<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 1, 1994
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SMITH INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-3822631
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
16740 HARDY STREET
HOUSTON, TEXAS 77032
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
SMITH INTERNATIONAL, INC.
1989 LONG-TERM INCENTIVE COMPENSATION PLAN
(FULL TITLE OF THE PLAN)
NEAL S. SUTTON
VICE PRESIDENT - ADMINISTRATION, GENERAL COUNSEL AND SECRETARY
SMITH INTERNATIONAL, INC.
16740 HARDY STRET
HOUSTON, TEXAS 77032
(713) 443-3370
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================================
PROPOSED
MAXIUM PROPOSED MAXIMUM AMOUNT OF
AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TITLE OF SECURITIES TO BE REGISTERED REGISTERED PER SHARE PRICE FEE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK, PAR VALUE $1.00 PER SHARE 1,500,000 SHARES $14.00(1) $21,000,000(1) $7,241.38(1)
================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee, based
upon the average of the high and low prices of a share of the Company's
Common Stock on the New York Stock Exchange on November 25, 1994 pursuant
to Rule 457(c).
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<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
The contents of Registration Statement (file no. 33-31556) as filed by
Smith International, Inc. on October 13, 1989, are incorporated herein by
refernce. This Registration Statement on Form S-8 is being filed solely to
register the sale of an additional 1,500,000 under the Smith International,
Inc. Incentive Compensation Plan (the "Plan") and to extend the term of the
Plan to April 27, 2004.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
4.1 Restated Certificate of Incorporation of the Company as amended to date. Filed as Exhibit 3.1 to
the Company's report on Form 10-K for the year ended December 31, 1993 and incorporated herein by
reference.
4.2 Bylaws of the Company as amended to date. Filed as Exhibit 3.2 to the Company's Report on Form 10-
K for the year ended December 31, 1993 and incorporated herein by reference.
4.3* Smith International Inc. 1989 Long-Term Incentive Compensation Plan, as amended.
5.1* Opinion of counsel regarding legality.
23.1* Consent of counsel (included in Exhibit 5.1 to this Registration Statement).
23.2* Consent of Arthur Andersen & Co.
24.1* Power of Attorney (set forth on the signature page contained in Part II of this Registration
Statement).
</TABLE>
* Filed with this Registration Statement.
II-1
<PAGE> 3
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 Houston, State of Texas, on December 1, 1994.
SMITH INTERNATIONAL, INC.
By: /s/ Douglas L. Rock
Douglas L. Rock
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned
officers and directors of Smith International, Inc. (the "Company") hereby
constitutes and appoints Douglas L. Rock, Loren K. Carroll, Neal S. Sutton and
John J. Kennedy, or each of them (with full power to each of them to act
alone), his true and lawful attorney-in- fact and agent, with full power of
substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this registration statement
under the Securities Act of 1933, as amended, and any or all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in order to effectuate the same, as fully to all intents and purposes as
he himself might or could do if personally present, hereby ratifying and
confirming all that such attorneys-in-fact and agents, or any of them, or their
substitute or substitutes, may lawfully do or cause to be done.
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 December 1, 1994
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Douglas L. Rock Chairman, President and
- --------------------------------------------------- Chief Executive Officer
Douglas L. Rock
/s/ Loren K. Carroll Executive Vice President,
- --------------------------------------------------- Chief Financial Officer
Loren K. Carroll and Director
/s/ Neal S. Sutton Vice President - Administration,
- --------------------------------------------------- General Counsel and Secretary
Neal S. Sutton
/s/ Benjamin F. Bailar Director
- ---------------------------------------------------
Benjamin F. Bailar
/s/ G. Clyde Buck Director
- ---------------------------------------------------
G. Clyde Buck
/s/ James R. Gibbs Director
- ---------------------------------------------------
James R. Gibbs
</TABLE>
II-2
<PAGE> 4
<TABLE>
<S> <C>
/s/ Jerry W. Neely Director
- ---------------------------------------------------
Jerry W. Neely
/s/ H. Moak Rollins Director
- ---------------------------------------------------
H. Moak Rollins
</TABLE>
II-3
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
4.1 Restated Certificate of Incorporation of the Company as amended to date. Filed as Exhibit 3.1 to
the Company's report on Form 10-K for the year ended December 31, 1993 and incorporated herein by
reference.
4.2 Bylaws of the Company as amended to date. Filed as Exhibit 3.2 to the Company's Report on Form 10-
K for the year ended December 31, 1993 and incorporated herein by reference.
4.3* Smith International Inc. 1989 Long-Term Incentive Compensation Plan, as amended.
5.1* Opinion of counsel regarding legality.
23.1* Consent of counsel (included in Exhibit 5.1 to this Registration Statement).
23.2* Consent of Arthur Andersen & Co.
24.1* Power of Attorney (set forth on the signature page contained in Part II of this Registration
Statement)
</TABLE>
* Filed with this Registration Statement.
<PAGE> 1
Exhibit 4.3
SMITH INTERNATIONAL, INC.
1989 LONG-TERM INCENTIVE COMPENSATION PLAN
(AS AMENDED AS OF APRIL 27, 1994)
1. PURPOSE OF THE PLAN
The purpose of the 1989 Long-Term Incentive Compensation Plan (the
"Plan") is to advance the interests of Smith International, Inc. (the
"Company") and its shareholders by strengthening the ability of the Company to
attract and retain in its employ persons of training, experience and ability,
and to furnish additional incentives to officers and valued employees of the
Company upon whose judgment, initiative and efforts the successful conduct and
development of the business of the Company largely depends.
2. DEFINITIONS
Whenever the following terms are used in this Plan, they shall have
the meaning specified below unless the context clearly indicates to the
contrary.
"Board of Directors" shall mean the Board of Directors of the Company.
"Cash Award" shall mean a cash award granted pursuant to Section 1 of
the Plan.
"Committee" shall mean the Compensation and Benefits Committee of the
Board of Directors, unless the Board of Directors appoints another committee to
administer the Plan.
"Common Stock" shall mean the common shares, $1.00 par value of the
Company and any class of common shares into which such common shares may
hereafter be converted.
"Company" shall mean Smith International, Inc.
"Director" shall mean a member of the Board of Directors.
"Disinterested Person" shall have the meaning assigned to that term
under the rules and regulations of the Securities and Exchange Commission under
the Securities Exchange Act of 1934.
"Eligible Person" shall mean a person eligible to receive an Incentive
Award.
"Employee" shall mean any employee of the Company, or of any of its
present or future parent or subsidiary corporations, or a corporation (or a
parent or subsidiary corporation of such corporation) issuing or assuming an
Option in a transaction to which Section 425(a) of
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<PAGE> 2
the Internal Revenue Code applies, whether such Employee is so employed at the
time this Plan is adopted or becomes so employed subsequent to adoption of this
Plan.
"Fair Market Value" shall mean the average of the high and low prices
of a share of Common Stock on the New York Stock Exchange on the date as of
which fair market value is to be determined, or if no such sales were made on
such date, the closing price of such shares on the New York Stock Exchange on
the next preceding date on which there were such sales; provided, however, that
the Committee may utilize such other listing or reporting services that in its
judgment provide an accurate index of the fair market value of the Common
Stock.
"Holder" shall mean a person holding an Incentive Award.
"Incentive Award" shall mean an Option, Stock Appreciation Right,
Restricted Stock, Stock Award or Cash Award granted under the Plan.
"Nonstatutory Stock Option" shall mean an option granted pursuant to
Section 7 of the Plan.
"Option" shall mean a Nonstatutory Stock Option.
"Optionee" shall mean any person holding an Option granted under the
Plan.
"Parent corporation" and "subsidiary corporation" shall -have the
meanings assigned to them in Sections 425(e) and 425(f) of the Internal Revenue
Code.
"Plan" shall mean the Smith International, Inc. 1989 Long-Term
Incentive Compensation Plan as set forth herein, as the same may be amended
from time to time.
"Stock Appreciation Right" shall mean a right granted pursuant to
Section 8 or Section 9 of the Plan to receive a number of shares of Common
Stock or, in the discretion of the Committee, an amount of cash or a
combination of shares and cash, based on the increase in the Fair Market Value
of the shares subject to the right.
"Stock Award" shall mean a stock award granted pursuant to Section 10
of the Plan.
3. SHARES OF COMMON STOCK SUBJECT TO THE PLAN
(a) Subject to the provisions of Section 3(c) and Section 12 of
the Plan, the aggregate number of shares of Common Stock that may be issued or
transferred or as to which Stock Appreciation rights may be exercised pursuant
to Incentive Awards under the Plan shall not exceed 2,500,000.
(b) The shares to be delivered under the Plan shall be made
available, at the discretion of the Board of Directors or the Committee, either
from authorized but unissued shares of Common Stock or from previously issued
shares of Common Stock reacquired by the
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<PAGE> 3
Company, including shares purchased on the open market. Common Stock issued
under the Plan in connection with restricted stock or stock awards shall be
issued shares held as treasury shares.
(c) If any shares of Common Stock subject to an Option are not
issued or transferred and cease to be issuable or transferable for any reason,
the shares not so issued or transferred shall no longer be charged against the
limitation provided for in Section 3(a) and may again be made subject to
Incentive Awards. However, shares as to which an Option has been surrendered
in connection with the exercise of a related Stock Appreciation Right shall not
again be available for the grant of any further Incentive Awards. If a Stock
Appreciation Right not related to an Option expires or terminates without
having been exercised, then the number of shares of Common Stock with respect
to which the unexercised portion of such Stock Appreciation Right was granted
shall no longer be charged against the limitation provided for in Section 3(a)
and may again be made subject to Incentive Awards.
(d) The Committee may, in its discretion, determine to cancel, and
agree to the cancellation of, Options in order to make a participant eligible
for the grant of an Option at a lower price than the option cancelled.
(e) In the event that shares of Common Stock are issued as
restricted stock or pursuant to a stock award and thereafter are forfeited or
reacquired by the Company pursuant to rights reserved upon issuance thereof,
such forfeited and reacquired shares may again be issued under the Plan, either
as restricted stock, pursuant to stock awards or otherwise.
4. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by the Committee, which shall
consist of three or more persons (i) who are not eligible to receive Incentive
Awards under the Plan, (ii) who have not been eligible, at any time within one
year prior to appointment to the Committee, for selection as persons to whom
Incentive Awards may be granted pursuant to the Plan or to whom shares may be
allocated or stock options or stock appreciation rights may be granted pursuant
to any other plan of the Company or any of its affiliates entitling the
participants therein to acquire stock, stock appreciation rights or options of
the Company or any of its affiliates and (iii) who are Disinterested Persons.
All members of the Committee shall be Disinterested Persons. The Board of
Directors may from time to time remove members from, or add members to, the
Committee. Vacancies on the Committee, however caused, shall be filled only by
the Board of Directors. The Board of Directors may take any action permitted
to be taken by the Committee if a majority of the Directors are Disinterested
Persons.
(b) The Committee shall have and may exercise such powers and
authority of the Board of Directors as may be necessary or appropriate for the
Committee to carry out its functions as described in the Plan, and any
references in the Plan to any specific power or authority of the Committee
shall not derogate from the foregoing. The Committee shall have authority in
its discretion to determine the Eligible Persons to whom, and the time or times
at which, Incentive Awards may be granted and the number of shares subject to
each Incentive
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<PAGE> 4
Award. Subject to the express provisions of the Plan, the Committee
shall also have authority to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to it, to determine the terms and
provisions of the respective Incentive Award agreements (which need not be
identical) and to make all other determinations necessary or advisable for the
administration of the Plan. All interpretations, determinations and actions by
the Committee shall be final, conclusive and binding upon all parties.
(c) No member of the Board of Directors or the Committee shall be
liable for any action or determination made in good faith by the Board of
Directors or the Committee with respect to the Plan or any Incentive Award
thereunder.
5. ELIGIBILITY
(a) All full-time salaried Employees (including officers and
directors, but excluding directors of the Company who are not also full-time
employees of the Company) who are engaged in performing management,
supervisory, sales, scientific or engineering services or who have been
determined bv the Committee to be key Employees are eligible to receive
Incentive Awards under the Plan. Eligible employees may be designated
individually or by groups or categories (for example, by pay grade) as the
Committee deems appropriate. Participation by officers of the Company and any
performance objectives relating to such officers must be approved by the
Committee. Participation by persons other than officers and any performance
objectives relating thereto may be approved by groups or categories (for
example, by pay grade) and authority to designate participants who are not
officers and to set or modify such targets may be delegated. The Committee
shall have authority, in its sole discretion, to determine and designate from
time to time those Eligible Persons who are to be granted Incentive Awards, the
type of Incentive Award to be granted, and the number of shares of Common Stock
or the amount of cash subject to each Incentive Award. In making such
determinations, the Committee may take into account the nature of the services
rendered by the respective Eligible Persons, their present and potential
contributions to the Company's success and such other factors as the Committee
in its sole discretion shall deem relevant.
(b) An Eligible Person who has been granted an Incentive Award
may, if he is otherwise eligible, be granted an additional Incentive Award.
6. FORMS OF INCENTIVE AWARDS
Incentive Awards may be granted in the following forms:
(a) Nonstatutory Stock Option in accordance with Section
7 of the Plan;
(b) Stock Appreciation Right, related to an Option in
accordance with Section 8 of the Plan;
(c) Stock Appreciation Right not related to an Option in
accordance with Section 9 of the Plan;
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<PAGE> 5
(d) Stock Award in accordance with Section 10 of the Plan;
(e) Restricted Stock in accordance with Section 10 of the
Plan;
(f) Cash Award in accordance with Section 1 of the Plan;
or
(g) Any combination of the foregoing.
7. NONSTATUTORY STOCK OPTIONS
The Committee may at any time and from time to time approve the grant
by the Company of Nonstatutory Stock Options to Eligible Persons to purchase
shares of Common Stock of the Company, and determine the specific Eligible
Persons to whom such Options may be granted, the number of shares subject to
each Option, the terms and provisions of the Option agreement, and the time or
times at which such Options may be exercised, subject to the following terms
and conditions:
(a) The date of grant shall be the date the Committee takes the
necessary action to approve the grant; provided, however, that if the minutes
or appropriate resolutions of the Committee provide that an Option is to be
granted as of a date in the future, the date of grant shall be such future
date. In any event, the intended Optionee must be an Eligible Person on the
date of grant.
(b) The purchase price of Common Stock under each Nonstatutory
Stock Option shall be determined by the Committee, and may be more or less than
the Fair Market Value of the Common Stock on the date the Option is granted,
subject to adjustment as provided in section 12 below.
(c) Each Nonstatutory Stock Option shall become exercisable at
such time or times during its term as shall be determined by the Committee at
the time of grant. The Committee may accelerate the exercisability of any
stock option. Subject to the foregoing and with the approval of the Committee,
all or any part of the shares of Common Stock with respect to which the right
to purchase has accrued may be purchased by the Company at the time of such
accrual or at any time or times thereafter during the term of the Option.
(d) No Nonstatutory Stock Option may be exercised after ten years
from the date the Option is granted.
(e) Upon the exercise of a Nonstatutory Stock Option, the purchase
price shall be payable in full in cash or its equivalent acceptable to the
Company. In the discretion of the Committee, the purchase price may be paid by
the assignment and delivery to the Company of shares of Common Stock or a
combination of cash and such shares equal in value to the Option exercise
price. Any shares so assigned and delivered to the Company in payment or
partial payment of the purchase price shall be valued at their Fair Market
Value on the exercise date.
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<PAGE> 6
(f) No fractional shares shall be issued pursuant to the exercise
of a Nonstatutory Stock Option, nor shall any cash payment be made in lieu
thereof.
(g) A Nonstatutory Stock Option shall not be assignable or
transferable by the Optionee to whom granted otherwise than by will or the laws
of descent and distribution, and may be exercised during the lifetime of the
Optionee only by the Optionee.
(h) No person shall have the rights and privileges of a
shareholder with respect to shares subject to or purchased under a Nonstatutory
Stock Option until the date appearing on the stock certificate issued upon the
exercise of the Option.
(i) To the extent that a Nonstatutory Stock Option is exercised,
any related Stock Appreciation Right shall be proportionately reduced by a
number of shares equal to the number of shares with respect to which the Option
is exercised.
(j) Upon approval of the Committee, the Company may repurchase a
previously-granted stock option from an Optionee by mutual agreement before
such option has been exercised by payment to the Optionee of the amount per
share by which: (i) the Fair Market Value of the Common Stock subject to the
option on the date of purchase exceeds (ii) the option price.
(k) Each Nonstatutory Stock Option shall be evidenced by a written
agreement and may, but need not, include any other terms and conditions not
inconsistent with the Plan as the Committee may approve.
8. STOCK APPRECIATION RIGHTS RELATED TO OPTIONS
The Committee may at any time and from time to time approve the grant
by the Company of Stock Appreciation Rights to Eligible Persons that are
related to Nonstatutory Stock Options, and determine the specific Eligible
Persons to whom Stock Appreciation Rights may be granted, the terms and
provisions of the Stock Appreciation Rights agreements, and the time or times
at which such Stock Appreciation Rights may be exercised, subject to the
following terms and conditions:
(a) The date of grant shall be the date the Committee takes the
necessary action to approve the grant; provided, however, that, if the minutes
of appropriate resolutions of the Committee provide that a Stock Appreciation
Right is to be granted as of a date in the future, the date of grant shall be
such future date. In any event, the intended Optionee must be an Eligible
Person on the date of grant.
(b) A Stock Appreciation Right may be granted in connection with a
Nonstatutory Stock Option, either at the time of the grant of such Option or at
any time thereafter during the term of the Option.
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<PAGE> 7
(c) A Stock Appreciation Right shall entitle the Holder of the
related Option, upon exercise of the Stock Appreciation Right, to surrender
such Option, or any portion thereof to the extent unexercised (subject to a
limitation of 50% of the shares of Common Stock subject to the Option), with
respect to the number of shares as to which Stock Appreciation Right is
exercised, and to receive payment of an amount computed pursuant to Section
8(e). Such Option shall, to the extent so surrendered, thereupon cease to be
exercisable.
(d) Subject to Section 8(g), a Stock Appreciation Right granted
hereunder shall be exercisable at such time or times, and only to the extent,
that a related Option is exercisable and shall not be transferable except to
the extent that such related Option may be transferable. The Stock
Appreciation Right shall be exercisable only by the Holder thereof or by such
other person entitled to exercise the related Option in the event of the death
of the Holder.
(e) Subject to the right of the Committee to deliver cash in lieu
of shares of Common Stock, the number of shares of Common Stock which shall be
issuable upon the exercise of a Stock Appreciation Right shall be determined by
dividing:
(i) the number of shares of Common Stock as to which the
Stock Appreciation Right is exercised multiplied by
the amount of the appreciation in such shares (for
this purposes the "appreciation" shall be the amount
by which the Fair Market Value of the shares of
Common Stock subject to the Stock Appreciation Right
on the exercise date exceeds an amount which shall be
determined by the Committee at the time of grant; by
(ii) the Fair Market Value of a share of Common Stock on
the exercise date.
(f) In lieu of issuing shares of Common Stock upon the exercise of
a Stock Appreciation Right, the Committee may elect to pay the holder of the
Stock Appreciation Right cash equal to the Fair Market Value on the exercise
date of any or all of the shares which would otherwise be issuable. No
fractional shares of Common Stock shall be issued upon the exercise of a Stock
Appreciation Right; instead, the holder of the Stock Appreciation Right shall
be entitled to receive a cash adjustment equal to the same fraction of the Fair
Market Value of a share of Common Stock on the exercise date or to purchase the
portion necessary to make a whole share at its Fair Market Value on the date of
exercise.
(g) The Committee may impose such conditions on the exercise of a
Stock Appreciation Right as may be required to satisfy the requirements of Rule
16b-3 under the Securities Exchange Act of 1934 (or any other comparable
provisions in effect at the time or times in question). Without limiting the
generality of the foregoing, the Committee may determine that a Stock
Appreciation Right may be exercised only during the period beginning on the
third business day and ending on the twelfth business day following the
publication of the Company's quarterly and annual summarized financial data.
Such publication shall be deemed to occur when the data first appears on a wire
service, in a financial news service or in a newspaper of general circulation.
The Company may provide written notification to the
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<PAGE> 8
Holder of a Stock Appreciation Right specifying the date on which such
financial data was published.
(h) No Stock Appreciation Right or related Option granted to an
officer of the Company may be exercised prior to six months after the date of
grant except in the event death or disability of the officer occurs prior to
the expiration of the six-month period.
(i) Each Stock Appreciation Right shall be evidenced by a written
instrument and may, but need not, include any other terms and conditions not
inconsistent with the Plan as the Committee may approve.
9. STOCK APPRECIATION RIGHTS UNRELATED TO OPTIONS
The Committee may at any time and from time to time approve the grant
by the Company to Eligible Persons of Stock Appreciation Rights that are
unrelated to Options, and determine the specific Eligible Persons to whom such
Stock Appreciation Rights may be granted, the terms and provisions of the Stock
Appreciation Rights agreements, and the time or times at which such Stock
Appreciation Rights may be exercised, subject to the following terms and
conditions.
(a) The date of grant shall be the date the Committee takes the
necessary action to approve the grant; provided, however, that if the minutes
or appropriate resolutions of the Committee provide that a Stock Appreciation
Right is to be granted as of a date in the future, the date of grant shall be
such future date. In any event, the intended Eligible Person must be an
Eligible Person on the date of grant.
(b) A Stock Appreciation Right shall entitle the Holder, upon
exercise of the Stock Appreciation Right, to receive payment of an amount
determined by dividing:
(i) the number of shares of Common Stock as to which the
Stock Appreciation Right is exercised multiplied by
the amount of the appreciation in such shares (for
this purposes the "appreciation' shall be the amount
by which the Fair Market Value of the shares of
Common Stock subject to the Stock Appreciation Right
on the exercise date exceeds an amount which shall be
determined by the Committee at the time of grant; by
(ii) the Fair Market Value of a share of Common Stock on
the exercise date.
(c) In lieu of issuing shares of Common Stock upon the exercise of
a Stock Appreciation Right, the Committee may elect to pay the holder of the
Stock Appreciation Right cash equal to the Fair Market Value on the exercise
date of any or all of the shares which would otherwise be issuable. No
fractional shares of Common Stock shall be issued upon the exercise of a Stock
Appreciation Right; instead, the holder of the Stock Appreciation Right shall
be entitled to receive a cash adjustment equal to the same fraction of the Fair
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<PAGE> 9
Market Value of the share of Common Stock on the exercise date or to purchase
the portion necessary to make a whole share at its Fair Market Value on the
date of exercise.
(d) The Committee may impose such conditions on the exercise of a
Stock Appreciation Right granted hereunder as may be required to satisfy the
requirements of Rule 16b-3 under the Securities Exchange Act of 1934 (or any
other comparable provisions in effect at the time or times in question).
Without limiting the generality of the foregoing, the Committee may determine
that a Stock Appreciation Right may be exercised only during the period
beginning on the third business day and ending on the twelfth business day
following the date of publication of the Company's quarterly and annual
summarized financial data. Such publication shall be deemed to occur when the
data first appears on the wire service, in a financial news service or in a
newspaper of general circulation. The Company may provide written notification
to the Holder of a Stock Appreciation Right specifying the date on which such
financial data was published.
(e) No Stock Appreciation Right granted to an officer of the
Company may be exercised prior to six months after the date of grant except in
the event death or disability of the officer occurs prior to the expiration of
said six-month period.
(f) A Stock Appreciation Right shall not be assignable or
transferable by the Holder otherwise than by will or the laws of descent and
distribution, and may be exercised during the lifetime of the Holder only by
the Holder.
(g) Each Stock Appreciation Right hereunder shall be evidenced by
a written instrument and may, but need not, include any other terms and
condition not inconsistent with the Plan as the Committee may approve.
10. STOCK AWARD AND RESTRICTED STOCK
The Committee may at any time and from time to time approve the grant
by the Company of a Stock Award or Restricted Stock to Eligible Persons, and
determine the specific Eligible Persons to whom such Stock awards and
restricted stock may be granted, the number of shares to be granted and the
terms and provisions of such award of Common Stock. A stock award consists of
the transfer by the Company to a participant of shares of Common Stock, without
other payment therefor, as additional compensation for his/her services to the
Company. A share of restricted stock consists of shares of Common Stock which
are sold or transferred by the Company to a participant at a price which may be
below their Fair Market Value or for no payment, but subject to restrictions on
their sale or other transfer by the participant. The transfer of Common Stock
pursuant to stock awards and the transfer and sale of restricted stock shall be
subject to the following terms and conditions:
(a) The number of shares to be transferred or sold by the Company
to a participant pursuant to a stock award or as restricted stock shall be
determined by the Committee.
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<PAGE> 10
(b) The Committee shall determine the prices, if any, at which
shares of restricted stock shall be sold to a participant, which may vary from
time to time and among participants and which may be below the Fair Market
Value of such shares of Common Stock at the date of sale.
(c) All shares of restricted stock transferred or sold hereunder
shall be subject to such restrictions as the Committee may determine,
including, without limitation any or all of the following:
(i) A prohibition against the sale, transfer, pledge or
other encumbrance of the shares of restricted stock,
such prohibition to lapse at such time or times as
the Committee shall determine (whether in annual or
more frequent installments, at the time of the death,
disability or retirement of the holder of such
shares, or otherwise);
(ii) A requirement that the holder of shares of restricted
stock forfeit, or (in the case of shares sold to a
participant) resell back to the Company at his cost,
all or a part of such shares in the event of
termination of his employment during any period in
which such shares are subject to restrictions;
(iii) A prohibition against employment of the holder of
such restricted stock by any competitor of the
Company or a subsidiary of the Company, or against
such holder's dissemination of any secret or
confidential information belonging to the Company or
a subsidiary of the Company.
(d) In order to enforce the restrictions imposed by the Committee
pursuant to (c) above, the participant receiving restricted stock shall enter
into an agreement with the Company setting forth the conditions of the grant.
Shares of restricted stock shall be registered in the name of the participant
and deposited, together with a stock power endorsed in blank, with the Company.
(e) At the end of any time period during which the shares of
restricted stock are subject to forfeiture and restrictions on transfer, such
shares will be delivered free of all restrictions to the participant or to the
participant's legal representative, beneficiary or heir.
(f) Subject to the terms and conditions of the Plan, each
participant receiving restricted stock shall have all the rights of a
stockholder with respect to shares of stock during any period in which such
shares are subject to forfeiture and restrictions on transfer, including
without limitation, the right to vote such shares. Dividends paid in cash or
property other than Common Stock with respect to shares of restricted stock
shall be paid to the participant currently or, at the election of the
participant, be reinvested by the participant under the Company's Automatic
Dividend Reinvestment Service. Shares purchased with reinvested dividends
shall not be restricted.
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<PAGE> 11
11. CASH AWARDS
The Committee may at any time and from time to time approve the
payment by the Company of a cash award to Eligible Persons. A cash award
consists of a monetary payment made by the Company to a participant as
additional compensation for his/her services to the Company. Payment of a cash
award will normally depend on achievement of performance objectives by the
Company or by individuals. The amount of any monetary payment constituting a
cash award shall be determined by the Committee in its sole discretion. Cash
awards may be subject to other terms and conditions, which may vary from time
to time and among participants, as the Committee determines to be appropriate.
12. Adjustment Provisions
(a) Subject to Section 12(b), if the outstanding shares of Common
Stock of the Company are increased, decreased or exchanged for a different
number or kind of shares or other securities, or if additional shares or new or
different shares or other securities are distributed with respect to such
shares of Common Stock or other securities, through merger, consolidation, sale
of all or substantially all of the property of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other distribution with respect to such shares of Common Stock or
other securities, an appropriate and proportionate adjustment may be made in
(i) the maximum number and kind of shares provided in Section 3 of the Plan,
(ii) the number and kind of shares or other securities subject to the then
outstanding Options and Stock Appreciation Rights, and (iii) the price for each
share or other unit of any other securities subject to then outstanding Options
and the value of any then outstanding Stock Appreciation Rights without change
in the aggregate purchase price or value as to which such Options or Stock
Appreciation Rights remain exercisable.
(b) Notwithstanding any provision in this Plan or in any Incentive
to the contrary, (i) the restrictions on all shares of restricted stock awarded
shall lapse immediately; (ii) all outstanding Options and Stock Appreciation
Rights will become exercisable immediately; and (iii) all performance
objectives shall be deemed to be met and payment made immediately if any of the
following events occur unless otherwise determined by the Board of Directors
and a majority of the Continuing Directors (as defined below):
(i) in the event of a pending or threatened takeover bid
or tender offer for 25% or more of the outstanding
securities of the Company, whether or not deemed a
tender offer under applicable state or federal laws,
or in the event that any person makes any filing
under Section 13(d) or 14(d) of the Securities
Exchange Act of 1934 with respect to the Company;
(ii) a majority of the members of the Board of Directors
of the Company is replaced within any period of less
than two years by directors not nominated and
approved by the Board of Directors; or
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<PAGE> 12
(iii) the stockholders of the Company approve an agreement
to merge or consolidate with or into another
corporation or an agreement to sell or otherwise
dispose of all or substantially all of the Company's
assets (including a plan of liquidation).
For purposes of this Section, "Continuing Directors" are directors (a)
who were in office prior to the time any of provisions (i), (ii) or (iii)
occurred or any person publicly announced an intention to acquire 25% or more
of any equity security of the Company, (b) directors in office for a period of
more than two years, and (c) directors nominated and approved by the Continuing
Directors.
(c) Adjustments under Sections 12(a) and 12(b) shall be made by
the Committee, whose determination as to what adjustments shall be made and the
extent thereof shall be final, binding and conclusive. No fractional interest
shall be issued under the Plan on account of any such adjustment.
13. GENERAL PROVISIONS
(a) With respect to any shares of Common Stock issued or
transferred under any provisions of the Plan, such shares may be issued or
transferred subject to such conditions, in addition to those specifically
provided in the Plan, as the Committee may direct.
(b) Nothing in the Plan or in any instrument executed pursuant
thereto shall confer upon any Holder any right to continue in the employ of the
Company or any of its subsidiaries or affect the right of the Company to
terminate the employment of any Holder at any time with or without cause.
(c) No shares of Common Stock shall be issued or transferred
pursuant to an Incentive Award unless and until all then applicable
requirements imposed by federal and state securities and other laws, rules and
regulations and by any regulatory agencies having jurisdiction, and by any
stock exchanges upon which the Common Stock may be listed, shall have been
fully met. As a condition precedent to the issuance of shares pursuant to the
grant or exercise of an Incentive Award, the Company may require the Holder to
take any reasonable action to meet such requirements.
(d) No Holder (individually or as a member of a group) and no
beneficiary or other person claiming under or through such Holder shall have
any right, title or interest in or to any shares of Common Stock allocated or
reserved under the Plan or subject to any Incentive Award except as to such
shares of Common Stock, if any, that have been issued or transferred to such
Holder.
(e) The Company may make such provisions as it deems appropriate
for the withholding of any taxes that the Company or any subsidiary corporation
determines it is required to withhold in connection with any Incentive Award.
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<PAGE> 13
(f) No Incentive Award and no right under the Plan, contingent or
otherwise, shall be assignable or subject to any encumbrance, pledge or charge
of any nature except that, under such rules and regulations as the Company may
establish pursuant to the terms of the Plan, a beneficiary may be designated
with respect to an Incentive Award in the event of the death of the Holder of
such Incentive Award and except also, that if such beneficiary is the executor
or administrator of the estate of the Holder of such Incentive Award, then any
rights with respect to such Incentive Award may be transferred to the person or
persons or entity (including a trust) entitled thereto under the will of the
holder of such Incentive Award, or in the case of intestacy, under the laws
relating to intestacy.
(g) Nothing in the Plan is intended to be a substitute for, or to
preclude or limit the establishment of, any other plan, practice or arrangement
for the payment of compensation or benefits to employees generally, or to any
class or group of employees that the Company now has or may hereafter lawfully
put into effect, including, without limitation, any retirement, pension,
insurance, stock purchase, incentive compensation or bonus plan.
(h) The Company may make a loan or guarantee a loan to an Optionee
(including an Optionee who is an officer of the Company or any subsidiary
corporation of the Company) in connection with the exercise of an Option in an
amount not to exceed the aggregate exercise price of the Option being exercised
and any federal and state taxes payable in connection with such exercise for
the purpose of assisting such Optionee to exercise such Option. The Company
may also make a loan or guarantee a loan to an optionee (including an optionee
who is an officer of the Company or any subsidiary corporation of the Company)
in connection with the exercise of an option granted under the Smith
International, Inc. 1971 and 1982 Stock Option Plans in an amount not to
exceed the aggregate exercise price of the option being exercised and any
federal and state taxes payable in connection with such exercise for the
purpose of assisting such optionee to exercise such option. Any such loan or
guarantee may be secured by shares of Common Stock or other collateral deemed
adequate by the Committee and shall comply in all respects with all applicable
laws and regulations. The Board of Directors and the Committee may adopt
policies regarding eligibility for such loans and guarantees, the maximum
amounts thereof and any terms and conditions not specified in the Plan upon
which such loans will be made and guarantees extended.
(i) The Company shall have the right to withhold from any payments
made under the Plan or to collect as a condition of payment, any taxes required
by law to be withheld. At any time when a participant is required to pay to
the Company an amount required to be withheld under applicable income tax laws
in connection with a distribution of Common Stock or upon exercise of an option
or Stock Appreciation Right, the participant may satisfy this obligation in
whole or in part by electing (the "Election") to have the Company withhold from
the distribution shares of Common Stock having a value equal to the amount
required to be withheld. The value of the shares to be withheld shall be based
on the Fair Market Value of the Common Stock on the date that the amount of tax
to be withheld shall be determined ("Tax Date"). Each Election must be made
prior to the Tax Date. The Committee may disapprove of any Election, may
suspend or terminate the right to make Elections, or may provide with
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<PAGE> 14
respect to any Incentive that the right to make Elections shall not apply to
such Incentive. An Election is irrevocable.
(j) If a participant is an officer of the Company within the
meaning of Section 16 of the 1934 Act, then an Election is subject to the
following additional restrictions:
(i) No Election shall be effective for a Tax Date which
occurs within six months of the grant of the award,
except that this limitation shall not apply in the
event death or disability of the participant occurs
prior to the expiration of the six-month period.
(ii) The Election must be made either six months prior to
the Tax Date or must be made during a period
beginning on the third business day following the
date of release for publication of the Company's
quarterly or annual summary statements of sales and
earnings and ending on the twelfth business day
following such date.
(k) Anything in this Plan to the contrary notwithstanding, the
Company, may if it shall determine it necessary or desirable for any reason, at
the time of award of any Incentive or the issuance of any shares of Common
Stock pursuant to any Incentive, require the recipient of the Incentive, as a
condition to the receipt thereof or to the receipt of shares of Common Stock
issued pursuant thereto, to deliver to the Company a written representation of
present intention to acquire the Incentive or the shares of Common Stock issued
pursuant thereto for his own account for investment and not for distribution.
14. AMENDMENT AND TERMINATION
(a) The Board of Directors shall have the power, in its
discretion, to amend, suspend or terminate the Plan at any time. No such
amendment shall, without approval of the shareholders of the Company, except as
provided in Section 12 of the Plan:
(i) Change the class of persons eligible to
receive Incentive Awards under the Plan;
(ii) Materially increase the benefits accruing to
Eligible Persons under the Plan;
(iii) Increase the number of shares of Common Stock
subject to the Plan; or
(iv) Transfer the administration of the Plan to
any person who is not a Disinterested Person.
(b) The Committee may, with the consent of a Holder, make such
modifications in the terms and conditions of an Option or a Stock Appreciation
Right as it deems advisable.
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<PAGE> 15
(c) No amendment, suspension or termination of the Plan shall,
without the consent of the Holder, alter, terminate, impair or adversely affect
any right or obligation under any Incentive Award previously granted under the
Plan.
(d) No amendment to the Plan shall be made that would permit the
granting of Incentive Awards to members of the Committee.
(e) A Stock Appreciation Right or an Option held by a person who
was an Employee at the time such Right or Option was granted shall terminate if
and when the Holder ceases to be an Employee, except as follows:
(i) If the employment of an Employee is terminated for
cause, for which the Company shall be the sole judge,
or if the Employee voluntarily resigns, all of the
Stock Appreciation Rights and Options of the Employee
shall expire immediately. Retirement with the
consent of the Company shall not be deemed a
voluntary resignation for purposes of this
subparagraph (i).
(ii) If the employment of an Employee is terminated by the
Company other than for cause, for which the Company
shall be the sole judge, then the Stock Appreciation
Rights and Options expire one year thereafter unless
by their terms they expire sooner. During said
period, the Stock Appreciation Rights and Options may
be exercised in accordance with their terms, but only
to the extent exercisable on the date of termination
of employment.
(iii) If the employee retires at normal retirement age or
retires with the consent of the Company at an earlier
date the Stock Appreciation Rights and Options of the
Employee shall expire three years thereafter unless
by their terms they expire sooner. During said
period, the Stock Appreciation Rights and Options may
be exercised in accordance with their terms, but only
to the extent exercisable on the date of retirement.
(iv) If an Employee dies or becomes permanently and
totally disabled while employed by the Company or a
parent or subsidiary corporation, the Stock
Appreciation Rights and Options of the Employee shall
expire three years after the date of death or
permanent and total disability unless by their terms
they expire sooner. If the Employee dies or becomes
permanently and totally disabled within the one-year
period referred to in subparagraph (ii) above, the
Stock Appreciation Rights and Options shall expire
one year after the date of death or permanent and
total disability, unless by their terms they expire
sooner. If the Employee dies or becomes permanently
and totally disabled within the three-year period
referred to in subparagraph (iii) above, the Stock
Appreciation
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<PAGE> 16
Rights and Options shall expire upon the later of
three years after retirement or one year after the
date of death or permanent and total disability,
unless by their terms they expire sooner. During
said periods the Stock Appreciation Rights and
Options may be exercised by the Employee, or in the
event of the death of the Employee, the Stock
Appreciation Rights and Options may be exercised by
the Employee's designated beneficiary, personal
representatives or the persons to whom his rights
under the Stock Appreciation Rights and Options have
passed by will or the laws of descent and
distribution, in accordance with their terms, but
only to the extent exercisable on the date of
retirement or termination of employment.
(v) Notwithstanding the above, a Stock Appreciation Right
or Option may not be exercised after the expiration
of ten years from the date the Stock Appreciation
Right or Option is granted.
(f) The Committee may in a particular case provide for earlier
termination or expiration periods for any Stock Appreciation Right or Option
but may not extend any of the periods provided for in this section.
(g) The Committee may in its sole discretion determine, with
respect to a Stock Appreciation Right or Option, that any Holder who is on
leave of absence for any reason will be considered as still in the employ of
the Company, provided that the Stock Appreciation Right or Option shall be
exercisable during a leave of absence only as to the amount of number of shares
with respect to which it was exercisable at the commencement of such leave of
absence.
15. EFFECTIVE DATE OF PLAN AND DURATION OF PLAN
This Plan shall become effective upon adoption by the Board of
Directors of the Company (February 6, 1989) and Incentive Awards may be made
under the Plan at any time thereafter, provided, however, that no shares of
Common Stock may be issued under the Plan, no Stock Appreciation Rights granted
under the Plan may be exercised and no Cash Award may be paid prior to
completion of the following: (a) the approval of the Plan by shareholders
owning a majority of the outstanding shares of Common Stock of the Company,
with the votes of any officers who are shareholders not being counted for the
purpose of determining a majority, (b) the registration of the Plan and
securities to be issued in connection therewith under the Securities Act of
1933, and (c) the listing of the shares of Common Stock reserved for issuance
under the Plan on the New York Stock Exchange, Inc. and the Pacific Stock
Exchange, Inc. Unless previously terminated by the Board of Directors, the
Plan shall terminate at the close of business on April 27, 2004, and no
Incentive Award may be granted under the Plan thereafter, but such termination
shall not affect any Incentive Award issued or granted on or prior to said
date.
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<PAGE> 1
EXHIBIT 5.1
November 30, 1994
Board of Directors
Smith International, Inc.
16740 Hardy Street
Houston, Texas 77032
Gentlemen:
As Vice President - Administration, General Counsel and Secretary
of Smith International, Inc., a Delaware corporation (the "Company"), I have
acted as counsel in connection with the Company's Registration Statement on
Form S- 8, dated the date hereof (the "Registration Statement"), relating to
the registration under the Securities Act of 1933, as amended, of the issuance
of up to 1,500,000 shares (the "Shares") of Common Stock, par value $1.00 per
share ("Common Stock"), of the Company issuable pursuant to the Smith
International, Inc. 1989 Long-Term Incentive Compensation Plan (the "Plan").
As the basis for the opinion hereinafter expressed, I have
examined, or caused attorneys under my supervision to examine, such corporate
records and documents, certificates of corporate and public officials and such
other instruments as I have deemed necessary for the purposes of the opinion
contained herein. As to all matters of fact material to such opinion, I have
relied upon the representations of officers of the Company. I have assumed the
genuineness of all signatures, the authenticity of all documents submitted to
me as originals, and the conformity with the original documents of all
documents submitted to me as copies.
Based upon the foregoing and having due regard for such legal
considerations as I deem relevant, I am of the opinion that the Shares to be
offered under the Plan have been duly authorized, and that the Shares, when
properly issued under the Plan, will be validly issued, fully paid and
nonassessable.
I hereby consent to the inclusion of this opinion as an exhibit
to the Registration Statement.
Very truly yours,
Neal S. Sutton
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement on Form S-8 of our
report dated February 9, 1994, appearing in the Annual Report of Smith
International, Inc. on Form 10-K for the year ended December 31, 1993 .
ARTHUR ANDERSEN LLP
Houston, Texas
November 30, 1994
