<PAGE>
As filed with the Securities and Exchange Commission on February 12, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
VARCO INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
California 95-0472620
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
--------------------
743 North Eckhoff Street
Orange, California
(Address of Principal 92868
Executive Offices) (Zip Code)
--------------------
1990 Stock Option Plan
(Full title of the plan)
RICHARD A. KERTSON
Vice President-Finance and Chief Financial Officer
743 North Eckhoff Street
Orange, California 92868
(Name and address of agent for service)
(714) 978-1900
(Telephone number, including area code, of agent for
service)
--------------------
The Commission is requested to send copies of all communications to:
LARRY M. MEEKS, ESQ.
Pircher, Nichols & Meeks
1999 Avenue of the Stars, Suite 2600
Los Angeles, California 90067
(310) 201-8903
--------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed maximum
Title of securities Amount to be maximum offering aggregate offering Amount of
to be registered registered price per unit price registration fee
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 2,000,000 shares $24.9375(1) $49,875,000(1) $15,113.64
=====================================================================================================================
</TABLE>
(1) Estimated solely for purpose of calculating the registration fee based on
the average of the high and low prices reported on the NYSE Composite Tape
on February 6, 1997.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents which have heretofore been filed by Varco
International, Inc. (the "Company") with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934 are incorporated by reference in
this registration statement:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
(2) The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996, June 30, 1996 and September 30, 1996.
(3) The description of the Company's Common Stock contained in the
Company's Form 8-A Registration Statement filed May 29, 1981, including any
amendment or report filed for the purpose of updating such description.
In addition, all documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, after the date
hereof and prior to the filing of a post-effective amendment to this
Registration Statement which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from their respective dates of filing.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The legality of the Common Stock registered pursuant to this Registration
Statement has been passed upon for the Company by Pircher, Nichols & Meeks, of
which Leo J. Pircher, a director of the Company, is a partner.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 204(a)(10) of the California General Corporation Law (the "GCL")
permits a corporation, in its Articles of Incorporation, to eliminate or limit
the personal liability of directors for monetary damages in an action brought by
or in the right of the corporation (a "derivative action") for breach of a
director's duties to the corporation provided, however, that such a provision
may not eliminate or limit the liability of directors for (1) acts or omissions
that involve intentional misconduct or a knowing and culpable violation of law;
(2) acts or omissions that a director believes to be contrary to the best
interests of the
1
<PAGE>
corporation or its shareholders or that involve the absence of good faith on the
part of the director; (3) any transaction from which the director derived an
improper personal benefit; (4) acts or omissions that show a reckless disregard
for the director's duty to the corporation or its shareholders in circumstances
in which the director was aware, or should have been aware, in the ordinary
course of performing a director's duties, of a risk of serious injury to the
corporation or its shareholders; (5) acts or omissions that constitute an
unexcused pattern of inattention that amounts to an abdication of the director's
duty to the corporation or its shareholders; (6) transactions between a
corporation and its directors or corporations having interrelated directors
under Section 310 of the GCL; or (7) improper distributions to shareholders,
loans or guaranties under Section 316 of the GCL.
Section 204(a)(11) of the GCL permits a corporation in its Articles of
Incorporation to provide for indemnification of directors, officers, employees
and other agents by bylaw, agreement or otherwise in excess of that expressly
permitted by Section 317 of the GCL except that provision may not be made for
indemnification which is expressly prohibited by Section 317 of the GCL or for
acts or omissions from which a director may not be relieved of liability under
Section 204(a)(10) of the GCL.
Section 317(b) of the GCL permits a corporation to indemnify a director,
officer, employee or other agent against expenses, judgments, fines, settlements
and other amounts incurred in connection with any proceeding other than a
derivative action if he acted in good faith and in a manner he reasonably
believed to be in the best interests of the corporation and, in the case of a
criminal proceeding, had no reasonable cause to believe that his conduct was
unlawful.
With respect to derivative actions, Section 317(c) of the GCL permits a
corporation to indemnify a director, officer, employee or other agent against
expenses incurred in connection with the defense or settlement of such an action
if he acted in good faith and in a manner which he believed to be in the best
interests of the corporation and its shareholders. Under Section 317(c),
indemnification in a derivative action is not permitted (1) with respect to any
matter in which the person seeking indemnification is held to be liable to the
corporation in the performance of his duties to the corporation and its
shareholders unless and only to the extent that the court in which the
proceeding was brought determines that, in view of all of the circumstances of
the case, such person is fairly and reasonably entitled to indemnification for
expenses and then only to the extent that such court shall determine; (2) for
any amount paid in settling or otherwise disposing of a pending action without
court approval; or (3) for expenses incurred in defending a pending action which
is settled or otherwise disposed of without court approval.
Section 317(d) of the GCL requires a corporation to indemnify any director,
officer, employee or other agent for all expenses actually and reasonably
incurred by him in any proceeding to the extent that he is successful on the
merits.
The Company's Amended and Restated Articles of Incorporation (1) eliminate
the liability of directors for monetary damages to the fullest extent permitted
under California law and (2) permit the Company to provide indemnification to
directors, officers, employees and other agents by bylaw provisions, agreements,
vote of shareholders or
2
<PAGE>
disinterested directors, or otherwise, in excess of the indemnification
otherwise permitted by Section 317 of the GCL subject only to the limits set
forth in Section 204 of the GCL.
The Bylaws of the Company generally require indemnification of any officer
or director of the Company for all costs, charges, expenses, liabilities and
losses (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties, and amounts paid in settlement) incurred in any action, suit or
proceeding by reason of the fact that he is or was a director of the Company
except to the extent that such indemnification would be expressly prohibited
under California law or the Company's Amended and Restated Articles of
Incorporation.
The Company is a party to an Indemnity Agreement with each of its directors
and executive officers which generally provides the indemnitee with a
contractual right to indemnification for all Expenses (which is defined to
include attorneys' fees and amounts paid in settlement), judgments, fines,
penalties and ERISA excise taxes incurred in any action, suit or proceeding by
reason of his position with the Company, except to the extent that such
indemnification is prohibited by California law.
The Company also maintains a liability insurance policy under which
officers and directors are generally indemnified against losses and liability
(including costs, expenses, settlements and judgments) incurred by them in such
capacities, other than specified excluded losses.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4.1 Amended and Restated Articles of Incorporation of the Company,
incorporated by reference to Exhibit 3.1 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995.
*4.2 1990 Stock Option Plan, as amended.
*5 Opinion of Pircher, Nichols & Meeks.
*23.1 Consent of Ernst & Young LLP.
*23.2 Consent of Pircher, Nichols & Meeks (included in Exhibit 5).
*24 Power of Attorney.
_____________
*Filed herewith.
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
3
<PAGE>
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the most
recent post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by the registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference
in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceedings) is asserted by
such director,
4
<PAGE>
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Orange, State of California, on February 11, 1997.
VARCO INTERNATIONAL, INC.
By: /s/Richard A. Kertson
-------------------------------------
Richard A. Kertson
Vice President-Finance
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
President and Chief
Executive Officer and
Director
*GEORGE BOYADJIEFF (Principal Executive
- --------------------------- Officer) February 11, 1997
George Boyadjieff
Vice President-Finance
and Chief Financial
Officer
/s/Richard A. Kertson (Principal Financial
- --------------------------- Officer) February 11, 1997
Richard A. Kertson
Controller-Treasurer
and Chief Accounting
Officer
/s/Donald L. Stichler (Principal Accounting
- --------------------------- Officer) February 11, 1997
Donald L. Stichler
*WALTER B. REINHOLD Director February 11, 1997
- ---------------------------
Walter B. Reinhold
*TALTON R. EMBRY Director February 11, 1997
- ---------------------------
Talton R. Embry
</TABLE>
6
<PAGE>
<TABLE>
<S> <C> <C>
*ANDRE R. HORN Director February 11, 1997
- ---------------------------
Andre R. Horn
*MAURICE E. JACQUES Director February 11, 1997
- ---------------------------
Maurice E. Jacques
*JACK W. KNOWLTON Director February 11, 1997
- ---------------------------
Jack W. Knowlton
*LEO J. PIRCHER Director February 11, 1997
- ---------------------------
Leo J. Pircher
*CARROLL W. SUGGS Director February 11, 1997
- ---------------------------
Carroll W. Suggs
*ROBERT A. TEITSWORTH Director February 11, 1997
- ---------------------------
Robert A. Teitsworth
*EUGENE R. WHITE Director February 11, 1997
- ---------------------------
Eugene R. White
*JAMES D. WOODS Director February 11, 1997
- ---------------------------
James D. Woods
*By /s/Richard A. Kertson
-----------------------
Richard A. Kertson
Attorney-in-fact
</TABLE>
7
<PAGE>
EXHIBIT INDEX
Exhibit Page
- ------- ----
4.1 Amended and Restated Articles of Incorporation of the
Company, incorporated by reference to Exhibit 3.1 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
4.2 1990 Stock Option Plan, as amended.
5 Opinion of Pircher, Nichols & Meeks.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Pircher, Nichols & Meeks (included in Exhibit 5).
24 Power of Attorney.
<PAGE>
EXHIBIT 4.2
VARCO INTERNATIONAL, INC.
1990 STOCK OPTION PLAN
AS AMENDED THROUGH NOVEMBER 7, 1996
1. PURPOSE
This 1990 Stock Option Plan (the "Plan") is established for the purpose of
promoting the interests of Varco International, Inc. ("Varco") and its
Subsidiaries (as hereinafter defined) (Varco and its Subsidiaries being
hereinafter collectively called the "Company") by providing to key employees of
the Company who are primarily responsible for the management, growth and success
of its business a favorable opportunity to acquire and to participate in the
appreciation of the Common Stock of Varco ("Common Stock") and to participate in
the overall growth and success of the Company, thereby providing such employees
with an incentive to remain in the employ of the Company and to contribute to
its success. The Plan seeks to achieve this purpose by providing for the grant
of incentive stock options ("Incentive Stock Options") within the meaning of
Section 422A of the Internal Revenue Code of 1986, as amended (the "Code"),
options other than Incentive Stock Options ("Nonstatutory Options") and stock
appreciation rights ("SAR's"). Unless provided to the contrary, all references
to "options" in this Plan shall include both Incentive Stock Options and
Nonstatutory Options. As used in the Plan, the term "Subsidiary" shall have the
meaning set forth in Section 425(f) of the Code.
2. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by a committee (the "Committee")
appointed by the Board of Directors of Varco (the "Board"), which shall consist
of not less than three directors of Varco, each of whom shall be a "Non-Employee
Director", as such term is defined in Rule 16b-3 adopted by the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as such
Rule may be amended from time to time. The members of the Committee shall serve
at the pleasure of the Board. The Board may designate its Compensation
Committee, if any, as the Committee provided that the members of the
Compensation Committee meet the foregoing criteria.
B. Subject to the provisions of the Plan, the Committee shall have the
sole authority to determine:
(1) The employees of the Company to whom options to purchase and SAR's
with respect to Common Stock shall be granted;
(2) The number of shares of Common Stock to be optioned to each
employee;
1
<PAGE>
(3) The number of SAR's to be granted to each employee;
(4) The price to be paid for the shares upon the exercise of each
option;
(5) The period within which each option or SAR may be exercised; and
(6) The terms and conditions of each stock option agreement and SAR
agreement entered into between Varco and any employee.
In addition, the Committee shall have the sole authority to determine, at
the time of grant, that an option which otherwise satisfies the criteria for
treatment as an Incentive Stock Option will not be treated as an Incentive Stock
Option.
C. The Committee shall have full power and authority to interpret and
construe any and all provisions of the Plan and all option agreements and SAR
agreements executed pursuant thereto, and to adopt rules and regulations for the
administration of the Plan. Decisions of the Committee shall be final and
binding upon all parties having an interest in the Plan.
3. ELIGIBILITY
The persons who shall be eligible to be granted options to purchase shares
of Common Stock and SAR's under the Plan shall be such key employees of the
Company (including officers and directors who are also key employees of the
Company) as the Committee shall determine from time to time, provided, however,
that no member of the Committee shall be eligible to be granted options or SAR's
under the Plan while serving as a member of the Committee.
4. COMMON STOCK SUBJECT TO PLAN
Subject to adjustment as provided in Section 8 hereof, the aggregate number
of shares of Common Stock which may be issued upon the exercise of options or
SAR's under the Plan shall not exceed three million (3,000,000). Such shares
shall be authorized but unissued shares. If any option granted under the Plan
shall expire or terminate for any reason without having been exercised in full,
the unpurchased shares subject thereto shall again become available for the
purposes of the Plan except that the shares subject to any option (or portion
thereof) surrendered upon the exercise of an SAR shall not again become
available for the purposes of the Plan.
5. [DELETED]
6. TERMS OF OPTIONS
6(a). IN GENERAL. Each option granted under the Plan shall be evidenced
by a stock option agreement between the employee to whom such option is granted
and Varco.
6(b). NONSTATUTORY OPTIONS. Each stock option agreement evidencing a
Nonstatutory Option shall provide that such Option is subject to the following
terms and
2
<PAGE>
conditions and to such other terms and conditions not inconsistent therewith as
the Committee may deem appropriate in each case:
A. Option Price. The price to be paid for each share of Common Stock
upon the exercise of each Nonstatutory Option shall be determined by the
Committee at the time such Option is granted, but shall in no event be less
than one hundred percent (100%) of the Fair Market Value (as hereinafter
defined) of the Common Stock on the date such Option is granted. As used
in the Plan, "Fair Market Value" of the Common Stock on any date shall mean
(i) the mean of the high and low sales prices of shares of Common Stock
reported by the New York Stock Exchange (or any other national stock
exchange on which the Common Stock is listed or admitted to unlisted
trading privileges) on such date (or if there was no sale on such date, the
highest asked price for Common Stock on such date), (ii) if the Common
Stock is not listed on the New York Stock Exchange (or listed or admitted
to unlisted trading privileges on any other national stock exchange) on
such date, the mean of the last reported "bid" and "asked" prices on such
date, as reported by the National Association of Securities Dealers
Automated Quotation System, or if not so reported, as furnished by the
National Quotation Bureau, Inc., or if such firm at the time is not engaged
in the business of reporting such prices, as furnished by any similar firm
then engaged in such business as selected by the Committee, or if there is
no such firm, as furnished by any member of the National Association of
Securities Dealers, Inc. selected by the Committee; or (iii) if the Common
Stock is not listed or admitted to unlisted trading privileges on any
national stock exchange and bid and asked prices are not so reported, Fair
Market Value shall be determined by the Committee based upon such evidence
as it may deem necessary or appropriate.
B. Period of Option. The period or periods within which a
Nonstatutory Option may be exercised shall be determined by the Committee
at the time such Option is granted, but shall in no event exceed ten (10)
years from the date such Option is granted. In this connection, the
Committee shall have authority in its discretion to prescribe in any
related option agreement that such Option shall be exercisable in full at
any time or from time to time during the term thereof, or to provide for
the exercise thereof in such installments at such times during said term as
the Committee may determine.
C. Payment for Stock. The option price for each share of Common
Stock purchased under a Nonstatutory Option shall be paid in full at the
time of purchase. The Committee may provide that the option price be
payable at the election of the employee, with the consent of the Committee,
in whole or in part, either in cash or by delivery of Common Stock in
transferable form, such Common Stock to be valued for such purpose at its
Fair Market Value on the date on which such Option is exercised. No share
of Common Stock shall be issued until full payment therefor has been made,
and no employee shall have any rights as an owner of shares of Common Stock
until the date of issuance to him of the stock certificate evidencing such
shares.
3
<PAGE>
D. Death. Upon the death of an employee, any Nonstatutory Option which
he holds may be exercised, to the extent it was exercisable on the date of
his death, within such period after the date of his death (not to exceed
twelve (12) months) as the Committee shall prescribe in his option
agreement, by the employee's representative or by the person entitled
thereto under his will or the laws of intestate succession. However, such
Option shall in no event be exercised more than ten years from the date it
was granted.
E. Retirement. Upon the retirement of an employee (either pursuant
to the Varco International, Inc. Profit Sharing Plan or pursuant to the
approval of the Committee), a Nonstatutory Option may be exercised by him
with respect to all or any portion of the balance of the shares of Common
Stock subject thereto within such period after the date of his retirement
(not to exceed three (3) months) as the Committee shall prescribe in his
option agreement. Such Option shall terminate upon the expiration of such
period unless the employee dies prior thereto, in which event he shall be
deemed to have died on the date of his retirement; provided, however, in no
event shall such Option be exercised more than ten years from the date such
Option is granted.
F. Other Severance. In the event an employee leaves the employ of
the Company for any reason other than as set forth in paragraphs D and E
above, any Nonstatutory Option which he holds shall terminate at the
earlier of the date his employment terminates or the date he receives
written notice that his employment is or will be terminated.
G. Transfer to Related Corporation. In the event that an employee
leaves the employ of Varco to become an employee of any Subsidiary or an
employee leaves the employ of a Subsidiary to become an employee of Varco
or another Subsidiary, such employee shall be deemed to continue as an
employee for all purposes of this Plan.
H. Nontransferability. Each Nonstatutory Option shall be
nontransferable except by will or the laws of descent and distribution and
shall be exercisable during an employee's lifetime only by him.
I. Agreement to Serve. Each employee shall agree that he will remain
in the service of the Company for a period of at least two (2) years from
the date of the grant of a Nonstatutory Option or until his earlier death
or retirement. However, nothing in this Plan or in any option granted
hereunder shall affect the Company's right to terminate at any time and for
any reason the employment of any employee who has been granted an option
hereunder.
6(c). INCENTIVE STOCK OPTIONS. Each stock option agreement evidencing an
Incentive Stock Option shall provide that the option is subject to the following
terms and conditions and to such other terms and conditions not inconsistent
therewith as the Committee may deem appropriate in each case:
4
<PAGE>
A. Option Price. The price to be paid for each share of Common Stock
upon the exercise of each Incentive Stock Option shall be determined by the
Committee at the time such Option is granted, but shall in no event be less
than one hundred percent (100%) of the Fair Market Value of the Common
Stock on the date such Option is granted or not less than 110% of the fair
market value of such shares on the date such Option is granted in the case
of an employee then owning (within the meaning of Section 425(d) of the
Code) more than 10% of the total combined voting power of all classes of
stock of the Company or of its parent or subsidiary corporations.
B. Period of Option. The period or periods within which an Incentive
Stock Option may be exercised shall be determined by the Committee at the
time such Option is granted, but shall in no event exceed ten (10) years
from the date such Option is granted or five (5) years in the case of an
employee owning (within the meaning of Section 425(d) of the Code), at the
time such option was granted, more than 10% of the total combined voting
power of all classes of stock of the Company or of its parent or subsidiary
corporations, except that no Incentive Stock Option shall be exercisable
with respect to any of the shares subject thereto earlier than the date
which is one year from the date of its grant nor later than the date which
is ten years after the date of grant. Subject to the foregoing
limitations, the Committee shall have the authority in its discretion to
prescribe in any related option agreement that such Option shall be
exercisable in full at any time or from time to time during the term
thereof, or to provide for the exercise thereof in such installments at
such times during said term as the Committee may determine.
C. Payment for Stock. The option price for each share of stock
purchased under an Incentive Stock Option shall be paid in full at the time
of purchase. The Committee may provide that the option price be payable at
the election of the employee with the consent of the Committee in whole or
in part either in cash or by delivery of Common Stock in transferable form,
such Common Stock to be valued for such purpose at its Fair Market Value on
the date on which such Option is exercised. No share of Common Stock shall
be issued until full payment therefor has been made, and no employee shall
have any rights as an owner of Common Stock until the date of issuance to
him of the stock certificate evidencing such Common Stock.
D. Death. Upon the death of an employee, any Incentive Stock Option
which he holds may be exercised, to the extent it was exercisable at the
date of his death, within such period after the date of his death (not to
exceed twelve (12) months) as the Committee shall prescribe in his option
agreement, by the employee's representative or by the person entitled
thereto under his will or the laws of intestate succession. However, such
Option shall in no event be exercised more than ten years from the date it
was granted.
E. Retirement. Upon the retirement of an employee (either pursuant
to the Varco International, Inc. Profit Sharing Plan or pursuant to the
approval of the Committee), an Incentive Stock Option may be exercised by
him with respect to all or any portion of the balance of the shares of
Common Stock subject thereto within
5
<PAGE>
such period after the date of his retirement (not to exceed three (3)
months) as the Committee shall prescribe in his option agreement. Such
Option shall terminate upon the expiration of such period unless the
employee dies prior thereto, in which event he shall be deemed to have died
on the date of his retirement; provided, however, in no event shall such
Option be exercised more than ten years from the date such Option is
granted.
F. Other Severance. In the event an employee leaves the employ of
the Company for any reason other than as set forth in paragraphs D and E
above, any Incentive Stock Option which he holds shall terminate at the
earlier of the date his employment terminates or the date he receives
written notice that his employment is or will be terminated.
G. Transfer to Related Corporation. In the event that an employee
leaves the employ of Varco to become an employee of any Subsidiary or an
employee leaves the employ of a Subsidiary to become an employee of Varco
or another Subsidiary, such employee shall be deemed to continue as an
employee for all purposes of this Plan.
H. Nontransferability. An Incentive Stock Option shall be
nontransferable except by will or the laws of descent and distribution and
shall be exercisable during an employee's lifetime only by him.
I. Agreement to Serve. Each employee shall agree that he will remain
in the service of the Company for a period of at least two (2) years from
the date of the grant of an Incentive Stock Option or until his earlier
death or retirement. However, nothing in this Plan or in any option
granted hereunder shall affect the Company's right to terminate at any time
and for any reason the employment of any employee who has been granted an
option hereunder.
J. Limitation on Amount. Subject to the further limitations set
forth in Section 4 hereof, the aggregate Fair Market Value (determined as
of the time the option is granted) of the Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by an
employee in any calendar year (under the Plan and all other incentive stock
option plans of the Company and any parent or subsidiary of the Company)
shall not exceed $100,000.
7. STOCK APPRECIATION RIGHTS
Each option granted under the Plan may, at the discretion of the Committee,
include an SAR. Each SAR shall be evidenced by an SAR agreement (which may be
included in the related stock option agreement) between the employee to whom
such SAR is granted and Varco. Each SAR agreement shall provide that each SAR
thereunder is subject to the following terms and conditions and to such other
terms and conditions not inconsistent therewith as the Committee may deem
appropriate in each case:
A. Grant. Each SAR shall be granted in connection with, and shall
relate to, a specific option granted under the Plan, and, in the discretion
of the
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Committee, shall be granted either concurrently with the grant of such
option or at any time prior to the date six months preceding the date of
the expiration of such option except that an SAR granted in connection with
and relating to an Incentive Stock Option may only be granted concurrently
with the grant of such Incentive Stock Option.
B. Entitlement of Holder. Subject to such conditions, limitations
and restrictions as the Committee shall specify, each SAR which relates to
an option granted under the Plan shall entitle the holder, upon surrender
to Varco of the SAR together with such option or any portion thereof to the
extent unexercised, to receive from Varco shares of Common Stock, cash or a
combination of shares of Common Stock and cash, as the Committee shall
determine. The amount of cash and/or the Fair Market Value of the Common
Stock received upon exercise of an SAR shall, in the aggregate, be equal to
the amount by which the Fair Market Value (on the date of surrender) of the
shares of Common Stock subject to the option (or portion thereof)
surrendered exceeds the option price of such shares of Common Stock.
C. Limitations. Subject to subsection D below, an SAR granted
hereunder shall be exercisable only at such time or times, and only to the
extent that, the related option is exercisable and shall not be
transferable except to the extent that such related option may be
transferable. Specifically, but not by way of limitation of the foregoing,
in the case of an SAR granted in connection with, and with respect to, an
Incentive Stock Option, the following conditions must be met:
(1) the expiration date of the SAR does not extend beyond the
expiration date of the underlying Incentive Stock Option;
(2) the SAR is transferable only when such Incentive Stock
Option is transferable and under the same conditions;
(3) the SAR is exercisable only when such Incentive Stock Option
is exercisable; and
(4) the SAR is exercisable only when the Fair Market Value of
the shares of Common Stock subject to such Incentive Stock Option
exceeds the option price of such option.
D. Manner of Exercise. Each SAR granted hereunder may be exercised
by written notice to Varco at its corporate headquarters. Except in the
case of the death or disability of the holder of such right, each SAR
granted pursuant to the Plan shall in no event be exercisable prior to the
expiration of six months after the date of grant of such SAR. If, on the
date when an option expires, the option price under such option is less
than the Fair Market Value of the Common Stock on such date and any portion
of such option has not been exercised or surrendered, then any SAR included
in such option shall automatically be deemed to be exercised as of such
date with respect to such portion.
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E. Maximum Payment. At the time of the grant of an SAR hereunder, the
Committee may (in its sole discretion) determine the maximum amount payable
with respect to such SAR.
8. ADJUSTMENT OF SHARES
A. In the event of changes in the outstanding Common Stock by reason of
stock dividends, splitups, consolidations, recapitalizations, reorganizations or
like events (as determined by the Committee), an appropriate adjustment shall be
made by the Committee in the number of shares available for issuance under the
Plan, in the number of shares set forth in Section 5 hereof, and in the number
of shares and the option price per share specified in any stock option agreement
with respect to any unpurchased shares. The determination of the Committee as
to what adjustments shall be made shall be conclusive.
B. Subsection A above to the contrary notwithstanding, in the event of
any merger, consolidation or other reorganization of Varco in which Varco is not
the surviving or continuing corporation (as determined by the Committee) or in
the event of the liquidation or dissolution of Varco, all options and SAR's
granted hereunder shall terminate on the effective date of the merger,
consolidation, reorganization, liquidation or dissolution unless the agreement
with respect thereto provides otherwise. Any other provision of this Plan to
the contrary notwithstanding, all outstanding options and SAR's granted
hereunder shall be fully exercisable for a period of thirty (30) days prior to
the effective date of any such merger, consolidation, reorganization,
liquidation or dissolution unless, in the case of a merger, consolidation or
reorganization, such options and SAR's are assumed by the continuing or
surviving corporation.
C. Neither the action of Varco in establishing the Plan, nor any action
taken by the Committee under the Plan, nor any provision of the Plan shall
affect the right or power of Varco to make or authorize any adjustments,
recapitalizations, or other changes in Varco's capital structure or business,
any merger or consolidation, any issuance of bonds, debentures, preferred shares
or common shares, the dissolution or liquidation of Varco or any Subsidiary, any
sale of all or any part of Varco's or any Subsidiary's assets or business or any
other act whether or not similar to the foregoing events.
9. AMENDMENT, EXTENSION AND RENEWAL OF OPTIONS AND SAR'S
Subject to the limitations of the Plan, the Committee may modify, extend or
renew outstanding options or may accept the cancellation of outstanding options
(to the extent not previously exercised) in return for the grant of new options
at the same or a different price. Notwithstanding the foregoing, no
modification of an option shall, without the consent of the optionee, alter or
impair his rights or obligations under such option.
10. WITHHOLDING TAXES
Varco or the Subsidiary that employs any employee shall have the right to
deduct any sums that federal, state or local tax law requires to be withheld
with respect to the exercise of any option or SAR, or as otherwise may be
required by such laws. Varco or
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such Subsidiary may require as a condition to issuing shares upon the exercise
of an option or making any payment upon the exercise of an SAR that the employee
or other person exercising the option or SAR pay any sums that federal, state or
local tax law requires to be withheld with respect to such exercise.
11. REGULATORY REQUIREMENTS
A. The Committee may require an employee, as a condition of either the
grant or the exercise of an option or an SAR to represent and establish to the
satisfaction of the Committee that all shares of Common Stock acquired upon the
exercise of such option or SAR will be acquired for investment and not for
resale. The Committee may prevent the sale or other disposition of any shares
acquired pursuant to any such representation until it is satisfied that such
sale or other disposition would not be in contravention of applicable state or
Federal securities laws.
B. No option granted pursuant to this Plan shall be exercisable in whole
or in part, nor shall an employee receive any shares of Common Stock upon
exercise of an SAR if at any time the Committee shall determine in its
discretion that the listing or qualification of the shares of Common Stock
subject to such option on any securities exchange or under any applicable law,
or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of such option
or the issue of shares thereunder, unless such listing, qualification, consent
or approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.
12. AMENDMENT
The Board may amend the Plan at any time, except that without shareholder
approval:
A. The number of shares of Common Stock subject to the Plan shall not
be increased except as provided in Section 8 hereof;
B. The number of shares of Common Stock which may be optioned to any
one employee may not be increased;
C. The option price per share of Common Stock may not be fixed at
less than 100 percent of the Fair Market Value of a share of Common Stock
of the Company on the date the option is granted;
D. The maximum period of ten years during which the options may be
exercised may not be extended;
E. The class of employees eligible to receive options under the Plan
as set forth in Section 3 shall not be changed; and
F. This Section 11 may not be amended in a manner which limits or
reduces the amendments which require shareholder approval.
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13. TERMINATION
The Board may at any time terminate the Plan by appropriate corporate
resolution. Unless sooner terminated, the Plan shall terminate automatically on
March 5, 2000. The termination of the Plan shall not affect the validity of any
option or SAR outstanding at the date of such termination, but no option or SAR
shall be granted after such date.
14. EFFECTIVE DATE
The Plan was adopted by the Board on March 6, 1990 and shall be effective
as of such date. Options and SAR's may be granted but not exercised prior to
shareholder approval of the Plan by a majority of the holders of the Common
Stock present or represented and entitled to vote at a meeting duly called and
held in accordance with the laws of the State of California. If such
shareholder approval shall not have been obtained on or before September 30,
1990, any options and SAR's therefore granted shall terminate retroactive as of
the date they were granted, and no additional options or SAR's shall be granted
under the Plan.
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EXHIBIT 5
PIRCHER, NICHOLS & MEEKS
Attorneys at Law
1999 Avenue of the Stars
Suite 2600
Los Angeles, California 90067
(310) 201-8900
FAX (310) 201-8922
February 11, 1997
Varco International, Inc.
743 North Eckhoff Street
Orange, California 92868
Ladies & Gentlemen:
We have acted as counsel to Varco International, Inc. (the "Company") in
connection with the preparation and filing by the Company of a Registration
Statement on Form S-8 (the "Registration Statement"), relating to 2,000,000
shares of the Company's Common Stock issuable under the Company's 1990 Stock
Option Plan, as amended (the "Plan").
We have reviewed originals or copies, certified or otherwise identified to
our satisfaction, of the Registration Statement and such certificates of public
officials and of officers of the Company and such other documents, corporate
records or other instruments as we have deemed necessary or appropriate for the
purposes of this opinion. We have assumed that all signatures on all documents
examined by us are genuine, all documents submitted to us as originals are
authentic, and all documents submitted to us as copies conform with the original
executed documents.
Based upon the foregoing, we are of the opinion that:
1. The Company is validly organized and existing under the laws of the
State of California.
2. Any shares of the Common Stock of the Company issued and sold by the
Company upon the exercise of options granted pursuant to the provisions of the
Plan will constitute validly authorized and issued Common Stock of the Company
and will be fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement referred to above.
Very truly yours,
/s/ PIRCHER, NICHOLS & MEEKS
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the 1990 Stock Option Plan of Varco International, Inc.
of our report dated February 15, 1996, with respect to the consolidated
financial statements and schedule of Varco International, Inc. incorporated by
reference in its Annual Report (Form 10-K) for the year ended December 31, 1995,
filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Orange County
February 12, 1997
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
GEORGE BOYADJIEFF and RICHARD A. KERTSON, and each of them, with full power of
substitution and resubstitution, as his or her true and lawful attorney-in-fact,
for him or her and in his or her name, place and stead, in any and all
capacities, to execute a Registration Statement on Form S-8 of Varco
International, Inc. (the "Company") relating to the registration under the
Securities Act of 1933, as amended, of 2,000,000 additional shares of the Common
Stock of the Company issuable pursuant to the Company's 1990 Stock Option Plan,
as amended, and any and all amendments or post-effective amendments to said
Registration Statement and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission.
/s/ George Boyadjieff /s/ Walter B. Reinhold
- ------------------------ ------------------------
GEORGE BOYADJIEFF WALTER B. REINHOLD
/s/ Talton R. Embry /s/ Carroll W. Suggs
- ------------------------ ------------------------
TALTON R. EMBRY CARROLL W. SUGGS
/s/ Andre R. Horn /s/ Robert A. Teitsworth
- ------------------------ ------------------------
ANDRE R. HORN ROBERT A. TEITSWORTH
/s/ Maurice E. Jacques /s/ Eugene R. White
- ------------------------ ------------------------
MAURICE E. JACQUES EUGENE R. WHITE
/s/ Jack W. Knowlton /s/ James D. Woods
- ------------------------ ------------------------
JACK W. KNOWLTON JAMES D. WOODS
/s/ Leo J. Pircher
- ------------------------
LEO J. PIRCHER
Dated: May 8, 1996
