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DEFERRED FEE AGREEMENT
This Agreement is made as of October 18, 1996, effective as of
, 1996 (the "Effective Date"), by and between National-Oilwell, Inc.,
a Delaware corporation (the "Company"), Inverness/Phoenix LLC, a Connecticut
limited liability company ("Inverness") and First Reserve Corporation, a
Delaware corporation ("First Reserve").
WHEREAS, the Company (under its former name, NOW Holdings, Inc.) and
Inverness (under its former name, Duff & Xxxxxx/Inverness LLC) entered into a
Management Services Agreement dated as of January 16, 1996 (the "Management
Services Agreement"), and
WHEREAS, the Company and Inverness desire to terminate the Management
Services Agreement and replace it with this Deferred Fee Agreement (the
"Agreement"), and
WHEREAS, the Company, Inverness and First Reserve desire to set forth
certain agreements with respect to the termination of the Management Services
Agreement and its replacement by the Agreement,
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties agree as follows:
1. DEFINITIONS.
(a) Seller Notes. The Seller Notes are the two subordinated
promissory notes issued by the Company on January 16, 1996 to Oilwell,
Inc., a Delaware corporation, and National Supply Company, Inc., a
Delaware corporation, each in the principal amount of $10,000,000 bearing
interest at 9% per annum and due January 16, 2005.
(b) Transaction. A Transaction is an acquisition, merger,
consolidation or divestiture involving the Company immediately after
which the consolidated net worth of the Company is equal to or greater
than such consolidated net worth immediately prior to such transaction.
2. TERMINATION OF MANAGEMENT SERVICES AGREEMENT. As of the Effective
Date, the Management Services Agreement shall be terminated and replaced with
this Agreement and all unpaid amounts accrued through September 30, 1996 under
the Management Services Agreement shall be paid by the Company to Inverness on
the Effective Date.
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3. PAYMENTS.
The Company shall make the following payments:
(a) Beginning on the first day of the calendar quarter following
the Effective Date and continuing through December 31, 1999, the Company
shall pay to Inverness a quarterly fee of $250,000 payable on the first
day of each calendar quarter, provided, however, that the first quarterly
payment under this section 3(a) shall be paid on the Effective Date; and
(b) The Company shall pay to Inverness fees aggregating
$1,050,000 and pay to First Reserve fees aggregating $225,000 on the
first date that such payments will not result in an event of default
under the Seller Notes; provided, however, that (i) if a Transaction
occurs prior to January 1, 2000, a portion of the $1,275,000 aggregate
fee payable to Inverness and First Reserve under this paragraph shall be
considered, and paid as, a transaction fee to the extent that such
payment does not cause an event of default under the Seller Notes and
(ii) any portion of the $1,275,000 aggregate fee payable to Inverness and
First Reserve under this paragraph remaining unpaid as of January 1, 2000
shall be considered as a management or similar fee and shall be paid by
the Company beginning on January 1, 2000, until the remaining unpaid
portion of the $1,275,000 has been paid in full, with such payments to be
made by the Company quarterly in advance in the aggregate amount of
$250,000 per quarter and such payments being allocated proportionally to
Inverness and First Reserve based on the outstanding amount of the
$1,275,000 aggregate fee owed to each of them respectively.
4. NOTICES. All notices hereunder shall be in writing and shall be
delivered personally or mailed by United States mail, postage prepaid,
addressed to the parties as follows:
To the Company:
National-Oilwell, Inc.
0000 Xxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Chief Executive Officer
To First Reserve:
First Reserve Corporation
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
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To Inverness:
Phoenix/Inverness LLC
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: X. XxXxxx Dunwoody
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
2300 First City Tower
0000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxx
5. ASSIGNMENT. No party may assign any obligations hereunder to any
other party without the prior written consent of the other parties; such
consent shall not be unreasonably withheld; provided, however, that Inverness
may assign its rights and obligations under this Agreement to any of its
affiliates or successors without the consent of the Company.
6. SUCCESSORS. This Agreement and all the obligations and benefits
hereunder shall inure to the successors and assigns of the parties.
7. COUNTERPARTS. This Agreement may be executed and delivered by each
party hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original and both of which taken together shall
constitute but one and the same agreement.
8. ENTIRE AGREEMENT; MODIFICATION; GOVERNING LAW. The terms and
conditions hereof constitute the entire agreement between the parties hereto
with respect to the subject matter of this Agreement and supersede all previous
communications, either oral or written, representations or warranties of any
kind whatsoever, except as expressly set forth herein. No modifications of
this Agreement nor waiver of the terms or conditions thereof shall be binding
upon either party unless approved in writing by an authorized representative of
such party. All issues concerning this agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut, without
giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Connecticut or any other jurisdiction) that would
cause the application of the law of any jurisdiction other than the State of
Connecticut.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first above written.
NATIONAL-OILWELL, INC.
By
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Xxxx X. Staff
Chief Executive Officer
INVERNESS/PHOENIX LLC
By
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X. XxXxxx Dunwoody
President
FIRST RESERVE CORPORATION
By
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Xxxxxxx X. Xxxxxxxx
President
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