FIRST AMENDMENT TO BAKER HUGHES INCORPORATED ANNUAL INCENTIVE COMPENSATION PLAN

Exhibit 10.7

FIRST AMENDMENT TO
BAKER HUGHES INCORPORATED
ANNUAL INCENTIVE COMPENSATION PLAN
(As Amended and Restated on February 20, 2008)

      THIS AGREEMENT by Baker Hughes Incorporated (the “ Company ”),

W I T N E S S E T H:

      WHEREAS, the Company sponsors the Baker Hughes Incorporated Annual Incentive Compensation Plan as amended and restated on February 20, 2008 (the “ Plan ”); and

      WHEREAS , pursuant to Section 13.05 of the Plan, the Company has the right to amend the Plan; and

      WHEREAS, the Company desires to amend the Plan;

      NOW, THEREFORE , the Company agrees that, effective January 1, 2009, Section 10.04 of the Plan is completely amended and restated to provide as follows:

10.04 Termination of Employment Prior to Change in Control or Following Certain Changes in Control . Notwithstanding any provision of the Plan to the contrary (other than the last sentence of this Section 10.04), a Participant shall be entitled to receive the payment described in Section 10.03 for a Performance Period if (i) su