FIRST AMENDMENT TO EMPLOYMENT AGREEMENT BETWEEN NATIONAL OILWELL VARCO L.P., NATIONAL OILWELL VARCO, INC. AND MERRILL A. MILLER, JR.
EXHIBIT 10.1
FIRST AMENDMENT
TO EMPLOYMENT AGREEMENT BETWEEN NATIONAL OILWELL VARCO L.P.,
NATIONAL OILWELL VARCO, INC. AND XXXXXXX X. XXXXXX, XX.
TO EMPLOYMENT AGREEMENT BETWEEN NATIONAL OILWELL VARCO L.P.,
NATIONAL OILWELL VARCO, INC. AND XXXXXXX X. XXXXXX, XX.
This First Amendment To Employment Agreement (this “First Amendment”) between
National-Oilwell L.P., a Delaware limited partnership, National-Oilwell, Inc., a Delaware
corporation, and Xxxxxxx X. Xxxxxx, Xx. (the “Executive”) is executed by National Oilwell Varco
L.P., a Delaware limited partnership (the “Company”), National Oilwell Varco, Inc., a Delaware
corporation (“NOI”), and the Executive on December 22, 2008, but is effective as set forth herein.
W I T N E S S E T H:
Whereas, National-Oilwell L.P., National-Oilwell, Inc. and the Executive entered into
an employment agreement dated as of January 1, 2002 (the “Original Agreement”);
Whereas, as a result of the merger of National-Oilwell, Inc. and Varco International,
Inc. on March 11, 2005, National-Oilwell L.P. and National-Oilwell, Inc. were reorganized in the
forms of the Company and NOI, respectively, each of which succeeded to the obligations of its
predecessor;
Whereas, the Original Agreement must be amended on or before December 31, 2008 to
comply with new Section 409A of the Internal Revenue Code of 1986, as amended by the America Jobs
Protection Act of 2004; and
Whereas, the Company, NOI and the Executive desire to amend the Original Agreement to
comply with new Section 409A and effect certain other changes as hereinafter provided;
Now, Therefore, in consideration of the premises and the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
| 1. | Each reference to “National-Oilwell L.P.” and “National-Oilwell, Inc.” contained in the Original Agreement shall be deleted and a reference to “National Oilwell Varco L.P.” and “National Oilwell Varco, Inc.”, respectively, shall be substituted in lieu of the original reference. |
| 2. | Paragraph (ii) of Section 2(b) of the Original Agreement is hereby amended and restated in its entirety to provide as follows: |
(ii) Annual Bonus. The Executive shall be eligible for an annual bonus (the
“Annual Bonus”) for each fiscal year ending during the Employment Period on the same
basis as other executive officers under the Company’s then current Annual Incentive
Plan (or such other name as may be adopted for the plan or its successor), which
shall be payable in accordance with the terms of such plan.
| 3. | Paragraph (v) of Section 2(b) of the Original Agreement is hereby amended to add the following new paragraph immediately following the end of such paragraph: |
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Any reimbursement of expenses required under this paragraph and any
reimbursement of legal fees and expenses required under Section 6(c) of this
Agreement shall be made by the Company upon or as soon as practicable following
receipt of supporting documentation reasonably satisfactory to the Company (but in
any event not later than the close of the Executive’s taxable year following the
taxable year in which the fee, disbursement, cost or expense is incurred by the
Executive); provided, however, that, upon the Executive’s termination of employment
with the Company, in no event shall any additional reimbursement be made prior to
the date that is six months after the date of the Executive’s termination of
employment to the extent such payment delay is required under Section
409A(a)(2)(B)(i) of the Internal Revenue Code of 1986, as amended (the “Code”). In
no event shall any reimbursement be made to the Executive for such expenses and fees
incurred after the later of (1) the tenth anniversary of the date of the Executive’s
death or (2) the date that is ten years after the date of the Executive’s
termination of employment with the Company.
| 4. | Paragraph (e) of Section 3 of the Original Agreement is hereby amended by adding the following sentence immediately at the end of such Section to provide as follows: |
For purposes of any payments or provision of benefits under this Agreement, the
Executive shall not be considered to have terminated employment with the Company
unless the Executive incurs a “separation from service” with the Company within the
meaning of Section 409A(a)(2)(A)(i) of the Code and applicable guidance issued
thereunder.
| 5. | The flush paragraph immediately following subclause (C) of Section 4(a)(i) of the Original Agreement is hereby deleted. |
| 6. | Subclauses (A), (B) and (C) of Section 4(a)(i) of the Original Agreement are hereby amended and restated in their entirety to provide as follows: |
(A) the sum of (1) the Executive’s Annual Base Salary through the Date of
Termination to the extent not theretofore paid, (2), the product of (x) the
higher of (I) the highest Annual Bonus received by the Executive over the preceding
three year period and (II) the Annual Bonus paid or payable, including any bonus or
portion thereof which has been earned but deferred (and annualized for any fiscal
year consisting of less than 12 full months or during which the Executive was
employed for less than 12 full months), for the most recently completed fiscal year
during the Employment Period, if any (such higher amount being referred to as the
“Highest Annual Bonus”) and (y) a fraction, the numerator of which is the
number of days in the current fiscal year through the Date of Termination, and the
denominator of which is 365; and (3) any accrued vacation pay, in each case to the
extent not theretofore paid (the sum of the amounts described in clauses (1), (2)
and (3) shall be hereinafter referred to as the “Accrued Obligations”), and
(B) an amount equal to three times the sum of (i) the then current Annual Base
Salary of the Executive and (ii) the Highest Annual Bonus, and
(C) an amount equal to the maximum amount of employer matching contributions
that could have been credited to the Executive under the Company’s 401(k) Savings
Plan (without regard to any applicable nondiscrimination tests), any other excess or
supplemental retirement plan in which the Executive participates or any other
deferred compensation plan during the twelve (12) month period immediately preceding
the month of the Executive’s Date of Termination multiplied by three, such amount to
be
grossed up so that the amount the Executive actually receives after payment of
any federal or state taxes payable thereon equals the amount first described above.
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| 7. | Clause (ii) of Section 4(a) of the Original Agreement is hereby amended and restated in its entirety to provide as follows: |
(ii) Until the date of the Executive’s death, the Company shall continue group
health plan (as defined for purposes of Section 4980B of the Code) benefits to the
Executive and/or the Executive’s family equal to those which would have been
provided to them in accordance with the plans, programs, practices and policies
described in Section 2(b)(iv) of this Agreement as if the Executive’s employment had
not been terminated; provided, that if the Executive’s participation after the Date
of Termination in such group health plan is not permitted by the terms of a plan,
then for the Executive’s lifetime, the Company shall provide the Executive through
other sources with substantially the same benefits that were provided to the
Executive by that plan immediately before the Termination Date; provided further,
that if the Executive becomes reemployed by another employer and is eligible to
receive any of such benefits under another employer provided plan, the benefits
provided hereunder shall be secondary to those provided under such other plans.
With respect to any group health plan that requires an employee contribution, for
the period of time during which the Executive would be entitled (or would, but for
this Agreement, be entitled) to continuation coverage under a group health plan of
the Company under Section 4980B of the Code if the Executive elected such coverage
and paid the applicable premiums (generally, 18 months), the Executive shall pay the
then active employee cost of the benefits as determined under the then current
practices of the Company on a monthly, semi-annual or annual basis as elected by the
Executive, and thereafter, the Executive shall pay the full cost of the benefits as
determined under the then current practices of the Company on a monthly or annual
basis as elected by the Executive, provided that the Company shall reimburse the
Executive the amount of the costs of the benefit that is in excess of the then
active employees costs for such benefits no later than 30 days following the end of
the Executive’s taxable year in which such reimbursable amounts are paid by the
Executive, and provided further that the reimbursements provided, during the
Executive’s taxable year shall not affect the expenses eligible for reimbursement in
any other taxable year (with the exception of applicable lifetime maximums
applicable to medical expenses or medical benefits described in Section 105(b) of
the Code) and the right to reimbursement hereunder shall not be subject to
liquidation or exchange for another benefit or payment;
| 8. | Clause (iii) of Section 4(a) of the Original Agreement is hereby amended and restated in its entirety to provide as follows: |
(iii) The Company shall reimburse Executive for all outplacement services
incurred on and prior to the last day of the second calendar year following the year
in which the Date of Termination occurs up to a maximum direct cost to the Company
of up to 15% of the Executive’s Annual Base Salary as of the Date of Termination.
Company shall reimburse Executive within 30 days after Executive provides the
Company with an invoice (and any supporting documentation required by the Company)
for such outplacement services, but in no event shall any such reimbursement be made
after the last day of the third calendar year following the year in which the Date
of Termination occurs;
| 9. | Clause (iv) of Section 4(a) of the Original Agreement is hereby amended and restated in its entirety to provide as follows: |
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(iv) With respect to all options to purchase Common Stock held by the Executive
pursuant to an NOI stock option plan on or prior to the Date of Termination that
were vested on or before December 31, 2004, irrespective of whether such options are
then exercisable, the Executive shall have the right, during the sixty (60) day
period after the Date of Termination, to elect to surrender all or part of such
options in exchange for a cash payment by the Company to the Executive in an amount
equal to the number of shares of Common Stock subject to the Executive’s option
multiplied by the difference between (x) and (y) where (x) equals the purchase price
per share covered by the option and (y) equals the highest reported sale price of a
share of Common Stock in any transaction reported on the New York Stock Exchange
during the sixty (60) day period prior to and including the Executive’s Date of
Termination. Such cash payments shall be made within thirty (30) days after the date
of the Executive’s election; provided, however, that if the Executive’s Date of
Termination is within six months after the date of grant of a particular option held
by the Executive and the Executive is subject to Section 16(b) of the Securities
Exchange Act of 1934, as amended, any cash payments related thereto shall be made on
the date which is six months and one day after the date of grant of such option to
the extent necessary to prevent the imposition of the disgorgement provisions under
Section 16(b).
Any options outstanding as of the Date of Termination and not then exercisable
shall become fully exercisable as of the Executive’s Date of Termination, and to the
extent the Executive does not elect to surrender any options that were vested on or
before December 31, 2004 for a cash payment as provided above, such options shall
remain exercisable for one year after the Executive’s Date of Termination, until the
stated expiration of the stated term thereof, or until the 10th
anniversary of the original date of grant thereof, whichever is shorter; any
restrictions imposed by NOI or the Company that are applicable to any shares of
Common Stock granted to the Executive by NOI or the Company shall lapse, as of the
date of the Executive’s Date of Termination;
| 10. | Clause (vi) of Section 4(a) of the Original Agreement is hereby amended and restated in its entirety to provide as follows: |
(vi) Any compensation previously deferred by the Executive under a plan
sponsored by the Company (together with any accrued interest or earnings thereon)
shall be distributed at the earliest time permitted by such plan or, if permitted
under the terms of such plan and all applicable laws, statutes or regulations
governing such plans, at such other time as the Executive may elect under the terms
of such plan;
| 11. | Clause (vii) of Section 4(a) of the Original Agreement is hereby amended and restated in its entirety to provide as follows: |
(vii) To the extent not theretofore paid or provided, the Company shall timely
pay or provide to the Executive any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive under any plan, program,
policy or practice or contract or agreement of the Company and its affiliated
companies; provided, however that any amounts or benefits required to be paid or
provided to the Executive under a plan that is intended to be a qualified plan as
described under Section 401(a) of the Code shall be paid in accordance with the
terms of such qualified plan (all such other amounts and benefits shall be
hereinafter referred to as the “Other Benefits”); and
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| 12. | A new flush paragraph shall be added immediately following clause (viii) of Section 4(a) of the Original Agreement to provide as follows: |
Provided that, notwithstanding anything contained herein to the contrary, in
accordance with Section 409A of the Code, if the Executive is determined by the
Board (or its delegate) to be a “specified employee” (as described in Section 409A
of the Code) for the year in which Executive’s Date of Termination occurs, (1) any
payments or in-kind benefits due hereunder that are not permitted to be paid or
provided on the date(s) specified hereunder without the imposition of additional
taxes, interest and penalties under Section 409A of the Code shall be paid in a lump
sum or provided on the first business day following the six-month anniversary of the
Date of Termination or, if earlier, Executive’s death (the “Section 409A Payment
Date”) and (2) any transfers of any memberships that are required under
Section 4(a)(v) shall not be transferred until the Section 409A Payment Date, and
for each month (or portion thereof) during such delay period, Executive shall be
entitled to use such memberships and, to the extent Executive elects to use such,
shall pay to the Company the fair market value of the usage; provided that on the
Section 409A Payment Date, the Company shall reimburse Executive for the payments
made to the Company for such usage during the delay period.
| 13. | The fourth sentence in Section 5 of the Original Agreement (which begins, “In addition, if . . .” and ends, “. . . of no further force and effect.”) shall be deleted. |
| 14. | The reference to “Internal Revenue Code of 1986, as amended (the “Code”)” contained in paragraph (c) of Section 6 of the Original Agreement shall be deleted and a reference to “Code” shall be substituted in lieu of the original reference. |
| 15. | A new Paragraph (e) shall be added immediately following Paragraph (d) of Section 7 of the Original Agreement to provide as follows: |
(e) Notwithstanding anything in this Agreement to the contrary, in accordance
with Section 409A of the Code, any additional payments due to Executive under this
Section 7 shall be paid by the Company no later than the end of the Executive’s
taxable year next following the Executive’s taxable year in which the related taxes
are remitted to the taxing authority.
| 16. | A new Paragraph (g) shall be added immediately following Paragraph (f) of Section 11 of the Original Agreement to provide as follows: |
(g) This Agreement is intended to meet the requirements of Section 409A of the
Code and shall be administered in a manner that is intended to meet those
requirements and shall be construed and interpreted in accordance with such intent.
To the extent that a payment, or the settlement or deferral thereof, is subject to
Section 409A of the Code, except as the Board of Directors and Executive otherwise
determine in writing, the payment shall be paid, settled or deferred in a manner
that will meet the requirements of Section 409A of the Code, including regulations
or other guidance issued with respect thereto, such that the payment, settlement or
deferral shall not be subject to the additional tax or interest applicable under
Section 409A of the Code. Any provision of this Agreement that would cause the
payment, settlement or deferral thereof to fail to satisfy Section 409A of the Code
shall be amended (in a manner that as closely as practicable achieves the original
intent of this Agreement) to comply with Section 409A of the Code on a timely basis,
which may be made on a retroactive basis, if permitted under the regulations and
other guidance issued under Section 409A of the Code. In the event additional
regulations or other guidance is issued under Section 409A of the Code or a court of
competent jurisdiction provides additional authority concerning the application of
Section 409A with respect to the payments described hereunder, then the
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provisions regarding such payments shall be amended to permit such payments to
be made at the earliest time allowed under such additional regulations, guidance or
authority that is practicable and achieves the original intent of this Agreement.
| 17. | This First Amendment shall be binding on each party hereto only when it has been executed by all of the parties hereto, and when so executed, shall, unless otherwise provided by a specific provision of this First Amendment, be and become effective. |
| 18. | All references to “Agreement” contained in the Original Agreement shall be deemed to be a reference to the Original Agreement, as amended by this First Amendment. Certain capitalized terms used herein that are not otherwise defined are defined in the Original Agreement, and the terms defined in this First Amendment shall be incorporated in the Original Agreement with the same meanings as set forth herein. |
| 19. | The validity, interpretation, construction and enforceability of this First Amendment shall be governed by the laws of the State of Texas, without reference to principles of conflict of laws. |
| 20. | Except as amended by this First Amendment, the Original Agreement shall remain in full force and effect. |
| 21. | This First Amendment may be executed in one or more counterparts, and by the parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which shall constitute one and the same agreement. |
Signature Page to Follow
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In Witness Whereof, the Company, NOI and the Executive have executed this First
Amendment on the date first written above, which is effective as set forth herein.
| NATIONAL OILWELL VARCO L.P. | ||||||
| By Its General Partner, NOW Oilfield Services, Inc. | ||||||
| By: | /s/ Xxxx Xxxxxxxx | |||||
| Name: | Xxxx Xxxxxxxx | |||||
| Title: | President | |||||
| NATIONAL OILWELL VARCO, INC. | ||||||
| By: | /s/ Xxxx Xxxxxxxx | |||||
| Name: | Xxxx Xxxxxxxx | |||||
| Title: | Senior Vice President & Chief Financial Officer | |||||
| EXECUTIVE | ||||||
| /s/ Xxxxxxx X. Xxxxxx, Xx. | ||||||
| Xxxxxxx X. Xxxxxx, Xx. |
||||||
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