EXHIBIT 10.4
FIRST AMENDMENT
TO
EMPLOYMENT AGREEMENT BETWEEN NATIONAL OILWELL VARCO L.P.,
NATIONAL OILWELL VARCO, INC. AND DWIGHT W. RETTIG
               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 Dwight W. Rettig (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.

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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:

          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

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     (B) an amount equal to 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, 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.

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;

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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:

     (iv) All options to purchase Common Stock held by the Executive pursuant to
a stock option plan on or prior to the Date of Termination shall be governed by
the terms of the option agreement or plan between the Executive, NOI, and/or the
Company; and any restricted stock held by the Executive, not already vested
shall be 100% vested;

10.   Clause (v) of Section 4(a) of the Original Agreement is hereby amended and
restated in its entirety to provide as follows:

     (v) 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.   A new flush paragraph shall be added immediately following clause (vii) 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, 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
“409A Payment Date”).

12.   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.   13.   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.

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14.   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.

15.   A new Paragraph (f) shall be added immediately following Paragraph (e) of
Section 11 of the Original Agreement to provide as follows:

     (f) 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
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.

16.   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.   17.   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.   18.   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.

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19.   Except as amended by this First Amendment, the Original Agreement shall
remain in full force and effect.   20.   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/ Clay Williams
 
        Name: Clay Williams         Title: President    
 
                NATIONAL OILWELL VARCO, INC.    
 
           
 
  By:   /s/ Merrill A. Miller, Jr.
 
        Name: Merrill A. Miller, Jr.         Title: Chairman, President & Chief
Executive Officer    
 
                EXECUTIVE    
 
                /s/ Dwight W. Rettig                   Dwight W. Rettig
   

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