EXHIBIT 4.7
[TODCO LETTERHEAD]
_____________, 2004
[INSERT NAME]
[INSERT ADDRESS]
Dear ____________:
Effective as of ___________ (the "Award Date"), TODCO (the "Company") hereby
grants to you a nonqualified option ("Option") to purchase __________ shares of
Class A Common Stock of the Company ("Common Stock") in accordance with the
TODCO Long-Term Incentive Plan (the "Plan"). Your award is more fully described
in the attached Appendix A, Terms and Conditions of Nonqualified Stock Option
Award.
The price at which you may purchase the shares of Common Stock covered by the
Option is _______ per share ("Exercise Price"). Unless otherwise provided in the
attached Appendix A, your Option will expire on ________________ ("Expiration
Date"), and will become exercisable in installments as follows (the "Schedule"):
PERIOD BEGINNING NUMBER OF SHARES PURCHASABLE
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______________, 2004
______________, 2005
______________, 2006
You must be in continuous employment with the Company or its Subsidiary (as
defined in the Plan) from the Award Date through each date on which your Option
becomes exercisable in order for your Option to become exercisable on such date.
Your award is subject to the terms and conditions set forth in the enclosed
Plan, any additional terms and conditions set forth in the attached Appendix A
and the Prospectus for the Plan, and any rules and regulations adopted by the
Executive Compensation Committee of the Company's Board of Directors.
This award letter and the attachments contain the formal terms and conditions of
your award and accordingly should be retained in your files for future
reference.
Very truly yours,
Xxx Xxxx
President and Chief Executive Officer
Enclosures
APPENDIX A
TO AWARD LETTER
DATED
[_________________]
TERMS AND CONDITIONS OF
EMPLOYEE NONQUALIFIED STOCK OPTION AWARD
The nonqualified stock option (the "Option") granted to you by TODCO (the
"Company") to purchase Class A Common Stock of the Company ("Common Stock") is
subject to the terms and conditions set forth in the TODCO Long-Term Incentive
Plan (the "Plan"), any rules and regulations adopted by the Executive
Compensation Committee of the Company's Board of Directors (the "Committee"),
any additional terms and conditions set forth in this Appendix A which forms a
part of the attached award letter to you (the "Award Letter") and the enclosed
Prospectus for the Plan. Any terms used in this Appendix A and not defined in
the Award Letter or this Appendix A have the meanings set forth in the Plan. In
the event there is an inconsistency between the terms of the Plan and this
Appendix A, the terms of the Plan will control.
1. EXERCISE PRICE
You may purchase the Shares of Common Stock covered by the Option for
the Exercise Price stated in your Award Letter.
2. TERM OF OPTION
Your Option expires on the Expiration Date stated in your Award Letter.
However, your Option will terminate prior to the Expiration Date as
provided in paragraph 6 of this Appendix A upon the occurrence of one
of the events described in that paragraph. Regardless of the provisions
of paragraph 6, in no event can your Option be exercised after the
Expiration Date, except that an Option which is outstanding on the date
of your death shall remain outstanding and exercisable until the later
of (i) one year after your death, or (ii) the Expiration Date.
3. EARN-OUT OF OPTION
(a) Unless it becomes exercisable on an earlier date as provided
in paragraphs 6 and 7 below, your Option will become
exercisable in installments as set forth in the Schedule in
your Award Letter.
(b) The number of shares covered by each installment will be in
addition to the number of shares which previously became
exercisable.
(c) To the extent your Option has become exercisable, you may
exercise the Option as to all or any part of the shares
covered by the Option, at any time on or before the date the
Option expires or terminates.
4. EXERCISE OF OPTION
Subject to the limitations set forth in this Appendix A and in the
Plan, your Option may be exercised by written notice provided to the
Company as set forth below. Such written notice shall (a) state the
number of shares of Common Stock with respect to which your Option is
being exercised and (b) be accompanied by a wire transfer, cashier's
check, cash or money order payable to TODCO in the full amount of the
Exercise Price for any shares of Common Stock being acquired and any
appropriate withholding taxes (as provided in paragraph 8 of this
Appendix), or by other consideration in the form and manner approved by
the Committee pursuant to paragraphs 5 and 8 of this Appendix. If any
law or regulation requires the Company to take any action with respect
to the shares specified in such notice, the time for delivery thereof,
which would otherwise be as promptly as possible, shall be postponed
for the period of time necessary to take such action. You shall have no
rights of a shareholder with respect to shares of Common Stock subject
to your Option unless and until such time as your Option has been
exercised and ownership of such shares of Common Stock has been
transferred to you.
5. SATISFACTION OF EXERCISE PRICE
(a) PAYMENT OF CASH OR COMMON STOCK. Your Option may be exercised
by payment in cash (including check, bank draft, money order
or wire transfer payable to the Company), in Common Stock, in
a combination of cash and Common Stock or in such other manner
as the Committee in its discretion may provide.
(b) PAYMENT OF COMMON STOCK. The fair market value of any shares
of Common Stock tendered as all or part of the Exercise Price
shall be the average of the high and low prices of the Common
Stock as reported on the New York Stock Exchange Composite
Tape for the date of exercise. The certificates evidencing
shares of Common Stock tendered must be duly endorsed or
accompanied by appropriate stock powers. Only stock
certificates issued solely in your name may be tendered in
exercise of your Option. Fractional shares may not be tendered
in satisfaction of the Exercise Price; any portion of the
Exercise Price which is in excess of the aggregate fair market
value of the number of whole shares tendered must be paid in
cash. If a certificate tendered in exercise of the Option
evidences more shares than are required pursuant to the
immediately preceding sentence for satisfaction of the portion
of the Exercise Price being paid in Common Stock, an
appropriate replacement certificate will be issued to you for
the number of excess shares.
6. TERMINATION OF EMPLOYMENT
(a) GENERAL. The following rules apply to your Option in the event
of your death, disability, retirement, or other termination of
employment.
(i) TERMINATION OF EMPLOYMENT. If your employment
terminates for any reason other than death,
disability, retirement, or for the convenience of the
Company (as those terms are used below), your Option
will terminate 60 days after termination of your
employment. Following the termination of your
employment, no additional portions of your Option
will become exercisable, and your Option will be
limited to the number of shares of Common Stock which
you were entitled to purchase under the Option on the
date of the termination of your employment.
(ii) RETIREMENT. If your employment terminates by reason
of retirement (under a retirement program of the
Company or one of its subsidiaries or otherwise as
determined by the Committee), your Option will
terminate three years after the date of your
retirement. Following your retirement, no additional
portions of your Option will become exercisable, and
your Option will be limited to the number of shares
of Common Stock which you were entitled to purchase
under the Option on the date of your retirement.
(iii) DEATH OR DISABILITY. If your employment terminates by
reason of death or disability (as determined by the
Committee), your Option will become fully
exercisable, and will remain exercisable until the
Expiration Date.
(iv) CONVENIENCE OF THE COMPANY. If your employment is
terminated for the convenience of the Company (as
determined by the Committee) or if you retire for the
convenience of the Company (as determined by the
Committee), your Option will become fully exercisable
and will remain exercisable until the Expiration
Date.
(v) ADJUSTMENTS BY THE COMMITTEE. The Committee may, in
its sole discretion, exercised before or after your
termination of employment, declare all or any portion
of your Option immediately exercisable and/or permit
all or any part of your Option to remain exercisable
for such period designated by it after the time when
the Option would have otherwise terminated as
provided in the applicable portion of this paragraph
6(a), but not beyond the Expiration Date of your
Option.
(b) COMMITTEE DETERMINATIONS. The Committee shall have absolute
discretion to determine the date and circumstances of
termination of your employment, and its determination shall be
final, conclusive and binding upon you.
7. CHANGE IN CONTROL
Notwithstanding the provisions of paragraphs 3 and 6, upon the
occurrence of a Change in Control (as defined in the Plan), your Option
will immediately become fully exercisable and will remain exercisable
until the Expiration Date.
8. TAX CONSEQUENCES AND WITHHOLDING
(a) You should consult the TODCO Long-Term Incentive Plan
Prospectus for a general summary of the federal income tax
consequences of your Option based on currently applicable
provisions of the Internal Revenue Code (the "Code") and
related regulations. The summary does not discuss state and
local tax laws, which may differ from the federal tax law. For
these reasons, you are urged to consult your own tax advisor
regarding the application of the tax laws to your particular
situation.
(b) The Option is not intended to be an "incentive stock option,"
as defined in Section 422 of the Code.
(c) You must make arrangements satisfactory to the Company to
satisfy any applicable federal, state or local withholding tax
liability arising from the grant or exercise of your Option.
You can either make a cash payment to the Company of the
required amount or you can elect to satisfy your withholding
obligation by having the Company retain shares of Common Stock
having a value equal to the amount of your withholding
obligation from the shares otherwise deliverable to you upon
the exercise of your Option. You may not elect to have the
Company withhold shares of Common Stock having a value in
excess of the minimum statutory withholding tax liability. If
you fail to satisfy your withholding obligation in a time and
manner satisfactory to the Company, the Company shall have the
right to withhold the required amount from your salary or
other amounts payable to you.
9. RESTRICTIONS ON RESALE
There are no restrictions imposed by the Plan on the resale of shares
of Common Stock acquired under the Plan. However, under the provisions
of the Securities Act of 1933 (the "Securities Act") and the rules and
regulations of the Securities and Exchange Commission (the "SEC"),
resales of shares acquired under the Plan by certain officers and
directors of the Company who may be deemed to be "affiliates" of the
Company must be made pursuant to an appropriate effective registration
statement filed with the SEC, pursuant to the provisions of Rule 144
issued under the Securities Act, or pursuant to another exemption from
registration provided in the Securities Act. At the present time, the
Company does not have a currently effective registration statement
pursuant to which such resales may be made by affiliates. There are no
restrictions imposed by the SEC on the resale of shares acquired under
the Plan by persons who are not affiliates of the Company.
10. EFFECT ON OTHER BENEFITS
Income recognized by you as a result of exercise of the Option will not
be included in the formula for calculating benefits under any of the
Company's retirement and disability plans or any other benefit plans.
If you have any questions regarding your Option or would like to obtain
additional information about the Plan or the Committee, please contact the
Company's General Counsel, TODCO, 0000 X. Xxx Xxxxxxx Xxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxx, Xxxxx 00000 (telephone (000) 000-0000). Your Award Letter and this
Appendix A contain the formal terms and conditions of your award and accordingly
should be retained in your files for future reference.
