ex10-26.htm


    
      

      

    

     

    EXHIBIT
10.26

    
 

    STOCK
OPTION

    GRANT
AGREEMENT

    


    2001
Directors and Officers Long-Term Incentive Plan

    


    


    On
_______________, 2009 (the “Date of Grant”) the Compensation Committee of the
Board of Directors (the “Committee”) of McDermott International, Inc. (the
“Company”) granted to you, pursuant to the 2001 Directors and Officers Long-Term
Incentive Plan (the “Plan”) of the Company, certain Non-Qualified Stock Options
(the “Options”), upon the terms and conditions set forth in the Program, and/or
in this Agreement (hereinafter, the “Grant”).  The provisions of the
Plan are incorporated herein by reference.  A copy of the Plan is
enclosed for your reference.

    


    Any
reference or definition contained in this Agreement shall, except as otherwise
specified, be construed in accordance with the terms and conditions of the Plan
and all determinations and interpretations made by the Committee with regard to
any question arising hereunder or under the Plan shall be binding and conclusive
on you and your legal representatives and beneficiaries.  The term
“Company” as used in this Agreement with reference to employment shall include
subsidiaries of the Company.  Whenever the words “you or your” are
used in any provision of this Agreement under circumstances where the provision
should logically be construed to apply to the beneficiary, estate, or personal
representative, to whom any rights under this Agreement may be transferred by
will or by the laws of descent and distribution, it shall be deemed to include
such person.

    


    Subject
to the provisions of the Plan, the terms and conditions of this Grant are as
follows:

    


    
      	
              1.  

            	
              Number and Price of
      Options – The Company grants to you the option to purchase from the
      Company at the price of $_________ up to, but not exceeding in the
      aggregate, the number of shares of the Company’s Common Stock (the “Common
      Stock”), as shown on the attached Notice of Grant and as explained
      hereinafter and in the Program.

            


    

    


    
      	
              2.  

            	
              Option Term –
      Options have been granted for a period of seven (7) years from the Date of
      Grant (the “Option Term”).

            


    

    


    
      	
              3.  

            	
              Vesting of
      Options – Subject to the “Forfeiture of Options” paragraph below,
      options do not provide you with any rights or interest therein until they
      vest and become exercisable in one-third (1/3) increments on the first,
      second and third anniversaries of the Date of Grant.  Options
      which are or become exercisable at the time of termination of employment
      continue to be exercisable until terminated in accordance with Paragraph 6
      below.

            


    

    


    All
unvested Options shall become vested and exercisable upon your termination of
employment due to death or disability, or upon the occurrence of a “Change in
Control” as defined in the Plan.

    


    If your
employment is terminated prior to the third anniversary of the Date of Grant due
to “Retirement”, 25 % of the then unvested Options will become vested and
exercisable provided your termination date is on or after the first anniversary
of the Date of Grant, and 50% of the then unvested Options will become vested
and exercisable provided your termination date is on or after the second
anniversary of the Date of Grant.  For this purpose, “Retirement”
means a voluntary termination of employment after attaining age 60 and
completing 10 years of service with the Company or its subsidiaries, or an
involuntary termination due to reduction in force.

    


    The
Committee, in its sole discretion, may provide for additional
vesting.

    


    
      	
              4.  

            	
              Forfeiture of Options
      - Options which are not and do not vest and become exercisable at
      your termination of employment with the Company or its subsidiaries for
      any reason shall, coincident therewith, terminate and be of no force and
      effect.

            


    

    


    In the
event that (i) you are convicted of (1) a felony or (2) misdemeanor involving
fraud, dishonesty or moral turpitude, or (ii) you engage in conduct that
adversely effects or may reasonably be expected to adversely affect the business
reputation or economic interests of the Company, as determined in the sole
discretion of the Committee, then all outstanding Options awarded to you under
this grant terminate and have no force and effect immediately upon notice of
such conviction or determination.  In addition, your right to exercise
Options may be suspended during any inquiry regarding any such acts pending a
final determination by the Committee.

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    How to Exercise –
Charles Schwab & Co., Inc. (“Schwab”) currently administers the Company’s
stock plans and you must exercise your Options with Schwab.  You have
two ways to exercise your Options through Schwab:

    


    
      	
              1.  

            	
              Online
      – http://equityawardcenter.schwab.com;
      or

            


    

    


    
      	
              2.  

            	
              Telephone
      – 1-800-654-2593.

            


    

    


    Certain
restrictions apply if you are a Section 16 insider.  The Committee may
change Plan administrators or exercise procedures from time to
time.  You will be notified of such changes, as
applicable.

    


    
      	
              5.  

            	
              Termination of
      Options – The Options, which become exercisable as provided in
      paragraphs 3 and 4 above, shall terminate and be of no force or effect as
      follows:

            


    

    


    
      	
              (a)  

            	
              If
      your employment terminates during the Option Term by reason of Retirement
      or disability, the Options terminate and have no force or effect upon the
      expiration of the Option Term;

            


    

    


    
      	
              (b)  

            	
              If
      your employment terminates during the Option Term by reason of death, the
      Options terminate and have no force or effect three (3) years after the
      date of death, or upon the expiration of the Option Term, whichever occurs
      first;

            


    

    


    
      	
              (c)  

            	
              If
      your employment terminates during the Option Term for any other reason,
      the Options terminate and have no force or effect upon the expiration of
      three (3) months after your termination of employment or the expiration of
      the Option Term, whichever occurs
first;

            


    

    


    
      	
              (d)  

            	
              If
      you continue in the employ of the Company through the Option Term, the
      Options terminate and have no force or effect upon the expiration of the
      Option Term.

            


    

    


    


    
      	
              6.  

            	
              Who Can
      Exercise – During your lifetime the Options shall be exercisable
      only by you.  No assignment or transfer of the Options, whether
      voluntary or involuntary, by operation of law or otherwise, except by will
      or the laws of descent and distribution or pursuant to a Qualified
      Domestic Relations Order, shall vest in the assignee or transferee any
      interest whatsoever.

            


    

    


    
      	
              7.  

            	
              Securities and
      Exchange Commission Requirements.  If you are a Section
      16 insider, this type of transaction must be reported on a Form 4 before
      the end of the second (2) business day following the Date of
      Grant.  Please be aware that if you are going to reject the
      grant, you should do so immediately after the Date of Grant to avoid
      potential Section 16 liability.  Please advise Kathy Peres and
      Renee Hack immediately by e-mail, fax or telephone call if you intend to
      reject this Grant.  Absent such notice of rejection, the Company
      will prepare and file the required Form 4 on your behalf within the
      required two business day deadline. If Section 16 applies to you, you are
      also subject to Rule 144.  This Rule is applicable only when the
      shares are sold, so you need not take any action under Rule 144 at this
      time.

            


    

    


    Those of
you covered by these requirements have already been advised of your
status.  Others of you may become Section 16 insiders at some future
date, in which case reporting will be required at that time.

    


    You will
recognize income upon the exercise of non-qualified stock options in accordance
with the tax laws of the jurisdiction that is applicable to you.  You
will be required to pay forthwith to the Company the amount which the Company
must withhold on your behalf upon exercise of the Options.  State
income tax and FICA withholding may also be required and will be withheld in the
same manner.

    


    Neither
the action of the Company in establishing the Program, nor any action taken by
it, by the Committee or the Board of Directors under this Program nor any
provisions of this Agreement shall be construed as giving to you the right to be
retained in the employ of the Company.