in part in such action, shall be entitled to recover from
the Company and shall be indemnified by the Company against any actual expenses
for attorneys' fees and disbursements reasonably incurred by the Indemnitee.

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

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

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

                                       11
<PAGE>

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

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

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

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

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

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

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

                                       12
<PAGE>

                  (a)      If to the Indemnitee to:

                           Facsimile:

                  (b)      If to the Company, to:

                           Baker Hughes Incorporated
                           Attn: General Counsel
                           3900 Essex Lane, Suite 1200
                           Houston, Texas 77027-5177
                           Facsimile: (713) 439-8472

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

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

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

                                            BAKER HUGHES INCORPORATED

                                            By_________________________________
                                                     Michael E. Wiley
                                                     Chairman, President and
                                                     Chief Executive Officer

                                            INDEMNITEE:

                                            By_________________________________

                                       13<PAGE>
                                                                    EXHIBIT 10.8

                            BAKER HUGHES INCORPORATED

                        CHANGE IN CONTROL SEVERANCE PLAN

                          (EFFECTIVE DECEMBER 3, 2003)

<PAGE>
                            BAKER HUGHES INCORPORATED

                        CHANGE IN CONTROL SEVERANCE PLAN

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

         WHEREAS, Baker Hughes Incorporated would like to provide severance
benefits in the event that the employment of a key management executive is
involuntarily terminated in conjunction with a change in control.

         NOW, THEREFORE, Baker Hughes Incorporated adopts the Baker Hughes
Incorporated Change in Control Severance Plan, effective December 3, 2003.

                                       i
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                   PAGE

<C>   <S>                                                                                           <C>
1.    ESTABLISHMENT AND OBJECTIVE....................................................................1

      1.1      Establishment.........................................................................1

      1.2      Objective.............................................................................1

2.    DEFINITIONS....................................................................................1

      2.1      Capitalized Terms.....................................................................1

      2.2      Number and Gender.....................................................................9

      2.3      Headings..............................................................................9

3.    ELIGIBILITY....................................................................................9

4.    BENEFITS......................................................................................10

      4.1      Equity Based Compensation............................................................10

      4.2      Compensation and Benefits During Incapacity and Prior to Termination of Employment...10

      4.3      Benefits Following Termination of Employment.........................................10

      4.4      Tax Gross-Up Payments................................................................13

      4.5      Legal Fees...........................................................................14

5.    TIME OF BENEFITS PAYMENTS.....................................................................15

6.    TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE........................................15

      6.1      Notice of Termination................................................................15

      6.2      Employment Termination Date..........................................................15

      6.3      Dispute Concerning Termination.......................................................16

      6.4      Compensation During Dispute..........................................................16

7.    WITHHOLDING...................................................................................16

8.    DEATH OF PARTICIPANT..........................................................................16

9.    AMENDMENT AND TERMINATION.....................................................................17

10.   ADOPTION OF PLAN BY OTHER EMPLOYERS...........................................................17

11.   MISCELLANEOUS.................................................................................17

      11.1     Plan Not an Employment Contract......................................................17

      11.2     Alienation Prohibited................................................................17

      11.3     Severability.........................................................................17

      11.4     Binding Effect.......................................................................17

</TABLE>

<PAGE>
                                TABLE OF CONTENTS
                                   (continued)
<TABLE>
<CAPTION>
                                                                                                   PAGE

<C>   <S>                                                                                           <C>

      11.5     Settlement of Disputes Concerning Benefits Under the Plan; Arbitration...............18

      11.6     Guaranty of Payment, Performance, and Observance by Baker Hughes.....................18

      11.7     No Mitigation........................................................................19

      11.8     Other Amounts Due....................................................................19

      11.9     Notices..............................................................................19

      11.10    Governing Law........................................................................20

</TABLE>

                                      -ii-

<PAGE>
                            BAKER HUGHES INCORPORATED

                        CHANGE IN CONTROL SEVERANCE PLAN

1.       ESTABLISHMENT AND OBJECTIVE

         1.1 ESTABLISHMENT. Baker Hughes Incorporated, a Delaware corporation,
hereby establishes a plan for certain designated employees to be known as the
"Baker Hughes Incorporated Change in Control Severance Plan" (the "Plan").

         1.2 OBJECTIVE. The Plan is designed to attract and retain certain
designated employees of the Company (defined below) and to reward such employees
of the Company by providing replacement income and certain benefits in
conjunction with a Change in Control (defined below).

2.       DEFINITIONS

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

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

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

                  "ASSETS" means assets of any kind owned by Baker Hughes,
         including but not limited to securities of Baker Hughes' direct and
         indirect subsidiaries and Affiliates.

                  "BAKER HUGHES" means Baker Hughes Incorporated, a Delaware
         corporation, and any successor by merger or otherwise.

                  "BASE COMPENSATION" means a Participant's base salary or wages
         (as defined in section 3401(a) of the Code for purposes of federal
         income tax withholding) from the Company, modified by including any
         portion thereof that such Participant could have received in cash in
         lieu of any elective deferrals made by the Participant pursuant to the
         Supplemental Retirement Plan (other than deferrals of bonuses) or
         pursuant to a qualified cash or deferred arrangement described in
         section 401(k) of the Code and any elective contributions under a
         cafeteria plan described in section 125, and modified further by
         excluding any bonus, incentive compensation (including but not limited
         to equity-based compensation), commissions, expense reimbursements or
         other expense allowances, fringe benefits (cash and noncash), moving
         expenses, deferred compensation (other than elective deferrals by the
         Participant under a qualified cash or deferred arrangement described in
         section 401(k) of the Code or the Supplemental Retirement Plan that are

                                       1
<PAGE>
         expressly included in "Base Compensation" under the foregoing
         provisions of this definition), welfare benefits as defined in ERISA,
         overtime pay, special performance compensation amounts and severance
         compensation.

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

                   "BOARD " means the Board of Directors of Baker Hughes or
         other governing body of Baker Hughes or its direct or indirect parent.

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

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

                  "CHANGE IN CONTROL" means the occurrence of any of the
         following events:

         (a) the individuals who are Incumbent Directors cease for any reason to
constitute a majority of the members of the Board;

         (b) the consummation of a Merger of Baker Hughes or an Affiliate of
Baker Hughes with another Entity, unless the individuals and Entities who were
the Beneficial Owners of the Voting Securities

                                       2
<PAGE>
of Baker Hughes outstanding immediately prior to such Merger own, directly or
indirectly, at least 50 percent of the combined voting power of the Voting
Securities of any of Baker Hughes, the surviving Entity or the parent of the
surviving Entity outstanding immediately after such Merger;

         (c) any Person, other than a Specified Owner, becomes a Beneficial
Owner, directly or indirectly, of securities of Baker Hughes representing 30
percent or more of the combined voting power of Baker Hughes' then outstanding
Voting Securities;

         (d) a sale, transfer, lease or other disposition of all or
substantially all of Baker Hughes' Assets is consummated (an "Asset Sale"),
unless:

                  (1) the individuals and Entities who were the Beneficial
Owners of the Voting Securities of Baker Hughes immediately prior to such Asset
Sale own, directly or indirectly, 50 percent or more of the combined voting
power of the Voting Securities of the Entity that acquires such Assets in such
Asset Sale or its parent immediately after such Asset Sale in substantially the
same proportions as their ownership of Baker Hughes' Voting Securities
immediately prior to such Asset Sale; or

                  (2) the individuals who comprise the Board immediately prior
to such Asset Sale constitute a majority of the board of directors or other
governing body of either the Entity that acquired such Assets in such Asset Sale
or its parent (or a majority plus one member where such board or other governing
body is comprised of an odd number of directors); or

         (e) The stockholders of Baker Hughes approve a plan of complete
liquidation or dissolution of Baker Hughes.

                  "CODE" means the Internal Revenue Code of 1986, as amended, or
         any successor act.

                  "COMMITTEE" means, prior to a Change in Control or a Potential
         Change in Control, the Compensation Committee of the Board. After a
         Change in Control or a Potential Change in Control, "Committee" means
         (i) the individuals (not fewer than three (3) in number) who, on the
         date six months prior to the Change in Control constitute the
         Compensation Committee of the Board, plus, (ii) in the event that fewer
         than three (3) individuals are available from the group specified in
         clause (i) above for any reason, such individuals as may be appointed
         by the individual or individuals so available (including for this
         purpose any individual or individuals previously so appointed under
         this clause (ii)); provided, however, that the maximum number of
         individuals constituting the Committee after a Change in Control or
         Potential Change in Control shall not exceed six (6).

                  "COMPANY" means Baker Hughes or an Employer.

                  "DISABILITY" means the Participant's incapacity due to
         physical or mental illness that has caused the Participant to be absent
         from full-time performance of his duties with the Company for a period
         of six (6) consecutive months.

                  "EFFECTIVE DATE" means December 3, 2003, the date on which the
         Plan is adopted.

                                       3
<PAGE>
                  "EMPLOYEE" means an individual (i) who is employed in the
         services of the Company on the Company's active payroll, and (ii) who
         is also a United States-based executive salary grade system employee
         (under the Company's then current payroll system categories), or any
         comparable executive designations in any system that replaces the
         United States-based salary grade system. Notwithstanding the foregoing,
         the Committee may from time to time designate other individuals who may
         be selected for participation in the Plan.

                  "EMPLOYER" means any Affiliate that adopts the Plan pursuant
         to the provisions of Section 10.

                  "EMPLOYMENT TERMINATION DATE" means the date as of which a
         Participant incurs a Termination of Employment determined in accordance
         with the provisions of Section 6.2.

                  "ENTITY" means any corporation, partnership, association,
         joint-stock company, limited liability company, trust, unincorporated
         organization or other business entity.

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

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

                  "EXCISE TAX" means the excise tax imposed by section 4999 of
         the Code or any similar tax payable under any United States federal,
         state, or local statute.

                  "EXPIRATION DATE" shall have the meaning specified in the
         definition of the "Term of the Plan".

                  "GOOD REASON" for termination by the Employee of his
         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 (ii) and (iii) of the
         second paragraph of the definition of Termination of Employment
         (treating all references to "Change in Control" in paragraphs (a)
         through (f) below as references to a "Potential Change in Control"), 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 or responsibilities
which are substantially diminished as compared to the Employee's duties and
responsibilities immediately prior to a Change in Control or a material change
in the Employee's reporting responsibilities, titles or offices as an Employee
and as in effect immediately prior to the Change in Control.

         (b) a reduction by the Company in the Employee's annual Base
Compensation 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

                                       4
<PAGE>
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 outside of a 50-mile radius 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 business
travel obligations immediately prior to a Change in Control;

         (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
seven (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 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
immediately prior to the time of the Change in Control; or

         (g) any purported termination of the Employee's employment which is not
effected pursuant to a notice of termination satisfying the requirements of
Section 6.1 hereof.

                  The Employee's right to terminate his employment for Good
         Reason shall not be affected by the Employee's incapacity due to
         physical or mental illness. The Employee's

                                       5
<PAGE>
         continued employment shall not constitute consent to, or a waiver of
         any 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. The
         Committee's determination regarding the existence of Good Reason shall
         be conclusive and binding upon all parties unless the Committee's
         determination is arbitrary and capricious.

                  "GROSS-UP PAYMENT" means the additional amount paid to a
         Participant pursuant to Section 4.4.

                  "HIGHEST BASE COMPENSATION" means the Participant's annualized
         Base Compensation in effect immediately prior to (1) a Change in
         Control, (2) the first event or circumstance constituting Good Reason,
         or (3) the Participant's Termination of Employment, whichever is
         greatest.

                  "INCUMBENT DIRECTOR" means -

                  (a) a member of the Board on the Effective Date; or

                  (b) an individual-

                           (1) who becomes a member of the Board after the
                  Effective Date;

                           (2) whose appointment or election by the Board or
                  nomination for election by Baker Hughes' stockholders is
                  approved or recommended by a vote of at least two-thirds of
                  the then serving Incumbent Directors (as defined herein); and

                           (3) whose initial assumption of service on the Board
                  is not in connection with an actual or threatened election
                  contest.

                  "MERGER" means a merger, consolidation or similar transaction.

                  "PARTICIPANT" means an individual who is eligible to
         participate in the Plan under the provisions of Section 3.

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

                  "PERQUISITES" means benefits such as any airline VIP club
         memberships; country club and/ or health club membership dues and
         expenses related to the use of the country club and/ or health club;
         supplemental life insurance; financial consulting; and office equipment
         for use in the home (e.g., cellular telephones, personal digital
         assistance, home computers and office accessories similar to the office
         accessories available to the Employee in his employment office and
         monthly Internet connection fees) that may be provided by the Company
         from time to time.

                                       6
<PAGE>
                  "PERSON" shall have the meaning ascribed to the term in
         Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and
         14(d) thereof, including a "group" as defined in Section 13(d) thereof,
         except that the term shall not include (a) the Company or any of its
         Affiliates, (b) a trustee or other fiduciary holding Company securities
         under an employee benefit plan of the Company or any of its Affiliates,
         (c) an underwriter temporarily holding securities pursuant to an
         offering of those securities or (d) a corporation owned, directly or
         indirectly, by the stockholders of the Company in substantially the
         same proportions as their ownership of stock of the Company.

                  "PLAN" means the Baker Hughes Incorporated Change in Control
         Severance Plan, as it may be amended from time to time.

                  "POTENTIAL CHANGE IN CONTROL" shall be deemed to have occurred
         if the event set forth in any one of the following paragraphs shall
         have occurred:

                           (a) the Company enters into an agreement, the
                  consummation of which would result in the occurrence of a
                  Change in Control;

                           (b) the Company or any Person publicly announces an
                  intention to take or to consider taking actions which, if
                  consummated, would constitute a Change in Control;

                           (c) any Person becomes the Beneficial Owner, directly
                  or indirectly, of securities of the Company representing 15
                  percent or more of either the then outstanding shares of
                  common stock of the Company or the combined voting power of
                  the Company's then outstanding securities (not including in
                  the securities beneficially owned by such Person any
                  securities acquired directly from the Company or its
                  Affiliates); or

                           (d) the Board adopts a resolution to the effect that,
                  for purposes of the Plan, a Potential Change in Control has
                  occurred.

                  "RENEWAL DATE" shall have the meaning specified in the
         definition of the "Term of the Plan."

                  "SPECIFIED OWNER" means any of the following:

                  (a) Baker Hughes;

                  (b) an Affiliate of Baker Hughes;

                  (c) an employee benefit plan (or related trust) sponsored or
maintained by Baker Hughes or any Affiliate of Baker Hughes;

                  (d) a Person that becomes a Beneficial Owner of Baker Hughes'
outstanding Voting Securities representing 30 percent or more of the combined
voting power of Baker Hughes' then outstanding Voting Securities as a result of
the acquisition of securities directly from Baker Hughes and/or its Affiliates;
or

                                       7
<PAGE>
                  (e) a Person that becomes a Beneficial Owner of Baker Hughes'
outstanding Voting Securities representing 30 percent or more of the combined
voting power of Baker Hughes' then outstanding Voting Securities as a result of
a Merger if the individuals and Entities who were the Beneficial Owners of the
Voting Securities of Baker Hughes outstanding immediately prior to such Merger
own, directly or indirectly, at least 50 percent of the combined voting power of
the Voting Securities of any of Baker Hughes, the surviving Entity or the parent
of the surviving Entity outstanding immediately after such Merger in
substantially the same proportions as their ownership of the Voting Securities
of Baker Hughes outstanding immediately prior to such Merger.

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

                  "TERM OF THE PLAN" means the period commencing on the
         Effective Date and ending on:

                  (a) the last day of the three-year period beginning on the
Effective Date if no Change in Control shall have occurred during that
three-year period (such last day being the "Expiration Date"); or

                  (b) if a Change in Control shall have occurred during (i) the
three-year period beginning on the Effective Date or (ii) any period for which
the Term of the Plan shall have been automatically extended pursuant to the
second sentence of this definition, the two-year period beginning on the date on
which the Change in Control occurred.

                  After the expiration of the time period described in
         subsection (a) of this definition and in the absence of a Change in
         Control (as described in subsection (b) of this definition) the Term of
         the Plan shall be automatically extended for successive two-year
         periods beginning on the day immediately following the Expiration Date
         (the beginning date of each successive two-year period being a "Renewal
         Date"), unless, not later than 18 months prior to the Expiration Date
         or applicable Renewal Date, the Company shall give notice to
         Participants that the Term of the Plan will not be extended.

                  "TERMINATION OF EMPLOYMENT" means the termination of an
         individual's employment relationship with the Company (i) by the
         Company without Cause after a Change in Control occurs, or (ii) by the
         individual for Good Reason after a Change in Control occurs.

                  For purposes of this definition, an individual's employment
         shall be deemed to have been terminated after a Change in Control, if
         (i) the individual'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; (ii) the
         individual terminates his employment for Good Reason prior to a Change
         in Control (whether nor not a Change in Control ever occurs) and the
         circumstance or event which constitutes Good Reason occurs at the
         request or direction of a Person who has entered into an agreement with
         the

                                       8
<PAGE>
         Company, the consummation of which would constitute a Change in
         Control; or (iii) the individual's employment is terminated by the
         Company without Cause or by the individual 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). For purposes
         of any determination regarding the applicability of the immediately
         preceding sentence, any position taken by the Participant shall be
         presumed to be correct unless the Company establishes to the Committee
         by clear and convincing evidence that such position is not correct.

                  Termination of Employment does not include (i) a termination
         of employment due to the individual's death or Disability, or (ii) a
         termination of employment by the individual without Good Reason.

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

                  "VOTING SECURITIES" means the outstanding securities entitled
         to vote generally in the election of directors or other governing body.

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

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

3.       ELIGIBILITY

         The individuals who shall be eligible to participate in the Plan shall
be those Employees who are selected by the Committee. The Committee shall notify
an Employee who has been selected for participation of his eligibility to
participate in the Plan by furnishing him a written notification of
participation that specifies whether he is a Level 1 or Level 2 executive for
purposes of the Plan.

         Notwithstanding any other provision of the Plan, an Employee shall not
be eligible to participate in the Plan if there is in effect an individual
severance agreement (including an employment agreement that provides for
severance benefits) or change in control agreement between the Employee and the
Company.

         Notwithstanding any other provision of the Plan, the Board may
discontinue an individual's eligibility to participate in the Plan by providing
him written advance notice (the "Notice"), no later than 18 months prior to the
Expiration Date or a Renewal Date (as defined in the definition of "Term of the
Plan" in Section 2.1), that he shall no longer participate in the Plan;
provided, however, that should a Change in Control occur during such 18-month
advance

                                       9
<PAGE>
notification period, the Notice shall be void and of no effect, and the
Participant shall be eligible to participate in the Plan as if the Notice were
never given.

4.       BENEFITS

         4.1 EQUITY BASED COMPENSATION. Upon the occurrence of a Change in
Control, all options to acquire Baker Hughes stock, all shares of restricted
Baker Hughes stock, all other equity or phantom equity incentives and any awards
the value of which is determined by reference to or based upon the value of
Baker Hughes stock, held by the Participant under any plan of the Company shall
become immediately vested, exercisable and nonforfeitable and all conditions
thereof (including, but not limited to, any required holding periods) shall be
deemed to have been satisfied.

         4.2 COMPENSATION AND BENEFITS DURING INCAPACITY AND PRIOR TO
TERMINATION OF EMPLOYMENT. Following a Change in Control and during the Term of
the Plan, during any period in which the Participant fails to perform the
Participant's full-time duties with the Company as a result of incapacity due to
physical or mental illness, the Company shall pay the Participant's full salary
to the Participant at the rate in effect at the commencement of any such period,
together with all compensation and benefits payable to the Participant under the
terms of any compensation or benefit plan, program or arrangement maintained by
the Company during such period, until the Participant's employment is terminated
by the Company for Disability.

         4.3 BENEFITS FOLLOWING TERMINATION OF EMPLOYMENT. If a Participant
incurs a Termination of Employment during the Term of the Plan, the Company
shall provide the Participant the benefits described below. Further details of
the benefits described in this Section 4.3 are provided in Exhibit A.

                  (a) SEVERANCE PAYMENT BASED UPON BASE COMPENSATION. The
Company will pay the Participant a cash severance benefit based on the
applicable multiple of the Employee's Highest Base Compensation. The "applicable
multiple" shall be determined in accordance with the relevant provisions of
Exhibit A. A Participant's severance payment under this paragraph (a) will be
paid in accordance with the provisions of Section 5.

                  (b) SEVERANCE PAYMENT BASED UPON BONUSES. The Company will pay
the Participant a cash severance benefit in an amount equal to the sum of (1)
and (2) where (1) is an amount equal to the product of (A) the expected value
target percentage under the Participant's Bonus for the Baker Hughes' fiscal
year in which the Participant's Termination of Employment occurs, (B) the
Participant's Highest Base Compensation and (C) a fraction, the numerator of
which is the number of full months and any fractional portion of a month during
the performance period through the Participant's Employment Termination Date and
the denominator of which is the total number of months during such performance
period; and (2) is an amount equal to the product of (A) the expected value
target percentage under the Participant's Bonus for the Baker Hughes' fiscal
year in which the Participant's Termination of Employment occurs, (B) the
Participant's Highest Base Compensation and (C) the applicable multiple
determined in accordance with the relevant provisions of Exhibit A. However, if
the Participant's Employment Termination Date occurs during the same calendar
year in which a Change in Control occurs, the pro-rata bonus payment described
in clause (1) of the preceding

                                       10
<PAGE>
sentence shall be offset by any payments received by the Participant under the
Baker Hughes Incorporated 1995 Employee Annual Incentive Compensation Plan in
connection with the Change in Control. A Participant's severance payment under
this paragraph (b) will be paid in accordance with the provisions of Section 5.

                  (c) OUTPLACEMENT. The Company will provide the Participant
outplacement services suitable to the Participant's position for the period of
time specified in the relevant provisions of Exhibit A. In lieu of such
outplacement services, if the Participant so elects, the Company shall pay the
Participant in cash the amount specified in the relevant provisions of Exhibit
A. Any such cash payment in lieu of outplacement services will be paid in
accordance with the provisions of Section 5.

                  (d) PENSION, THRIFT AND SUPPLEMENTAL RETIREMENT PLANS. In
addition to the retirement benefits to which the Participant is entitled under
the Thrift Plan, the Pension Plan and the Supplemental Retirement Plan, the
Company shall pay the Participant a single sum cash payment in an amount equal
to the undiscounted value of (A) the employer-provided accruals under the
Pension Plan that the Participant would have earned and (B) the employer
contributions the Company would have made to the Thrift Plan and the
Supplemental Retirement Plan (including but not limited to matching and base
contributions) on behalf of the Participant had the Participant continued in the
employ of the Company for a period of time determined in accordance with the
relevant provisions of Exhibit A, assuming for this purpose that (i) the
Participant's earned compensation per year during the relevant period of time
provided in Exhibit A is the sum of (1) the Participant's Highest Base
Compensation and (2) the product of (A) the expected value target percentage
under the Participant's Bonus for the Baker Hughes' fiscal year in which the
Participant's Termination of Employment occurs, (B) the Participant's Highest
Base Compensation, and (C) is the applicable multiple specified in Exhibit A for
purposes of paragraph (b) of this Section 4.3; and (ii) contribution, deferral,
credit and accrual percentages made under the Pension Plan, the Thrift Plan and
the Supplemental Retirement Plan, by and on behalf of the Participant during the
relevant period of time provided in Exhibit A, are the same percentages in
effect on the date of the Change in Control or the Participant's Employment
Termination Date, whichever is more favorable for the Participant. The payment
required under this paragraph (d) will be made in accordance with the provisions
of Section 5.

                  (e) ACCIDENT AND HEALTH INSURANCE BENEFITS. For the period of
time following the Participant's Employment Termination Date specified in
Exhibit A (the "Continuation Period"), the Company shall arrange to provide the
Participant and his dependents accident and health insurance benefits, in each
case, substantially similar to those provided to the Participant and his
dependents immediately prior to the Employment Termination Date or, if more
favorable to the Participant, those provided to the Participant and his
dependents immediately prior to the first occurrence of an event or circumstance
constituting Good Reason, at no greater cost to the Participant than the cost to
the Participant immediately prior to such date or occurrence. Benefits otherwise
receivable by the Participant pursuant to this Section 4.3(f) shall be reduced
to the extent benefits of the same type are received by or made available to the
Participant during the Continuation Period (and any such benefits received by or
made available to the Participant shall be reported to the Company by the
Participant); provided, however, that the Company shall reimburse the
Participant for the excess, if any, of the cost of such benefits to

                                       11
<PAGE>
the Participant over such cost immediately prior to the Employment Termination
Date or, if more favorable to the Participant, the first occurrence of an event
or circumstance constituting Good Reason.

                  (f) LIFE INSURANCE. A Participant shall be entitled to a
single sum cash payment in an amount equivalent to the product of (1) the
monthly basic life insurance premium applicable to the Participant's basic life
insurance coverage on his Employment Termination Date and (2) the period of time
determined in accordance with the relevant provisions of Exhibit A. The single
sum cash payment will be made in accordance with the provisions of Section 5. A
Participant may, at his option, convert his basic life insurance coverage to an
individual policy after his Employment Termination Date by completing the forms
required by the Company.

                  (g) PERQUISITES. A Participant shall be entitled to a single
sum cash payment which shall be an amount equal to the sum of (1) the cost of
the Participant's Perquisites in effect prior to his Termination of Employment
for the remainder of the calendar year in which the Employment Termination Date
occurs; plus (2) the cost of the Participant's Perquisites in effect prior to
his Termination of Employment for an additional period of time determined in
accordance with the relevant provisions of Exhibit A. The payment required under
this paragraph (f) will be made in accordance with the provisions of Section 5.
A Participant may, at his option, purchase any of his club memberships held in
the Company's name for fair market value and on the terms mutually agreed by the
Participant and the Committee.

                  (h) RETIREE MEDICAL. If the Participant would have become
entitled to benefits under the Company's post-retirement health care insurance
plans, as in effect immediately prior to the Employment Termination Date or, if
more favorable to the Participant as in effect immediately prior to the first
occurrence of an event or circumstance constituting Good Reason, had the
Participant's employment terminated at any time during the period of thirty-six
(36) months after the Employment Termination Date, the Company shall provide
such post-retirement health care insurance benefits to the Participant and the
Participant's dependents commencing on the later of (i) the date on which such
coverage would have first become available and (ii) the date on which the
applicable benefits described in paragraph (e) of this Section 4.3 terminate.

         4.4      TAX GROSS-UP PAYMENTS.

                  If any payments or benefits received or to be received by the
         Participant (whether pursuant to the terms of the Plan, or any other
         plan or agreement with the Company, any Person whose actions result in
         a Change in Control or any Person affiliated with the Company or such
         Person) (such payments or benefits, excluding the Gross-Up Payment,
         being hereinafter referred to as the "Total Payments") will be subject
         to the Excise Tax, the Company shall pay the Participant an additional
         amount (the "Gross-Up Payment") such that the net amount retained by
         the Participant after the deduction of any Excise Tax on the Total
         Payments and any federal, state and local income and employment taxes
         and Excise Tax upon the Gross-Up Payment shall be equal to the Total
         Payments. The purpose of this Section is to place the Participant in
         the same economic position such

                                       12
<PAGE>
         Participant would have been in had no Excise Tax been imposed with
         respect to the Total Payments.

                  For purposes of determining whether any of the Total Payments
         will be subject to the Excise Tax and the amount of such Excise Tax,

                  (i) all of the Total Payments shall be treated as "parachute
payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the
opinion of tax counsel (the "Tax Counsel") reasonably acceptable to the
Participant and selected by the accounting firm which was, immediately prior to
the Change in Control, the Company's independent auditor (the "Auditor"), such
payments or benefits (in whole or in part) do not constitute parachute payments,
including by reason of section 280G(b)(4)(A) of the Code,

                  (ii) all "excess parachute payments" within the meaning of
section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax
unless, in the opinion of the Tax Counsel, such excess parachute payments (in
whole or in part) represent reasonable compensation for services actually
rendered (within the meaning of section 280G(b)(4)(B) of the Code) in excess of
the "base amount" (within the meaning of section 280G(b)(3) of the Code)
allocable to such reasonable compensation, or are otherwise not subject to the
Excise Tax, and

                  (iii) the value of any noncash benefits or any deferred
payment or benefit shall be determined by the Auditor in accordance with the
principles of sections 280G(d)(3) and (4) of the Code.

                  For purposes of determining the amount of the Gross-Up
         Payment, the Participant shall be deemed to pay federal income tax at
         the highest marginal rate of federal income taxation in the calendar
         year in which the Gross-Up Payment is to be made and state and local
         income taxes at the highest marginal rate of taxation in the state and
         locality of the Participant's residence on the Employment Termination
         Date (or if there is no Employment Termination Date, then the date on
         which the Gross-Up Payment is calculated for purposes of this Section
         4.4), net of the maximum reduction in federal income taxes which could
         be obtained from deduction of such state and local taxes.

                  In the event that the Excise Tax is finally determined to be
         less than the amount taken into account hereunder in calculating the
         Gross-Up Payment, the Participant shall repay to the Company, within
         ten (10) business days following the time that the amount of such
         reduction in the Excise Tax is finally determined, the portion of the
         Gross-Up Payment attributable to such reduction (plus that portion of
         the Gross-Up Payment attributable to the Excise Tax and federal, state
         and local income and employment taxes imposed on the Gross-Up Payment
         benefit being repaid by the Participant, to the extent that such
         repayment results in a reduction in the Excise Tax and a
         dollar-for-dollar reduction in the Participant's taxable income and
         wages for purposes of federal, state and local income and employment
         taxes), plus interest on the amount of such repayment at 120 percent of
         the rate provided in section 1274(b)(2)(B) of the Code. In the event
         that the Excise Tax is determined to exceed the amount taken into
         account hereunder in calculating the Gross-Up Payment (including by
         reason of any payment the existence or

                                       13
<PAGE>
         amount of which cannot be determined at the time of the payment of the
         Gross-Up Payment), the Company shall make an additional Gross-Up
         Payment in respect of such excess (plus any interest, penalties or
         additions payable by the Participant with respect to such excess)
         within five (5) business days following the time that the amount of
         such excess is finally determined. The Participant and the Company
         shall each reasonably cooperate with the other relative to any
         administrative or judicial proceedings concerning the existence or
         amount of liability for the Excise Tax.

         4.5 LEGAL FEES. The Company shall pay, on a fully grossed up, after tax
basis, all legal fees and expenses incurred by the Participant (i) in disputing
in good faith any issue relating to the Participant's termination of employment,
(ii) in seeking in good faith to obtain or enforce any benefit or right provided
under the Plan in accordance with Section 11.5, or (iii) in connection with any
tax audit or proceeding to the extent attributable to the application of section
4999 of the Code to any payment or benefit under the Plan. Such payments shall
be made within ten (10) business days after delivery of the Participant's
written request for payment accompanied with such evidence of fees and expenses
incurred as the Company may reasonably require.

5.       TIME OF BENEFITS PAYMENTS

         The Company shall pay the Participant any cash benefits described in
paragraphs (a), (b), (c) (if the Participant elects to receive a cash payment in
lieu of outplacement services), (d), (e) and (f) of Section 4.3 in a single sum
cash payment within thirty (30) days after the Participant's Employment
Termination Date. If it is subsequently determined that additional monies are
due and payable to the Participant as benefits described in paragraphs (a), (b),
(c) (if the Participant elects to receive a cash payment in lieu of outplacement
services), (d) and (f) of Section 4.3, the Company will pay any such unpaid
benefits to the Participant, together with interest on the unpaid benefits from
the date the single sum cash payment was made at the annual rate of 120 percent
of the rate provided in section 1274(b)(2)(B) of the Code, within ten (10)
business days of discovering that the additional monies are due and payable. If
the benefits paid to the Participant are subsequently determined to exceed the
amount of benefits the Participant should have received, such excess shall
constitute a loan by the Company to the Participant, payable within ten (10)
business days after demand by the Company, together with interest from the date
the single sum cash payment was made at the annual rate of 120 percent of the
rate provided in section 1274(b)(2)(B) of the Code, but only to the extent such
amount has not been previously paid by the Participant.

6.       TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE

         6.1 NOTICE OF TERMINATION. After a Change in Control and during the
Term of the Plan, any purported termination of the Participant's employment by
the Company shall be communicated by the Company by a written Notice of
Termination to the Participant in accordance with Section 11.8 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in the Plan relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Participant's employment under the
provision so indicated. Further, a Notice of Termination for Cause is required
to include a copy of a resolution duly

                                       14
<PAGE>
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board which was called and
held for the purpose of considering such termination (after reasonable notice to
the Participant and an opportunity for the Participant, together with the
Participant's counsel, to be heard before the Board) finding that, in the good
faith opinion of the Board, the Participant was guilty of conduct set forth in
clause (i) or (ii) of the definition of Cause herein, and specifying the
particulars thereof in detail. No purported termination of the Participant's
employment by the Company after a Change in Control and during the Term of the
Plan shall be effective unless the Company complies with the procedures set
forth in this Section 6.1.

         6.2 EMPLOYMENT TERMINATION DATE. "Employment Termination Date," with
respect to any purported termination of the Participant's employment after a
Change in Control and during the Term of the Plan, shall mean (i) if the
Participant's employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the Participant shall not have
returned to the full-time performance of the Participant's duties during such
thirty (30) day period), and (ii) if the Participant's employment is terminated
for any other reason, the date specified in the Notice of Termination (which, in
the case of a termination by the Company, shall not be less than thirty (30)
days (except in the case of a termination for Cause) and, in the case of a
termination by the Participant, shall not be less than fifteen (15) days nor
more than sixty (60) days, respectively, from the date such Notice of
Termination is given).

         6.3 DISPUTE CONCERNING TERMINATION. If within fifteen (15) days after
any Notice of Termination is given, or, if later, prior to the Employment
Termination Date (as determined without regard to this Section 6.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Employment Termination Date shall be
extended until the earlier of (i) the date on which the Term of the Plan ends or
(ii) the date on which the dispute is finally resolved, either by mutual written
agreement of the parties or by a final judgment, order or decree of an
arbitrator or a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); provided, however, that the Employment Termination Date shall
be extended by a notice of dispute given by the Participant only if such notice
is given in good faith and the Participant pursues the resolution of such
dispute with reasonable diligence.

         6.4 COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control and during the Term of the Plan and the Employment
Termination Date is extended in accordance with Section 6.3 hereof, the Company
shall continue to pay the Participant the full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to,
salary) and continue the Participant as a participant in all compensation,
benefit and insurance plans in which the Participant was participating when the
notice giving rise to the dispute was given or those plans in which the
Participant was participating immediately prior to the first occurrence of an
event or circumstance giving rise to the Notice of Termination, if more
favorable to the Participant, until the Employment Termination Date, as
determined in accordance with Section 6.3 hereof. Amounts paid under this
Section 6.4 are in addition to all other amounts due under the Plan (other than
those due under Section 4.2 hereof) and shall not be offset against or reduce
any other amounts due under the Plan.

                                       15
<PAGE>
7.       WITHHOLDING

         Subject to the provisions of Section 4.4, Company may withhold from any
benefits paid under the Plan all income, employment, and other taxes required to
be withheld under applicable law.

8.       DEATH OF PARTICIPANT

         If a Participant dies after his Employment Termination Date but before
the Participant receives full payment of the benefits to which he is entitled,
any unpaid benefits will be paid to the Participant's surviving spouse, or if
the Participant does not have a surviving spouse, to the Participant's estate.

9.       AMENDMENT AND TERMINATION

         During the Term of the Plan, the Plan may not be terminated or amended
in any manner that would negatively affect a Participant's rights under the
Plan. Further, no amendment or termination of the Plan after a Participant's
Employment Termination Date shall affect the benefits payable to such
Participant. Subject to the foregoing restrictions, Baker Hughes may amend or
terminate the Plan by a written instrument that is authorized by the Committee.

10.      ADOPTION OF PLAN BY OTHER EMPLOYERS

                  (a) With the written approval of the Committee, any entity
that is an Affiliate may adopt the Plan by appropriate action of its board of
directors or noncorporate counterpart, as evidenced by a written instrument
executed by an authorized officer of such entity or an executed adoption
agreement (approved by the board of directors or noncorporate counterpart of the
Affiliate), agreeing to be bound by all the terms, conditions and limitations of
the Plan and providing all information required by the Committee.

                  (b) The provisions of the Plan shall apply separately and
equally to each adopting Affiliate and its employees in the same manner as is
expressly provided for the Company and its employees, except that the power to
appoint the Committee and the power to amend or terminate the Plan shall be
exercised by Baker Hughes.

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

11.      MISCELLANEOUS

         11.1 PLAN NOT AN EMPLOYMENT CONTRACT. The adoption and maintenance of
the Plan is not a contract between the Company and its employees that gives any
employee the right to be retained in its employment. Likewise, it is not
intended to interfere with the rights of the Company to terminate an employee's
employment at any time with or without notice and with or without cause or to
interfere with an employee's right to terminate his employment at any time.

         11.2 ALIENATION PROHIBITED. No benefits hereunder shall be subject to
anticipation or assignment by a Participant, to attachment by, interference
with, or control of any creditor of a

                                       16
<PAGE>
Participant, or to being taken or reached by any legal or equitable process in
satisfaction of any debt or liability of a Participant prior to its actual
receipt by the Participant. Any attempted conveyance, transfer, assignment,
mortgage, pledge, or encumbrance of the benefits hereunder prior to payment
thereof shall be void.

         11.3 SEVERABILITY. Each provision of the Plan may be severed. If any
provision is determined to be invalid or unenforceable, that determination shall
not affect the validity or enforceability of any other provision.

         11.4 BINDING EFFECT. The Plan shall be binding upon any successor of
the Company. Further, the Board shall not authorize a Change in Control that is
a merger or a sale transaction unless the purchaser or the Company's successor
agrees to take such actions as are necessary to cause all Participants to be
paid or provided all benefits due under the terms of the Plan as in effect
immediately prior to the Change in Control.

         11.5 SETTLEMENT OF DISPUTES CONCERNING BENEFITS UNDER THE PLAN;
ARBITRATION. All claims by a Participant for benefits under the Plan shall be
directed to and determined by the Committee and shall be in writing. Any denial
by the Committee of a claim for benefits under the Plan shall be delivered to
the Participant in writing within thirty (30) days after written notice of the
claim is provided to the Company in accordance with Section 11.9 and shall set
forth the specific reasons for the denial and the specific provisions of the
Plan relied upon. The Committee shall afford a reasonable opportunity to the
Participant for a review of the decision denying a claim and shall further allow
the Participant to appeal to the Committee a decision of the Committee within
sixty (60) days after notification by the Committee that the Participant's claim
has been denied. Any further dispute or controversy arising out of or relating
to the Plan, including without limitation, any and all disputes, claims (whether
in tort, contract, statutory or otherwise) or disagreements concerning the
interpretation or application of the provisions of the Plan shall be resolved by
arbitration in accordance with the rules of the American Arbitration Association
(the "AAA") then in effect. No arbitration proceeding relating to the Plan may
be initiated by either the Company or the Participant unless the claims review
and appeals procedures specified in Section 14 have been exhausted. Within ten
(10) business days of the initiation of an arbitration hereunder, the Company
and the Participant will each separately designate an arbitrator, and within
twenty (20) business days of selection, the appointed arbitrators will appoint a
neutral arbitrator from the AAA Panel of Commercial Arbitrators. The arbitrators
shall issue their written decision (including a statement of finding of facts)
within thirty (30) days from the date of the close of the arbitration hearing.
The decision of the arbitrators selected hereunder will be final and binding on
both parties. This arbitration provision is expressly made pursuant to and shall
be governed by the Federal Arbitration Act, 9 U.S.C. Sections 1-16 (or
replacement or successor statute). Pursuant to Section 9 of the Federal
Arbitration Act, the Company and any Participant agree that a judgment of the
United States District Court for the District in which the headquarters of Baker
Hughes is located at the time of initiation of an arbitration hereunder may be
entered upon the award made pursuant to the arbitration.

         11.6 GUARANTY OF PAYMENT, PERFORMANCE, AND OBSERVANCE BY BAKER HUGHES.
Baker Hughes hereby unconditionally guarantees to Participant the due, prompt
and punctual payment, performance and observance by the Company, and its
successors and assigns

                                       17
<PAGE>
(collectively, the "Obligor"), of the Obligor's obligations under the Plan
(collectively, the "Guaranteed Obligations"), including, but not limited to, (i)
the due, prompt and punctual payment of each and all amounts that the Company
shall become obligated to pay under the Plan, as and when the same shall become
due and payable hereunder, and (ii) the due, prompt and punctual performance and
observance by the Company of each term, provision and condition the Company is
required to perform or observe under the Plan, as and when the same shall be
required to be performed or observed hereunder. In any case of the failure of
the Obligor to punctually pay, perform or observe any of the Guaranteed
Obligations, Baker Hughes agrees to promptly cause to be promptly paid,
performed or observed such Guaranteed Obligation as and when such Guaranteed
Obligation is required to be paid, performed or observed. Baker Hughes agrees
that its obligations hereunder shall be as if it were the principal obligor and
not merely a surety, and shall be absolute and unconditional, irrespective of,
and shall be unaffected by, any invalidity, irregularity or unenforceability of
any provision of the Plan, or any waiver, modification or indulgence granted to
the Obligor with respect thereto, by the Participant, or any other circumstance
that may otherwise constitute a legal or equitable discharge of a surety or
guarantor. Baker Hughes hereby waives diligence, presentment, demand, any right
to require a proceeding first against the Obligor, and all demands whatsoever,
and covenants that its obligations under the Plan will not be discharged except
by payment, performance and observance in full of all of the Guaranteed
Obligations. The agreements of Baker Hughes hereunder shall inure to the benefit
of and be enforceable by Participant's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.

         11.7 NO MITIGATION. The Company agrees that if the Participant's
employment with the Company terminates during the Term of the Plan, the
Participant is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Participant by the Company pursuant to the
Plan. Further, except as expressly provided otherwise herein, the amount of any
payment or benefit provided for in the Plan (other than Section 4.3(f) hereof)
shall not be reduced by any compensation earned by the Participant as the result
of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Participant to the Company, or otherwise.

         11.8 OTHER AMOUNTS DUE. Except as expressly provided otherwise herein,
the payments and benefits provided for in the Plan are in addition to and not in
lieu of amounts and benefits that are earned by a Participant prior to his
Termination of Employment. The Company shall pay a Participant any compensation
earned through the Employment Termination Date but not previously paid the
Participant. Further the Participant shall be entitled to any other amounts or
benefits due the Participant in accordance with any contract, plan, program or
policy of the Company or any of its Affiliates. Amounts that the Participant is
entitled to receive under any plan, program, contract or policy of the Company
or any of its Affiliates at or subsequent to the Participant's Termination of
Employment shall be payable or otherwise provided in accordance with such plan,
program, contract or policy, except as expressly modified herein.

         11.9 NOTICES. For the purpose of the Plan, notices and all other
communications provided for in the Plan shall be in writing and shall be deemed
to have been duly given when delivered or mailed by United States registered
mail, return receipt requested, postage prepaid, addressed, if to the
Participant, to the residential address listed on the Participant's notification
of participation and, if to the Company, to 3900 Essex Lane; Houston, Texas
77027; Attention:

                                       18
<PAGE>
General Counsel, or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon actual receipt.

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

                                       19
<PAGE>
         IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officer this ____ day of December, 2003.

                                         BAKER HUGHES INCORPORATED

                                         By:
                                            ------------------------------------
                                         Title:
                                               ---------------------------------

                                       20
<PAGE>
                            INTERNATIONAL SUPPLEMENT

1.    GENERAL. The provisions of this Supplement apply to individuals who are
      Non-US Employees (as defined below). The provisions of the Plan apply to
      Non-US Employees, except to the extent this Supplement modifies the
      provisions of the Plan.

      The purpose of this Supplement is to provide for severance benefits for
      Non-US Employees in the event of a Termination of Employment.

      Capitalized terms used in this Supplement which are defined in the Plan
      have the same meaning in this Supplement unless such terms are defined
      differently for purposes of this Supplement. The definition of terms
      defined in this Supplement apply only to this Supplement and not to other
      parts of the Plan.

2.    DEFINITIONS. Section 2.1 of the Plan is modified to add the following
      definitions to read as follows:

            "NON-US EMPLOYEE" means an individual (i) employed in the services
            of the Company on the active payroll where the operations or
            principal place of business of the individual's employment is
            located outside of the United States and (ii) who is also an
            executive salary grade system employee (under the Company's then
            current payroll system categories), or any comparable executive
            designations in any system that replaces such salary grade system.
            Notwithstanding the foregoing, the Committee may from time to time
            designate other individuals who may be eligible to participate in
            the Plan.

            "NON-US PARTICIPANT" means a Non-US Employee who is eligible to
            participate in the Plan.

3.    REFERENCES. References in the Plan to "Employees" and "Participants" are
      deemed to be references to "Non-US Employees" and "Non-US Participants,"
      respectively.

4.    BENEFITS.

         Section 4.3 shall be modified in the first paragraph to read as
follows:

         "Upon the occurrence of a Change in Control, the Company shall provide
         a Non-US Participant who has satisfied the eligibility requirements of
         Section 3 such severance benefits under the Plan as the Committee
         determines in accordance with the provisions of Exhibit A, taking into
         consideration any prohibitions or restrictions and any statutorily
         mandated severance benefits applicable to the Non-US Participant, with
         the intent of providing the Non-US Participant benefits that are
         generally comparable to the benefits provided to Participants under the
         Plan. It is the express intent of the Company that any benefits paid to
         a Non-US Participant under this Supplement and the Plan will be in lieu
         of any statutorily-mandated severance benefits (or other employment
         termination related benefits), including, but not limited to, gratuity
         and similar benefits.

                                       21
<PAGE>
                                                                       EXHIBIT A
                            BAKER HUGHES INCORPORATED

                        CHANGE IN CONTROL SEVERANCE PLAN

               SCHEDULE OF POST-TERMINATION OF EMPLOYMENT BENEFITS

                  The benefits described in this Schedule are summaries
         only. Each benefit is fully described in the Plan. In the
         event of a conflict between the provisions of the Plan and
         this Exhibit A, the terms of the Plan shall govern.

<Table>
<Caption>
                 BENEFIT                      DETAILS OF BENEFIT
                 -------                      ------------------
<S>      <C>                                  <C>
1.       SEVERANCE PAYMENT
         BASED UPON BASE COMPENSATION

               Level                          3 years (equivalent of 36 months) of Highest Base
                                              Compensation

               Level 2                        2 years (equivalent of 24 months) of Highest Base
                                              Compensation

2.       SEVERANCE PAYMENT                    Based on the "Expected Value" (EV) target percentage
         BASED UPON BONUSES                   under the Participant's Bonus for the Termination
                                              of Employment year prorated to the Participant's
                                              Employment Termination Date, plus an additional
                                              sum which is the product of:

                                              (A) EV target percentage under the Participant's
                                              Bonus for the Termination of Employment year,
                                              multiplied by

                                              (B) Participant's Highest Base Compensa tion, and
                                              multiplied by either

               Level 1                        (C)  3

               Level 2                             2
</TABLE>

                                            22
<PAGE>
                                                                       EXHIBIT A
<Table>
<S>      <C>                                  <C>
3.       OUTPLACEMENT

               Level 1                        3 years; or, if the Participant elects to receive
                                              a cash payment in lieu of outplacement, $30,000

               Level 2                        2 years; or, if the Participant elects to receive
                                              a cash payment in lieu of outplacement, $20,000

4.       PERFORMANCE AWARDS                   Equity based performance awards are immediately
                                              vested and exercisable and all conditions thereof
                                              are deemed satisfied.

5.       LOST BENEFITS UNDER PENSION,         An amount equal to the undiscounted value of the
         THRIFT AND SUPPLEMENTAL              employer-provided accruals and credits the
         RETIREMENT PLANS                     Participant would have earned under the Pension
                                              Plan, the Thrift Plan and the Supplemental
                                              Retirement Plan for the following period after
                                              the Participant's Employment Termination Date
                                              had he continued to participate thereunder:

               Level 1                        3 years

               Level 2                        2 years

6.       ACCIDENT AND HEALTH INSURANCE        Coverage for the following time period:

               Level 1                        36 months

               Level 2                        24 months

7.       LIFE INSURANCE                       Payment of the monthly premium amount for the
                                              basic life insurance coverage the Participant had
                                              at his Employment Termination Date multiplied by
                                              the following:

               Level 1                        36

               Level 2                        24
</TABLE>

                                              23
<PAGE>
                                                                       EXHIBIT A
<Table>
<S>      <C>                                  <C>
8.       PERQUISITES                          An amount equal to (i) the cost of the
                                              Participant's Perquisites for the remainder of
                                              the calendar year in which the Employment
                                              Termination Date occurs and (ii) the cost of the
                                              Participant's Perquisites for the following
                                              additional time period:

               Level 1                        36 months

               Level 2                        24 months

9.       TAX GROSS-UP PAYMENT                 An amount such that after the payment of (i) any
                                              Excise Taxes due on the Benefits and other
                                              benefits or payments, (ii) any federal, state and
                                              local income and employment taxes on the
                                              Benefits, and (iii) any Excise Tax on the
                                              Gross-Up Payment benefit, the net amount retained
                                              by the Participant shall be equal to the gross
                                              amount of the Benefits prior to such deductions.

10.      LEGAL FEES                           Legal fees and expenses incurred by the Participant
                                              (i) in disputing in good faith any issue relating
                                              to the Participant's termination of employment,
                                              (ii) in seeking in good faith to obtain or
                                              enforce any Benefit or right provided under the
                                              Plan, or (iii) in connection with any tax audit
                                              or proceeding to the extent attributable to the
                                              application of section 4999 of the Code to the
                                              payment of the Benefits or other benefits or
                                              payments.
</Table>

                                       24

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