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                                                                    EXHIBIT 10.5




                               GRANT PRIDECO, INC.
                           2000 EMPLOYEE STOCK OPTION
                            AND RESTRICTED STOCK PLAN



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                               GRANT PRIDECO, INC.
                           2000 EMPLOYEE STOCK OPTION
                            AND RESTRICTED STOCK PLAN

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                            Section
                                                                                                            -------
ARTICLE I - PLAN
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         Purpose................................................................................................1.1
         Effective Date of Plan.................................................................................1.2


ARTICLE II - DEFINITIONS

         Affiliate..............................................................................................2.1
         Agreement..............................................................................................2.2
         Award..................................................................................................2.3
         Board of Directors.....................................................................................2.4
         Code...................................................................................................2.5
         Committee..............................................................................................2.6
         Company................................................................................................2.7
         Disability.............................................................................................2.8
         Employee...............................................................................................2.9
         Exchange Act..........................................................................................2.10
         Fair Market Value.....................................................................................2.11
         Incentive Stock Option................................................................................2.12
         Nonqualified Stock Option.............................................................................2.13
         Option................................................................................................2.14
         Optionee..............................................................................................2.15
         Plan..................................................................................................2.16
         Restricted Period.....................................................................................2.17
         Restricted Stock......................................................................................2.18
         Restricted Stock Award................................................................................2.19
         Retained Distributions................................................................................2.20
         Stock.................................................................................................2.21
         Ten Percent Shareholder...............................................................................2.22

ARTICLE III - ELIGIBILITY


ARTICLE IV - STOCK SUBJECT TO THE PLAN
</TABLE>



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<TABLE>
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ARTICLE V - GENERAL PROVISIONS RELATING TO ALL OPTIONS

         Authority to Grant Options ............................................................................5.1
         Non-Transferability....................................................................................5.2
         Changes in the Company's Capital Structure.............................................................5.3
         No Rights As a Stockholder.............................................................................5.4
         Tax Withholding........................................................................................5.5


ARTICLE VI - VARIABLE PROVISIONS RELATING TO SPECIFIC OPTIONS

         Option Price...........................................................................................6.1
         Duration of Options....................................................................................6.2
         Maximum Value of Stock Subject to Options Which are Incentive Stock Options............................6.3
         Amount Exercisable.....................................................................................6.4
         Exercise of Options....................................................................................6.5
         Exercise Following Termination of Employment...........................................................6.6
         Substitution Options...................................................................................6.7


ARTICLE VII - GENERAL PROVISIONS RELATING TO ALL RESTRICTED STOCK AWARDS

         Authority to Grant Awards..............................................................................7.1
         Transferability and Rights with Respect to Restricted Stock............................................7.2
         Withholding Tax........................................................................................7.3
         Changes in Company's Capital Structure.................................................................7.4


ARTICLE VIII - VARIABLE PROVISIONS RELATING TO SPECIFIC RESTRICTED STOCK AWARDS

         Vesting of Restricted Stock............................................................................8.1
         Consequence of Vesting.................................................................................8.2


ARTICLE IX - REQUIREMENTS OF LAW


ARTICLE X - ADMINISTRATION


ARTICLE XI - AMENDMENT OR TERMINATION OF PLAN
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<TABLE>
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ARTICLE XII - MISCELLANEOUS

         No Establishment of a Trust Fund......................................................................12.1
         No Employment Obligation..............................................................................12.2
         Written Agreement.....................................................................................12.3
         Indemnification of the Committee and the Board of Directors...........................................12.4
         Gender................................................................................................12.5
         Headings..............................................................................................12.6
         Other Compensation Plans..............................................................................12.7
         Other Awards..........................................................................................12.8
         Section 83(b) Elections...............................................................................12.9
         Distribution Agreement Options.......................................................................12.10
         Governing Law........................................................................................12.11
</TABLE>



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                                    ARTICLE I

                                      PLAN

         1.1 PURPOSE. The Plan is maintained for certain employees of the
Company and its Affiliates and is intended to advance the best interests of the
Company, its Affiliates, and its stockholders by providing those persons who
have substantial responsibility for the management and growth of the Company and
its Affiliates with additional incentives and an opportunity to obtain or
increase their proprietary interest in the Company, thereby encouraging them to
continue in the employ of the Company or any of its Affiliates.

         1.2 EFFECTIVE DATE OF PLAN. The Plan is effective on the effective date
of the distribution by Weatherford International, Inc. to its stockholders of
all the outstanding shares of stock of the Company.


                                   ARTICLE II

                                   DEFINITIONS

         The words and phrases defined in this Article shall have the meaning
set out in these definitions throughout the Plan, unless the context in which
any such word or phrase appears reasonably requires a broader, narrower, or
different meaning.

         2.1 "AFFILIATE" means any parent corporation and any subsidiary
corporation. The term "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 action or transaction, each of the corporations other than the
Company owns stock possessing 50 percent or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain. The
term "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 action or transaction, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other
corporations in the chain.

         2.2 "AGREEMENT" means a written agreement setting forth the terms of an
Award.

         2.3 "AWARD" means an Option or a Restricted Stock Award granted under
the Plan.

         2.4 "BOARD OF DIRECTORS" means the board of directors of the Company.

         2.5 "CODE" means the Internal Revenue Code of 1986, as amended.

         2.6 "COMMITTEE" means the Compensation Committee of the Board of
Directors or other committee designated by the Board of Directors to administer
the Plan.



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         2.7 "COMPANY" means Grant Prideco, Inc.

         2.8 "DISABILITY" means a mental or physical disability which, in the
opinion of a physician selected by the Committee, shall prevent the Employee
from earning a reasonable livelihood with the Company or any Affiliate and which
can be expected to result in death or which has lasted or can be expected to
last for a continuous period of not less than 12 months and which: (a) was not
contracted, suffered or incurred while the Employee was engaged in, or did not
result from having engaged in, a felonious criminal enterprise; (b) did not
result from alcoholism or addiction to narcotics; and (c) did not result from an
injury incurred while a member of the Armed Forces of the United States for
which the Employee receives a military pension.

         2.9 "EMPLOYEE" means a person employed by the Company or any Affiliate.

         2.10 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

         2.11 "FAIR MARKET VALUE" of the Stock as of any date means (a) the
closing sales price of the Stock on that date on the principal securities
exchange on which the Stock is listed; or (b) if the Stock is not listed on a
securities exchange, the average of the high and low bid quotations for the
Stock on that date as reported by the National Association of Securities Dealers
Automated Quotation National Market System; or (c) if neither of the foregoing
is applicable, an amount determined by the Committee in its sole discretion.

         2.12 "INCENTIVE STOCK OPTION" means an Option that is intended by the
Committee to meet the requirements of section 422 of the Code or any successor
provision.

         2.13 "NONQUALIFIED STOCK OPTION" means an Option granted pursuant to
the Plan which does not qualify as an Incentive Stock Option.

         2.14 "OPTION" means the right to purchase Stock at a price to be
specified and upon terms to be designated by the Committee pursuant to the Plan.
An Option shall be designated by the Committee as an Incentive Stock Option or a
Nonqualified Stock Option.

         2.15 "OPTIONEE" means a person to whom an Option is granted.

         2.16 "PLAN" means the Grant Prideco, Inc. 2000 Employee Stock Option
and Restricted Stock Plan, as set out in this document and as it may be amended
from time to time.

         2.17 "RESTRICTED PERIOD" means the period designated by the Committee
during which Restricted Stock may not be sold, assigned, transferred, pledged,
or otherwise encumbered.

         2.18 "RESTRICTED STOCK" means those shares of Stock issued pursuant to
a Restricted Stock Award which are subject to the restrictions, terms, and
conditions set forth in the related Agreement.

         2.19 "RESTRICTED STOCK AWARD" means an award of Restricted Stock
pursuant to Section 7.1.



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         2.20 "RETAINED DISTRIBUTIONS" means any securities or other property
(other than regular cash dividends) distributed by the Company in respect of
Restricted Stock during any Restricted Period.

         2.21 "STOCK" means the common stock of the Company, $.01 par value (or
such other par value as may be designated by act of the Company's stockholders)
or, in the event that the outstanding shares of common stock are later changed
into or exchanged for a different class of stock or securities of the Company or
another corporation, that other stock or security.

         2.22 "TEN PERCENT SHAREHOLDER" means an individual who, at the time the
Option is granted, owns stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or of any
Affiliate. An individual shall be considered as owning the stock owned, directly
or indirectly, by or for his brothers and sisters (whether by the whole or half
blood), spouse, ancestors, and lineal descendants; and stock owned, directly or
indirectly, by or for a corporation, partnership, estate, or trust, shall be
considered as being owned proportionately by or for its stockholders, partners,
or beneficiaries.



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                                   ARTICLE III

                                   ELIGIBILITY

         The individuals who shall be eligible to receive Awards shall be those
key employees of the Company or any of its Affiliates as the Committee shall
determine from time to time. The Board of Directors may designate one or more
individuals who shall not be eligible to receive any Awards under the Plan.


                                   ARTICLE IV

                            STOCK SUBJECT TO THE PLAN

         The total amount of the Stock with respect to which Awards may be
granted shall not exceed in the aggregate 10,000,000 shares. The class and
aggregate number of shares which may be subject to the Options granted under the
Plan shall be subject to adjustment under Section 5.4. The class and aggregate
number of shares which may be subject to the Restricted Stock Awards granted
under the Plan shall also be subject to adjustment under Section 7.4. Shares may
be treasury shares or authorized but unissued shares. If any Award under the
Plan shall expire or terminate for any reason without having been exercised in
full, or if any Award shall be forfeited, the shares subject to the unexercised
or forfeited portion of such Award shall again be available for the purposes of
the Plan.


                                   ARTICLE V

                   GENERAL PROVISIONS RELATING TO ALL OPTIONS

         5.1 AUTHORITY TO GRANT OPTIONS. The Committee may grant to those
employees of the Company or any of its Affiliates, as it shall from time to time
determine, Incentive Stock Options or Nonqualified Stock Options under the terms
and conditions of the Plan. Subject only to any applicable limitations set out
in the Plan, the number of shares of Stock to be covered by any Option to be
granted to an employee of the Company or any of its Affiliates shall be as
determined by the Committee.

         5.2 NON-TRANSFERABILITY. Options shall not be transferable by the
Employee otherwise than by will or under the laws of descent and distribution or
pursuant to a domestic relations order, and shall be exercisable, during the
Employee's lifetime, only by the Employee.

         5.3 CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence of
outstanding Options shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Stock or the rights thereof, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any



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part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.

         If the Company shall effect a subdivision or consolidation of shares or
other capital adjustment of, or the payment of a dividend in capital stock or
other equity securities of the Company on its Stock, or other increase or
reduction of the number of shares of the Stock without receiving consideration
therefor in money, services, or property, or the reclassification of its Stock,
in whole or in part, into other equity securities of the Company, then (a) the
number, class and per share price of shares of Stock subject to outstanding
Options hereunder shall be appropriately adjusted (or in the case of the
issuance of other equity securities as a dividend on, or in a reclassification
of, the Stock, the Options shall extend to such other securities) in such a
manner as to entitle an Optionee to receive, upon exercise of an Option, for the
same aggregate cash consideration, the same total number and class or classes of
shares (or in the case of a dividend of, or reclassification into, other equity
securities, such other securities) he would have held after such adjustment if
he had exercised his Option in full immediately prior to the event requiring the
adjustment, or, if applicable, the record date for determining stockholders to
be affected by such adjustment; and (b) the number and class of shares then
reserved for issuance under the Plan (or in the case of a dividend of, or
reclassification into, other equity securities, such other securities) shall be
adjusted by substituting for the total number and class of shares of stock then
received, the number and class or classes of shares of stock (or in the case of
a dividend of, or reclassification into, other equity securities, such other
securities) that would have been received by the owner of an equal number of
outstanding shares of Stock as a result of the event requiring the adjustment.
Comparable rights shall accrue to each Optionee in the event of successive
subdivisions, consolidations, capital adjustments, dividends or
reclassifications of the character described above.

         If the Company shall distribute to all holders of its shares of Stock
(including any such distribution made to non-dissenting stockholders in
connection with a consolidation or merger in which the Company is the surviving
corporation and in which holders of shares of Stock continue to hold shares of
Stock after such merger or consolidation) evidences of indebtedness or cash or
other assets (other than cash dividends payable out of consolidated retained
earnings not in excess of, in any one year period, the greater of (a) an amount
per share of Stock equal to $.01 per share of Stock (as the same may be adjusted
from time to time by the Board of Directors to reflect the effect of changes in
capitalization) and (b) two times the aggregate amount of dividends per share
paid during the preceding calendar year and dividends or distributions payable
in shares of Stock or other equity securities of the Company described in the
immediately preceding paragraph, but including stock or other securities of any
corporation or other entity owned by the Company), then in each case the Option
price shall be adjusted by reducing the Option price in effect immediately prior
to the record date for the determination of stockholders entitled to receive
such distribution by the fair market value, as determined in good faith by the
Board of Directors (whose determination shall be described in a statement filed
in the Company's corporate records and be available for inspection by any holder
of an Option) of the portion of the evidence of indebtedness or cash or other
assets so to be distributed applicable to one share of Stock; provided that in
no event shall the Option price be less than the par value of a share of Stock.
In the event such adjustment would result in the Option price being less than
the par value of a share of Stock but for the foregoing proviso, the terms of
the Option shall be appropriately adjusted so as to maintain the economic value
of the Option, including through an adjustment to the number of shares of Stock
subject to the Option and through



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a provision allowing the holder of the Option to receive the evidence of
indebtedness or cash or other assets so to be distributed applicable to one
share of Stock for each share of Stock that may be purchased on the exercise of
the Option. Such adjustment shall be made whenever any such distribution is
made, and shall become effective on the date of the distribution retroactive to
the record date for the determination of the stockholders entitled to receive
such distribution. In addition, in the event the Company distributes shares or
other securities of a subsidiary corporation or other entity to the holders of
the Stock, the Board of Directors may, in lieu of the adjustment provided above,
make provision allowing the holder of the Option to receive the shares or
securities of the corporation or entity that is subject to the distribution.
Comparable adjustments shall be made in the event of successive distributions of
the character described above.

         If the Company shall make a tender offer for, or grant to all of its
holders of its shares of Stock the right to require the Company or any
subsidiary of the Company to acquire from such stockholders shares of Stock, at
a price in excess of the Fair Market Value (a "Put Right"), or the Company shall
grant to all of its holders of its shares of Stock the right to acquire shares
of Stock for less than the Fair Market Value (a "Purchase Right") then, in the
case of a Put Right, the Option price shall be adjusted by multiplying the
Option price in effect immediately prior to the record date for the
determination of stockholders entitled to receive such Put Right by a fraction,
the numerator of which shall be the number of shares of Stock then outstanding
minus the number of shares of Stock which could be purchased at the Fair Market
Value for the aggregate amount which would be paid if all Put Rights are
exercised and the denominator of which is the number of shares of Stock which
would be outstanding if all Put Rights are exercised; and, in the case of a
Purchase Right, the Option price shall be adjusted by multiplying the Option
price in effect immediately prior to the record date for the determination of
the stockholders entitled to receive such Purchase Right by a fraction, the
numerator of which shall be the number of shares of Stock then outstanding plus
the number of shares of Stock which could be purchased at the Fair Market Value
for the aggregate amount which would be paid if all Purchase Rights are
exercised and the denominator of which is the number of shares of Stock which
would be outstanding if all Purchase Rights are exercised. In addition, the
number of shares subject to the Option shall be increased by multiplying the
number of shares then subject to the Option by a fraction which is the inverse
of the fraction used to adjust the Option price. Notwithstanding the foregoing,
if any such Put Rights or Purchase Rights shall terminate without being
exercised, the Option price and number of shares subject to the Option shall be
appropriately readjusted to reflect the Option price and number of shares
subject to the Option which would have been in effect if such unexercised Put
Rights or Purchase Rights had never existed. Comparable adjustments shall be
made in the event of successive transactions of the character described above.

         After the merger of one or more corporations into the Company, after
any consolidation of the Company and any one or more corporations, or after any
other corporate transaction described in section 424(a) of the Code in which the
Company shall be the surviving corporation, each Optionee, at no additional
cost, shall be entitled to receive, upon any exercise of his Option, in lieu of
the number of shares as to which the Option shall then be so exercised, the
number and class of shares of stock or other equity securities to which the
Optionee would have been entitled pursuant to the terms of the agreement of
merger or consolidation if at the time of such merger or consolidation such
Optionee had been a holder of a number of shares of Stock equal to the number of
shares as to which the Option shall then be so exercised and, if as a result of
such merger,



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consolidation or other transaction, the holders of Stock are not entitled to
receive any shares of Stock pursuant to the terms thereof, each Optionee, at no
additional cost, shall be entitled to receive, upon exercise of his Option, such
other assets and property, including cash, to which he would have been entitled
if at the time of such merger, consolidation or other transaction he had been
the holder of the number of shares of Stock equal to the number of shares as to
which the Option shall then be so exercised. Comparable rights shall accrue to
each Optionee in the event of successive mergers or consolidations of the
character described above.

         After a merger of the Company into one or more corporations, after any
consolidation of the Company and any one or more corporations, or after any
other corporate transaction described in section 424(a) of the Code in which the
Company is not the surviving corporation, each Optionee shall, at no additional
cost, be entitled, at the option of the surviving corporation, (i) to have his
then existing Option assumed or to have a new option substituted for the
existing Option by the surviving corporation to the transaction which is then
employing him, or a parent or subsidiary of such corporation, on a basis where
the excess of the aggregate fair market value of the shares subject to the
option immediately after the substitution or assumption over the aggregate
option price of such option is equal to the excess of the aggregate fair market
value of all shares subject to the Option immediately before such substitution
or assumption over the aggregate Option price of such shares, provided that the
shares subject to the new option must be traded on the New York or American
Stock Exchange or quoted on the National Association of Securities Dealers
Automated Quotation National Market System (or successor system) or (ii) to
receive upon any exercise of his Option, in lieu of the number of shares as to
which the Option shall then be so exercised, the securities, property and other
assets, including cash, to which the Optionee would have been entitled pursuant
to the terms of the agreement or merger or consolidation or the agreement giving
rise to the other corporate transaction if at the time of such merger,
consolidation or other transaction such Optionee had been the holder of the
number of shares of Stock equal to the number of shares as to which the Option
shall then be so exercised.

         If a corporate transaction described in section 424(a) of the Code
which involves the Company is to take place and there is to be no surviving
corporation while an Option remains in whole or in part unexercised, it shall be
cancelled by the Board of Directors as of the effective date of any such
corporate transaction but before the date each Optionee shall be provided with a
notice of such cancellation and each Optionee shall have the right to exercise
such Option in full (without regard to any limitations on exercise set forth in
or imposed by the Agreement pursuant to which such Option was granted) to the
extent it is then still unexercised during a 30-day period preceding the
effective date of such corporate transaction.

         In the event (i) the Company were to distribute to its stockholders or
otherwise divest of a majority of the stock of a subsidiary corporation that is
the principal employer of the Employee and (ii) following such distribution or
divestment the stock of the subsidiary corporation or any parent corporation of
such subsidiary corporation is listed or authorized for listing on a national
securities exchange or authorized for quotation on the National Association of
Securities Dealers Automated Quotation National Market System (or successor
system), the Board of Directors may, but shall not be required to, adjust the
terms of the Option to provide that such Option shall only represent a right to
purchase shares in such subsidiary corporation or parent corporation and the
number of shares and exercise price will be appropriately adjusted so as to
maintain the economic value of the Option.



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This adjustment would be in lieu of any adjustment that might otherwise be
required under this Section 5.4 for that transaction.

         Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Stock then subject to
outstanding Options.

         5.4 NO RIGHTS AS A STOCKHOLDER. No Employee shall have any rights as a
stockholder with respect to Stock covered by his Option until the date a stock
certificate is issued for the Stock.

         5.5 TAX WITHHOLDING. The Company or any Affiliate shall be entitled to
deduct from other compensation payable to each Employee any sums required by
federal, state, or local tax law to be withheld with respect to the grant or
exercise of an Option. In the alternative, the Company may require the Employee
(or other person exercising the Option) to pay the sum directly to the employer
corporation. If the Employee (or other person exercising the Option) is required
to pay the sum directly, payment in cash or by check of such sums for taxes
shall be delivered within ten days after the date of exercise. The Company shall
have no obligation upon exercise of any Option until payment has been received,
unless withholding (or offset against a cash payment) as of or prior to the date
of exercise is sufficient to cover all sums due with respect to that exercise.
The Company and its Affiliates shall not be obligated to advise an Employee of
the existence of the tax or the amount which the employer corporation will be
required to withhold. The Company may also allow for the retention of shares of
Stock issuable upon the exercise of an Option to satisfy such withholding as
specified in Section 6.4.


                                   ARTICLE VI

                VARIABLE PROVISIONS RELATING TO SPECIFIC OPTIONS

         6.1 OPTION PRICE. The price at which shares of Stock may be purchased
under a Nonqualified Stock Option shall not be less than the aggregate par value
of the shares of Stock on the date the Nonqualified Stock Option is granted. The
Committee in its discretion may provide that the price at which shares of Stock
may be purchased under a Nonqualified Stock Option may be more or less than 100
percent of Fair Market Value on the date the Option is granted.

         The price at which shares of Stock may be purchased under an Incentive
Stock Option shall be not less than the Fair Market Value of the shares of Stock
on the date the Incentive Stock Option is granted. However, in the case of a Ten
Percent Shareholder, the price at which shares of Stock may be purchased under
an Incentive Stock Option shall be at least 110 percent of the Fair Market Value
of the Stock on the date the Option is granted.

         6.2 DURATION OF OPTIONS. No Option which is an Incentive Stock Option
shall be exercisable after the expiration of ten years from the date such Option
is granted. In the case of a



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Ten Percent Shareholder, no Incentive Stock Option shall be exercisable after
the expiration of five years from the date the Incentive Stock Option is
granted. Unless otherwise provided in an Agreement, no Nonqualified Stock Option
shall be exercisable after one day less than ten years from the date such Option
first becomes exercisable.

         6.3 MAXIMUM VALUE OF STOCK SUBJECT TO OPTIONS WHICH ARE INCENTIVE STOCK
OPTIONS. To the extent that the aggregate Fair Market Value (determined as of
the date the Option is granted) of the Stock with respect to which Incentive
Stock Options are exercisable for the first time by the Optionee in any calendar
year (under the Plan and any other incentive stock option plan(s) of the Company
and any Affiliate) exceeds $100,000, the Options shall be treated as
Nonqualified Stock Options. In making this determination, Options shall be taken
into account in the order in which they were granted.

        6.4 AMOUNT EXERCISABLE - INCENTIVE OPTIONS. Each Option may be exercised
from time to time, in whole or in part, in the manner and subject to the
conditions the Committee, in its sole discretion, may provide in the Agreement,
as long as the Option is valid and outstanding under the terms of the Plan. To
the extent that the aggregate Fair Market Value (determined as of the time an
Incentive Option is granted) of the Stock with respect to which Incentive
Options first become exercisable by the Employee during any calendar year (under
the Plan and any other incentive stock option plan(s) of the Company or any
Affiliate) exceeds $100,000, the Incentive Options shall be treated as
Nonqualified Stock Options. In making this determination, Incentive Stock
Options shall be taken into account in the order in which they were granted.
Unless otherwise provided in an Agreement, (a) in the case of death or
Disability within three years of the date of grant, while the Optionee is an
Employee, each Option shall become immediately exercisable as described in
Section 6.6, and (b) in the case of retirement by an Employee within three years
of the date of grant, each Option shall become exercisable as described in
Section 6.6.

         6.5 EXERCISE OF OPTIONS. An Optionee may exercise his Option by
delivering to the Company a written notice stating (i) that he wishes to
exercise the Option on the date the notice is delivered, (ii) the number of
shares of Stock with respect to which the Option is to be exercised, (iii) the
address to which the certificate representing such shares of Stock should be
mailed, and (iv) his social security number. In order to be effective, such
written notice shall be accompanied by (i) payment of the Option price of such
shares of Stock and (ii) payment of an amount of money necessary to satisfy any
withholding tax liability that may result from the exercise of the Option. Each
such payment shall be made by cashier's check drawn on a national banking
association and payable to the order of the Company in United States dollars.

         Unless otherwise provided in an Agreement, if, at the time of receipt
by the Company of such written notice, (i) the Company has unrestricted surplus
in an amount not less than the Option price of such shares of Stock, (ii) all
accrued cumulative preferential dividends and other current preferential
dividends on all outstanding shares of preferred stock of the Company have been
fully paid, (iii) the acquisition by the Company of its own shares of Stock for
the purpose of enabling such Optionee to exercise such Option is otherwise
permitted by applicable law and without any vote or consent of any stockholder
of the Company, and (iv) there shall have been adopted, and there shall be in
full force and effect, a resolution of the Board of Directors authorizing the
acquisition by the Company of its own shares of Stock for such purpose, then the
Optionee may deliver to the



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Company, in payment of the Option price of the shares of Stock with respect to
which the Option is exercised, (x) certificates registered in the name of the
Optionee that represent a number of shares of Stock legally and beneficially
owned by the Optionee (free of all liens, claims and encumbrances of every kind)
and having a fair market value on the date of receipt by the Company of such
written notice that is not greater than the Option price of the shares of Stock
with respect to which the Option is to be exercised, such certificates to be
accompanied by stock powers duly endorsed in blank by the record holder of the
shares of Stock represented by such certificates, with the signature of such
record holder guaranteed by a national banking association (or in lieu of such
certificates, other arrangements for the transfer of such shares to the Company
which are satisfactory to the Company), and (y) if the Option price of the
shares of Stock with respect to which such Option is to be exercised exceeds
such fair market value, a cashier's check drawn on a national banking
association and payable to the order of the Company in an amount, in United
States dollars, equal to the amount of such excess plus the amount of money
necessary to satisfy any withholding tax liability that may result from the
exercise of the Option. Notwithstanding the provisions of the immediately
preceding sentence, the Committee, in its sole discretion, may refuse to accept
shares of Stock in payment of the Option price of the shares of Stock with
respect to which the Option is to be exercised and, in that event, any
certificates representing shares of Stock that were received by the Company with
such written notice shall be returned to the Optionee, together with notice by
the Company to the Optionee of the refusal of the Committee to accept such
shares of Stock. Unless otherwise provided in the Agreement, the Company, upon
approval of the Committee and in its sole discretion, upon the request of the
Optionee, may retain shares of Stock which would otherwise be issued upon
exercise of an Option to satisfy any withholding tax liability that may result
from the exercise of such Option, which shares shall be valued for such purpose
at their then Fair Market Value. If, at the expiration of seven business days
after the delivery to the Optionee of such written notice from the Company, the
Optionee shall not have delivered to the Company a cashier's check drawn on a
national banking association and payable to the order of the Company in an
amount, in United States dollars, equal to the Option price of the shares of
Stock with respect to which the Option is to be exercised, such written notice
from the Optionee to the Company shall be ineffective to exercise the Option.

         As promptly as practicable after the receipt by the Company of (i) such
written notice from the Optionee, (ii) payment, in the form required by the
foregoing provisions of this Section 6.4, of the Option price of the shares of
Stock with respect to which the Option is to be exercised, and (iii) payment, in
the form required by the foregoing provisions of this Section 6.4, of an amount
of money necessary to satisfy any withholding tax liability that may result from
the exercise of the Option, a certificate shall be issued representing the
number of shares of Stock with respect to which the Option has been so
exercised, reduced, to the extent applicable by the number of shares retained by
the Company as provided above to pay any required withholding tax, such
certificate to be registered in the name of the Optionee, provided that such
delivery shall be considered to have been made when such certificate shall have
been mailed, postage prepaid, to such optionee at the address specified for such
purpose in such written notice from the Optionee to the Company.

         6.6 EXERCISE FOLLOWING TERMINATION OF EMPLOYMENT. Unless it is
expressly provided otherwise in the Agreement or other written agreement with
the Employee that provides otherwise, an Option shall terminate as follows,
provided, however, if an Incentive Stock Option is not



                                      -10-
<PAGE>   15

exercised within specified time limits prescribed by the Code, it shall become a
Nonqualified Stock Option by operation of law:

         SEVERANCE OF EMPLOYMENT. If the Employee severs employment from the
Company and all Affiliates prior to three years from the date his Option was
granted, for any reason, with or without cause, other than for death, retirement
under the then-established rules of the Company, or as a result of his incurring
a Disability, his Option shall terminate and be immediately forfeited. If the
Employee severs employment from the Company and all Affiliates for any reason,
with or without cause, other than for death, retirement under the
then-established rules of the Company, or as a result of his incurring a
Disability on or after three years from the date his Option was granted, the
Option shall continue in effect until the date the Option is otherwise due to
expire in accordance with Section 6.2. Whether authorized leave of absence or
absence on military or government service shall constitute severance of the
employment of the Employee shall be determined by the Committee at that time.

         In determining the employment relationship between the Company and the
Employee, employment by any Affiliate shall be considered employment by the
Company, as shall employment by a corporation issuing or assuming a stock option
in a transaction to which section 424(a) of the Code applies, or by a parent
corporation or subsidiary corporation of the corporation issuing or assuming a
stock option (and for this purpose, the phrase "corporation issuing or assuming
a stock option" shall be substituted for the word "Company" in the definitions
of parent corporation and subsidiary corporation in Section 2.1, and the
parent-subsidiary relationship shall be determined at the time of the corporate
action described in section 424(a) of the Code).

         DEATH. If the Employee dies prior to three years from the date his
Option was granted, the Option shall continue in effect until ten years
following the date of the Employee's death. If the Employee dies on or after
three years from the date his Option was granted, the Option shall continue in
effect until the date the Option is otherwise due to expire in accordance with
Section 6.2. After the death of the Employee, the Employee's executors,
administrators or any persons to whom his Option may be transferred by will or
by the laws of descent and distribution shall have the right, at any time prior
to the Option's expiration to exercise it.

         RETIREMENT. If the Employee retires in good standing from the employ of
the Company under the then-established rules of the Company, prior to three
years from the date his Option was granted, the Employee shall become entitled
to exercise that portion of his Option determined by multiplying the number of
shares of Stock subject to the Option by a fraction, the numerator of which is
the Employee's total whole years of service since the Option was granted and the
denominator of which is three. To the extent that the Option is exercisable
under the preceding sentence, the Option shall be exercisable until ten years
following the date of the Employee's retirement in accordance with this Section
6.5, and the remainder of the Option shall terminate immediately. If the
Employee retires in good standing from the employ of the Company under the
then-established rules of the Company on or after three years from the date his
Option was granted, such Option shall continue until the date the Option is
otherwise due to expire in accordance with Section 6.2.



                                      -11-
<PAGE>   16

         DISABILITY. If the Employee severs from the employ of the Company as a
result of his incurring a Disability prior to three years from the date his
Option was granted, the Option shall be immediately exercisable and shall
continue in effect until ten years following the date he was severed from the
employ of the Company due to Disability. If the Employee severs from the employ
of the Company due to his Disability on or after three years from the date his
Option was granted, the Option shall continue in effect until the date the
Option is otherwise due to expire in accordance with Section 6.2.

         6.7 SUBSTITUTION OPTIONS. Options may be granted under the Plan from
time to time in substitution for stock options held by employees of other
corporations who are about to become employees of the Company, or whose employer
is about to become a parent or subsidiary corporation of the Company,
conditioned upon the employee becoming an employee of the Company or a parent or
subsidiary corporation of the Company, as a result of the merger or
consolidation of the Company with another corporation, or the acquisition by the
Company of substantially all the assets of another corporation, or the
acquisition by the Company of at least 50 percent of the issued and outstanding
stock of another corporation as the result of which it becomes a subsidiary of
the Company. The terms and conditions of the substitute Options so granted may
vary from the terms and conditions set forth in the Plan to such extent as the
Board of Directors at the time of grant may deem appropriate to conform, in
whole or in part, to the provisions of the stock options in substitution for
which they are granted.


                                   ARTICLE VII

           GENERAL PROVISIONS RELATING TO ALL RESTRICTED STOCK AWARDS

         7.1 AUTHORITY TO GRANT AWARDS. The Committee may make an Award of
Restricted Stock to selected eligible Employees. The amount of each Restricted
Stock Award and the respective terms and conditions of each Award (which terms
and conditions need not be the same in each case) shall be determined by the
Committee in its sole discretion. However, the terms and conditions of an Award
shall not be inconsistent with the terms of the Plan.

         7.2 TRANSFERABILITY AND RIGHTS WITH RESPECT TO RESTRICTED STOCK. Except
as provided herein, Restricted Stock may not be sold, assigned, transferred,
pledged, or otherwise encumbered during a Restricted Period. Any attempted sale,
assignment, transfer, pledge or encumbrance of Restricted Stock in violation of
the Plan shall be void and the Company shall not be bound thereby.

         During the Restricted Period, certificates representing the Restricted
Stock and any Retained Distributions shall be registered in the recipient's name
and may bear a restrictive legend to the effect that ownership of such
Restricted Stock (and any such Retained Distributions), and the enjoyment of all
rights appurtenant thereto are subject to the restrictions, terms, and
conditions provided in the Plan and the applicable Agreement. Such certificates
shall be deposited by the recipient with the Company, together with stock powers
or other instruments of assignment, each endorsed in blank, which will permit
transfer to the Company of all or any portion of the Restricted Stock and any
securities constituting Retained Distributions which shall be forfeited in
accordance



                                      -12-
<PAGE>   17

with the Plan and the applicable Agreement. Restricted Stock shall constitute
issued and outstanding shares of Stock for all corporate purposes.

         Subject to the terms of the Plan and the Agreement with respect to the
Award, the recipient shall have the right to vote the Restricted Stock awarded
to such recipient and to receive and retain all regular cash dividends, and to
exercise all other rights, powers and privileges of a holder of Stock, with
respect to such Restricted Stock, with the exception that (i) the recipient
shall not be entitled to delivery of the stock certificate or certificates
representing such Restricted Stock until the restrictions applicable thereto
shall have expired, (ii) the Company shall retain custody of all Retained
Distributions made or declared with respect to the Restricted Stock (and such
Retained Distributions shall be subject to the same restrictions, terms and
conditions as are applicable to the Restricted Stock) until such time, if ever,
as the Restricted Stock with respect to which such Retained Distributions shall
have been made, paid, or declared shall have become vested, and such Retained
Distributions shall not bear interest or be segregated in separate accounts and
(iii) the recipient may not sell, assign, transfer, pledge, exchange, encumber,
or dispose of the Restricted Stock or any Retained Distributions during the
Restricted Period. Nothing in this Section shall prevent transfers by will or by
the applicable laws of descent and distribution.

         7.3 WITHHOLDING TAX. The Company or any Affiliate shall be entitled to
deduct from other compensation payable to each Employee any sums required by
federal, state or local tax law to be withheld with respect to Restricted Stock
Awards hereunder; or the Company may require the Employee to pay such sums
directly to the employer corporation.

         The Company may meet its tax withholding obligations under the Code and
applicable state or local law arising upon the vesting of Restricted Stock by
delivering to the Restricted Stock recipient (or his estate, if applicable) a
reduced number of shares of Stock in the manner specified below. At the time of
vesting of shares of Restricted Stock, the Company shall (i) calculate the
amount of withholding tax due on the assumption that all such vested shares of
Restricted Stock are made available for delivery, (ii) reduce the number of such
shares made available for delivery so that the Fair Market Value of the shares
withheld on the vesting date approximates the amount of tax the Company is
obliged to withhold and (iii) in lieu of the withheld shares, remit cash to the
United States Treasury and other applicable governmental authorities, on behalf
of the participant, in the amount of the withholding tax due. The Company shall
withhold only whole shares of Stock to satisfy its withholding obligation. If
the Fair Market Value of the withheld shares does not equal Company's
withholding tax obligation, the Company shall withhold shares with a Fair Market
Value slightly in excess of the amount of its withholding obligation and shall
remit the excess cash to the Restricted Stock Award recipient (or his estate, if
applicable) with the shares of Stock made available for delivery. The withheld
shares of Restricted Stock not made available for delivery by the Company shall
be retained as treasury stock or will be cancelled and, in either case, the
recipient's right, title and interest in such Restricted Stock shall terminate.

         7.4 CHANGES IN COMPANY'S CAPITAL STRUCTURE. In the event that the
issued and outstanding shares of Stock should, as a result of any stock
dividend, stock split or spin-off, recapitalization, combination or exchange of
shares, merger, consolidation, acquisition of property or stock, separation,
reclassification, reorganization, liquidation, or other similar event, be
increased or decreased or changed into or exchanged for a different number or
kind of share of stock or other



                                      -13-
<PAGE>   18

securities of the Company or of another corporation, the number and class of
additional shares or other securities which may be issued pursuant to Restricted
Stock Awards under the Plan will be appropriately adjusted by the Committee to
reflect such action. If any adjustment shall result in a fractional share, the
fraction shall be disregarded.


                                  ARTICLE VIII

        VARIABLE PROVISIONS RELATING TO SPECIFIC RESTRICTED STOCK AWARDS

         8.1 VESTING OF RESTRICTED STOCK. Restricted Stock Awards shall be
subject to such vesting restrictions, if any, as the Committee shall determine
in its sole discretion. The vesting restrictions shall be specified in the
Agreements relating to the Awards.

         8.2 CONSEQUENCE OF VESTING. Subject to Article IX, when shares of
Restricted Stock become vested, the Restricted Period shall be terminated as to
those shares, and the Company shall deliver to the Restricted Stock Award
recipient (or his estate, if applicable) a Stock certificate representing those
shares and all Retained Distributions made or declared with respect to those
shares, reduced as necessary to satisfy the Company's tax withholding
obligation.


                                   ARTICLE IX

                               REQUIREMENTS OF LAW

         The Company shall not be required to sell, issue or deliver any shares
of Stock under any Award if such sale, issuance or delivery shall constitute a
violation by the Award recipient or the Company of any provisions of any law or
regulation of any governmental authority. Each Award granted under the Plan
shall be subject to the requirements that, if at any time the Board of Directors
or the Committee shall determine that the listing, registration or qualification
of the shares upon any securities exchange or under any state or federal law of
the United States or of any other country or governmental subdivision, or the
consent or approval of any governmental regulatory body, or investment or other
representations, are necessary or desirable in connection with the issue, or
purchase or delivery of shares subject to an Award, that Award shall not be
exercised in whole or in part and no shares shall be delivered pursuant to an
Award unless the listing, registration, qualification, consent, approval or
representations shall have been effected or obtained free of any conditions not
acceptable to the Committee. Any determination in this connection by the
Committee shall be final. In the event the shares issuable or deliverable on
exercise or vesting of an Award are not registered under the Securities Act of
1933, the Company may imprint on the certificate for those shares the following
legend or any other legend which counsel for the Company considers necessary or
advisable to comply with the Securities Act of 1933:

         "The shares of stock represented by this certificate have not been
         registered under the Securities Act of 1933 or under the securities
         laws of any state and may not be sold or transferred except upon
         registration or upon receipt by the Corporation of an



                                      -14-
<PAGE>   19

         opinion of counsel satisfactory to the Corporation, in form and
         substance satisfactory to the Corporation, that registration is not
         required for a sale or transfer."

The Company may, but shall in no event be obligated to, register any securities
covered by the Plan under the Securities Act of 1933 (as now in effect or as
later amended) and, in the event any shares are registered, the Company may
remove any legend on certificates representing those shares. The Company shall
not be obligated to take any other affirmative action in order to cause the
exercise of an Award or the issuance or delivery of shares under the Award to
comply with any law or regulation or any governmental authority.


                                    ARTICLE X

                                 ADMINISTRATION

         The Plan shall be administered by the Committee. All questions of
interpretation and application of the Plan and Options shall be subject to the
determination of the Committee. A majority of the members of the Committee shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by a majority of the members shall be as effective as if it had been made
by a majority vote at a meeting properly called and held. The Plan shall be
administered in such a manner as to permit the Options granted under it which
are designated to be Incentive Options to qualify as Incentive Options. In
carrying out its authority under the Plan, subject to the express terms of any
outstanding Option or other agreement with an Employee, the Committee shall have
full and final authority and discretion, including but not limited to the
following rights, powers and authorities, to:

                  (a) determine the Employees to whom and the time or times at
         which Options will be made,

                  (b) determine the number of shares and the purchase price of
         Stock covered in each Option, subject to the terms of the Plan,

                  (c) determine the terms, provisions and conditions of each
         Option, which need not be identical,

                  (d) accelerate the time at which any outstanding Option may be
         exercised,

                  (e) define the effect, if any, on an Option of the death,
         Disability, retirement, or termination of employment of the Employee,

                  (f) prescribe, amend and rescind rules and regulations
         relating to administration of the Plan, and

                  (g) make all other determinations and take all other actions
         deemed necessary, appropriate, or advisable for the proper
         administration of the Plan.



                                      -15-
<PAGE>   20

The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Article and all other Articles of the Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive and
binding on all parties.


                                   ARTICLE XI

                        AMENDMENT OR TERMINATION OF PLAN

         The Board of Directors may amend, terminate or suspend the Plan at any
time, in its sole and absolute discretion subject to the rights of holders of
outstanding Awards at the time of such amendment, termination or suspension.


                                   ARTICLE XII

                                  MISCELLANEOUS

         12.1 NO ESTABLISHMENT OF A TRUST FUND. No property shall be set aside
nor shall a trust fund of any kind be established to secure the rights of any
Employee under the Plan. All Employees shall at all times rely solely upon the
general credit of the Company for the payment of any benefit which becomes
payable under the Plan.

         12.2 NO EMPLOYMENT OBLIGATION. The granting of any Option shall not
constitute an employment contract, express or implied, nor impose upon the
Company or any Affiliate any obligation to employ or continue to employ any
Employee. The right of the Company or any Affiliate to terminate the employment
of any person shall not be diminished or affected by reason of the fact that an
Option has been granted to him.

         The decision of the Committee as to the cause of the Employee's
discharge, the damage done to the Company or an Affiliate, and the extent of the
Employee's competitive activity shall be final. No decision of the Committee,
however, shall affect the finality of the discharge of the Employee by the
Company or an Affiliate in any manner.

         12.3 WRITTEN AGREEMENT. Each Award shall be embodied in a written
Agreement which shall be subject to the terms and conditions of the Plan and
shall be signed by the Employee and the Company. The Agreement may contain any
other provisions that the Committee in its discretion shall deem advisable.

         12.4 INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS. With
respect to administration of the Plan, the Company shall indemnify each present
and future member of the Committee and the Board of Directors against, and each
member of the Committee and the Board of Directors shall be entitled without
further act on his part to indemnity from the Company for, all expenses
(including attorney's fees, the amount of judgments and the amount of approved
settlements made with a view to the curtailment of costs of litigation, other
than amounts paid to the Company itself) reasonably incurred by him in
connection with or arising out of any action, suit, or



                                      -16-
<PAGE>   21

proceeding in which he may be involved by reason of his being or having been a
member of the Committee and/or the Board of Directors, whether or not he
continues to be a member of the Committee and/or the Board of Directors at the
time of incurring the expenses--including, without limitation, matters as to
which he shall be finally adjudged in any action, suit or proceeding to have
been found to have been negligent in the performance of his duty as a member of
the Committee or the Board of Directors. However, this indemnity shall not
include any expenses incurred by any member of the Committee and/or the Board of
Directors in respect of matters as to which he shall be finally adjudged in any
action, suit or proceeding to have been guilty of gross negligence or willful
misconduct in the performance of his duty as a member of the Committee or the
Board of Directors. In addition, no right of indemnification under the Plan
shall be available to or enforceable by any member of the Committee and the
Board of Directors unless, within 60 days after institution of any action, suit
or proceeding, he shall have offered the Company, in writing, the opportunity to
handle and defend same at its own expense. This right of indemnification shall
inure to the benefit of the heirs, executors or administrators of each member of
the Committee and the Board of Directors and shall be in addition to all other
rights to which a member of the Committee and the Board of Directors may be
entitled as a matter of law, contract, or otherwise.

         12.5 GENDER. If the context requires, words of one gender when used in
the Plan shall include the others and words used in the singular or plural shall
include the other.

         12.6 HEADINGS. Headings of Articles and Sections are included for
convenience of reference only and do not constitute part of the Plan and shall
not be used in construing the terms of the Plan.

         12.7 OTHER COMPENSATION PLANS. The maintenance of the Plan shall not
affect any other stock option, incentive or other compensation or benefit plans
or arrangements, including any employment, change of control or severance
agreements, in effect with or for the Company or any Affiliate, nor shall the
maintenance of the Plan preclude the Company from establishing any other forms
of incentive or other compensation for employees of the Company or any
Affiliate.

         12.8 OTHER AWARDS. The grant of an Award shall not confer upon the
Employee the right to receive any future or other Awards under the Plan, whether
or not Awards may be granted to similarly situated Employees, or the right to
receive future Awards upon the same terms or conditions as previously granted.

         12.9 SECTION 83(b) ELECTIONS. No Employee shall exercise the election
permitted under section 83(b) of the Code with respect to an Award without
written approval of the chief financial officer of the Company. If the Committee
permits such an election with respect to any Award, the Company shall require
the Award recipient to pay the Company an amount necessary to satisfy the
Company's tax withholding obligation.

         12.10 DISTRIBUTION AGREEMENT OPTIONS. Notwithstanding any other
provision of the Plan, Nonqualified Stock Options may be granted under the Plan
in accordance with the Distribution Agreement by and between Weatherford
International, Inc. and the Company (the "Distribution Agreement") whether or
not the persons to whom such Nonqualified Stock Options are granted are
Employees. For the purpose of any Nonqualified Stock Option granted pursuant to
this Section



                                      -17-
<PAGE>   22

12.10, employment with either the Company and any of its Affiliates or
Weatherford International, Inc. and any of its subsidiaries or other affiliates
will satisfy any condition to continuing employment where discontinued
employment would cause the Nonqualified Stock Option to terminate.

         12.11 GOVERNING LAW. The provisions of the Plan shall be construed,
administered, and governed under the laws of the State of Texas.



                                      -18-