NONSTATUTORY STOCK OPTION AGREEMENT
Exhibit
10.5
AGREEMENT
made as
of the <DATE> between STANDARD
DRILLING, INC.,
a
Delaware corporation (the “Company”), and<Executive>
(“Executive”).
To
carry
out the purposes of the STANDARD
DRILLING, INC.
2006 STOCK INCENTIVE PLAN
(the
“Plan”), by affording Executive the opportunity to purchase shares of the common
stock of the Company, par value $0.001 per share (“Stock”), and in consideration
of the mutual agreements and other matters set forth herein and in the Plan,
the
Company and Executive hereby agree as follows:
1.
Grant
of Option.
The
Company hereby irrevocably grants to Executive the right and option (“Option”)
to purchase all or any part of an aggregate of <NUMBER> shares of Stock on
the terms and conditions set forth herein and in the Plan, which Plan is
incorporated herein by reference as a part of this Agreement. In the event
of
any conflict between the terms of this Agreement and the Plan, the Plan shall
control. Capitalized terms used but not defined in this Agreement shall have
the
meaning attributed to such terms under the Plan, unless the context requires
otherwise. This Option shall not be treated as an incentive stock option within
the meaning of section 422(b) of the Code.
2.
Purchase
Price.
The
purchase price of Stock purchased pursuant to the exercise of this Option shall
be <PRICE> which has been determined to be not less than the Fair Market
Value of the Stock at the date of grant of this Option. For all purposes of
this
Agreement, Fair Market Value of Stock shall be determined in accordance with
the
provisions of the Plan.
3.
Exercise
of Option.
Subject
to the earlier expiration of this Option as herein provided, this Option may
be
exercised, by written notice to the Company at its principal executive office
addressed to the attention of its Corporate Secretary (or such other officer
or
Executive of the Company as the Company may designate from time to time), at
any
time and from time to time after the later of the date the closing price of
our
common stock on any exchange on which the common stock of Standard Drilling,
Inc. is traded or quoted equals or exceeds $2.50 for 10 trading days or January
1, 2007.
This
Option shall survive the Executive’s termination date if such termination occurs
after December 31, 2006. If the Executive’s termination date occurs prior to
January 1, 2007, the Option shall be forfeited unexercised.
This
Option shall not be exercisable in any event after January 25, 2008. Except
as
provided in Paragraph 4, the purchase price of shares as to which this Option
is
exercised shall be paid in full at the time of exercise (a) in cash (including
check, bank draft or money order payable to the order of the Company), (b)
by
delivering or constructively tendering to the Company shares of Stock having
a
Fair Market Value equal to the purchase price (provided such shares used
for
this purpose must have been held by Executive for such minimum period of
time as
may be established from time to time by the Committee), (c) if the Stock
is
readily tradable on a national securities market, through a “cashless exercise”
in accordance with a Company established policy or program for the same,
or (d)
any combination of the foregoing. No fraction of a share of Stock shall be
issued by the Company upon exercise of an Option or accepted by the Company
in
payment of the exercise price thereof; rather, Executive shall provide a
cash
payment for such amount as is necessary to affect the issuance and acceptance
of
only whole shares of Stock. Unless and until a certificate or certificates
representing such shares shall have been issued by the Company to Executive,
Executive (or the person permitted to exercise this Option in the event of
Executive’s death) shall not be or have any of the rights or privileges of a
shareholder of the Company with respect to shares acquirable upon an exercise
of
this Option.
4.
Stock
Appreciation Right.
In lieu
of exercising this Option, with the consent of the Committee Executive (or
the
person entitled to exercise this Option in the event of Executive’s death) may
elect to have the Company compute an amount (the “Appreciation Amount”) equal to
the excess of the aggregate Fair Market Value of any number of the shares of
Stock with respect to which this Option is exercisable over the aggregate
purchase price of such number of shares and pay to Executive (or such person),
in lieu of Executive’s purchasing such number of shares, an amount of cash, a
whole number of shares of Stock, or any combination thereof as Executive or
such
person may elect, with the consent of the Committee, equal to the Appreciation
Amount. Notwithstanding anything to the contrary herein, if Executive is then
an
officer, director or affiliate of the Company who is subject to section 16
of
the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”),
this Option may not be exercised prior to the expiration of six months from
the
date of grant hereof (except in the event of the death or disability of
Executive prior to the expiration of such six month period); thereafter, any
exercise of this Option or election pursuant to this Paragraph 4 wherein
Executive would receive any portion of the Appreciation Amount in cash (other
than cash in lieu of a fractional share) may be made only during a period
beginning on the third business day and ending on the twelfth business day
following the date of release by the Company for publication of quarterly and
annual summary statements of sales and earnings. Should Executive elect pursuant
to this Paragraph 4 to receive the Appreciation Amount solely in shares of
Stock, the number of shares of Stock distributable to Executive shall be the
highest whole number of shares whose value does not exceed the Appreciation
Amount, and any fractional share shall be paid in cash.
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5.
Withholding
of Tax.
To the
extent that the exercise of this Option or the disposition of shares of Stock
acquired by exercise of this Option results in compensation income or wages
to
Executive for federal, state or local tax purposes, Executive shall deliver
to
the Company at the time of such exercise or disposition such amount of money
as
the Company may require to meet its minimum obligation under applicable tax
laws
or regulations. Executive may elect with respect to this Option to surrender
or
authorize the Company to withhold shares of Stock (valued at their Fair Market
Value on the date of surrender or withholding of such shares) to satisfy any
tax
required to be withheld upon exercise of this Option. An election pursuant
to
the preceding sentence shall be referred to herein as a “Stock Withholding
Election.” All Stock Withholding Elections shall be made by written notice to
the Company’s Corporate Secretary (or such other officer or Executive of the
Company as the Company may designate from time to time). If Executive is not
a
Section 16 Person (as hereinafter defined), Executive may revoke such election
by delivering to the Company’s Corporate Secretary (or such other designated
officer or Executive) written notice of such revocation prior to the date such
election is implemented through actual surrender or withholding of shares of
Stock (the “Withholding Date”). If Executive is a Section 16 Person, the Stock
Withholding Election must:
(a)
Be
irrevocable and made six months prior to the Withholding Date; or
(b)
(i)
be
approved by the Committee either before or after such election is made, (ii)
be
made, and the Withholding Date occur, during a period beginning on the third
business day following the date of release by the Company for publication of
quarterly and annual summary statements of sales and earnings and ending on
the
twelfth business day following such date, and (iii) be made more than six months
after the date of the grant of this Option to Executive; or
(c)
be
made in
connection with (i) a delivery to the Company of shares of Stock owned by
Executive prior to the exercise of this Option to satisfy the portion of the
tax
required to be withheld with respect to those shares of Stock received by
Executive upon exercise of this Option for which payment of the purchase price
was made to the Company in shares of Stock owned by Executive prior to the
exercise of this Option pursuant to Paragraph 3 hereof and (ii) the exercise
of
this Option more than six months after the date of grant hereof.
If
Executive fails to pay the required amount to the Company or fails to make
a
Stock Withholding Election, the Company is authorized to withhold from any
cash
remuneration (or, if Executive is not a Section 16 Person, Stock remuneration,
including withholding any shares of Stock distributable to Executive upon
exercise of this Option) then or thereafter payable to Executive any tax
required to be withheld by reason of the exercise of this Option or the
disposition of shares of Stock acquired by exercise of this Option. For purposes
of this Agreement, the term “Section 16 Person” means an officer, director or
affiliate of the Company or a former officer, director or affiliate of the
Company who is subject to Section 16 of the Securities Exchange
Act.
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6.
Certain
Restrictions.
Shares
of Stock purchased pursuant to the exercise of this Option shall be subject
to
the following restrictions (until such time as such restrictions terminate
as
provided below):
(a)
such
shares of Stock may not be sold,
assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered
or disposed of by Executive;
and
(b)
if
Executive’s employment with the Company is terminated for “cause,” as defined in
Paragraph 3(c) hereof, the Company (or any subsidiary of the Company designated
by it) shall have the option for 60 days after such termination of employment
to
purchase for cash all or any part of such shares of Stock at the purchase price
paid therefore upon exercise of this Option.
The
restrictions imposed on such shares of Stock under this Paragraph shall
terminate on the earliest to occur of the following:
(a)
the
90th
day after the date on which shares of Stock are first listed or admitted to
unlisted trading privileges on a national stock exchange or on the National
Market System of NASDAQ or have sales or bid and offer quotations reported
in
the automated quotation system operated by the National Association of
Securities Dealers, Inc.;
(b)
the
2nd
anniversary of the date of grant of this Option;
(c)
as
to any
shares of Stock for which the Company’s (or a subsidiary’s) 60 day option to
purchase upon termination of Executive’s employment with the Company shall have
become exercisable but shall have expired without having been exercised, on
the
first business day of the calendar month next following the expiration of such
60 day option period;
(d)
the
first
business day of the calendar month next following the termination of Executive’s
employment with the Company because of Executive’s death, normal or early
retirement in accordance with his employer’s established employment policies or
practices, or disability (within the meaning of section 22(e)(3) of the Code);
or
(e)
the
date
of the termination of this Option due to an adjustment being made to this Option
pursuant to Paragraph IX of the Plan.
7.
Lock-up
Provision.
Executive hereby agrees that in the event of any underwritten public offering
of
stock, including an initial public offering of stock, made by the Company
pursuant to an effective registration statement filed under the Securities
Act
of 1933, as amended (the “Securities Act”), Executive shall not offer, sell,
contract to sell, pledge, hypothecate, grant any option to purchase or make
any
short sale of, or otherwise dispose of any shares of stock of the Company or
any
rights to acquire stock of the Company for such period of time from and after
the effective date of such registration statement as may be established by
the
underwriter for such public offering; provided,
however,
that
such period of time shall not exceed 180 days from the effective date of the
registration statement to be filed in connection with such public offering.
The
foregoing limitation shall not apply to shares registered in the public offering
under the Securities Act. Executive shall be subject to this Paragraph provided
and only if the officers and directors of the Company are also subject to
similar arrangements.
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8.
Status
of Stock.
Executive understands that at the time of the execution of this Agreement the
shares of Stock to be issued upon exercise of this Option have not been
registered under the Securities Act, or any state securities law, and that the
Company does not currently intend to affect any such registration. Until the
shares of Stock acquirable upon the exercise of the Option have been registered
for issuance under the Securities Act, the Company will not issue such shares
unless the holder of the Option provides the Company with a written opinion
of
legal counsel, who shall be satisfactory to the Company, addressed to the
Company and satisfactory in form and substance to the Company’s counsel, to the
effect that the proposed issuance of such shares to such Option holder may
be
made without registration under the Securities Act. In the event exemption
from
registration under the Securities Act is available upon an exercise of this
Option, Executive (or the person permitted to exercise this Option in the event
of Executive’s death or incapacity), if requested by the Company to do so, will
execute and deliver to the Company in writing an agreement containing such
provisions as the Company may require to assure compliance with applicable
securities laws.
Executive
agrees that the shares of Stock which Executive may acquire by exercising this
Option shall be acquired for investment without a view to distribution, within
the meaning of the Securities Act, and shall not be sold, transferred, assigned,
pledged or hypothecated in the absence of an effective registration statement
for the shares under the Securities Act and applicable state securities laws
or
an applicable exemption from the registration requirements of the Securities
Act
and any applicable state securities laws. Executive also agrees that the shares
of Stock which Executive may acquire by exercising this Option will not be
sold
or otherwise disposed of in any manner which would constitute a violation of
any
applicable federal or state securities laws.
In
addition, Executive agrees that (i) the certificates representing the shares
of
Stock purchased under this Option may bear such legend or legends as the
Committee deems appropriate in order to assure compliance with Xxxxxxxxx 0,
Xxxxxxxxx 7, and applicable securities laws, (ii) the Company may refuse to
register the transfer of the shares of Stock purchased under this Option on
the
stock transfer records of the Company if such proposed transfer would in the
opinion of counsel satisfactory to the Company constitute a violation of
Xxxxxxxxx 0, Xxxxxxxxx 7, or any applicable securities law, and (iii) the
Company may give related instructions to its transfer agent, if any, to stop
registration of the transfer of the shares of Stock purchased under this
Option.
9.
Employment
Relationship.
For
purposes of this Agreement, Executive shall be considered to be in the
employment of the Company as long as Executive remains an Executive of either
the Company, an Affiliate, or a corporation or a parent or subsidiary of such
corporation assuming or substituting a new option for this Option. Without
limiting the scope of the preceding sentence, it is expressly provided that
Executive shall be considered to have terminated employment with the Company
at
the time of the termination of the “Affiliate” status under the Plan of the
entity or other organization that employs Executive. Any question as to whether
and when there has been a termination of such employment, and the cause of
such
termination, shall be determined by the Committee and its determination shall
be
final.
10.
Restrictions
on Transfer.
An Award
shall be transferable freely transferable on the date of issuance.
-5-
11.
Binding
Effect.
This
Agreement shall be binding upon and inure to the benefit of any successors
to
the Company and all persons lawfully claiming under Executive.
12.
Entire
Agreement.
This
Agreement constitutes the entire agreement of the parties with regard to the
subject matter hereof, and contains all the covenants, promises,
representations, warranties and agreements between the parties with respect
to
the Option granted hereby. Without limiting the scope of the preceding sentence,
all prior understandings and agreements, if any, among the parties hereto
relating to the subject matter hereof are hereby null and void and of no further
force and effect. Any modification of this Agreement shall be effective only
if
it is in writing and signed by both Executive and an authorized officer of
the
Company.
13.
Governing
Law. This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of Delaware, without regard to conflicts of laws principles
thereof.
14.
Jurisdiction.Each
of
the Company and Executive hereby irrevocably (i) submits and consents to the
personal jurisdiction of the state and federal courts sitting in Kent County,
Delaware with respect to any suit, action, or proceeding arising out of or
based
upon this Agreement or the transactions contemplated hereby and (ii) waives
the
right to contend in any such action that venue is improperly laid in any such
court or that it is an improper or inconvenient forum or lacks personal
jurisdiction. If Executive now or hereafter resides outside the State of
Delaware, Executive hereby irrevocably appoints the General Counsel of the
Company as Executive’s authorized agent upon whom process may be served at such
General Counsel’s Company office for notices under this Agreement in any suit,
action, or proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby that may be instituted in any state or federal
court in the State of Delaware by the Company, and Executive hereby agrees
to so
act. Executive agrees to take any and all action, including the filing of any
and all documents and instruments, that may be necessary to continue such
appointment in full force and effect as aforesaid. Service of process upon
the
authorized agent of Executive and written notice of such service to Executive
shall be deemed, in every respect, effective service of process as to Executive
for purposes of any such suit, action, or proceeding instituted in any state
or
federal court in the State of Delaware.
Nonstatutory
Option.
-6-
IN
WITNESS WHEREOF,
the
Company has caused this Agreement to be duly executed by its officer thereunto
duly authorized, and Executive has executed this Agreement, all as of the day
and year first above written.
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STANDARD
DRILLING, INC.
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By:
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Xxxxxxx
X. Xxxxxxxxx, Xx., CEO
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<EXECUTIVE>
(“Executive”)
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Print
Name
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