EXHIBIT 10.1

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Notice of Grant of Stock Options
and Option Agreement
  National-Oilwell, Inc.
10000 Richmond Avenue — 6th Floor
Houston, TX 77042
 

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Name:
 
Grant Date:
 
Number of Shares:  
 
Exercise Price:

 

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     Effective ___, you have been granted a Nonqualified Stock Option to buy
___shares of National-Oilwell, Inc. (the Company) common stock at $  per share.

The options vest annually in three equal installments beginning on the first
anniversary of the grant date and expire ten years from the grant date.

By your signature and the Company’s signature below, you and the Company agree
that these options are granted under and governed by the terms and conditions of
the attached Nonqualified Stock Option Agreement and the National-Oilwell, Inc.
Stock Award and Long-Term Incentive Plan, as amended and restated.

 

     

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National-Oilwell, Inc.
 

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Employee
By:

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Its:

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NATIONAL-OILWELL, INC.

Nonqualified Stock Option Agreement

     AGREEMENT made as of _________ between NATIONAL-OILWELL, INC., a Delaware
corporation (the “Company”) and _______________ (“Employee”).

     To carry out the purposes of the National-Oilwell Stock Award and Long Term
Incentive Plan, as amended and restated (the “Plan”), by affording Employee the
opportunity to purchase shares of the Common Stock of the Company (“Stock”), and
in consideration of the mutual agreements and other matters set forth herein and
in the Plan, the Company and Employee hereby agree as follows:

     1. Grant of Option. The Company hereby grants to Employee the right and
option (“Option”) to purchase all or any part of an aggregate of _________
shares of Stock, on the terms and conditions set forth herein and in the Plan,
which Plan is incorporated herein by reference as a part of this Agreement. This
Option shall not be treated as an incentive stock option within the meaning of
section 422(b) of the Internal Revenue Code of 1986, as amended (the “Code”).

     2. Purchase Price. The purchase price of Stock purchased pursuant to the
exercise of this Option shall be $_________ per share, which has been determined
to be not less than 100% of the fair market value of the Stock at the date of
grant of this Option. For all purposes of this Agreement, fair market value of
Stock shall be determined in accordance with the provisions of the Plan.

     3. Exercise of Option. Subject to the earlier expiration of this Option as
herein provided, this Option may be exercised, by written notice to the Company
at its principal executive office addressed to the attention of its Secretary,
at any time and from time to time after the date of grant hereof, but, except as
otherwise provided below, this Option shall not be exercisable for more than a
percentage of the aggregate number of shares offered by this Option determined
by the number of full years from the date of grant hereof to the date of such
exercise, in accordance with the following schedule:

          PERCENTAGE OF SHARES THAT NUMBER OF FULL YEARS   MAY BE PURCHASED
Less than 1 year
  0%
1 year
  33 1/3%
2 years
  66 2/3%
3 years or more
  100%

     This Option may be exercised only while Employee remains an employee of the
Company and will terminate and cease to be exercisable upon Employee’s
termination of employment with the Company, except that:

     (a) If Employee’s employment with the Company terminates by reason of
disability (within the meaning of section 22(e)(3) of the Code), this Option may
be exercised by Employee (or Employee’s estate or the person who acquires this
Option by will or the laws of descent and distribution or otherwise by reason of
the

 

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death of Employee) at any time during the period of one year following such
termination, but only as to the number of shares Employee was entitled to
purchase hereunder as of the date Employee’s employment so terminates.

     (b) If Employee dies while in the employ of the Company, Employee’s estate,
or the person who acquires this Option by will or the laws of descent and
distribution or otherwise by reason of the death of Employee, may exercise this
Option at any time during the period of one year following the date of
Employee’s death, but only as to the number of shares Employee was entitled to
purchase hereunder as of the date of Employee’s death.

     (c) If Employee’s employment with the Company is involuntarily terminated
at any time after a Change of Control, unless such employment is terminated for
cause, this Option may be exercised by Employee at any time during the period of
three months following such Involuntary Termination, or by Employee’s estate (or
the person who acquires this Option by will or the laws of descent and
distribution or otherwise by reason of the death of Employee) during a period of
one year following Employee’s death if Employee dies during such three-month
period, and in each case for 100% of the aggregate number of shares offered by
this Option. As used in this paragraph, the term “cause” shall have the same
meaning as set forth in paragraph (d) below. As used in this paragraph, “Change
of Control” shall mean: (i) the Company completes the sale of assets having a
gross sales price which exceeds 50% of the consolidated total capitalization of
the Company (consolidated total stockholders’ equity plus consolidated total
long-term debt as determined in accordance with generally accepted accounting
principles) as at the end of the last full fiscal quarter prior to the date such
determination is made; or (ii) any corporation, person or group within the
meaning of Section 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the “Act”), becomes the beneficial owner (within the meaning of
Rule 13d-3 under the Act) of voting securities of the Company representing more
than 30% of the total votes eligible to be cast at any election of directors of
the Company. As used in this paragraph, “Involuntary Termination” means a
termination from employment with the Company that is either (i) initiated by the
Company for reasons other than cause, or (ii) initiated by the Employee within
twelve months following a Change of Control and after (a) a reduction by the
Company of the authority, duties or responsibilities of the Employee immediately
prior to the Change of Control (excluding for this purpose (A) an insubstantial
reduction of such authorities, duties or responsibilities or an insubstantial
reduction of Employee’s offices, titles and reporting requirements, or (B) an
isolated, insubstantial and inadvertent action not taken in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given by the
Employee), (b) a reduction of the Employee’s base salary or total compensation
as in effect immediately prior to the Change of Control (total compensation
including for this purpose: base salary, participation in an annual bonus plan,
and participation in a long-term incentive plan) or (c) the transfer of the
Employee, without the Employee’s express written consent, to a location which is
outside the general metropolitan area in which the Employee’s principal place of
business immediately prior to the Change of Control may be located or the
Company’s requiring the Employee to travel on company business to a
substantially greater extent than required immediately prior to the Change of
Control.

     (d) If Employee’s employment with the Company terminates for any reason
other than as described in (a), (b) or (c) above, unless such employment is
terminated for cause, this Option may be exercised by Employee at any time
during the period of three months following such termination, or by Employee’s
estate (or the person who acquires this Option by will or the laws of descent
and distribution or otherwise by reason of the death of Employee) during a
period of one year following Employee’s death if Employee dies during such
three-month period, but in each case only as to the number of shares Employee
was entitled to purchase hereunder upon exercise of this Option as of the date
Employee’s employment so terminates. As used in this paragraph, the

 

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term “cause” shall mean Employee’s gross negligence or willful misconduct in
performance of the duties of Employee’s employment, or Employee’s final
conviction of a felony or of a misdemeanor involving moral turpitude.

     This Option shall not be exercisable after the expiration of ten years from
the date of grant hereof (the “Expiration Date”), and may only be extended
pursuant to the terms and conditions set forth in Section 9 of this Agreement.
The purchase price of shares as to which this Option is exercised shall be paid
in full at the time of exercise (a) in cash (including check, bank draft or
money order payable to the order of the Company), (b) by delivering to the
Company shares of Stock having a fair market value equal to the purchase price,
or (c) any combination of cash or Stock. No fraction of a share of Stock shall
be issued by the Company upon exercise of an Option or accepted by the Company
in payment of the purchase price thereof; rather, Employee shall provide a cash
payment for such amount as is necessary to effect the issuance and acceptance of
only whole shares of Stock. Unless and until a certificate or certificates
representing such shares shall have been issued by the Company to Employee,
Employee (or the person permitted to exercise this Option in the event of
Employee’s death) shall not be or have any of the rights or privileges of a
shareholder of the Company with respect to shares acquirable upon an exercise of
this Option.

     4. Withholding of Tax. To the extent that the exercise of this Option or
the disposition of shares of Stock acquired by exercise of this Option results
in compensation income to Employee for federal or state income tax purposes,
Employee shall deliver to the Company at the time of such exercise or
disposition such amount of money or shares of Stock as the Company may require
to meet its obligation under applicable tax laws or regulations, and, if
Employee fails to do so, the Company is authorized to withhold from any cash or
Stock remuneration then or thereafter payable to Employee any tax required to be
withheld by reason of such resulting compensation income. Upon an exercise of
this Option, the Company is further authorized in its discretion to satisfy any
such withholding requirement out of any cash or shares of Stock distributable to
Employee upon such exercise.

     5. Status of Stock. Employee agrees that the shares of Stock which Employee
may acquire by exercising this Option will not be sold or otherwise disposed of
in any manner which would constitute a violation of any applicable securities
laws, whether federal or state. Employee also agrees (i) that the certificates
representing the shares of Stock purchased under this Option may bear such
legend or legends as the Committee deems appropriate in order to assure
compliance with applicable securities laws, (ii) that the Company may refuse to
register the transfer of the shares of Stock purchased under this Option on the
stock transfer records of the Company, if such proposed transfer would, in the
opinion of counsel satisfactory to the Company, constitute a violation of any
applicable securities law and (iii) that the Company may give related
instructions to its transfer agent, if any, to stop registration of the transfer
of the shares of Stock purchased under this Option.

     6. Employment Relationship. For purposes of this Agreement, Employee shall
be considered to be in the employment of the Company as long as Employee remains
an employee of either the Company, a parent or subsidiary corporation (as
defined in section 424 of the Code) of the Company, or a corporation or a parent
or subsidiary of such corporation assuming or substituting a new option for this
Option. For jurisdictions where notice of termination is required, employment
shall terminate for purposes of this Agreement on the date employment actually
ceases, irrespective of any determination as to the appropriate period of
notice. Any question as to whether and when there has been a termination of such
employment, and the cause of such termination, shall be determined by the
Committee, and its determination shall be final.

 

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     7. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of any successors to the Company and all persons lawfully claiming under
Employee.

     8. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware.

     9. Extension of Expiration Date. This option shall be exercisable for an
extended period (the “Extension Period”) if 1) the Employee would be subject to
the Company’s Special Policy on Insider Trading (the “Policy”) on the Expiration
Date, and 2) the Expiration Date occurs during a period when the Employee is
prohibited from transacting in the Company’s stock as a result of being subject
to the Policy (the “Restricted Period”). The Extension Period shall expire upon
the earlier of the following: 1) thirty days after the Restricted Period, or 2)
a number of days following the Restricted Period equal to the number of days
that the Employee was prohibited from transacting in the Company’s stock during
the Restricted Period.