Contract
Xxxxxxx
00x
0000
XXXXX COMPANIES, INC. LONG-TERM INCENTIVE PLAN
THIS
NONQUALIFIED STOCK OPTION AGREEMENT
(this
“Agreement”) is made as of the ____day
of
______(“Grant
Date”), between Rowan Companies, Inc., a Delaware corporation (the “Company”)
and [name] (“Participant”).
| 1. |
Grant
of Option.
To carry out the purposes of the 2005 Rowan Companies, Inc. Long-Term
Incentive Plan (the “Plan”), by affording Participant the opportunity to
purchase shares of common stock, $0.125 par value per share of
the Company
(“Stock”), and in consideration of the mutual agreements and other matters
set forth herein and in the Plan, the Company hereby irrevocably
grants to
Participant the right and option (“Option”) to purchase all or any part of
an aggregate of [number] shares of Stock, effective as of the Grant
Date
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.
All
capitalized terms not otherwise defined herein shall have the meanings
set
forth in the Plan. The Plan and this Option shall be administered
by the
Compensation Committee (the “Committee”) of the Board of Directors of the
Company. This Option shall not be treated as an incentive stock
option
within the meaning of section 422(b) of the Internal Revenue Code
of 1986,
as amended (the “Code”).
|
| 2. |
Purchase
Price.
The purchase price of Stock purchased pursuant to the exercise
of this
Option shall be $_____per
share.
|
| 3. |
Exercise
of Option.
This Option shall be exercisable in the manner described below
for 25% of
the aggregate number of shares offered by this Option on and after
each of
the first, second, third and fourth anniversaries of the Grant
Date;
provided, however, this Option may be exercised only prior to its
expiration date and, except as otherwise provided below, only while
Participant remains an Employee of the Company. The Option will
terminate
and cease to be exercisable upon Participant’s termination of employment
with the Company, except that:
|
| (a) |
If
Participant’s employment with the Company terminates by reason of
Retirement, Participant may exercise this Option at any time during
the
period of five years following the date of such termination, but
only as
to the number of shares that Participant was entitled to purchase
hereunder as of the date his employment so terminates, plus such
additional number of shares, if any, that the Committee, in its
sole
discretion, determines to be exercisable as of such
Retirement.
|
| (b) |
If
Participant dies within the five-year period following the date
of
Participant’s termination of employment by reason of Retirement,
Participant’s estate, or the person who acquires this Option by bequest or
inheritance or otherwise by reason of the death of Participant,
may
exercise this Option at any time during the period of two years
following
the date of Participant’s death, but only as to the number of shares
Participant was entitled to purchase hereunder as of the date
Participant’s employment terminated by reason of
Retirement.
|
| (c) |
If
Participant’s employment with the Company terminates by reason of
Disability, Participant may exercise this Option in full at any
time
during the period of five years following the date of such
termination.
|
| (d) |
If
Participant dies while in the employ of the Company or within the
five-year period following the date of Participant’s termination of
employment by reason of Disability, Participant’s estate, or the person
who acquires this Option by bequest or inheritance or by reason
of the
death of Participant, may exercise this Option in full at any time
during
the period of two years following the date of Participant’s
death.
|
If
Participant’s employment with the Company terminates other than by reason of
Retirement, Disability or death, this Option (to the extent not exercised
prior
thereto) shall terminate as of the date Participant’s employment so terminates.
This Option shall not be exercisable in any event after the expiration of
ten
years from the Grant Date hereof.
| 4. |
Manner
of Exercise.
In order to exercise this Option, the Participant shall deliver
to the
Chief Financial Officer or other designated officer of the Company
payment
in full for (i) the shares being purchased and (ii) unless other
arrangements have been made with the Committee, any required withholding
taxes. The payment of the exercise price for each Option shall
be either
in cash or by check payable and acceptable to the Company; provided,
however, with the consent of the Committee, which consent may be
granted
or withheld in the Committee’s sole discretion and subject to any
instructions or conditions as the Committee may impose, payment
of the
exercise price and/or withholding may be made by (x) tendering
to the
Company shares of Stock having an aggregate Fair Market Value as
of the
date of exercise that is not greater than the full exercise price
for the
shares with respect to which the Option is being exercised and
the amount
required to be withheld, or (y) the Company may deliver certificates
for
the shares of Stock for which the Option is being exercised to
a broker
for sale on behalf of Participant, provided that Participant has
irrevocably instructed such broker to remit directly to the Company
on
Participant’s behalf from the proceeds of such sale the full amount of the
exercise price, plus all required withholding taxes. In the event
that
Participant, with the consent of the Committee, elects to make
payment as
allowed under clause (x) above, the Committee may, upon confirming
that
Participant owns the number of shares being tendered, authorize
the
issuance of a new certificate for the number of shares being acquired
pursuant to the exercise of the Option, less the number of shares
being
tendered upon the exercise, and return to Participant (or not require
surrender of) the certificate for the shares being tendered upon
the
exercise.
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| 5. |
Retirement.
For purposes of the Agreement and pursuant to the terms of the
Plan,
Retirement of an employee shall have occurred
if:
|
| (a) |
in
the case of an Employee who is an employee of Rowan Companies,
Inc. or an
employee of an Employing Company, as defined in the Rowan Pension
Plan
|
(the
“Rowan Plan”), the Employee: (1) has satisfied the requirements for normal
retirement pursuant to the rules of the Rowan Plan which, in terms of age,
is a
minimum of 60 and (2) has requested and received authorization from the
administrative committee appointed by the Company’s Board of Directors to
administer the Rowan Plan to commence receiving pension benefits;
or
| (b) |
in
the case of an Employee who is an employee of XxXxxxxxxx, Inc.
or an
employee of an Employing Company, as defined in the XxXxxxxxxx
Pension
Plan (the “XxXxxxxxxx Plan”), the Employee: (1) has satisfied the
requirements for either normal or late retirement pursuant to the
rules of
the XxXxxxxxxx Plan,
|
(2)
has
requested and received authorization from the administrative committee appointed
by the Board of Directors of XxXxxxxxxx, Inc. to administer the XxXxxxxxxx
Plan
to commence receiving pension benefits, and (3) would have satisfied the
requirements for normal retirement pursuant to the rules of the Rowan Plan
if he
or she was an employee of Rowan Companies, Inc. or an employee of an Employing
Company under the Rowan Plan.
Determination
of the date of termination of employment by reason of Retirement shall be
based
on such evidence as the Committee may require, and a determination by the
Committee of such date of termination shall be final and controlling on all
interested parties.
| 6. |
Status
of Stock.
The Company intends to register for issuance under the Securities
Act of
1933, as amended (the “Act”), the shares of Stock acquirable upon exercise
of this Option and to keep such registration effective throughout
the
period that this Option is exercisable. In the absence of such
effective
registration or an available exemption from registration under
the Act,
issuance of shares of Stock acquirable upon exercise of the Option
will be
delayed until registration of such shares is effective or an exemption
from registration under the Act is available. The Company intends
to use
its reasonable efforts to ensure that no such delay will occur.
In the
event exemption from registration under the Act is available upon
an
exercise of this Option,
Participant (or the person permitted
to exercise this Option
in the event
of
Participant’s incapacity or death), 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 assuring
compliance with applicable securities laws. The Company shall incur
no
liability to Participant
for failure to register the Stock or maintain the
registration.
|
Participant
agrees that the shares of Stock, which Participant may acquire by exercising
this Option,
will not be sold or otherwise disposed of in any manner that would constitute
a
violation of
any
applicable securities laws, whether federal or state. Participant also agrees
(i) that 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 applicable securities
laws,
(ii) that 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 any applicable securities law and (iii) that 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.
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| 7. |
Employment
Relationship.
For purposes of this Agreement, Participant shall be considered
to be in the employment of the Company as long as Participant remains
an
Employee of either the
Company, a parent or subsidiary corporation (as defined in section
424 of
the Code) of the Company, or
a corporation or a parent or subsidiary of such corporation assuming
or
substituting a new option for
this Option. 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
in its
sole discretion, and its determination shall be
final.
|
| 8. |
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
to
Participant for federal or state income tax purposes, Participant
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 obligation
under
applicable tax laws or regulations, and if Participant fails to
do so, the
Company is authorized to withhold from any cash or Stock remuneration
then
or thereafter payable to Participant any tax required to be withheld
by
reason of such resulting compensation income. Upon an exercise
of this
Option, the Company is further authorized in its discretion to
satisfy
any withholding requirement out of any cash or shares of Stock
distributable
to Participant
upon such exercise.
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| 9. |
Reorganization
of the Company. The
existence
of
this Agreement 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; any merger or consolidation
of the
Company; any issuance of bonds, debentures, preferred or prior
preference
stock ahead of or affecting the Stock or the rights thereof; the
dissolution or liquidation of the Company; any sale or transfer
of all or
any part of its assets or business; or any other corporate act
or
proceeding, whether of a similar character or
otherwise.
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| 10. |
Recapitalization
Events. In
the
event of stock dividends, spin-offs of assets or other extraordinary
dividends, stock splits, combinations of shares, recapitalizations,
mergers, consolidations, reorganizations, liquidations, issuances
of
rights or warrants and similar transactions or events involving
the
Company (“Recapitalization Events”), then for all purposes references
herein to Stock shall mean and include all securities or other
property
(other than cash) that holders of Stock of the Company are entitled
to
receive in respect of Stock by reason of each successive Recapitalization
Event, and the exercise price of the Option shall be adjusted as
deemed
necessary or appropriate in the sole discretion of the Committee
to
prevent enlargement or dilution of Participant’s rights under this
Agreement.
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-4-
| 11. |
Transfer
of Option.
Except as provided herein, all rights granted hereunder shall not
be
transferable other than by will or the laws of descent and distribution
and shall be exercisable during the Participant’s lifetime only by the
Participant or, in the case of the Participant’s death or incapacity, by
the Participant’s guardian or legal representative. Participant
(hereinafter the “Initial Optionee”) for the purposes of this Paragraph 11
may transfer this Option (in whole or in part) subject to Committee
approval, and such conditions and limitations, if any, as the Committee
may impose with respect to such transfer to any of (i) the spouse,
children or grandchildren (“Immediate Family Members”) of the Initial
Optionee, (ii) a trust or trusts for the exclusive benefit of one
or more
of the Immediate Family Members and, if applicable, the Initial
Optionee,
(iii) a partnership or limited liability company whose only partners,
shareholders or members are the Initial Optionee and/or one or
more
Immediate Family Members or (iv) an organization that has been
determined
by the Internal Revenue Service to be exempt under Section 501
(c)(3) of
the Code. Following any transfer by the Initial Optionee, this
Option may
not be transferred except back to the Initial Optionee, unless
the
Committee approves otherwise on such terms as it shall establish
in its
sole discretion. A transfer of this Option must be for no consideration,
unless the Committee otherwise agrees to a transfer for consideration.
The
terms and conditions of the Plan and this Agreement shall continue
to be
subject to the same limitation, vesting and expiration provisions
of (a),
(b), (c) and (d) of Paragraph 3 above, which shall be applied “as
if”
Participant continued to be the holder of the Option. If transferred,
this
Option
shall not be exercisable unless arrangements satisfactory
to the Company have been made to
satisfy any tax withholding obligations
the Company may have with respect to the transferee’s
exercise of the Option. Further, the Company shall have no obligation
to
provide any notices to an Option transferee of any event, term
or
provision with respect to the Option, including, without limitation,
the
early termination of the Option on account of termination of Participant’s
employment. No transfer of this Option shall be effective unless
the
Committee receives prior written notice of the terms and conditions
of any
intended transfer, determines that the transfer complies
with the requirements imposed hereunder with respect to Option transfers
and approves
the transfer. Any purported assignment, alienation, pledge, attachment,
sale, transfer or encumbrance of this Option that does not satisfy
the
requirements set forth hereunder shall be void and unenforceable
against
the Company.
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| 12. |
Severability. In
the event that any provision of this Agreement shall be held illegal,
invalid, or unenforceable for any reason, such provision shall
be
fully severable and shall not affect the remaining provisions of
this
Agreement, and the Agreement shall be construed and enforced as
if the
illegal, invalid or unenforceable provision had never been included
herein.
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| 13. |
Certain
Restrictions. By
executing this Agreement, Participant acknowledges that he will
enter into
such written representations, warranties
and agreements and execute such documents as the Company may reasonably
request in order to comply with this Agreement, the securities
laws or any
other applicable laws, rules or regulations, or the terms of the
Plan.
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| 14. |
Amendment
and Termination.
Except as otherwise provided in the Plan or this Agreement, no
amendment
or termination of this Agreement shall be made by the Company without
the
written consent of the Participant.
|
-5-
| 15. |
No
Guarantee of Tax Consequences. The
Company
makes no commitment or guarantee to Participant that any federal
or state
tax treatment will apply or be available to any person eligible
for
benefits under this Agreement.
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| 16. |
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
Participant.
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| 17. |
IN
WITNESS WHEREOF,
the
Company has caused this Agreement to be duly executed by its
officer thereunto duly authorized, and Participant has executed this Agreement,
all as of the day and
year
first above written.
ROWAN
COMPANIES, INC.
By:_________________________________________ Date:_____________________________
Xxxxxx
X.
Xxxxxx,
Vice
Chairman and Chief Administrative Officer
PARTICIPANT:
______________________________________ Date:______________________________
Address:
______________________________________
______________________________________
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