Exhibit 10.6

AMENDMENT AND RESTATEMENT OF THE
VARCO INTERNATIONAL, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(Effective as of November 15, 2001)

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AMENDMENT AND RESTATEMENT OF THE

VARCO INTERNATIONAL, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(Effective as of November 15, 2001)

ARTICLE I
PURPOSE AND DEFINITIONS

          1.01     Purpose and Effect of Amendments.  The purpose of this VARCO
INTERNATIONAL, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (the “Plan”) is to
provide supplemental pension benefits to certain employees of VARCO
INTERNATIONAL, INC. (the “Company”).  The Plan was originally effective
January 1, 1991, and replaced and superseded any prior non-qualified
Supplemental Executive Retirement Plans then in effect.

          Pursuant to the Agreement and Plan of Merger, dated as of March 22,
2000, between Tuboscope Inc., a Delaware corporation (“Tuboscope”), and Varco
International, Inc., a California corporation (“Old Varco”), Old Varco was
merged with and into Tuboscope effective as of May 30, 2000.  Effective upon the
merger, Tuboscope, as successor to the merger, was renamed “Varco International
Inc.” and succeeded to the obligations of Old Varco under the Plan.  The
“Company,” as used herein, refers to Varco International, Inc., a Delaware
corporation and the surviving corporation in such merger on and after May 30,
2000 and refers to Old Varco before May 30, 2000.

          The Plan is hereby amended and restated effective as of November 15,
2001 (the “Effective Date”).  The terms of the Plan, as so amended and restated
on the Effective Date, shall apply to each Participant who is an employee of the
Company or one of its subsidiaries on or after the Effective Date and is listed
on Exhibit A hereto.  The terms of the Plan in effect prior to the Effective
Date shall continue to apply to all other Participants in the Plan and listed on
Exhibit B hereto.

          1.02     Definitions.  The following terms have the meanings set forth
below.

 

(a)

“Administrator” means the officer or officers to which administrative duties and
responsibilities under the Plan may be delegated by the Committee under
Article V.

 

 

 

 

(b)

“Board” means the Board of Directors or governing body that has the authority to
bind the Company.

 

 

 

 

(c)

“Change in Control” means (i) any person or persons acting in concert becoming
the beneficial owner, directly or indirectly, of securities of the Company
representing forty (40%) percent or more of the total voting power of all of its
then outstanding voting securities, (ii) a merger or consolidation of the
Company in which (x) the voting securities of the Company immediately prior to
the merger or consolidation do not represent, or are not converted into,
securities that represent, a majority of the voting power of all voting
securities of the surviving entity immediately after the merger or consolidation
or (y) individuals who were directors of the Company immediately prior to the
effectiveness of such merger or

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consolidation do not constitute a majority of the Board of Directors of the
surviving entity immediately after the merger or consolidation, (iii) a sale of
substantially all of the assets of the Company (other than a sale to one or more
subsidiaries of the Company), (iv) a liquidation or dissolution of the Company,
or (v) individuals who, as of May 18, 2000, constituted the Board of Directors
(the “Incumbent Board”) cease (for any reason other than death) to constitute at
least a majority of such Board; provided that any individual who becomes a
director of the Company subsequent to May 18, 2000, whose election, or
nomination for election by the Company’s stockholders, was approved by the vote
of at least a majority of the directors then in office shall be deemed a member
of the Incumbent Board.

 

 

 

 

(d)

“Committee” means the Compensation Committee of the Board of Directors in charge
of administering the Plan, as provided in Article V.

 

 

 

 

(e)

“Company” means Varco International Inc., a Delaware corporation, and any
successor entity.

 

 

 

 

(f)

“Disability” means a physical or mental condition sufficient to initially
qualify the Participant for benefits pursuant to the terms of the Company’s
group long-term disability insurance plans then in force and effect.

 

 

 

 

(g)

“Early Retirement” means the date a Participant retires from employment with the
Company and its subsidiaries after attaining age 55 (and prior to attaining age
65).

 

 

 

 

(h)

“Normal Retirement” means the date a Participant retires from employment with
the Company and its subsidiaries after attaining age 65.

 

 

 

 

(i)

“Participant” means an employee who has met the participation requirements of
Article II of this Plan.

 

 

 

 

(j)

“Plan” means the Amendment and Restatement of the Varco International, Inc.
Supplemental Executive Retirement Plan, as contained herein, as the same may be
amended and/or restated from time to time.

 

 

 

 

(k)

“Retirement” means a Participant’s Early Retirement or Normal Retirement.

 

 

 

 

(l)

“Spouse” means the person to whom benefits under this Plan are to be paid in the
event of the death of the Participant, in the following order:  (i) the spouse
of a Participant who is legally married to the Participant on the date of the
Participant’s death, and if no person is so legally married to the Participant
at such time or in the event of the prior death of the spouse of the
Participant; then (ii) to the beneficiary designated by the Participant on any
Company approved form, and if no beneficiary has been so designated; then (iii)
to the person(s) entitled to benefits under the Participant’s will or the laws
of descent and distribution, as applicable.

 

 

 

 

(m)

“Trust Agreement” means the agreement, if any, reached between the Company and
the Trustee for the administration of the Trust Fund.

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(n)

“Trust” means the trust, if any, established by the Company for purposes of
holding all contributions used to fund the benefits provided by the Plan.

 

 

 

 

(o)

“Trustee” means the Trustee named in the Trust Agreement, or any successor
thereof.

 

 

 

 

(p)

“Years of Service” means, with respect to a Participant, the number of calendar
years in which such Participant completes 1,000 or more hours of service as an
employee with the Company and/or its subsidiaries.  For purposes of this
subsection, a Participant’s employment with Tuboscope and its subsidiaries (and
their predecessors), or a Participant’s employment with Old Varco and its
subsidiaries (and their predecessors) prior to May 30, 2000, shall be treated as
employment with the Company and its subsidiaries.

ARTICLE II
ELIGIBILITY AND PARTICIPATION

          2.01     Eligibility.  Each employee who is an executive officer of
the Company and is designated by the Board for eligibility in this Plan will be
eligible to become a Participant with respect to the benefits provided under
Article III.

          2.02     Participation.  Each employee who is eligible to become a
Participant under Section 2.01 will become a Participant at the time he is
designated a Participant by the Board and such employee acknowledges the terms
of such employee’s participation in the Plan in writing on a form provided by
the Committee. 

          In addition, the employees who hold the following positions on the
Effective Date shall become Participants effective as of the Effective Date: 
Chairman and Chief Executive Officer; President and Chief Operating Officer;
Executive Vice President and Chief Financial Officer; President, Drilling
Equipment; President, Services; Vice President and General Counsel; Vice
President, Human Resources and Administration; and Vice President, Corporate
Development.  The employees who hold such positions as executive officers of the
Company as of the Effective Date are listed on Exhibit A hereto. 

          2.03     Termination of Participation.  A Participant’s participation
hereunder will terminate when all of his benefits under the Plan have been paid
in full.

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ARTICLE III
BENEFITS

          3.01     Benefits for Normal Retirement 

 

(a)

Upon Normal Retirement, each Participant shall have a nonforfeitable right to
receive a supplemental pension benefit of an annual fixed dollar amount equal to
50% of the average of such Participant’s highest (not necessarily consecutive)
five calendar years of base salary from the Company and/or its subsidiaries,
except as provided in Section 3.02(c).  The base salary of a Participant for
employment during any calendar year that is greater than six months but less
than the full calendar year shall be annualized for purposes of these
calculations.  For example, if an Employee who is 100% vested and who turns 65
on August 1, 1997, wants to retire at that time, and he earned a base salary of
$110,000 in 1993, $115,000 in 1994, $120,000 in 1995, $125,000 in 1996, and
$130,000 annualized for 1997, for a total of $600,000.  His average base salary
for his highest five calendar years would be $120,000.  His annual benefit would
be 50% of $120,000 or $60,000 ($5,000 per month).  This annual benefit is a
guaranteed benefit payable for 120 months to the Participant and, in the event
of his death prior to receiving 120 payments, the remaining payments would
continue to his Spouse until a total of 120 payments have been made. 
Notwithstanding the forgoing, if the Participant is hired after attaining age
50, the amount otherwise payable shall be multiplied by a fraction in which the
numerator is Years of Service at Normal Retirement and the denominator is 15.

 

 

 

 

(b)

For purposes of this Section, a Participant’s base salary from employment with
Tuboscope and its subsidiaries (and their predecessors), or from Old Varco and
its subsidiaries prior to May 30, 2000, shall be treated as base salary from the
Company and its subsidiaries (and their predecessors).

          3.02     Benefits for Early Retirement or Termination of Employment
Prior to Normal Retirement

 

(a)

Upon Early Retirement, or other termination of employment prior to reaching
Normal Retirement, each Participant shall have a non-forfeitable right to
receive the vested portion of the benefit for Normal Retirement set forth in
Section 3.01, except that such benefit shall be pro-rated for actual service by
multiplying the benefit determined pursuant to Section 3.01 by a fraction:  The
numerator of this fraction is Years of Service at the earlier of Early
Retirement or other termination of employment, and the denominator is Years of
Service at age 65 (determined assuming that such Participant accrued a Year of
Service for the calendar year of such Participant’s Early Retirement or other
termination of employment and each subsequent calendar year until age 65).

 

 

 

 

(b)

The pro-rated benefit provided by Section 3.02(a) shall be payable at age 65,
unless the Participant reaches age 55 and elects to begin receiving his benefit
at or after that time.  If a Participant elects to begin receiving his benefit
at or after age 55 and prior to age 65, such benefit shall be further reduced by
5% per year compounded, for each year benefits commence prior to age 65.  Such
5% per year

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reduction shall be applied pro-rata on a monthly basis for any period of less
than a year.

 

 

 

 

(c)

Notwithstanding anything herein to the contrary, in the event of a termination
of employment of a Participant prior to reaching Normal Retirement or in the
event of the Early Retirement of a Participant, in each case, following a Change
in Control:

 

 

 

 

 

(i)

for a Change in Control that occurs in the period from January 1, 2001 through
and including January 1, 2006, such Participant’s benefits hereunder shall be
determined based on 50% of the greater of:  (A) the average of such
Participant’s highest five (not necessarily consecutive) calendar years of base
salary as determined in accordance with Section 3.01(a) above; or (B) the
average of such Participant’s base salary since January 1, 2001; and

 

 

 

 

 

 

(ii)

such Participant’s benefits hereunder shall not be prorated for service as
described above in Section 3.02 (a).  However, in the event any payments
hereunder will be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended, and the Company has not agreed to
reimburse such Participant (or otherwise compensate or make such Participant
whole) for such excise taxes levied against the benefit payable to such
Participant, the value of the increase in such benefit due to no prorating
pursuant to 3.02(a) shall not be greater than three times such Participant’s
base salary; and

 

 

 

 

 

 

(iii)

Section 3.02(b) shall apply to such Participant.  Thus, benefits shall be
payable at age 65 unless such Participant elects payment at or after age 55
pursuant to Section 3.02(b), in which case such Participant’s benefits shall be
subject to the proration for early payments provided in Section 3.02(b).

          3.03     Benefits for Death.   In the event of the death of the
Participant while employed, the Participant’s Spouse shall have a
non-forfeitable right to receive the Participant’s Normal Retirement benefit
(not prorated pursuant to Section 3.02(a)) pursuant to Section 3.01, commencing
at the time of death.

          3.04     Benefits for Long-Term Disability.  In the event of the
Participant’s Disability while employed, the Participant shall have a
non-forfeitable right to receive the same benefit as a Normal Retirement benefit
(not prorated pursuant to Section 3.02 (a)) pursuant to Section 3.01, but
payable at age 65 or death, if earlier.  If the Participant recovers from
Disability before reaching age 65, he will be treated as Retired on the date of
his recovery, unless he returns to work with the Company at such time.

          3.05     Benefit upon Termination of Supplemental Executive Retirement
Plan.  In the event of the termination of the Plan, each eligible Participant
shall have a non-forfeitable right to receive the same benefits as if the Plan
was not terminated.

          3.06     Time and Manner of Payment.   The benefits payable under the
Plan will be paid as set forth herein:

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(a)

Normal Retirement.  The benefit for Normal Retirement pursuant to Section 3.01
shall be payable in monthly installments beginning at age 65 for a period of 120
months guaranteed.  If a Participant dies before receiving 120 total payments,
the Participant’s Spouse shall continue to receive payments until 120 payments
have been made.

 

 

 

 

(b)

Early Retirement, Termination of Employment.  The benefit for Early Retirement
or termination of employment pursuant to Section 3.02 shall be payable in
monthly installments for a period of 120 months guaranteed, beginning at age 65
or at such time the Participant elects earlier payments pursuant to Section
3.02(b).  If a Participant dies before receiving 120 total payments, the
Participant’s Spouse shall continue to receive payments until 120 payments have
been made.

 

 

 

 

(c)

Death. The benefit for Death pursuant to Section 3.03 shall be payable in
monthly installments to the Participant’s Spouse beginning at the Participant’s
death, for a period of 120 months guaranteed.

 

 

 

 

(d)

Long-Term Disability.  The benefit for Disability pursuant to Section 3.04 shall
be payable in monthly installments beginning at age 65 or the Participant’s
death, if earlier, for a period of 120 months guaranteed.  If the Participant
dies before receiving 120 total payments, the Participant’s Spouse shall
continue to receive payments until 120 payments have been made.

          3.07     Funding of Benefits.  The benefits payable under the Plan may
be funded by periodic contributions to a Trust based upon determinations made by
an actuary.

ARTICLE IV
VESTING

          4.01     Vesting.  If a Participant’s employment service is terminated
prior to Normal Retirement, he shall be entitled to receive the vested
percentage of his benefits pursuant to Article III in accordance with the
following schedule:

Years of Service

 

Vested
Percentage

 

Forfeited
Percentage

 

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Less than 1
 

 

0

%

 

100

%

1 but less than 2
 

 

10

%

 

90

%

2 but less than 3
 

 

20

%

 

80

%

3 but less than 4
 

 

30

%

 

70

%

4 but less than 5
 

 

40

%

 

60

%

5 but less than 6
 

 

50

%

 

50

%

6 but less than 7
 

 

60

%

 

40

%

7 but less than 8
 

 

70

%

 

30

%

8 but less than 9
 

 

80

%

 

20

%

9 but less than 10
 

 

90

%

 

10

%

10 or more
 

 

100

%

 

0

%

Notwithstanding the forgoing, in the event of a Change in Control, the
Participant shall be 100% vested in his benefit payable pursuant to Article III.

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ARTICLE V
ADMINISTRATION

          5.01     Administrative Powers and Duties.  The Committee shall
administer the Plan.  The Committee may authorize one or more officers of the
Company to act on behalf of the Committee with respect to administration of the
Plan (the “Administrator”), in coordination with and under the direction of the
Committee. All policy and discretionary decisions will be the responsibility of
the Committee, and the Administrator will act under the direction of the
Committee.  The Committee and Administrator will adopt rules that are consistent
with Plan provisions.

          The Committee and/or the Administrator may retain auditors,
accountants, legal counsel, and any other counsel it selects.  A Committee
member or Administrator may himself act in any such capacity, acting in a
similar capacity for the Company, and may be an employee of the Company.  The
opinion of any such auditor, accountant, legal counsel, or other counsel will be
full and complete authority, and the Committee and Administrator will be
protected in respect to any action it takes or omits in good faith and in
accordance with such opinion.

          The Board may assume any or all of the responsibilities and powers of
the Committee under the Plan at any time and from time to time.  If a Committee
or Board member is a Participant, he will not be allowed to vote on any decision
that applies only to him or his Plan benefits.

          5.02     Expenses.  The Company will pay or reimburse the Committee
and/or Administrator, as applicable, for all reasonable expenses incurred by the
Committee and Administrator in the administration of the Plan, including the
fees and compensation for the persons referred to in the second paragraph of
Section 6.01.

ARTICLE VI
MISCELLANEOUS PROVISIONS

          6.01     Employment and Other Rights.  Nothing contained herein will
require the Company to continue any Participant in its employ, or require any
Participant to continue in the employ of the Company, nor does the Plan create
any rights of any Participant or Spouse, nor any obligations on the part of the
Company, other than those set forth herein.  The benefits payable under this
Plan will be independent of, and in addition to, any other agreements that may
exist from time to time concerning any other compensation or benefits payable by
the Company.

          6.02     Right to Benefits.  The sole interest of each Participant and
each Beneficiary of a Participant under the Plan will be to receive the benefit
provided herein as and when the same becomes due and payable in accordance with
the terms hereof, and neither any Participant nor any Beneficiary of the
Participant will have any right, title, or interest in or to any of the specific
assets of the company.  All benefits hereunder will be paid solely from the
general assets of the Company, and the Company will not maintain any separate
fund or other segregated assets to provide any benefits hereunder.  In no manner
will any assets of the Company be deemed or construed through any of the
provisions of this Plan to be held in trust for the benefit of any Participant
or  Spouse or to be collateral security for the performance of the obligations
imposed by this Plan on the Company.  The rights of any Participant hereunder
and any Spouse of the Participant will be solely those of a general unsecured
creditor of the Company.

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          6.03     Amendment and Termination.  While the Company hopes to
continue this Plan indefinitely, the Plan may be amended, suspended, or
terminated at any time by the Board or the Committee.  In the event it should at
any time be determined for any reason by an applicable agency of the United
States government or by any court of applicable jurisdiction that the Plan does
not qualify for the exclusion of ERISA Sections 201(2), 301(a)(3), and
401(a)(1), the affected portion of the Plan will be deemed terminated as of the
date of such determination unless alternative action is taken by the Board. 
Notwithstanding the foregoing, no such amendment, suspension or termination of
the Plan may in any way adversely alter or impair any of the rights of the then
existing Participants under the Plan.

          6.04     No Duty to Mitigate.  No Participant shall be required to
mitigate the amount of any benefit provided for in this Plan by seeking other
employment or otherwise, nor shall the amount of any benefit provided for in
this Plan be reduced by any compensation earned or benefit received by a
Participant as a result of employment, self-employment, retirement benefits or
by offset against any amount claimed to be owed by Participant to the Company or
otherwise.

{Signature Page follows}

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IN WITNESS WHEREOF, the Company has caused this amendment and restatement of the
Plan to be signed by it duly authorized officer to be effective as of November
15, 2001.

 

VARCO INTERNATIONAL, INC.

 

 

 

 

By:

/s/  GEORGE BOYADJIEFF

 

 

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George Boyadjieff,

 

 

Chairman of the Board and Chief Executive Officer

And:

 /s/  JOHN F. LAULETTA

 

 

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John F. Lauletta,

 

 

President and Chief Operating Officer

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EXHIBIT A

AMENDMENT AND RESTATEMENT OF THE
VARCO INTERNATIONAL, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(Effective as of November 15, 2001)

Executive Officers of the Company who are Participants as of the Effective Date
and are entitled to the benefits set forth in this Amendment and Restatement
of the Supplemental Executive Retirement Plan (Effective as of November 15,
2001)

George Boyadjieff

John F. Lauletta

Joseph C. Winkler

Michael W. Sutherlin

Haynes B. Smith

James F. Maroney, III

Kenneth L. Nibling

Clay C. Williams

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EXHIBIT B

AMENDMENT AND RESTATEMENT OF THE
VARCO INTERNATIONAL, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(Effective as of November 15, 2001)

Other Participants Who Are Entitled Only To the Benefits set forth in
the Supplemental Executive Retirement Plan prior to its
Amendment and Restatement Effective as of November 15, 2001

Roderick Abbott

Robert DeVries

Robert Gondek

Mark Merit

Roger Morgan

Jerry Gill

Theresa Hope-Reese

Maurice Jacques

Richard Kertson

Donald Stichler