Document:

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                                                                    Exhibit 10.2

                              EMPLOYMENT AGREEMENT

         This EMPLOYMENT AGREEMENT (this "Agreement"), dated effective as of
January 1, 2002, by and among National-Oilwell L.P., a Delaware limited
partnership (the "Company"), National-Oilwell, Inc., a Delaware corporation
("NOI"), and Dwight W. Rettig (the "Executive").

                                   WITNESSETH:

         WHEREAS, the Board of Directors of NOI (the "Board") has previously
determined that it is in the best interests of NOI and its stockholders to
retain the Executive and to induce the employment of the Executive for the long
term benefit of NOI, its shareholders and its affiliated companies, including
the Company;

         WHEREAS, the Board does not contemplate the termination of the
Executive during the term hereof and the Board and the Executive expect that the
Executive will be retained for at least the one year period contemplated herein;
and

         WHEREAS, to accomplish these objectives, the Board has caused the
Company to enter into this Agreement.

         NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1.     EMPLOYMENT.

      (a) The Company hereby agrees that the Company or an affiliated company
will continue the Executive in its employ, and the Executive hereby agrees to
remain in the employ of the Company or an affiliated company subject to the
terms and conditions of this Agreement, during the Employment Period (as defined
below). As used in this Agreement, the term "affiliated companies" shall include
any company controlled by, controlling or under common control with the Company.

      (b) The "Employment Period" shall mean the period commencing on the date
hereof and ending on the first (1st) anniversary of the date hereof; provided,
however, that commencing on the date one year after the date hereof, and on each
annual anniversary of such date (such date and each annual anniversary thereof
shall be hereinafter referred to as the "Renewal Date"), unless previously
terminated, the Employment Period shall be automatically extended so as to
terminate one year after such Renewal Date, unless at least sixty (60) days
prior to the Renewal Date the Company shall give notice to the Executive that
the Contract Period shall not be so extended.

2.     TERMS OF EMPLOYMENT.

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      (a) Position and Duties.

         (i) During the Employment Period, (A) the Executive's position
         (including status, offices, titles and reporting requirements,
         authority, duties and responsibilities) shall be substantially similar
         to that in effect as of the date hereof and (B) the Executive's
         services shall be performed at the location where the Executive was
         employed immediately preceding the date hereof or any office or
         location less than fifty (50) miles from such location.

         (ii) During the Employment Period, and excluding any periods of
         vacation and sick leave to which the Executive is entitled, the
         Executive agrees to devote the Executive's full time, skill and
         attention to the business and affairs of the Company and, to the extent
         necessary to discharge the responsibilities assigned to the Executive
         hereunder, to use the Executive's reasonable best efforts to perform
         faithfully and efficiently such responsibilities. During the Employment
         Period it shall not be a violation of this Agreement for the Executive
         to (A) serve on corporate, civic or charitable boards or committees,
         (B) deliver lectures, fulfill speaking engagements or teach at
         educational institutions and (C) manage personal investments, so long
         as such activities do not significantly interfere with the performance
         of the Executive's responsibilities as an employee of the Company in
         accordance with this Agreement. It is expressly understood and agreed
         that to the extent that any such activities have been conducted by the
         Executive prior to the date hereof, the continued conduct of such
         activities (or the conduct of activities similar in nature and scope
         thereto) subsequent to the date hereof shall not thereafter be deemed
         to interfere with the performance of the Executive's responsibilities
         to the Company.

      (b) Compensation.

         (i) Base Salary. During the Employment Period, the Executive shall
         receive an annual base salary equal to the current base salary being
         received by the Executive ("Annual Base Salary"), which shall be paid
         in accordance with the Company's standard payroll practice. During the
         Employment Period, the Annual Base Salary shall be reviewed no more
         than twelve (12) months after the last salary increase awarded to the
         Executive prior to the date hereof and thereafter at least annually;
         provided, however, that a salary increase shall not necessarily be
         awarded as a result of such review. Any increase in Annual Base Salary
         may not serve to limit or reduce any other obligation to the Executive
         under this Agreement. Annual Base Salary shall not be reduced after any
         increase without the express written consent of the Executive. The term
         Annual Base Salary as utilized in this Agreement shall refer to Annual
         Base Salary as so increased.

         (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 then
         current National Oilwell Incentive Plan (or such other name as may be
         adopted for the plan or its successor). Each such Annual Bonus shall be
         paid no later than the end of the third month of the fiscal year next
         following the fiscal year for which the Annual Bonus is awarded, unless
         the Executive shall elect to

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         defer the receipt of such Annual Bonus pursuant to a Company sponsored
         deferred compensation plan in effect.

         (iii) Incentive, Savings and Retirement Plans. During the Employment
         Period, the Executive shall be entitled to participate in all
         incentive, stock option, savings and retirement plans, practices,
         policies and programs applicable generally to the Executive's peer
         executives of the Company and its affiliated companies, but in no event
         shall such plans, practices, policies and programs provide the
         Executive with incentive opportunities (measured with respect to both
         regular and special incentive opportunities, to the extent, if any,
         that such distinction is applicable), savings opportunities and
         retirement benefit opportunities, in each case, less favorable, in the
         aggregate, than the most favorable of those provided by the Company and
         its affiliated companies for the Executive under such plans, practices,
         policies and programs as in effect on the date hereof.

         (iv) Welfare Benefit Plans. During the Employment Period, the Executive
         and/or the Executive's family, as the case may be, shall be eligible to
         participate in and shall receive all benefits under welfare benefit
         plans, practices, policies and programs provided by the Company and its
         affiliated companies (including, without limitation, medical,
         prescription, dental, disability, salary continuance, employee life,
         group life, accidental death and travel accident insurance plans and
         programs) to the extent applicable generally to the Executive's peer
         executives of the Company and its affiliated companies, but in no event
         shall such plans, practices, policies and programs provide the
         Executive with benefits which are less favorable, in the aggregate,
         than such plans, practices, policies and programs in effect for the
         Executive on the date hereof.

         (v) Expenses. During the Employment Period, the Executive shall be
         entitled to receive prompt reimbursement for all reasonable expenses
         incurred by the Executive in accordance with the most favorable
         policies, practices and procedures of the Company and its affiliated
         companies in effect for the Executive on the date hereof.

         (vi) Fringe Benefits. During the Employment Period, the Executive shall
         be entitled to fringe benefits (including, without limitation,
         financial planning services, payment of club dues, a car allowance or
         use of an automobile and payment of related expenses, as appropriate)
         in accordance with the most favorable plans, practices, programs and
         policies of the Company in effect on the date hereof.

         (vii) Vacation. During the Employment Period, the Executive shall be
         entitled to paid vacation in accordance with the most favorable plans,
         policies, programs and practices of the Company and its affiliated
         companies in effect for the Executive on the date hereof.

3.     TERMINATION OF EMPLOYMENT.

      (a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. If the
Company determines in good faith that a Disability of the Executive has occurred
during the Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in

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accordance with Section 11(b) of this Agreement of its intention to terminate
the Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective thirty (30) days after receipt of such notice
by the Executive (the "Disability Effective Date"), provided that within the
thirty (30) day period after such receipt, the Executive shall not have returned
to full-time performance of the Executive's duties. For purposes of this
Agreement, "Disability" shall mean the absence of the Executive from the
Executive's duties with the Company on a full-time basis for one hundred eighty
(180) calendar days as a result of incapacity due to mental or physical illness
which is determined to be total and permanent by a physician selected by the
Company or its insurers and acceptable to the Executive or the Executive's legal
representative.

      (b) Cause. The Company may terminate the Executive's employment during the
Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean:

         (i) the willful and continued failure of the Executive to perform
         substantially the Executive's duties with the Company or one of its
         affiliates (other than any such failure resulting from incapacity due
         to physical or mental illness), after a written demand for substantial
         performance is delivered to the Executive by the Board or the Chief
         Executive Officer of the Company which specifically identifies the
         manner in which the Board or Chief Executive Officer believes that the
         Executive has not substantially performed the Executive's duties, or

         (ii) the willful engaging by the Executive in illegal conduct or gross
         misconduct which is materially and demonstrably injurious to the
         Company. For purposes of this provision, no act, or failure to act, on
         the part of the Executive shall be considered "willful" unless it is
         done, or omitted to be done, by the Executive in bad faith or without
         reasonable belief that the Executive's action or omission was in the
         best interests of the Company. Any act, or failure to act, based upon
         authority given pursuant to a resolution duly adopted by the Board or
         upon the instructions of the Chief Executive Officer or of a senior
         officer of the Company or based upon the advice of counsel for the
         Company shall be conclusively presumed to be done, or omitted to be
         done, by the Executive in good faith and in the best interests of the
         Company.

      (c) Good Reason. The Executive may terminate the Executive's employment
during the Employment Period for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean:

         (i) the assignment to the Executive of any duties inconsistent in any
         respect with the Executive's position (including status, offices,
         titles and reporting requirements), authority, duties or
         responsibilities as contemplated by Section 2(a) of this Agreement, or
         any other action by the Company which results in a diminution in such
         position, authority, duties or responsibilities, excluding for this
         purpose 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 Executive;

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         (ii) any failure by the Company to comply with any of the provisions of
         Section 2(b) of this Agreement, other than an isolated, insubstantial
         and inadvertent failure not occurring in bad faith and which is
         remedied by the Company promptly after receipt of notice thereof given
         by the Executive;

         (iii) the Company's requiring the Executive to be based at any office
         or location other than as provided in Section 2(a)(i)(B) hereof or the
         Company's requiring the Executive to travel on Company business to a
         substantially greater extent than required immediately prior to the
         date hereof;

         (iv) any purported termination by the Company of the Executive's
         employment otherwise than as expressly permitted by this Agreement; or

         (v) any failure by the Company to comply with and satisfy Section 9(c)
         of this Agreement, or

         (vi) notice by the Company to the Executive that the Company is not
         extending or renewing this Agreement.

      (d) Notice of Termination. Any termination during the Employment Period by
the Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 11(b) of the Agreement. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than 30 days after the giving of such notice). The
failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.

      (e) Date of Termination. "Date of Termination" shall mean:

         (i) if the Executive's employment is terminated by the Company for
         Cause, or by the Executive for Good Reason, the date of receipt of the
         Notice of Termination or any later date specified therein, as the case
         may be;

         (ii) if the Executive's employment is terminated by the Company other
         than for Cause, death or Disability, the Date of Termination shall be
         the date on which the Company notifies the Executive of such
         termination; and

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         (iii) if the Executive's employment is terminated by reason of death or
         Disability, the Date of Termination shall be the date of death of the
         Executive or the Disability Effective Date, as the case may be.

4.     OBLIGATIONS OF THE COMPANY UPON TERMINATION.

      (a) Good Reason; Other than For Cause, Death or Disability. If, during the
Employment Period, the Company shall terminate the Executive's employment other
than for Cause, death or Disability, or the Executive shall terminate employment
for Good Reason:

         (i) The Company shall pay to the Executive in a lump sum in cash within
         thirty (30) days after the Date of Termination the aggregate of the
         following amounts:

                  (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
                  compensation previously deferred by the Executive under a plan
                  sponsored by the Company (together with any accrued interest
                  or earnings thereon), and 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 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 total of the employer matching
                  contributions credited to the Executive under the Company's
                  401(k) Savings Plan (the "401(k) Plan"), 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.

         Provided that, notwithstanding anything contained herein to the
contrary, for that portion of the Accrued Obligations consisting of compensation
previously deferred by the Executive under a plan sponsored by the Company
(together with any accrued interest or earnings thereon), the Executive shall
have the option, at Executive's sole discretion, to receive any payments due
from such plan in accordance with the terms of the plan or in cash within thirty
(30) days after

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the Date of Termination as provided in this Section 4(a)(i), so long as the
election to receive cash under this Section is permitted under all applicable
regulations governing payouts from the plan and does not have an adverse effect
on the plan or the remaining participants in the plan.

         (ii) For a period of one year from the Executive's Date of Termination
         (the "Remaining Contract Term") or such longer period as may be
         provided by the terms of the appropriate plan, program, practice or
         policy, the Company shall continue 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 if the Executive's
         employment had not been terminated; provided, however, that with
         respect to any of such plans, programs, practices or policies requiring
         an employee contribution, the Executive shall continue to pay the
         monthly employee contribution for same, and provided further, that if
         the Executive becomes reemployed by another employer and is eligible to
         receive medical or other welfare benefits under another employer
         provided plan, the medical and other welfare benefits described herein
         shall be secondary to those provided under such other plan during such
         applicable period of eligibility (for purpose of determining
         eligibility of the Executive for retiree benefits pursuant to such
         plans, programs, and arrangements, the Executive shall be considered to
         have remained employed until one year after the Date of Termination and
         to have retired on the last day of such period);

         (iii) The Company shall, at its sole expense as incurred, provide the
         Executive with outplacement services, the scope and provider of which
         shall be selected by the Executive in his sole discretion;

         (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;

         (v) All benefits under the Company's 401(k) Savings Plan and any other
         similar plans, including any restricted stock held by the Executive,
         not already vested shall be 100% vested, to the extent such vesting is
         permitted under the Code (as defined below);

         (vi) 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 (such other
         amounts and benefits shall be hereinafter referred to as the "Other
         Benefits"); and

         (vii) The foregoing payments are intended to compensate the Executive
         for a breach of the Company's obligations and place Executive in
         substantially the same position had the employment of the Executive not
         been so terminated as a result of a breach by the Company.

      (b) Death. If Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the

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Executive's legal representatives under this Agreement, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive's estate or beneficiaries, as
applicable, in a lump sum in cash within thirty (30) days after the Date of
Termination. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 4(b) shall include, without limitation, and
the Executive's estate and/or beneficiaries shall be entitled to receive,
benefits at least equal to the most favorable benefits provided by the Company
and affiliated companies to the estates and beneficiaries of the Executive's
peer executives of the Company and such affiliated companies under such plans,
programs, practices and policies relating to death benefits, if any, in effect
on the date hereof or, if more favorable, those in effect on the date of the
Executive's death.

      (c) Disability. If the Executive's employment is terminated by reason of
the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
thirty (30) days after the Date of Termination. With respect to the provision of
Other Benefits, the term Other Benefits as utilized in this Section 4(c) shall
include, without limitation, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable benefits generally provided by the Company and its
affiliated companies to the Executive's disabled peer executives and/or their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, in effect generally on the date hereof or, if
more favorable, those in effect at the time of the Disability.

      (d) Cause; Other Than for Good Reason. If the Executive's employment is
terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than the
obligation to pay to the Executive (x) his or her Annual Base Salary through the
Date of Termination, (y) the amount of any compensation previously deferred by
the Executive, and (z) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the Employment
Period, excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued Obligations
and the timely payment or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within thirty
(30) days after the Date of Termination subject to such other options or
restrictions as provided by law.

5.     OTHER RIGHTS.

         Except as provided herein, nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
and for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with the Company or any of its affiliated companies. Except as
provided herein, amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy, practice or program of or
any contract or agreement with the Company or any of its affiliated companies at
or subsequent to the Date of Termination shall be payable in

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accordance with such plan, policy, practice or program or contract or agreement.
It is expressly agreed by the Executive that he or she shall have no right to
receive, and hereby waives any entitlement to, any severance pay or similar
benefit under any other plan, policy, practice or program of the Company. In
addition, if the Executive has an employment or similar agreement with the
Company at the Date of Termination, he or she agrees that he or she shall have
the right to receive all of the benefits provided under this Agreement or such
other agreement, whichever one, in its entirety, the Executive chooses, but not
both agreements, and when the Executive has made such election, the other
agreement shall be superseded in its entirety and shall be of no further force
and effect. The Executive also agrees that to the extent he or she may be
eligible for any severance pay or similar benefit under any laws providing for
severance or termination benefits, such other severance pay or similar benefit
shall be coordinated with the benefits owed hereunder, such that the Executive
shall not receive duplicate benefits.

6.     FULL SETTLEMENT.

      (a) No Rights of Offset. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others.

      (b) No Mitigation Required. In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and such amounts shall not be reduced whether or not the Executive obtains other
employment.

      (c) Legal Fees. The Company agrees to pay as incurred, to the full extent
permitted by law, all legal fees and expense which the Executive may reasonably
incur as a result of any contest (regardless of the outcome thereof) by the
Company or the Executive of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance thereto
(including as a result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case interest on any delayed
payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of
the Internal Revenue Code of 1986, as amended (the "Code").

7.     CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.

      (a) Although this Agreement is not being entered into in connection with
or contingent upon a change of control of the Company, anything in this
Agreement to the contrary notwithstanding and except as set forth below, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
7) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by the Executive with respect
to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after

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payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 7(a), if it shall be
determined that the Executive is entitled to a Gross-Up Payment, but that the
Executive, after taking into account the Payments and the Gross-Up Payment,
would not receive a net after-tax benefit of at least $50,000 (taking into
account both income taxes and any Excise Tax) as compared to the net after-tax
proceeds to the Executive resulting from an elimination of the Gross-Up Payment
and a reduction of the Payments, in the aggregate, to an amount (the "Reduced
Amount") such that the receipt of Payments would not give rise to any Excise
Tax, then no Gross-Up Payment shall be made to the Executive and the Payments,
in the aggregate, shall be reduced to the Reduced Amount.

      (b) Subject to the provisions of Section 7(c), all determinations required
to be made under this Section 7, including whether and when a Gross-Up Payment
is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination shall be made by Ernst & Young,
L.L.P., 1221 McKinney, Suite 2400, Houston, Texas 77010 or, as provided below,
such other certified public accounting firm as may be designated by the
Executive (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within fifteen (15) business
days after the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group affecting a change of control of the Company, the Executive
shall appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 7, shall be paid by the Company to the Executive within
five days after the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 7(c) and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.

      (c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment (or an additional Gross-Up Payment) in the event
the IRS seeks higher payment. Such notification shall be given as soon as
practicable, but no later than ten business days after the Executive is informed
in writing of such claim, and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the thirty (30) day period
following the date on which he

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gives such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such period that it desires
to contest such claim, the Executive shall:

         (i) give the Company any information reasonably requested by the
         Company relating to such claim;

         (ii) take such action in connection with contesting such claim as the
         Company shall reasonably request in writing from time to time,
         including without limitation, accepting legal representation with
         respect to such claim by an attorney reasonably selected by the
         Company;

         (iii) cooperate with the Company in good faith in order effectively to
         contest such claim; and

         (iv) permit the Company to participate in any proceedings relating to
         such claims; provided, however, that the Company shall bear and pay
         directly all costs and expenses (including additional interest and
         penalties) incurred in connection with such costs and shall indemnify
         and hold the Executive harmless, on an after-tax basis, for any Excise
         Tax or income tax (including interest and penalties with respect
         thereto) imposed as a result of such representation and payment of
         costs and expenses. Without limitation on the foregoing provisions of
         this Section 7(c), the Company shall control all proceedings taken in
         connection with such contest and, at its sole option, may pursue or
         forego any and all administrative appeals, proceedings, hearings and
         conferences with the taxing authority in respect of such claim and may,
         at its sole option, either direct the Executive to pay the tax claimed
         and sue for a refund or contest the claim in any permissible manner,
         and the Executive agrees to prosecute such contest to determination
         before any administrative tribunal, in a court of initial jurisdiction
         and in one or more appellate courts, as the Company shall determine;
         provided, however, that if the Company directs the Executive to pay
         such claim and sue for a refund, the Company shall advance the amount
         of such payment to the Executive, on an interest-free basis and shall
         indemnify and hold the Executive harmless, on an after-tax basis, from
         any Excise Tax or income tax (including interest or penalties with
         respect thereto) imposed with respect to such advance or with respect
         to any imputed income with respect to such advance; and further
         provided that any extension of the statute of limitations relating to
         payment of taxes for the taxable year of the Executive with respect to
         which such contested amount is claimed to be due is limited solely to
         such contested amount. Furthermore, the Company's control of the
         contest shall be limited to issues with respect to which a Gross-Up
         Payment would be payable hereunder and the Executive shall be entitled
         to settle or contest, as the case may be, any other issues raised by
         the Internal Revenue Service or any other taxing authority.

      (d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 7(c), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 7(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or

                                    Page 11
<PAGE>

credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 7(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.

8.     CONFIDENTIAL INFORMATION.

         The Executive shall hold in a fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their respective businesses,
which shall have been obtained by the Executive during the Executive's
employment by the Company or any of its affiliated companies, provided that it
shall not apply to information which is or shall become part of the public
domain (other than by acts by the Executive or representatives of the Executive
in violation of this Agreement), information that is developed by the Executive
independently of such information, or knowledge or data or information that is
disclosed to the Executive by a third party under no obligation of
confidentiality to the Company. After termination of the Executive's employment
with the Company, the Executive shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal process, communicate
or divulge any such information, knowledge or data to anyone other than the
Company and those designated by it. In no event shall an asserted violation of
the provisions of this Section 8 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.

9.     SUCCESSORS.

      (a) This Agreement is personal to the Executive and shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.

      (b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.

      (c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.

10.      POST EMPLOYMENT NON-COMPETITION OBLIGATIONS.

      (a) As part of the consideration for the compensation and benefits to be
paid to Executive hereunder, and as an additional incentive for the Company and
NOI to enter into this Agreement,

                                    Page 12
<PAGE>

the Company, NOI and Executive agree to the non-competition provisions of this
Section 10. Executive agrees that during the period of Executive's
non-competition obligations hereunder, Executive will not, directly or
indirectly for Executive or for others, in any geographic area or market where
the Company, NOI or any of their subsidiaries or affiliated companies are
conducting any business as of the date of termination of the employment
relationship or have during the previous twelve months conducted any business:

         (i)      engage in any business competitive with any line of business
                  conducted by the Company, NOI, or any of their subsidiaries or
                  affiliates;

         (ii)     render advice or services to, or otherwise assist, any other
                  person, association, or entity who is engaged, directly or
                  indirectly, in any business competitive with any line of
                  business conducted by the Company, NOI, or any of their
                  subsidiaries or affiliates;

         (iii)    induce any officer or manager of the Company or NOI, or any of
                  their subsidiaries or affiliates to terminate his or her
                  employment with the Company, NOI, or any of their subsidiaries
                  or affiliates, or hire or assist in the hiring of any such
                  officer or manager by person, association, or entity not
                  affiliated with the Company, NOI or any of their subsidiaries
                  or affiliates.

These non-competition obligations shall apply during Executive's employment and
for a period ending on the first (1st ) anniversary date of the Date of
Termination. After termination of Executive's employment these non-competition
obligations shall apply only to businesses having annual revenues in excess of
$10 million competitive with any line of business conducted by the Company, NOI,
or any of their subsidiaries having annual revenues in excess of $10 million for
the last fiscal year prior to the time of termination. If the Company, NOI, or
any of their subsidiaries or affiliates abandons a particular aspect of its
business, that is, ceases such aspect of its business with the intention to
permanently refrain from such aspect of its business, then this post-employment
non-competition covenant shall not apply to such former aspect of that business.

     (b) Executive understands that the foregoing restrictions may limit his
ability to engage in certain businesses anywhere in the world during the period
provided for above, but acknowledges that Executive will receive sufficiently
high remuneration and other benefits under this Agreement to justify such
restriction. Executive acknowledges that money damages would not be sufficient
remedy for any breach of this Section 10 by Executive, and the Company, NOI, or
any of their subsidiaries or affiliates shall be entitled to specific
performance and injunctive relief as remedies for such breach or any threatened
breach after notification by the Company of any breach and Executive's failure
to cure same. Such remedies shall not be deemed the exclusive remedies for a
breach of this Section 10, but shall be in addition to all remedies available at
law or in equity to the Company, NOI, or any of their subsidiaries or
affiliates, including, without limitation, the recovery of damages from
Executive and his agents involved in such breach.

                                    Page 13
<PAGE>

     (c) The Executive, the Company and NOI each expressly acknowledge and agree
that the restrictions contained in this Agreement, including this Section 10,
are deemed by each to reasonable and necessary to protect the business interests
of NOI and the Company and their subsidiaries and affiliates. However, in the
event that any of the restrictions contained in this Agreement, and specifically
this Section 10, are found by a court of competent jurisdiction to be
unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, it is the parties express intention for the restrictions herein
set forth to be modified by such court so as to be reasonable and enforceable
and, as so modified by the court, to be fully enforced.

11.    MISCELLANEOUS.

      (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORD-ANCE WITH
THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF
LAWS. The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

      (b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:

     If to Executive:                          If to Company:

     Dwight W. Rettig                          National-Oilwell, L.P.
     1100 Bering Drive, Apt. 513               P.O. Box 4888
     Houston, Texas 77057                      Houston, Texas 77210-4888
                                               Attn: President

                                               With copy to:

                                               National-Oilwell, Inc.
                                               10000 Richmond Ave., Suite 400
                                               Houston, Texas 77042
                                               Attn: Chief Financial Officer

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.

      (c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.

      (d) The Company may withhold from any amounts payable under this Agreement
such Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

                                    Page 14
<PAGE>

      (e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 3(c)(i)-(vi) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.

         IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.

Executive                                     National-Oilwell, L.P.
                                              by its general partner
                                              NOW Oilfield Services, Inc.
-------------------------
Dwight W. Rettig
                                              By:
                                                  ----------------------------
                                              Name:
                                                    --------------------------
                                              Title:
                                                     -------------------------

                                              National-Oilwell, Inc.

                                              By:
                                                  ----------------------------
                                              Name:
                                                    --------------------------
                                              Title:
                                                     -------------------------

                                    Page 15<PAGE>

                                                                    EXHIBIT 10.3

                              EMPLOYMENT AGREEMENT

         This Employment Agreement ("Agreement") is entered into between IRI
International Corporation, a Delaware corporation having offices at 1000
Louisiana, Suite 5900, Houston, Texas 77002 ("Employer"), and Gary W.
Stratulate, ("Employee"), to be effective as of the Closing Date (as defined in
that certain Agreement of Merger of even date herewith among Employer, Arrow
Acquisition Corp. and National-Oilwell, Inc.

         Employer is desirous of continuing to employ Employee pursuant to the
terms and conditions and for the consideration set forth in this Agreement and
of terminating any prior employment agreement or arrangement, and Employee is
desirous of continuing in the employ of Employer pursuant to such terms and
conditions and for such consideration set forth in this Agreement and of
terminating any prior existing employment agreement or arrangement.

         NOW, THEREFORE, for and in consideration of the mutual promises,
covenants, and obligations contained herein, Employer and Employee agree as
follows:

1.       EMPLOYMENT AND DUTIES:

         1.1. Employer agrees to continue to employ Employee, and Employee
agrees to be employed by Employer throughout the Term (as defined below) of this
Agreement, subject to the terms and conditions of this Agreement.

         1.2 Employee shall serve as President & Chief Operating Officer of the
Employer and shall report to Chief Executive Officer of Employer. Employee
agrees to serve in the assigned position and to perform diligently and to the
best of Employee's abilities the duties and services appertaining to such
position as determined by Employer, as well as such additional or different
duties and services appropriate to such position which Employee from time to
time may be reasonably directed to perform by Employer; provided, that the
Employee shall not be forced to relocate anywhere other than the metropolitan
areas of Houston, Texas or any other city where Employee is located as of the
date of this Agreement. Employer will provide Employee with those resources
reasonably required for the performance of his duties hereunder. Employee shall
at all times comply with and be subject to such generally applicable policies
and procedures as Employer may establish from time to time.

         1.3. Employee shall, during the period of Employee's employment by
Employer, devote Employee's full business time, energy, and best efforts to the
business and affairs of Employer. Employee may not engage, directly or
indirectly, in any other business, investment, or activity that interferes with
Employee's performance of Employee's duties hereunder, is contrary to the
interests of Employer or any of its subsidiaries or affiliates or requires any
significant portion of Employee's business time; provided, however, that
Employee may have other

<PAGE>

business, personal, and civic interests which, from time to time, require
portions of his time but which (i) do not and will not interfere with the
performance of his duties hereunder and (ii) are not and will not be competitive
with the Relevant Business (as defined herein). Such other interests may include
service on boards and governing bodies of charitable, cultural, educational, and
other non-profit organizations, and on the boards of other enterprises that do
not engage in any business in competition with the Relevant Business.

         1.4. Employee acknowledges and agrees that Employee owes a fiduciary
duty of loyalty, fidelity and allegiance to act at all times in the best
interests of Employer any of its subsidiaries or affiliates and to do no act
which would injure the business, interests, or reputation of Employer or any of
its subsidiaries or affiliates. In keeping with these duties, Employee shall
make full disclosure to Employer of all business opportunities pertaining to
Employer's business and shall not appropriate for Employee's own benefit
business opportunities concerning the subject matter of the fiduciary
relationship.

2.       COMPENSATION AND BENEFITS:

         2.1. Employee's initial base salary under this Agreement shall be
($255,895.00) per annum, and shall be paid in installments in accordance with
Employer's standard payroll practice. Employee's base salary may be increased
from time to time by Employer and, after any such change, Employee's new level
of base salary shall be Employee's base salary for purposes of this Agreement
until the effective date of any subsequent change.

         2.2. Employer and Employee may enter into separate written stock option
agreements pursuant to which Employee may be granted options to purchase shares
of common stock of Employer subject to the terms and conditions of any such
agreement. The number of shares and terms of the restrictions placed upon
exercising the options shall be as specified in any such agreement. Employee
acknowledges that his participation in any Employer stock option plans shall be
subject to the Board of Directors approval of his participation

         2.3. Employer's current management incentive program (or such other
name as it is adopted) and the Board of Directors approval of his participation
shall govern employee's participation, if any, in any bonus plans.

         2.4. While employed by Employer, Employee shall be allowed to
participate, on the same basis generally as other employees of Employer, in all
general employee benefit plans and programs, including improvements or
modifications of the same, which on the effective date or thereafter are made
available by Employer to all or substantially all of Employer's employees. Such
benefits, plans, and programs may include, without limitation, medical, health,
and dental care, life insurance, disability protection, and pension plans.
Nothing in this Agreement is to be construed or interpreted to provide greater
rights, participation, coverage, or benefits under such benefit plans or
programs than provided to similarly situated employees pursuant to the terms and
conditions of such benefit plans and programs.

<PAGE>

         2.5. Employer shall not by reason of this Article 2 be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing, any
such incentive compensation or employee benefit program or plan, so long as such
actions are similarly applicable to covered employees generally. Moreover,
unless specifically provided for in a written plan document adopted by the Board
of Directors of Employer, none of the benefits or arrangements described in this
Article 2 shall be secured or funded in any way, and each shall instead
constitute an unfunded and unsecured promise to pay money in the future
exclusively from the general assets of Employer and its subsidiaries and
affiliates.

         2.6 Employer may withhold from any compensation, benefits, or amounts
payable under this Agreement all federal, state, city, or other taxes as may be
required pursuant to any law or governmental regulation or ruling.

3.       TERM OF THIS AGREEMENT, EFFECT OF EXPIRATION OF TERM, AND TERMINATION
         PRIOR TO EXPIRATION OF TERM AND EFFECTS OF SUCH TERMINATION:

         3.1. The term of this Agreement shall be for one (1) year from the date
hereof, and shall be automatically extended for successive terms of one year
commencing on the first anniversary of the effective date of this Agreement, and
on each anniversary date thereafter, unless Employer or Employee gives written
notice to the other, not less than ninety (90) days prior to the next succeeding
anniversary date, that employment will not be renewed or continued hereunder
following such anniversary date.

         3.2. Notwithstanding any other provisions of this Agreement, Employer
shall have the right to terminate Employee's employment under this Agreement at
any time for any of the following reasons:

         (i)      For "cause" upon the determination by the Employer's Board of
                  Directors that "cause" exists for the termination of the
                  employment relationship. As used in this Section 3.2(i), the
                  term "cause" shall mean (a) Employee has engaged in gross
                  negligence, incompetence or willful misconduct in the
                  performance of, or Employee's refusal to perform, the duties
                  and services required of Employee pursuant to this Agreement;
                  (b) Employee has committed any fraudulent or dishonest acts
                  involving Employer or has been convicted of a crime involving
                  moral turpitude; or (c) Employee's breach of any material
                  provision of this Agreement or corporate code or policy. A
                  decision as to whether "cause" exists for termination of the
                  employment relationship with Employee shall be made by
                  Employer's Board of Directors. Employee, if he so requests,
                  after reasonable notice that cause exists, shall be entitled
                  to be heard before the Employer's Board of Directors. If
                  Employee disagrees with the decision reached by the Employer's
                  Board

<PAGE>

                  of Directors, any dispute will be limited to whether the
                  Employer's Board of Directors reached its decision in good
                  faith;

         (ii)     for any other reason whatsoever, including termination without
                  cause, in the sole discretion of Employer's Chief Executive
                  Officer or Employer's Board of Directors;

         (iii)    upon Employee's death; or

         (iv)     upon Employee becoming incapacitated by accident, sickness, or
                  other circumstance which in the reasonable opinion of a
                  qualified doctor approved by the Executive Committee or
                  Employer's Board of Directors renders him mentally or
                  physically incapable of performing the duties and services
                  required of Employee, and which will continue in the
                  reasonable opinion of such doctor for a period of not less
                  than 180 days.

The termination of Employee's employment shall constitute a "Termination for
Cause" if made pursuant to Section 3.2(i); the effect of such termination is
specified in Section 3.4. The termination of Employee's employment shall
constitute an "Involuntary Termination" if made pursuant to Section 3.2(ii); the
effect of such termination is specified in Section 3.5. The effect of the
employment relationship being terminated pursuant to Section 3.2(iii) as a
result of Employee's death is specified in Section 3.7. The effect of the
employment relationship being terminated pursuant to Section 3.2(iv) as a result
of the Employee becoming incapacitated is specified in Section 3.8.

         3.3. Notwithstanding any other provisions of this Agreement, Employee
shall have the right to terminate the employment relationship under this
Agreement at any time for any of the following reasons:

         (i)      a material breach by Employer of any material provision of
                  this Agreement, including, without limitation, a material
                  reduction in Employee's title, position, duties,
                  responsibilities, and authority to such an extent that
                  Employee is relegated to a position substantially inferior to
                  that which he shall hold with Employer at the commencement of
                  this Agreement, or elimination of Employee's job and him not
                  being offered employment by Employer or a successor to all or
                  a portion of Employer's business or assets, with (a)
                  comparable responsibilities, (b) the same or greater base
                  salary, (c) comparable value for his participation in any
                  stock option plans and (d) comparable severance benefits, and
                  then only if any such breach remains uncorrected for 30 days
                  following written notice of such breach by Employee to
                  Employer's Board of Directors

         (ii)     (x) Employer completes a merger or consolidation, a sale of
                  all or substantially all of its assets of Employer, or the
                  sale of all of its outstanding common stock, in

<PAGE>

                  each case in which all of the stockholders of Employer receive
                  in such transaction cash and/or securities that are publicly
                  traded, and (y) Employee's employment is terminated after such
                  transaction by virtue of an Involuntary Termination within
                  ninety (90) days after the completion of such transaction;

         (iii)    any corporation, person or group within the meaning of
                  Sections 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 Employer representing more than fifty percent of
                  the total votes eligible to be cast at any election of
                  directors of Employer and Employee's employment is terminated
                  after such event by virtue of Involuntary Termination within
                  ninety (90) days after the occurrence of such event;

         (iv)     the dissolution of Employer; or

         (v)      for any other reason whatsoever, in the sole discretion of
                  Employee.

The termination of Employee's employment by Employee shall constitute an
"Involuntary Termination" if made pursuant to Section 3.3(i), 3.3(ii), 3.3(iii)
or 3.3(iv); the effect of such termination is specified in Section 3.5. The
termination of Employee's employment by Employee shall constitute a "Voluntary
Termination" if made pursuant to Sections 3.3(v); the effect of such termination
is specified in Section 3.4.

         3.4. Upon a "Voluntary Termination" of the employment relationship by
Employee or a termination of the employment relationship for "Cause" by
Employer, all future compensation to which Employee is entitled and future
benefits for which Employee is eligible shall cease and terminate as of the date
of termination. Employee shall be entitled to pro rata salary through the date
of such termination, but Employee shall not be entitled to any bonuses not yet
paid at the date of such termination.

         3.5. Upon an Involuntary Termination of the employment relationship by
either Employer or Employee pursuant to Sections 3.2(ii), 3.3(i), 3.3(iii) or
3.3(iii), Employee shall be entitled, in consideration of Employee's continuing
obligations hereunder after such termination (including, without limitation,
Employee's non-competition obligations), to receive a lump sum payment equal to
150% of Employee's base salary for the year in which termination occurs.
Employee's rights under this Section 3.5 are Employee's sole and exclusive
rights against Employer or its subsidiaries or affiliates, and Employer's and
its subsidiaries' and affiliates' sole and exclusive liability to Employee under
this Agreement, in contract, tort, or otherwise, for any Involuntary Termination
of the employment relationship, provided however, Employee's rights and
obligations with respect to Employee stock options, if any, are governed the
controlling option agreement.

         3.6. Employee covenants not to sue or lodge any claim, demand or cause
of action

<PAGE>

against Employer based on Involuntary Termination for any monies other than
those specified in Section 3.5. If Employee breaches this covenant, Employer and
its subsidiaries' and affiliates' shall be entitled to recover from Employee all
sums expended by Employer and its subsidiaries and affiliates (including costs
and attorneys fees) in connection with such suit, claim, demand or cause of
action. Employer and its subsidiaries and affiliates shall not be entitled to
offset any of the amounts specified in the immediately preceding sentence
against amounts otherwise owing by Employer and its subsidiaries and affiliates
to Employee prior to a final determination under the terms of the arbitration
provisions of this Agreement that Employee has breached the covenant contained
in this Section 3.6.

         3.7. Upon termination of the employment relationship as a result of
Employee's death, Employee's heirs, administrators, or legatees shall be
entitled to Employee's pro rata salary through the date of such termination, but
Employee's heirs, administrators, or legatees shall not be entitled to any
individual bonuses not yet paid to Employee at the date of such termination.

         3.8. Upon termination of the employment relationship as a result of
Employee's incapacity, Employee shall be entitled to his pro rata salary for a
period of six months following the date of such termination, but Employee shall
not be entitled to any individual bonuses not yet paid to Employee at the date
of such termination.

         3.9. In all cases, the compensation and benefits payable to Employee
under this Agreement upon termination of the employment relationship shall be
reduced and offset by any amounts to which Employee may otherwise be entitled
under any and all severance plans or policies of Employer or its subsidiaries or
affiliates or any successor to all or a portion of the business or assets of
Employer; provided, however, that no sums received by Employee pursuant to
Employer's pension and retirement and thrift plan shall be considered a payment
requiring offset under this Section.

         3.10. Termination of the employment relationship shall not terminate
those obligations imposed by this Agreement which are continuing in nature,
including, without limitation, Employee's obligations of confidentiality,
non-competition and Employee's continuing obligations with respect to business
opportunities that had been entrusted to Employee by Employer during the
employment relationship.

         3.11. This Agreement governs the rights and obligations of Employer and
Employee with respect to Employee's salary and other perquisites of employment.
Except as otherwise provided in this Agreement, Employee's rights and
obligations with respect to any Employee stock options and other incentive
awards shall be governed by the applicable plans, awards, or other governing
documents.

4.       UNITED STATES FOREIGN CORRUPT PRACTICES ACT AND OTHER LAWS:

         4.1. Employee shall at all times comply with United States laws
applicable to

<PAGE>

Employee's actions on behalf of Employer and its subsidiaries and affiliates,
including specifically, without limitation, the United States Foreign Corrupt
Practices Act, generally codified in 15 USC 78 (FCPA), as the FCPA may hereafter
be amended, and/or its successor statutes. If Employee pleads guilty to or nolo
contendre or admits civil or criminal liability under the FCPA or other
applicable United States law, or if a court finds that Employee has personal
civil or criminal liability under the FCPA or other applicable United States
law, or if a court finds that Employee committed an action resulting in Employer
or any of its subsidiaries or affiliates having civil or criminal liability or
responsibility under the FCPA or other applicable United States law, such action
or finding shall constitute "cause" for termination under this Agreement unless
Employer's Board of Directors determines that the actions found to be in
violation of the FCPA or other applicable United States law were taken in good
faith and in compliance with all applicable policies of Employer. Moreover, to
the extent that Employer or its subsidiaries or affiliates is found or held
responsible for any civil or criminal fines or sanctions of any type under the
FCPA or other applicable United States law or suffers other damages as a result
of Employee's actions, Employee shall be responsible for, and shall reimburse
and pay to that entity an amount of money equal to, such civil or criminal
fines, sanctions or damages. The rights afforded Employer or its subsidiaries
and affiliates under this provision are in addition to any and all rights and
remedies otherwise afforded by the law.

5.       OWNERSHIP AND PROTECTION OF INFORMATION; COPYRIGHTS:

         5.1. All information, ideas, concepts, improvements, discoveries, and
inventions, whether patentable or not, which are conceived, made, developed or
acquired by Employee, individually or in conjunction with others, during
Employee's employment by Employer (whether during business hours or otherwise
and whether on Employer's premises or otherwise) which relate to Employer's or
any of its subsidiaries' or affiliates' businesses, products or services
(including, without limitation, all such information relating to corporate
opportunities, research, financial and sales data, pricing and trading terms,
evaluations, opinions, interpretations, acquisition prospects, the identity of
customers or their requirements, the identity of key contacts within the
customer's organizations or within the organization of acquisition prospects, or
marketing and merchandising techniques, prospective names, and marks) shall be
disclosed to Employer and are and shall be the sole and exclusive property of
Employer. Upon termination of Employee's employment, for any reason, Employee
promptly shall deliver the same, and all copies thereof, to Employer.

         5.2. Employee will not, at any time during or after his employment by
Employer, make any unauthorized disclosure of any confidential business
information or trade secrets of Employer or its subsidiaries or affiliates, or
make any use thereof, except in the carrying out of his employment
responsibilities hereunder. Employer's subsidiaries and affiliates shall be
third party beneficiaries of Employee's obligations under this Section. As a
result of Employee's employment by Employer, Employee may also from time to time
have access to, or knowledge of, confidential business information or trade
secrets of third parties, such as customers, suppliers, partners, joint
ventures, and the like, of Employer and its subsidiaries and affiliates.

<PAGE>

Employee also agrees to preserve and protect the confidentiality of such third
party confidential information and trade secrets to the same extent, and on the
same basis, as Employer's or any of their subsidiaries' or affiliates'
confidential business information and trade secrets.

         5.3. If, during Employee's employment by Employer, Employee creates any
original work of authorship fixed in any tangible medium of expression which is
the subject matter of copyright (such as videotapes, written presentations on
acquisitions, computer programs, E-mail, voice mail, electronic databases,
drawings, maps, architectural renditions, models, manuals, brochures, or the
like) relating to Employer's or any of its subsidiaries' or affiliates'
businesses, products, or services, whether such work is created solely by
Employee or jointly with others (whether during business hours or otherwise and
whether on Employer's or any of its subsidiaries' or affiliates' premises or
otherwise), Employer shall be deemed the author of such work if the work is
prepared by Employee in the scope of his employment; or, if the work is not
prepared by Employee within the scope of his employment but is specially ordered
by Employer or any of its subsidiaries or affiliates as a contribution to a
collective work, as a part of a motion picture or other audiovisual work, as a
translation, as a supplementary work, as a compilation, or as an instructional
text, then the work shall be considered to be work made for hire and Employer or
any of its subsidiaries or affiliates shall be the author of the work. If such
work is neither prepared by Employee within the scope of his employment nor a
work specially ordered that is deemed to be a work made for hire, then Employee
hereby agrees to assign, and by these presents does assign, to Employer all of
Employee's worldwide right, title, and interest in and to such work and all
rights of copyright therein.

         5.4. Both during the period of Employee's employment by Employer and
thereafter, Employee shall assist Employer or any of its subsidiaries or
affiliates and their nominees, at any time, in the protection of Employer's or
any of its subsidiaries' or affiliates' worldwide right, title, and interest in
and to information, ideas, concepts, improvements, discoveries, and inventions,
and its copyrighted works, including without limitation, the execution of all
formal assignment documents requested by Employer or any of its subsidiaries or
affiliates or their nominees and the execution of all lawful oaths and
applications for applications for patents and registration of copyright in the
United States and foreign countries.

6.       POST-EMPLOYMENT NON-COMPETITION OBLIGATIONS:

         6.1. As part of the consideration for the compensation and benefits to
be paid to Employee hereunder, and as an additional incentive for Employer to
enter into this Agreement, Employer and Employee agree to the non-competition
provisions of this Article 6. Employee agrees that during the period of
Employee's non-competition obligations hereunder, Employee will not, directly or
indirectly for Employee or for others, in any county within the State of Texas,
and to the extent allowed by law, in any geographic area or market where
Employer or any of its subsidiaries or affiliated companies are engaged in the
Relevant Business as of the date of termination of the employment relationship
or have during the previous twelve months engaged in the Relevant Business:

<PAGE>

         (i)      engage in the business of the design, manufacture, sale,
                  repair and distribution of products used in oil and gas
                  drilling and production and any other business engaged in by
                  the Employer immediately prior to the date of this Agreement
                  (the "Relevant Business");

         (ii)     render advice or services to, or otherwise assist, any other
                  person, association, or entity who is engaged, directly or
                  indirectly, in the Relevant Business; and

         (iii)    induce any employee of Employer or any of its subsidiaries or
                  affiliates to terminate his or her employment with Employer or
                  any of its subsidiaries or affiliates, or hire or assist in
                  the hiring of any such employee by any person, association, or
                  entity not affiliated with Employer or any of its subsidiaries
                  or affiliates; provided, however, that this clause (iii) shall
                  not apply to responses to general advertising not directed
                  toward employees of Employer or any of its subsidiaries or
                  affiliates.

These non-competition obligations shall apply during Employee's employment and
for a period of one (1) year after termination of employment. After termination
of employment these non-competition obligations shall apply only to businesses
having annual revenues in excess of $20 million dollars competitive with any
line of business conducted by Employer or any of its subsidiaries having annual
revenues in excess of $20 million dollars for the last fiscal year prior to the
time of termination. If Employer or any of its subsidiaries or affiliates
abandons a particular aspect of its business, that is, ceases such aspect of its
business with the intention to permanently refrain from such aspect of its
business, then this post-employment non-competition covenant shall not apply to
such former aspect of that business.

         6.2. Employee understands that the foregoing restrictions may limit his
ability to engage in certain businesses during the period provided for above,
but acknowledges that Employee will receive sufficiently high remuneration and
other benefits (e.g., the right to receive compensation under Section 3.6 for
the remainder of the Term upon Involuntary Termination) under this Agreement to
justify such restriction. Employee acknowledges that money damages would not be
sufficient remedy for any breach of this Article 6 by Employee, and Employer or
any of its subsidiaries or affiliates shall be entitled to enforce the
provisions of this Article 6 by terminating any payments then owing to Employee
under this Agreement and/or to specific performance and injunctive relief as
remedies for such breach or any threatened breach. Such remedies shall not be
deemed the exclusive remedies for a breach of this Article 6, but shall be in
addition to all remedies available at law or in equity to Employer or any of its
subsidiaries or affiliates, including, without limitation, the recovery of
damages from Employee and his agents involved in such breach.

         6.3. It is expressly understood and agreed that Employer and Employee
consider the restrictions contained in this Article 6 to be reasonable and
necessary to protect the proprietary

<PAGE>

information of Employer and its subsidiaries and affiliates. Nevertheless, if
any of the aforesaid restrictions are found by a court having jurisdiction to be
unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.

7.       EMPLOYEE CONFIDENTIALITY COMMITMENT:

         7.1 In the course of employment, Employer will provide Employee with a
great deal of proprietary, confidential, and restricted information, including
Trade Secrets (as herein defined), not known to those outside of Employer
(collectively, "Confidential Information"). "Trade Secrets" are any information,
including a formula, pattern, compilation, program, device, method, technique,
or process, that derives independent economic value, actual or potential, from
not being generally known to the public or to other persons who can obtain
economic value from its disclosure or use is the subject of efforts that are
reasonable under circumstances to maintain its secrecy.

         7.2 Employee shall not disclose or make use of Employer's Confidential
Information to anyone not employed by either Employer without written
authorization. Employee shall be bound by Employer's rules governing company
trade secret usage and will not use Employer's Trade Secrets outside the scope
of Employee's employment. Employee further shall not disclose or use Employer's
Confidential Information for any purpose for a period of one (1) year after
employment with Employer is terminated.

         7.3 Employee will not disclose any Confidential Information to persons
(including other employees of Employer unless such persons have executed a
declaration similar to this one); provided, however, that Employee may make such
disclosure if required by law. Employee will hold Confidential Information in
trust, and consistently exercise all reasonable precautions to ensure that it is
not disclosed to any unauthorized persons, or used in any unauthorized manner,
published, or otherwise disseminated, either during or subsequent to, employment
with Employer, and will immediately report to Employer any breach or violation
of the commitments made in this declaration, whether the breach or violation is
intentional or inadvertent.

         7.4 Employee acknowledges that the Confidential Information,
particularly regarding Trade Secrets, is material to the successful and
profitable operation of Employer, and if such Confidential Information is
improperly divulged, it will constitute an irreparable injury to Employer.
Therefore, Employee consents to the imposition of whatever injunctive or other
relief Employer deems necessary or appropriate in order to protect the
Confidential Information.

         7.5 In the event Employee has any question as to whether information is
to be covered by the terms of this Section, Employee shall treat such
information as Confidential Information, and as such, falling under the terms
and obligations of this Section.

<PAGE>

8.       MISCELLANEOUS:

         8.1. For purposes of this Agreement the terms "affiliates" or
"affiliated" means an entity who directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with
Employer.

         8.2. Employer and Employee shall refrain, both during the employment
relationship and after the employment relationship terminates, from publishing
any oral or written statements about each other or any of Employer's
subsidiaries' or affiliates' directors, officers, employees, agents or
representatives that are slanderous, libelous, or defamatory; or that disclose
private or confidential information about Employee's or Employer's or any of its
subsidiaries' or affiliates' business affairs, officers, employees, agents, or
representatives; or that constitute an intrusion into the seclusion or private
lives of Employee or Employer's or any of its subsidiaries' or affiliates'
directors, officers, employees, agents, or representatives; or that give rise to
unreasonable publicity about the private lives of Employee or Employer's or any
of its subsidiaries' or affiliates' officers, employees, agents, or
representatives; or that place Employee or Employer or any of its subsidiaries
or affiliates or their respective officers, employees, agents, or
representatives in a false light before the public; or that constitute a
misappropriation of the name or likeness of Employee or Employer or any of its
subsidiaries or affiliates or their respective officers, employees, agents, or
representatives. A violation or threatened violation of this prohibition may be
enjoined.

         8.3. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

If to Employer to:

         IRI International Corporation
         1000 Louisiana, Suite 5900
         Houston, Texas  77002

         Attn:  Hushang Ansary, Chairman and Chief Executive Officer
         Fax:  (713) 659-3137

with a copy to:

         Jones, Day, Reavis & Pogue
         599 Lexington Avenue
         New York, NY  10022

         Attn: Mr. William F. Henze II
         Fax:  (212) 755-7306

<PAGE>

If to Employee, to the address reflected in Employer's records as his residence.

Either Employer or Employee may furnish a change of address to the other in
writing in accordance herewith, except that notices of changes of address shall
be effective only upon receipt.

         8.4. This Agreement shall be governed in all respects by the laws of
the State of Texas, excluding any conflict-of-law rule or principle that might
refer the construction of the Agreement to the laws of another State or country.

         8.5. No failure by either party hereto at any time to give notice of
any breach by the other party of, or to require compliance with, any condition
or provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.

         8.6. It is a desire and intent of the parties that the terms,
provisions, covenants, and remedies contained in this Agreement shall be
enforceable to the fullest extent permitted by law. If any such term, provision,
covenant, or remedy of this Agreement or the application thereof to any person,
association, or entity or circumstances shall, to any extent, be construed to be
invalid or unenforceable in whole or in part, then such term, provision,
covenant, or remedy shall be construed in a manner so as to permit its
enforceability under the applicable law to the fullest extent permitted by law.
In any case, the remaining provisions of this Agreement or the application
thereof to any person, association, or entity or circumstances other than those
to which they have been held invalid or unenforceable, shall remain in full
force and effect.

         8.7. Any and all claims, demands, cause of action, disputes,
controversies and other matters in question arising out of or relating to this
Agreement, any provision hereof, the alleged breach thereof, or in any way
relating to the subject matter of this Agreement, involving Employer, its
subsidiaries and affiliates and Employee (all of which are referred to herein as
"Claims"), even though some or all of such Claims allegedly are
extra-contractual in nature, whether such Claims sound in contract, tort or
otherwise, at law or in equity, under state or federal law, whether provided by
statute or the common law, for damages or any other relief, including equitable
relief and specific performance, shall be resolved and decided by binding
arbitration pursuant to the Federal Arbitration Act in accordance with the
Commercial Arbitration Rules then in effect with the American Arbitration
Association. In the arbitration proceeding the Employee shall select one
arbitrator, the Employer shall select one arbitrator and the two arbitrators so
selected shall select a third arbitrator. Should one party fail to select an
arbitrator within five days after notice of the appointment of an arbitrator by
the other party or should the two arbitrators selected by the Employee and the
Employer fail to select an arbitrator within ten days after the date of the
appointment of the last of such two arbitrators, any person sitting as a Judge
of the United States District Court of any District in Texas, upon application
of

<PAGE>

the Employee or the Employer, shall appoint an arbitrator to fill such space
with the same force and effect as though such arbitrator had been appointed in
accordance with the immediately preceding sentence of this Section 8.7. The
decision of a majority of the arbitrators shall be binding on the Employee, the
Employer and its subsidiaries and affiliates. The arbitration proceeding shall
be conducted in Houston, Texas. Judgment upon any award rendered in any such
arbitration proceeding may be entered by any federal or state court having
jurisdiction. This agreement to arbitrate shall be enforceable in either federal
or state court. The enforcement of this agreement to arbitrate and all
procedural aspects of this Agreement to arbitrate, including but not limited to,
the construction and interpretation of this agreement to arbitrate, the scope of
the arbitrable issues, allegations of waiver, delay or defenses to
arbitrability, and the rules governing the conduct of the arbitration, shall be
governed by and construed pursuant to the Federal Arbitration Act.

         In deciding the substance of any such Claim, the Arbitrators shall
apply the substantive laws of the State of Texas; provided, however, that the
Arbitrators shall have no authority to award treble, exemplary or punitive type
damages under any circumstances regardless of whether such damages may be
available under Texas law, the parties hereby waiving their right, if any, to
recover treble, exemplary or punitive type damages in connection with any such
Claims.

         8.8. This Agreement shall be binding upon and inure to the benefit of
Employer, its subsidiaries and affiliates, and any other person, association, or
entity which may hereafter acquire or succeed to all or a portion of the
business or assets of Employer by any means whether direct or indirect, by
purchase, merger, consolidation, or otherwise. Employee's rights and obligations
under this Agreement are personal and such rights, benefits, and obligations of
Employee shall not be voluntarily or involuntarily assigned, alienated, or
transferred, whether by operation of law or otherwise, by Employee without the
prior written consent of Employer.

         8.9. Except as provided in (1) written company policies promulgated by
Employer dealing with issues such as securities trading, business ethics,
governmental affairs and political contributions, consulting fees, commissions
and other payments, compliance with law, investments and outside business
interests as officers and employees, reporting responsibilities, administrative
compliance, and the like, (2) the written benefits, plans, and programs
referenced in Sections 2.2, 2.3 and 2.4, or (3) any signed written agreements
contemporaneously or hereafter executed by Employer and Employee, this Agreement
constitutes the entire agreement of the parties with regard to such subject
matters, and contains all of the covenants, promises, representations,
warranties, and agreements between the parties with respect to such subject
matters and replaces and merges previous agreements and discussions pertaining
to the employment relationship between Employer and Employee. Specifically, but
not by way of limitation, any other employment agreement or arrangement in
existence as of the date hereof between Employer and Employee is hereby canceled
and Employee hereby irrevocably waives and renounces all of Employee's rights
and claims under any such agreement or arrangement.

<PAGE>

         IN WITNESS WHEREOF, Employer and Employee have duly executed this
Agreement in multiple originals to be effective on the date first stated above.

EMPLOYEE                                 IRI International Corporation

By:                                      By:
   ------------------------                 ---------------------------

                                         Title:
                                               ------------------------

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