EXHIBIT 4(a)
THE TUBOSCOPE VETCO INTERNATIONAL CORPORATION
EMPLOYEE QUALIFIED STOCK PURCHASE PLAN
Tuboscope Vetco International Corporation, a corporation organized under
the laws of the State of Delaware (the "Company"), hereby adopts The Tuboscope
Vetco International Corporation Employee Qualified Stock Purchase Plan (the
"Plan"). The purposes of the Plan are as follows:
(1) To assist employees of the Company and its Subsidiary Corporations (as
defined below) in acquiring a stock ownership interest in the Company pursuant
to a plan which is intended to qualify as an "employee stock purchase plan"
within the meeting of Section 423(b) of the Internal Revenue Code of 1986, as
amended.
(2) To help employees provide for their future security and to encourage
them to remain in the employment of the Company and its Subsidiary Corporations.
1. DEFINITIONS
Whenever any of the following terms is used in the Plan with the first
letter or letters capitalized, it shall have the following meaning unless
context clearly indicates to the contrary (such definitions to be equally
applicable to both the singular and the plural forms of the terms defined):
(a) "Authorization" has the meaning assigned to that term in Section
3(b) hereof.
(b) "Board of Directors" or "Board" means the Board of Directors of the
Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the committee appointed to administer the Plan
pursuant to Section 12 hereof.
(e) "Company" means Tuboscope Vetco International Corporation, a
Delaware corporation.
(f) "Date of Exercise" means, with respect to any Option, the last day
of the Offering Period for which the Option was granted.
(g) "Date of Grant" means, with respect to any Option, the date upon
which the Option is granted, as set forth in Section 3(a) hereof.
(h) "Eligible Compensation" means the employee's base pay. In the case
of salespersons, Eligible Compensation includes regular commissions.
(i) "Eligible Employee" means an employee of the Company or any
Subsidiary Corporation (1) who does not, immediately after the option is
granted, own stock possessing five percent or more of the total combined
voting power or value of all classes of stock of the Company, a Parent
Corporation or a Subsidiary Corporation; (2) who has been employed by the
Company or any Subsidiary Corporation for not less than six months; (3)
whose customary employment is for more than 20 hours per week; and (4)
whose customary employment is for more than five months in any calendar
year. For purposes of paragraph (1), the rules of Section 424(d) of the
Code with regard to the attribution of stock ownership shall apply in
determining the stock ownership of an individual, and stock which an
employee may purchase under outstanding options shall be treated as stock
owned by the employee. During a leave of absence meeting the requirements
of Treasury Regulation 1.421-7(h)(2), an individual shall be treated as an
employee of the Company or Subsidiary Corporation employing such individual
immediately prior to such leave. "Eligible Employee" shall not include any
director of the Company or any Subsidiary Corporation who does not render
services to the Company in the status of an employee within the meaning
of Section 3401(c) of the Code.
(j) "Offering Period" shall mean the six-month periods commencing
January 1 and July 1 of each Plan Year as specified in Section 3(a) hereof.
Options shall be granted on the Date of Grant and exercised on the Date of
Exercise as provided in Sections 3(a) and 4(a) hereof.
(k) "Option" means an option granted under the Plan to an Eligible
Employee to purchase shares of the Company's Stock.
(l) "Option Period" means, with respect to any Option, the period
beginning upon the Date of Grant and ending upon the Date of Exercise.
(m) "Option Price" has the meaning set forth in Section 4(b) hereof.
(n) "Parent Corporation" means any corporation, other than the Company,
in an unbroken chain of corporations ending with the Company if, at the
time of the granting of the Option, each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain.
(o) "Participant" means an Eligible Employee who has complied with the
provisions of Section 3(b) hereof.
(p) "Payday" means the regular and recurring established day for payment
of cash compensation to employees of the Company or any Subsidiary
Corporation.
(q) "Plan" means the Tuboscope Vetco International Corporation Employee
Qualified Stock Purchase Plan.
(r) "Plan Year" means the calendar year.
(s) "Stock" means the shares of the Company's Common Stock, $0.01 par
value.
(t) "Subsidiary Corporation" means any corporation, other than the
Company, in an unbroken chain of corporations beginning with the Company
if, at the time of the granting of the Option, each of the corporations
other than the last corporation in an unbroken chain owns stock possessing
50% or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
2. STOCK SUBJECT TO THE PLAN
Subject to the provisions of Section 9 hereof (relating to adjustments upon
changes in the Stock) and Section 11 hereof (relating to amendments of the
Plan), the Stock which may be sold pursuant to Options granted under the Plan
shall not exceed in the aggregate 100,000 shares, and may be unissued shares or
treasury shares or shares bought on the market for purposes of the Plan.
3. GRANT OF OPTIONS
(a) General Statement. The Company shall offer Options under the Plan to
all Eligible Employees in successive six-month Offering Periods commencing on
July 1, 1993 and continuing until the earlier of (i) the date when the number of
shares of Stock available under the Plan have been sold or (ii) the date when
the Plan is terminated. Dates of Grant shall include January 1 and July 1 of
each Plan Year and such other date or dates as the Committee may from time to
time determine. Each Option shall expire on the Date of Exercise immediately
after the automatic exercise of the Option pursuant to Section 4(a) hereof. The
number of shares of Stock subject to each Option shall equal the payroll
deductions authorized by each Participant in accordance with subsection (b)
hereof for the Option Period, divided by the Option Price, except as provided in
Section 4(a).
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(b) Election to Participate; Payroll Deduction Authorization. Except as
provided in subsection (d) hereof, an Eligible Employee shall participate in the
Plan only by means of payroll deduction. Each Eligible Employee who elects to
participate in the Plan shall deliver to the Company during the calendar month
preceding a Date of Grant no later than five (5) working days before such Date
of Grant, a completed and executed written payroll deduction authorization in a
form prepared by the Company (the "Authorization"). An Eligible Employee's
Authorization shall give notice of such Eligible Employee's election to
participate in the Plan for the next following Offering Period and subsequent
Offering Periods and shall designate a stated whole percentage of Eligible
Compensation to be withheld on each Payday. The amount withheld shall not be
less than $10.00 each Payday and the stated percentage shall not exceed 10% of
Eligible Compensation. The cash compensation payable to a Participant for an
Offering Period shall be reduced each Payday through a payroll deduction in an
amount equal to the stated percentage of Eligible Compensation specified in the
Authorization payable on such Payday, and such amount shall be credited to the
Participant's account under the Plan. Any Authorization shall remain in effect
until the Eligible Employee amends the same pursuant to this subsection,
withdraws pursuant to Section 5 or ceases to be an Eligible Employee pursuant to
Section 6.
(c) $25,000 Limitation. No Eligible Employee shall be granted an Option
under the Plan which permits his rights to purchase stock under the Plan and
under all other employee stock purchase plans of the Company, any Parent
Corporation or any Subsidiary Corporation subject to the Section 423 to accrue
at a rate which exceeds $25,000 of fair market value of such stock (determined
at the time the Option is granted) for each calendar year in which the Option is
outstanding at any time. For purpose of the limitation imposed by this
subsection, the right to purchase stock under an Option accrues when the Option
(or any portion thereof) first becomes exercisable during the calendar year, the
right to purchase stock under an Option accrues at the rate provided in the
Option, but in no case may such rate exceed $25,000 of the fair market value of
such stock (determined at the time such Option is granted) for any one calendar
year, and a right to purchase stock which has accrued under an Option may not be
carried over to any other Option.
(d) Leaves of Absence. During a leave of absence meeting the requirements
of Treasury Regulation Section 1.421-7(h)(2), a Participant may continue to
participate in the Plan by making cash payments to the Company on each Payday
equal to the amount of the Participant's payroll deductions under the Plan for
the Payday immediately preceding the first day of such Participant's leave of
absence.
4. EXERCISE OF OPTIONS; OPTION PRICE
(a) General Statement. Each Participant automatically and without any act
on such Participant's part shall be deemed to have exercised such Participant's
Option on the Date of Exercise to the extent that the balance then in the
Participant's account under the Plan is sufficient to purchase at the Option
Price whole shares of the Stock subject to the Option. No fractional shares of
Stock shall be purchased upon the exercise of an Option and any excess balance
in a Participant's account remaining after the purchase of whole shares of Stock
upon the exercise of an Option shall be paid to the Participant by the Company
in cash in one lump sum within sixty (60) days after the Date of Exercise,
without any interest thereon.
(b) Option Price Defined. The option price per share of Stock (the "Option
Price") to be paid by a Participant upon the exercise of the Participant's
Option shall be equal to 85% of the lesser of the fair market value of a share
of Stock on the Date of Exercise or the fair market value of a share of Stock on
the Date of Grant. The fair market value of a share of Stock as of a given date
shall be: (i) the average of the closing prices of a share of Stock on the
principal exchange on which the Stock is then trading, if any, on the three
trading days immediately preceding such date; (ii) if the Stock is not traded on
an exchange but is quoted on NASDAQ or a successor quotation system, (1) the
average of the last sales price (if the Stock is then listed as a National
Market Issue under the NASD National Market System) or (2) the average of the
mean between the closing representative bid and asked prices (in all other
cases) for a share of the Stock for the three trading days immediately preceding
such date as reported by NASDAQ or such successor quotation system; (iii) if the
Stock is not publicly traded on an exchange and not quoted on NASDAQ or a
successor quotation system, the average of the mean between the closing bid and
asked prices for a share of Stock for the three trading days immediately
preceding such date as determined in good faith by the Committee; or (iv) if the
Stock is not publicly traded, the fair market value of a share of Stock
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established by the Committee acting in good faith.
(c) Delivery of Share Certificates. As soon as practicable after each Date
of Exercise, the Company shall deliver to each Participant a certificate issued
in the Participant's name for the number of shares of Stock with respect to
which the Participant's Option was exercised. In the event the Company is
required to obtain authority from any commission or agency to issue any such
certificate, the Company shall seek to obtain such authority. The inability of
the Company to obtain authority from any such commission or agency which the
Committee in its absolute discretion, deems necessary for the lawful issuance of
any such certificate shall relieve the Company from liability to any Participant
except to pay to the Participant the amount of the balance in the Participant's
account in cash in one lump sum without any interest thereon.
(d) Pro Rata Allocations. If the total number of shares of Stock for which
Options are to be exercised on any date exceeds the number of shares remaining
unsold under the Plan (after deduction of all shares for which Options have
theretofore been exercised), the Committee shall make a pro rata allocation of
the available remaining shares in as nearly a uniform manner as shall be
practicable and any balance of payroll deductions credited to the accounts of
Participants which have not been applied to the purchase of shares of Stock
shall be paid to such Participants in cash in one lump sum within sixty (60)
days after the Date of Exercise, without any interest thereon.
5. WITHDRAWAL FROM THE PLAN
(a) General Statement. Any Participant may withdraw from participation
under the Plan at any time except that no Participant may withdraw during the
last ten (10) days of any Offering Period. A Participant who wishes to withdraw
from the Plan must deliver to the Company a notice of withdrawal in a form
prepared by the Company (the "Withdrawal Election") not later than ten (10) days
prior to the Date of Exercise during any Offering Period. Upon receipt of a
Participant's Withdrawal Election, the Company shall pay to the Participant the
amount of the balance in the Participant's account under the Plan in cash in one
lump sum within sixty (60) days, without any interest thereon. Upon receipt of
a Participant's Withdrawal Election by the Company, the Participant shall cease
to participate in the Plan and the Participant's Option shall terminate.
(b) Eligibility Following Withdrawal. A Participant who withdraws from the
Plan and who is still an Eligible Employee shall be eligible to participate
again in the Plan as of any subsequent Date of Grant by delivering to the
Company an Authorization pursuant to Section 3(b) hereof.
6. TERMINATION OF EMPLOYMENT
(a) Termination of Employment Other than by Death. If the employment of a
Participant terminates other than by death, the Participant's participation in
the Plan automatically and without any act on the Participant's part shall
terminate as of the date of the termination of the Participant's employment. As
soon as practicable after such a termination of employment, the Company will pay
to the Participant the amount of the balance in the Participant's account under
the Plan without any interest thereon. Upon a Participant's termination of
employment covered by this Section 6(a), the Participant's Authorization,
interest in the Plan and Option under the Plan shall terminate.
(b) Termination By Death. If the employment of a participant is terminated
by the Participant's death, the executor of the Participant's will or the
administrator of the Participant's estate by written notice to the Company may
request payment of the balance in the Participant's account under the Plan, in
which event the Company shall make such payment without any interest thereon as
soon as practicable after receiving such notice; upon receipt of such notice the
Participant's Authorization, interest in the Plan and Option under the Plan
shall terminate. If the Company does not receive such notice prior to the next
Date of Exercise, the Participant's Option shall be deemed to have been
exercised on such Date of Exercise.
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7. RESTRICTION UPON ASSIGNMENT
An Option granted under the Plan shall not be transferable other than by
will or the laws of descent and distribution, and is exercisable during the
Participant's lifetime only by the Participant. Except as provided in Section
6(c) hereof, an Option may not be exercised to any extent except by the
Participant. The Company shall not recognize and shall be under no duty to
recognize any assignment or alienation of the Participant's interest in the
Plan, the Participant's Option or any rights under the Participant's Option.
8. NO RIGHTS OF STOCKHOLDERS UNTIL CERTIFICATE ISSUED
With respect to shares of Stock subject to an Option, a Participant shall
not be deemed to be a stockholder of the Company, and the Participant shall not
have any of the rights or privileges of a stockholder, until a certificate for
such shares has been issued to the Participant following exercise of the
Participant's Option. No adjustments shall be made for dividends (ordinary or
extraordinary, whether in cash securities, or other property) or distribution or
other rights for which the record date occurs prior to the date such certificate
is issued, except as otherwise expressly provided herein.
9. CHANGES IN THE STOCK; ADJUSTMENTS OF AN OPTION
Whenever any change is made in the Stock or to Options outstanding under
the Plan, by reason of a stock split, stock dividend, recapitalization or other
subdivision, combination, or reclassification of shares, appropriate action
shall be taken by the Committee to adjust accordingly the number of shares of
Stock subject to the Plan and the number and the Option Price of shares of Stock
subject to the Options outstanding under the Plan to preserve, but not increase,
the rights of Participants hereunder.
10. USE OF FUNDS; NO INTEREST PAID
All funds received or held by the Company under the Plan shall be included
in the general funds of the Company free of any trust or other restriction and
may be used for any corporate purpose. No interest will be paid to any
Participant or credited to any Participant's account under the Plan with respect
to such funds.
11. AMENDMENT OF THE PLAN
The Board of Directors may amend, suspend, or terminate the Plan at any
time and from time to time, provided that approval by a vote of the holders of
more than 50% of the outstanding shares of the Company's capital stock entitled
to vote shall be required to amend the Plan (i) to change the number of shares
of Stock reserved for sale pursuant to Options under the Plan, (ii) to decrease
the Option Price below a price computed in the manner stated in Section 4(b)
hereof, (iii) to alter the requirements for eligibility to participate in the
Plan or (iv) in any manner that would cause the Plan to no longer be an
"employee stock purchase plan" within the meaning of Section 423(b) of the Code.
12. ADMINISTRATION BY COMMITTEE; RULES AND REGULATIONS
(a) Appointment of Committee. The Plan shall be administered by the
Committee, which shall be composed of not less than two members of the Board of
Directors, none of whom shall be eligible to serve on the Committee unless such
member is then a "disinterested person" within the meaning of paragraph (d)(3)
of Rule 16b-3 which has been adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended, if and as such rule is
then in effect. Each member of the Committee shall serve for a term commencing
on a date specified by the Board of Directors and continuing until the member
dies or resigns or is removed from office by the Board of Directors.
(b) Duties and Powers of Committee. It shall be the duty of the Committee
to conduct the general administration of the Plan in accordance with the
provisions of the Plan. The Committee shall have the power to interpret the
Plan and the terms of the Options and to adopt such rules for the
administration, interpretation, and
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application of the Plan as are consistent therewith and to interpret, amend or
revoke any such rules. In its absolute discretion, the Board may at any time
and from time to time exercise any and all rights and duties of the Committee
under the Plan.
(c) Majority Rule. The Committee shall act by a majority of its members in
office. The Committee may act either by vote at a meeting or by a memorandum or
other written instrument signed by a majority of the Committee.
(d) Compensation; Professional Assistance; Good Faith Actions. All expenses
and liabilities incurred by members of the Committee in connection with the
administration of the Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company and its
officers and directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon all Participants, the Company and all other interested persons. No member
of the Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Options, and
all members of the Committee shall be fully protected by the Company in respect
to any such action, determination, or interpretation.
13. NO RIGHTS AS AN EMPLOYEE
Nothing in the Plan shall be construed to give any person (including any
Eligible Employee or Participant) the right to remain in the employ of the
Company, a Parent Corporation or a Subsidiary Corporation or to affect the right
of the Company, any Parent Corporation or any Subsidiary Corporation to
terminate the employment of any person (including any Eligible Employee or
Participant) at any time, with or without cause.
14. MERGER, ACQUISITION OR LIQUIDATION OF THE COMPANY
In the event of the merger or consolidation of the Company into another
corporation, the acquisition by another corporation of all or substantially all
of the Company's assets or 50% or more of the Company's then outstanding voting
stock, the liquidation or dissolution of the Company or any other reorganization
of the Company, the Date of Exercise with respect to outstanding Options shall
be the business day immediately preceding the effective date of such merger,
consolidation, acquisition, liquidation, dissolution, or reorganization unless
the Committee shall, in its sole discretion, provide for the assumption or
substitution of such Options in a manner complying with Section 424(a) of the
Code.
15. TERM; APPROVAL BY STOCKHOLDERS
No Option may be granted during any period of suspension of the Plan or
after termination of the Plan. The Plan shall be submitted for the approval of
the Company's stockholders within 12 months after the date of the Board of
Directors' adoption of the Plan. Options may be granted prior to such
stockholder approval; provided, however, that such Options shall not be
exercisable prior to the time when the Plan is approved by the stockholders; and
provided, further, that if such approval has not been obtained by the end of
said 12-month period, all Options previously granted under the Plan shall
thereupon expire.
16. EFFECT UPON OTHER PLANS
The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company, any Parent Corporation or any
Subsidiary Corporation. Nothing in this Plan shall be construed to limit the
right of the Company, any Parent Corporation or any Subsidiary Corporation (a)
to establish any other forms of incentives or compensation for employees of the
Company, any Parent Corporation or any Subsidiary Corporation or (b) to grant or
assume options otherwise than under this Plan in connection with any proper
corporate purpose, including, but not by way of limitation, the grant or
assumption of options in connection with the acquisition, by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.
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17. CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES.
The Company shall not be required to issue or deliver any certificate or
certificates for shares of Stock purchased upon the exercise of Options prior to
fulfillment of all the following conditions:
(a) The admission of such shares to listing on all stock exchanges, if
any, on which is then listed; and
(b) The completion of any registration or other qualification of such
shares under any state or federal law or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental
regulatory body, which the Committee shall, in its absolute discretion,
deem necessary or advisable; and
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The payment to the Company of all amounts which it is required to
withhold under federal, state or local law upon exercise of the Option; and
(e) The lapse of such reasonable period of time following the exercise
of the Option as the Committee may from time to time establish for reasons
of administrative convenience.
18. NOTIFICATION OF DISPOSITION
Each Participant shall give prompt notice to the Company of any disposition
or other transfer of any shares of Stock purchased upon exercise of an Option if
such disposition or transfer is made (a) within two (2) years from the Date of
Grant of the Option or (b) within one (1) year after the transfer of such shares
to such Participant upon exercise of such Option. Such notice shall specify the
date of such disposition or other transfer and the amount realized, in cash,
other property, assumption of indebtedness or other consideration, by the
Participant in such disposition or other transfer.
19. NOTICES
Any notice to be given under the terms of the Plan to the Company shall be
addressed to the Company in care of its Secretary and any notice to be given to
any Eligible Employee or Participant shall be addressed to such Employee at such
Employee's last address as reflected in the Company's records. By a notice
given pursuant to this Section, either party may designate a different address
for notices to be given to it, him or her. Any notice which is required to be
given to an Eligible Employee or a Participant shall, if the Eligible Employee
or Participant is then deceased, be given to the Eligible Employee's or
Participant's personal representative if such representative has previously
informed the Company of his status and address by written notice under this
Section. Any notice shall have been deemed duly given if enclosed in a properly
sealed envelope or wrapper addressed as aforesaid at the time it is deposited
(with postage prepaid) in a post office or branch post office regularly
maintained by the United States Postal Service.
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20. HEADINGS
Headings are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of the Plan.
* * * * * * *
I hereby certify that the foregoing Plan was adopted by the Board of
Directors of Tuboscope Vetco International Corporation on March 23, 1993.
Executed as of this 23rd day of March, 1993.
/s/James F. Maroney, III
------------------------
James F. Maroney, III,
Vice President, Secretary
and General Counsel
* * * * * * *
I hereby certify that the foregoing Plan was approved by the stockholders
of Tuboscope Vetco International Corporation on May 11, 1993.
Executed at Houston, Texas on this 11th day of May, 1993.
/s/James F. Maroney, III
------------------------
James F. Maroney, III,
Vice President, Secretary
and General Counsel
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