Exhibit 4.3
NONQUALIFIED STOCK OPTION AGREEMENT
FOR INDEPENDENT DIRECTORS
THIS AGREEMENT, dated ____________, 19__, is made by and between Tuboscope
Vetco International Corporation, a Delaware corporation hereinafter referred to
as "Company," and _________________________, an independent director of the
Company or Subsidiary of the Company, hereinafter referred to as "Optionee":
WHEREAS, the Company wishes to afford the Optionee the opportunity to
purchase shares of its $.01 par value Common Stock;
WHEREAS, the Company wishes to carry out its 1996 Equity Participation Plan
(the terms of which are hereby incorporated by reference and made a part of this
Agreement); and
WHEREAS, the Committee, appointed to administer the Plan, has determined
that it would be to the advantage and best interest of the Company and its
stockholders to grant the Non-Qualified Option provided for herein to the
Optionee as an inducement to enter into or remain in the service of the Company
or its Subsidiaries and as an incentive for increased efforts during such
service, and has advised the Company thereof and instructed the undersigned
officers to issue said Option.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
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Whenever the following terms are used in this Agreement, they shall have
the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
Section 1.1 - Board
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"Board" shall mean the Board of Directors of the Company.
Section 1.2 - Code
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"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.3 - Committee
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"Committee" shall mean the Compensation Committee of the Board, or a
subcommittee of the Board, appointed as provided in Section 9.1 of the Plan.
Section 1.4 - Common Stock
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"Common Stock" shall mean the common stock of the Company, par value $.01
per share, and any equity security of the Company issued or authorized to be
issued in the future, but excluding any warrants, options or other rights to
purchase Common Stock. Debt securities of the Company convertible into Common
Stock shall be deemed equity securities of the Company.
Section 1.5 - Company
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"Company" shall mean Tuboscope Vetco International Corporation, a Delaware
corporation.
Section 1.6 - Director
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"Director" shall mean a member of the Board.
Section 1.7 - Employee
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"Employee" shall mean any officer or other employee (as defined in
accordance with Section 3401(c) of the Code) of the Company, or of any
corporation which is a Subsidiary.
Section 1.8 - Exchange Act
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
Section 1.9 - Fair Market Value
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"Fair Market Value" of a share of Common Stock as of a given date shall be
(i) the closing price of a share of Common Stock on the principal exchange on
which shares of Common Stock are then trading, if any (or as reported on any
composite index which includes such principal exchange), on the trading day
previous to such date, or if shares were not traded on the trading day previous
to such date, then on the next preceding date on which a trade occurred, (ii) if
Common Stock is not traded on an exchange but is quoted on Nasdaq or a successor
quotation system, the mean between the closing representative bid and asked
prices for the Common Stock on the trading day previous to such date as reported
by Nasdaq or such successor quotation system, or (iii) if Common Stock is not
publicly traded on an exchange and not quoted on Nasdaq or a successor quotation
system, the Fair Market Value of a share of Common Stock as established by the
Committee (or the Board, in the case of Options granted to Independent
Directors) acting in good faith.
Section 1.10 - Independent Director
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"Independent Director" shall mean a member of the Board who is not an
Employee of the Company.
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Section 1.11 - Option
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"Option" shall mean a non-qualified stock option granted under this
Agreement and Article III of the Plan.
Section 1.12 - Optionee
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"Optionee" shall mean an Independent Director granted an Option under this
Agreement and the Plan.
Section 1.13 - Plan
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"Plan" shall mean The 1996 Equity Participation Plan of Tuboscope Vetco
International Corporation.
Section 1.14 - Rule 16b-3
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"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act, as
such Rule may be amended from time to time.
Section 1.15 - Secretary
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"Secretary" shall mean the Secretary of the Company.
Section 1.16 - Securities Act
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"Securities Act" shall mean the Securities Act of 1933, as amended.
Section 1.17 - Subsidiary
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"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then 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.
Section 1.18 - Termination of Directorship
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"Termination of Directorship" shall mean the time when the Optionee ceases
to be a Director for any reason, including, but not by way of limitation, a
termination by resignation, failure to be elected, death or retirement. The
Board, in its sole and absolute discretion, shall determine the effect of all
matters and questions relating to Termination of Directorship.
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ARTICLE II
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GRANT OF OPTION
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Section 2.1 - Grant of Option
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In consideration of the Optionee's agreement to serve as an Independent
Director of the Company or its Subsidiaries until the next annual meeting of
stockholders of the Company and for other good and valuable consideration, on
the date hereof the Company irrevocably grants to the Optionee the option to
purchase any part or all of an aggregate of ________ shares of its $.01 par
value Common Stock upon the terms and conditions set forth in this Agreement.
Section 2.2 - Purchase Price
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The purchase price of the shares of stock covered by the Option shall be
$_____ per share (which is the Fair Market Value of a share of Common Stock on
the date of the granting of this Option) without commission or other charge.
Section 2.3 - Consideration to Company
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In consideration of the granting of this Option by the Company, the
Optionee agrees to render faithful and efficient services to the Company or a
Subsidiary, with such duties and responsibilities as the Company shall from time
to time prescribe, until the next annual meeting of stockholders of the Company.
Nothing in the Plan or this Agreement shall confer upon any Optionee any right
to continue as a director of the Company, or shall interfere with or restrict in
any way the rights of the Company and any Subsidiary, which are hereby expressly
reserved, to discharge the Optionee at any time for any reason whatsoever, with
or without good cause.
Section 2.4 - Adjustments in Option
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(a) In the event that the outstanding shares of the stock subject to the
Option are changed into or exchanged for a different number or kind of shares of
the Company or other securities of the Company, or of another corporation, by
reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock splitup, stock dividend or combination of shares, the
Board shall make an appropriate and equitable adjustment in the number and kind
of shares as to which the Option, or portions thereof then unexercised, shall be
exercisable, to the end that after such event the Optionee's proportionate
interest shall be maintained as before the occurrence of such event. Such
adjustment in the Option may include any necessary corresponding adjustment in
the Option price per share, but shall be made without change in the total price
applicable to the unexercised portion of the Option (except for any change in
the aggregate price resulting from rounding-off of share quantities or prices).
Any such adjustment made by the Board shall be final and binding upon the
Optionee, the Company and all other interested persons.
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(b) Notwithstanding the foregoing, in the event of such a reorganization,
merger, consolidation, recapitalization, reclassification, stock splitup, stock
dividend or combination, or other adjustment or event which results in shares of
Common Stock being exchanged for or converted into cash, securities (including
securities of another corporation) or other property, the Company will have the
right to terminate the Plan as of the date of the exchange or conversion, in
which case all options, rights and other awards under the Plan shall become the
right to receive such cash, securities or other property, net of any applicable
exercise price.
(c) In the event of a "spin-off" or other substantial distribution of
assets of the Company which has a material diminutive effect upon the Fair
Market Value of the Company's Common Stock, the Board may in its discretion make
an appropriate and equitable adjustment to the Option to reflect such diminution
in accordance with Section 10.3 of the Plan.
ARTICLE III
PERIOD OF EXERCISABILITY
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Section 3.1 - Commencement of Exercisability
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(a) Subject to Section 5.6, the Option shall become exercisable in four (4)
cumulative installments as follows:
(i) The first installment shall consist of twenty-five percent (25%) of the
shares covered by the Option and shall become exercisable on the first
anniversary of the date the Option is granted.
(ii) The second installment shall consist of twenty-five percent (25%) of
the shares covered by the Option and shall become exercisable on the second
anniversary of the date the Option is granted.
(iii) The third installment shall consist of twenty-five percent (25%) of
the shares covered by the Option and shall become exercisable on the third
anniversary of the date the Option is granted.
(iv) The fourth installment shall consist of twenty-five percent (25%) of
the shares covered by the Option and shall become exercisable on the fourth
anniversary of the date the Option is granted.
(b) No portion of the Option which is unexercisable at Termination of
Directorship shall thereafter become exercisable.
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Section 3.2 - Duration of Exercisability
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The installments provided for in Section 3.1 are cumulative. Each such
installment which becomes exercisable pursuant to Section 3.1 shall remain
exercisable until it becomes unexercisable under Section 3.3.
Section 3.3 - Expiration of Option
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The Option may not be exercised to any extent by anyone after the first to
occur of the following events:
(a) The expiration of ten (10) years from the date the Option was granted;
(b) The expiration of three (3) months from the date of the Optionee's
Termination of Directorship for any reason other than such Optionee's death or
permanent and total disability (within the meaning of Section 22(e)(3) of the
Code), unless the Optionee dies within said three-month period;
(c) The expiration of one (1) year from the date of the Optionee's
Termination of Directorship by reason of such Optionee's permanent and total
disability;
(d) The expiration of one (1) year from the date of the Optionee's death;
or
(e) The effective date of either the merger or consolidation of the Company
with or into another corporation, the exchange of all or substantially all of
the assets of the Company for the securities of another corporation, the
acquisition by another corporation or person of all or substantially all of the
Company's assets or eighty percent (80%) or more of the Company's then
outstanding voting stock, or the liquidation or dissolution of the Company,
unless the Board waives this provision in connection with such transaction and
such waiver is consistent with Rule 16b-3; provided, however, that any Option
granted or deemed regranted within six months of such merger, consolidation
acquisition or other event listed above shall remain exercisable until the
expiration of six months and one day from the later of the date such Option was
granted or the date such Option was deemed regranted. At least ten (10) days
prior to the effective date of such merger, consolidation, exchange,
acquisition, liquidation or dissolution, the Committee shall give the Optionee
notice of such event if the Option has then neither been fully exercised nor
become unexercisable under this Section 3.3.
Section 3.4 - Acceleration of Exercisability
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To the extent consistent with the requirements of Rule 16b-3, in the event
of the merger or consolidation of the Company with or into another corporation,
the exchange of all or substantially all of the assets of the Company for the
securities of another corporation, the acquisition by another corporation or
person of all or substantially all of the Company's assets or eighty percent
(80%) or more of the Company's then outstanding voting stock, or the liquidation
or dissolution of the Company, the Board may, in its absolute discretion and
upon such terms and conditions as it deems appropriate, provide by resolution,
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adopted prior to such event and incorporated in the notice referred to in
Section 3.3(f), that at some time prior to the effective date of such event this
Option shall be exercisable as to all the shares covered hereby, notwithstanding
that this Option may not yet have become fully exercisable under Section 3.1(a).
The Board may make such determinations and adopt such rules and conditions
as it, in its absolute discretion, deems appropriate in connection with such
acceleration of exercisability, including, but not by way of limitation,
provisions to ensure that any such acceleration and resulting exercise shall be
conditioned upon the consummation of the contemplated corporate transaction.
None of the foregoing discretionary terms of this Section shall be
permitted to the extent that such discretion would be inconsistent with the
requirements of Rule 16b-3.
Section 3.5 - Acceleration of Exercisability Upon Retirement
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To the extent consistent with the requirements of Rule 16b-3, this Option
shall be exercisable as to all the shares covered hereby, notwithstanding that
this Option may not yet have become fully exercisable under Section 3.1(a), upon
the retirement of the Optionee in accordance with the Company's retirement
policy applicable to Directors.
ARTICLE IV
EXERCISE OF OPTION
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Section 4.1 - Person Eligible to Exercise
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During the lifetime of the Optionee, only he may exercise the Option or any
portion thereof. After the death of the Optionee, any exercisable portion of
the Option may, prior to the time when the Option becomes unexercisable under
Section 3.3, be exercised by his personal representative or by any person
empowered to do so under the Optionee's will or under the then applicable laws
of descent and distribution.
Section 4.2 - Partial Exercise
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Any exercisable portion of the Option or the entire Option, if then wholly
exercisable, may be exercised in whole or in part at any time prior to the time
when the Option or portion thereof becomes unexercisable under Section 3.3;
provided, however, that each partial exercise shall be for not less than one
hundred (100) shares (or the minimum installment set forth in Section 3.1, if a
smaller number of shares) and shall be for whole shares only.
Section 4.3 - Manner of Exercise
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The Option, or any exercisable portion thereof, may be exercised solely by
delivery to the Secretary or his office of all of the following prior to the
time when the Option or such portion becomes unexercisable under Section 3.3:
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(a) Notice in writing signed by the Optionee or the other person then
entitled to exercise the Option or portion, stating that the Option or portion
is thereby exercised, such notice complying with all applicable rules
established by the Committee or the Board;
(b) (i) Full payment (in cash) for the shares with respect to which such
Option or portion is exercised;
(ii) With the consent of the Board, payment delayed for up to thirty (30)
days from the date the Option, or portion thereof, is exercised;
(iii) With the consent of the Board, (A) shares of the Company's Common
Stock owned by the Optionee duly endorsed for transfer to the Company or (B)
subject to the timing requirements of Section 4.4, shares of the Company's
Common Stock issuable to the Optionee upon exercise of the Option, with a Fair
Market Value on the date of Option exercise equal to the aggregate purchase
price of the shares with respect to which such Option or portion is exercised;
(iv) With the consent of the Board, property of any kind which constitutes
good and valuable consideration;
(v) With the consent of the Board, a full recourse promissory note bearing
interest (at no less than such rate as shall then preclude the imputation of
interest under the Code or successor provision) and payable upon such terms as
may be prescribed by the Committee or the Board. The Committee may also
prescribe the form of such note and the security to be given for such note. The
Option may not be exercised, however, by delivery of a promissory note or by a
loan from the Company when or where such loan or other extension of credit is
prohibited by law; or
(vi) With the consent of the Board, any combination of the consideration
provided in the foregoing subparagraphs (iii), (iv) and (v);
(c) A bona fide written representation and agreement, in a form
satisfactory to the Committee or the Board, signed by the Optionee or other
person then entitled to exercise such Option or portion, stating that the shares
of stock are being acquired for his own account, for investment and without any
present intention of distributing or reselling said shares or any of them except
as may be permitted under the Securities Act and then applicable rules and
regulations thereunder, and that the Optionee or other person then entitled to
exercise such Option or portion will indemnify the Company against and hold it
free and harmless from any loss, damage, expense or liability resulting to the
Company if any sale or distribution of the shares by such person is contrary to
the representation and agreement referred to above. The Committee may, in its
absolute discretion, take whatever additional actions it deems appropriate to
insure the observance and performance of such representation and agreement and
to effect compliance with the Securities Act and any other federal or state
securities laws or regulations. Without limiting the generality of the
foregoing, the Committee may require an opinion of counsel acceptable to it to
the effect that any subsequent transfer of shares acquired on an Option exercise
does not violate the
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Securities Act, and may issue stop-transfer orders covering such shares.
Share certificates evidencing stock issued on exercise of this Option shall
bear an appropriate legend referring to the provisions of this subsection (c)
and the agreements herein. The written representation and agreement referred
to in the first sentence of this subsection (c) shall, however, not be required
if the shares to be issued pursuant to such exercise have been registered under
the Securities Act, and such registration is then effective in respect of
such shares;
(d) Full payment to the Company (or other employer corporation) of all
amounts which, under federal, state or local tax law, it is required to withhold
upon exercise of the Option; with the consent of the Board, (i) shares of the
Company's Common Stock owned by the Optionee duly endorsed for transfer, or (ii)
subject to the timing requirements of Section 4.4, shares of the Company's
Common Stock issuable to the Optionee upon exercise of the Option, having a Fair
Market Value at the date of Option exercise equal to the sums required to be
withheld, may be used to make all or part of such payment; and
(e) In the event the Option or portion shall be exercised pursuant to
Section 4.1 by any person or persons other than the Optionee, appropriate proof
of the right of such person or persons to exercise the Option.
Section 4.4 - Certain Timing Requirements
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Shares of the Company's Common Stock issuable to the Optionee upon exercise
of the Option may be used to satisfy the Option price or the tax withholding
consequences of such exercise only (i) during the period beginning on the third
(3rd) business day following the date of release of the quarterly or annual
summary statement of sales and earnings of the Company and ending on the twelfth
(12th) business day following such date or (ii) pursuant to an irrevocable
written election by the Optionee to use shares of the Company's Common Stock
issuable to the Optionee upon exercise of the Option to pay all or part of the
Option price or the withholding taxes (subject to the approval of the Board)
made at least six (6) months prior to the payment of such Option price or
withholding taxes.
Section 4.5 - Conditions to Issuance of Stock Certificates
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The shares of stock deliverable upon the exercise of the Option, or any
portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such shares shall
be fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of the Option or portion thereof prior to fulfillment of all of the
following conditions:
(a) The admission of such shares to listing on all stock exchanges on which
such class of stock is then listed;
(b) The completion of any registration or other qualification of such
shares under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission or of any other governmental regulatory body,
which the Committee or Board shall, in its absolute discretion, deem necessary
or advisable;
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(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee or Board shall, in its absolute
discretion, determine to be necessary or advisable;
(d) The receipt by the Company of full payment for such shares, including
payment of all amounts which, under federal, state or local tax law, it is
required to withhold upon exercise of the Option; and
(e) The lapse of such reasonable period of time following the exercise of
the Option as the Committee or Board may from time to time establish for reasons
of administrative convenience.
Section 4.6 - Rights as Stockholder
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The holder of the Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares purchasable
upon the exercise of any part of the Option unless and until certificates
representing such shares shall have been issued by the Company to such holder.
ARTICLE V
OTHER PROVISIONS
----------------
Section 5.1 - Administration
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With respect to this Option, the full Board, acting by a majority of its
members in office, shall have the power to interpret the Plan and this Agreement
and to adopt such rules for the administration, interpretation and application
of the Plan as are consistent therewith and to interpret or revoke any such
rules. All actions taken and all interpretations and determinations made by the
Board in good faith shall be final and binding upon the Optionee, the Company
and all other interested persons. No member of the Board shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or the Option.
Section 5.2 - Option Not Transferable
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Neither the Option nor any interest or right therein or part thereof shall
be liable for the debts, contracts or engagements of the Optionee or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that this Section 5.2
shall not prevent transfers by will or by the applicable laws of descent and
distribution.
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Section 5.3 - Shares to Be Reserved
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The Company shall at all times during the term of the Option reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of this Agreement.
Section 5.4 - Notices
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Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary, and any notice to be
given to the Optionee shall be addressed to him at the address given beneath his
signature hereto. By a notice given pursuant to this Section 5.4, either party
may hereafter designate a different address for notices to be given to him. Any
notice which is required to be given to the Optionee shall, if the Optionee is
then deceased, be given to the Optionee's personal representative if such
representative has previously informed the Company of his status and address by
written notice under this Section 5.4. Any notice shall be deemed duly given
when enclosed in a properly sealed envelope or wrapper addressed as aforesaid,
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.
Section 5.5 - Titles
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Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.
Section 5.6 - Shareholder Approval
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The Plan will be submitted for approval by the Company's shareholders
within twelve (12) months after the date the Plan was initially adopted by the
Board. This Option may not be exercised to any extent by anyone prior to the
time when the Plan is approved by the shareholders, and if such approval has not
been obtained by the end of said twelve-month period, this Option shall
thereupon be cancelled and become null and void.
Section 5.7 - Construction
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This Agreement shall be administered, interpreted and enforced under the
laws of the State of Texas.
Section 5.8 - Conformity to Securities Laws
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The Optionee acknowledges that the Plan is intended to conform to the
extent necessary with all provisions of the Securities Act and the Exchange Act
and any and all regulations and rules promulgated by the Securities and Exchange
Commission thereunder, including without limitation Rule 16b-3. Notwithstanding
anything herein to the contrary, the Plan shall be administered, and the Option
is granted and may be exercised, only in such a manner as to conform to such
laws, rules and regulations. To the extent permitted
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by applicable law, the Plan and this Agreement shall be deemed amended to the
extent necessary to conform to such laws, rules and regulations.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.
TUBOSCOPE VETCO INTERNATIONAL
CORPORATION
By:
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President
Date:
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By:
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Secretary
Date:
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Optionee
- -------------------------------
- -------------------------------
Address
Optionee's Taxpayer
Identification Number:
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