BAKER HUGHES INCORPORATED EMPLOYEE STOCK PURCHASE PLAN

Exhibit 10.3

BAKER HUGHES INCORPORATED
EMPLOYEE STOCK PURCHASE PLAN

(As Amended and Restated
Effective as of February 26, 2009)

BAKER HUGHES INCORPORATED
EMPLOYEE STOCK PURCHASE PLAN

(As Amended and Restated
Effective as of February 26, 2009)

WITNESSETH:

      WHEREAS, the Baker Hughes Incorporated 1987 Employee Stock Purchase Plan was adopted for the benefit of the eligible employees of Baker Hughes Incorporated; and

      WHEREAS, the Plan has, from time to time, been amended and restated; and

      WHEREAS, the Company desires to restate the Plan and to amend the Plan to increase by eight million (8,000,000) shares the number of shares available under the Plan from 14,500,000 to 22,500,000, and to make revisions to other provisions of the Plan;

      NOW THEREFORE, the Plan is hereby amended and restated in its entirety as follows with no interruption in time, effective as of February 26, 2009, except as otherwise indicated herein:

BAKER HUGHES INCORPORATED
EMPLOYEE STOCK PURCHASE PLAN

(As Amended and Restated
Effective as of February 26, 2009)

TABLE OF CONTENTS

BAKER HUGHES INCORPORATED
EMPLOYEE STOCK PURCHASE PLAN

(As Amended and Restated
Effective as of February 26, 2009)

ARTICLE 1: PURPOSE

1.1 Purpose .

     (a) The purpose of the BAKER HUGHES INCORPORATED EMPLOYEE STOCK PURCHASE PLAN (the “ Plan ”) is to encourage and enable Eligible Employees (defined below) to voluntarily acquire proprietary interests in BAKER HUGHES INCORPORATED (the “ Company ”) through the ownership of the Company’s Common Stock (defined below) at a favorable price and upon favorable terms and to furnish to the Eligible Employees an incentive to advance the best interests of the Company for the mutual benefit of the Eligible Employees, the Company and the Company’s stockholders. The Plan is intended to qualify as an “employee stock purchase plan” under section 423 of the Code (defined below). Accordingly, the provisions of the Plan shall be construed in a manner consistent with the requirements of that Code section.

     (b) Subject to approval by the Company’s stockholders, the provisions of Section 5.1 shall become effective as of February 26, 2009.

ARTICLE 2: DEFINITIONS

2.1 Definitions .

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

      “Beneficiary” or “Beneficiaries” shall be as determined pursuant to the provisions of Section 8.4.

      “Board” means the Board of Directors of the Company.

      “Code” means the Internal Revenue Code of 1986, as amended. References to sections of the Code shall include the regulations issued thereunder.

      “Committee” means the Administrative Committee that may be appointed by the Compensation Committee as a Plan Administrator.

      “Common Stock” means the $1 par value common stock of the Company.

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

      “Compensation Committee” means the Compensation Committee of the Board.

      “Date of Exercise” means, for each Option Period, the last day that the principal securities exchange on which the Common Stock is listed is open for trading.

      " Date of Grant” means the date on which Options are granted, as such date is determined by the Board or the Compensation Committee.

      “Eligible Compensation” means a Participant’s base salary or wages measured on an annual basis (as defined in section 3401(a) of the Code for purposes of federal income tax withholding) from the Company, modified by including any portion thereof that such Participant could have received in cash in lieu of (a) any deferrals made by the Participant pursuant to the Baker Hughes Incorporated Supplemental Retirement Plan or (b) elective contributions made on his behalf by the Company pursuant to a qualified cash or deferred arrangement described in section 401(k) of the Code and any elective contributions under a cafeteria plan described in section 125 of the Code, and modified further by excluding any bonus, incentive compensation, commissions, expense reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, deferred compensation (other than elective contributions to the Company’s qualified cash or deferred arrangement described in section 401(k) of the Code), welfare benefits as defined in the Employee Retirement Income Security Act of 1974, as amended, overtime pay, special performance compensation amounts and severance compensation.

      “Eligible Employee” means each Employee who is scheduled to work at least 20 hours per pay period during the Option Period, and subject to the provisions of Section 3.2(f), is an Employee at the beginning of the Option Period; provided, that the following Employees shall not be eligible to participate in the Plan:

     (a) an Employee who is a citizen of a foreign country that prohibits foreign corporations from granting stock options to any of its citizens; and

     (b) an Employee if such Employee, immediately after the Option is granted, owns stock (as defined by sections 423(b)(3) and 424(d) of the Code) possessing 5 percent or more of the total combined voting power or value of all classes of stock of the Company or of a subsidiary.

      “Employee” means each individual employed by an Employer.

      “Employer” means the Company and each entity that has adopted the Plan pursuant to the provisions of Article 7.

      “ESPP Account” means the individual account established by the ESPP Administrator for each Participant in the Plan.

      “ESPP Administrator” means the stock brokerage or other financial services firm

designated or approved by the Plan Administrator to hold shares purchased under the Plan for the ESPP Accounts of Participants.

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

      “Fair Market Value” means the per share price of the last sale of the Common Stock on the “composite tape” on the trading day prior to the date on which the value is being determined. The “composite tape” is the composite transactions in the Common Stock as reported by The Wall Street Journal .

      “Option” means an option to purchase shares of Common Stock under the terms and provisions of the Plan.

      “Option Period” means the 12-month period commencing on January 1 of each calendar year, unless the Board or the Compensation Committee changes the duration of the Option Period with respect to future Options, and except as modified by Sections 3.3(c)(2) and 3.3(c)(4). An Option Period may not exceed 27 months.

      “Option Price” means the price per share to be paid by each Participant on each exercise of his Option and shall be a sum equal to 85% of the Fair Market Value of a share of Common Stock on the Date of Exercise or on the Date of Grant, whichever amount is lesser, unless the Board or the Compensation Committee changes the Option Price with respect to future Options. Prior to the commencement of any future Option Period, the Board or the Compensation Committee may, in lieu of the Option Price specified in the preceding sentence, establish an Option Price that is greater than 85% of the Fair Market Value of a share of Common Stock on the Date of Exercise.

      “Participant” means each Eligible Employee who elects to participate in the Plan.

      “ Plan ” means the Baker Hughes Incorporated Employee Stock Purchase Plan, as amended from time to time.

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

      “Securities Act” means the Securities Act of 1933, as amended, or any successor statute.

2.2 Number and Gender . Wherever appropriate herein, words used in the singular shall be considered to include the plural and words used in the plural shall be considered to include the singular. The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender.

2.3 Headings . The headings of Articles and 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.

ARTICLE 3: ELIGIBILITY AND PARTICIPATION

3.1 Eligibility . All Eligible Employees shall be eligible to participate in the Plan for an Option Period, provided that the Eligible Employee’s employment with an Employer continues uninterrupted throughout the Option Period. A transfer between or among Employers shall not be treated as an interruption of the Eligible Employee’s employment.

3.2 Participation .

     (a)  Election to Participate . An Eligible Employee shall become a Participant after satisfying the eligibility requirements in Section 3.1 and delivering to the Plan Administrator during the enrollment period established by the Plan Administrator an enrollment form that (1) indicates the Eligible Employee’s election to participate in the Plan as of the next following Date of Grant; (2) authorizes the payroll deduction and states the amount to be deducted regularly from the Participant’s Eligible Compensation and to be accrued under the Plan for his benefit; and (3) authorizes the purchase of the Common Stock at the end of the Option Period. The effective date of a Participant’s participation shall be the Date of Grant following the Plan Administrator’s receipt of the Participant’s authorization. The procedure established by the Plan Administrator for an Eligible Employee to enroll in the Plan may be through any written form or any telephonic, electronic mail, intranet, internet or any other electronic process established by the Plan Administrator from time to time.

     (b)  Continuing Election . A Participant’s election to participate in the Plan with respect to an Option Period shall continue for each successive Option Period at the same payroll deduction percentage as in effect at the termination of the prior Option Period unless the Participant amends or cancels his participation pursuant to subsection 3.2(d).

     (c)  Payroll Deductions . Each Participant will designate in his participation election the stated amount to be deducted from his Eligible Compensation on each payday. A Participant may elect to have deducted from 1% to 10% of his Eligible Compensation, or such other percentages as the Committee may from time to time determine. A Participant’s percentage deduction election must be in whole percentages, and a Participant’s payroll deductions for the entire Option Period are based on his Eligible Compensation at the beginning of the Option Period. The stated amount may not be less than a sum that will result in the payment into the Plan of at least $5.00 each payday. The stated amount may not exceed either of (1) 10% of the amount of Eligible Compensation (or such other maximum percentage as determined by the Committee), or (2) an amount which will result in noncompliance with the $25,000 statutory limitation described in Section 4.2.

     Participant payroll deductions are maintained by the Company as an accrual for the benefit of the Participant until the Date of Exercise.

     (d)  Changes in Payroll Deductions . By delivering to the Plan Administrator a new written payroll deduction authorization form, a Participant may amend the stated amount of his payroll deduction to reduce the rate of his payroll deductions at any time during an Option Period. A Participant’s payroll deduction designation rate may not be increased during an Option Period. The new payroll deduction rate will become effective for the next payroll period, provided that the next payroll period commences more than 15 days after receipt of the new authorization form. Any change to the rate of payroll deduction will continue for the remainder of the Option Period. Changes in the rate of payroll deductions are limited to one change during any Option Period.

     (e)  Leaves of Absence . During leaves of absence approved by the Plan Administrator and in compliance with the requirements of Treasury Regulation § 1.421-1(h)(2), a Participant may continue participation in the Plan at the stated amount in his payroll deduction election by making cash payments to the Company on his normal paydays equal to any reduction in his payroll deductions caused by his leave.

     (f)  Re-admission to Participate after Termination of Participation . If a Participant’s participation in the Plan is terminated due to his withdrawal from the Plan in accordance with the provisions of Section 3.3(a), the Participant shall be eligible to participate again in the Plan upon the expiration of the Option Period during which such Participant ceased participation and may participate in any subsequent Option Period by making an election to participate in accordance with the provisions of Section 3.2(a). If a Participant’s participation in the Plan is terminated due to his termination of employment and he is subsequently re-employed by an Employer, he may participate in the Plan upon his re-employment if he satisfies the eligibility requirements of Section 3.1 and he elects to participate in the Plan in accordance with the provisions of Section 3.2(a).

3.3 Termination of Participation .

     (a)  Withdrawal from Participation . A Participant may withdraw completely from participation in the Plan at any time during an Option Period. To withdraw from the Plan, a Participant must deliver to the Plan Administrator a notice of withdrawal in a form and manner authorized by the Plan Administrator, and the notice of withdrawal must be delivered within the time period established by the Plan Administrator. After the Plan Administrator’s receipt of the notice of withdrawal, the Participant’s payroll deduction authorization and his interest in unexercised options under the Plan will terminate and the Participant’s prior payroll deductions made under the Plan will be refunded to the Participant.

     (b)  Voluntary Termination of Participation . A Participant may voluntarily terminate his participation in the Plan by lowering the rate of his payroll deductions to zero for the remainder of the Option Period, in accordance with the provisions of Section 3.2(d). A Participant who has decreased his rate of payroll deduction to zero will be deemed to continue as a Participant in the Plan until he withdraws from the Plan in accordance with the provisions of subsection 3.3(a) or his participation is terminated in accordance with the provisions of subsection 3.3(c). As long as the Participant continues as a Participant in the Plan, the amount

accrued for the Participant under the Plan will be applied to the purchase of Common Stock at the end of the Option Period.

     (c)  Involuntary Termination of Participation .

          (1) Termination of Employment Other than by Retirement, Death or Disposition of Assets, etc. If the employment of a Participant with all Employers terminates other than by retirement, death or as a result of a disposition of assets, a division or an entity or as a result of a plant closing, or if he is no longer eligible to participate in the Plan, his participation in the Plan shall, without any action on his part, automatically terminate as of the date of the termination of his employment or the date of the termination of his eligibility. The Employer will refund to the Participant the amount of the Participant’s prior payroll deductions made under the Plan, and his interest in unexercised Options under the Plan shall terminate. A termination of employment does not include a transfer of employment among Employers or a transfer of employment to a venture or entity in which the Company or an Affiliate has an equity interest exceeding 50 percent.

          (2) Termination by Retirement . If a Participant is at least 55 years of age and has an aggregate of at least ten (10) years of service with all Employers, he may retire under the Plan. The Participant may, at his election by written noti