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                                                                   Exhibit 10(d)

        Summary of Compensation Arrangements with Non-Employee Directors
                              As of January 1, 2005

The following summarizes the current cash compensation and benefits received by
the Company's non-employee directors as of January 1, 2005. It is intended to be
a summary of existing oral, at will, arrangements, and in no way is intended to
provide any additional rights to any non-employee director.

Fees

     Non-employee directors receive an annual retainer fee of $60,000, which is
paid on a quarterly basis. The respective chairmen of the Audit Committee,
Compensation and Stock Option Committee, Corporate Governance and Nominating
Committee and Finance Committee receive an additional annual retainer fee of
$10,000. All non-employee directors are entitled to reimbursement of expenses
for all services as a director, including committee participation or special
assignments. Non-employee directors also receive meeting attendance fees, as
follows:

     o  For committee meetings held in conjunction with regular Board meetings,
        committee chairmen who attend in person (or who participate by telephone
        because of illness or the inability to travel) will receive $1,500 and
        committee members who attend in person (or who participate by telephone
        because of illness or the inability to travel) will receive $1,000;

     o  For special committee meetings (not held in conjunction with regular
        Board meetings), committee chairmen who attend in person or who
        participate by telephone will receive $1,500 and committee members who
        attend in person or who participate by telephone will receive $1,000;
        and

     o  For special Board meetings, all non-employee directors who attend in
        person or who participate by telephone will receive $1,000.

Directors Deferred Compensation Plan

     Non-employee directors may defer all or a portion of their annual retainer
and meeting attendance fees under the Directors Deferred Compensation Plan.

Non-Employee Directors Stock Plan

     All non-employee directors are eligible to participate in the Non-Employee
Directors Stock Plan.

     Options. Under this Plan, non-employee directors are eligible to receive
stock options if, for the immediately preceding fiscal year, we have achieved
after-tax basic earnings per share of 10% over the previous year. The size of
individual grants and vesting terms are set by the Board at the time of grant.

     During the second quarter of fiscal 2005, we granted options to purchase
8,000 shares to John M. Cassaday upon his election to the Board on November 12,
2004. These options have an exercise price of $35.06, vest ratably over a
five-year period and expire seven years after the date of grant. Non-employee
directors are also eligible to participate in the Company's Equity Deferral Plan
described on page 20 of our 2004 Proxy Statement.

     Elected Shares. This Plan also permits each non-employee director to elect
to receive up to one-half of his or her annual retainer in Common Stock, in
which case we will provide a matching grant of 50% of the number of shares
received as a portion of the retainer.

     Retainer Shares. In addition, as of the date of each year's annual meeting,
each newly elected director who has not previously received a retainer award is
granted a one-time retainer award of 4,000 shares. Mr. Cassaday received a
retainer stock award of 4,000 shares upon his election to the Board on November
12, 2004.

     The Directors Deferred Compensation Plan and Non-Employee Directors Stock
Plan, as amended, have been filed as exhibits to the Company's Exchange Act
filings. Additional information regarding these plans is also included in the
Company's 2004 Proxy Statement.exv10w1

 

EXHIBIT 10.1

	 	 	 
	Notice of Grant of Stock Options

and Option Agreement

	 	National-Oilwell, Inc.

10000 Richmond Avenue — 6th Floor

Houston, TX 77042
 

	 	 	 
	Name:
 

Grant Date:
 

Number of Shares:  
 

Exercise Price:

	 
 

     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.

 

	 	 	 
	
National-Oilwell, Inc.

	 	
Employee
	By:

	 	 
	Its:

	 	 

 

 

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

 

 

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

 

 

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.

 

 

     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.

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