Exhibit
10.1


 


LONE STAR TECHNOLOGIES, INC. 

FORM OF DIRECTOR OPTION AGREEMENT


 


Non-Qualified Stock Option

Granted Pursuant to the

2004 Long-Term Incentive Plan


 


OPTION granted [              ],
20[    ] (the “Date of
Grant”) by Lone Star Technologies, Inc. (“LST”)
to [                  ]
(“Optionee”) pursuant to LST’s 2004
Long-Term Incentive Plan (the “Plan”).


 


1.                                       Option Grant.  LST hereby grants to the Optionee the option
(“Option”) to purchase a total of [            ]
shares of Common Stock, $1.00 par value, of LST (“Common Stock”)
at the exercise price per share of $[        ],
upon the terms and conditions hereinafter stated. This Option shall not be
treated as an “incentive stock option” within the meaning of section 422 of the
Internal Revenue Code of 1986, as amended.


 


2.                                       Portions of Option Exercisable.  Except as specifically provided herein, the
Option will become exercisable as to the total number of shares covered by the
Option on the first anniversary of the Date of Grant, subject to the Optionee’s
remaining in the continuous service as a director of LST (“service”)
through such anniversary date. The Option will expire upon the termination of
the Optionee’s service if and to the extent the Option has not then become
exercisable.


 


3.                                       Acceleration of Vesting. The Option
will become fully exercisable if, before the first anniversary of the Date of
Grant, (a) the Optionee’s service terminates by reason of the Optionee’s death,
retirement after age 65 or retirement with the consent of LST (subject, in the
case of retirement, to such other conditions as LST may impose), or (b) there
is a Change in Control (within the meaning of Section 9(d) of the Plan) and,
within two years after the Change in Control, the Optionee’s service terminates
by reason of his removal without Cause (within the meaning of Section 5(e)(ii)
of the Plan).


 


4.                                       Periods in which Option Exercisable.
If and to the extent the Option becomes exercisable, it may be exercised in
whole or in part until (a) the third anniversary of the termination of the
Optionee’s service in the case of a termination described in Section 3, whether
or not such termination occurred before the first anniversary of the Date of
Grant, (b) the first anniversary of the Optionee’s death if the Optionee dies
after the termination of his service, but only to the extent the Option was
otherwise exercisable at the time of his death (provided that nothing in this
Section 4(b) shall shorten any longer period to which the Optionee is entitled
under Section 4(a)), (c) the date of the termination of the Optionee’s service
for Cause (as defined in the Plan), and (d) the date 90 days after the date of
the termination of the Optionee’s service for any reason other than those
described in (a)-(c) above.


 


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5.                                       Expiration of Option. The Option
will expire if and to the extent it is not (or does not become) exercisable
upon the termination of the Optionee’s service or is not exercised within the
applicable period following the Optionee’s death or termination of service
during which it remains exercisable (or, in the case of a termination for
Cause, to the extent it is not exercised before such termination of service).
Notwithstanding anything to the contrary herein, the Option will not be
exercisable after the fifth anniversary of the Date of Grant and, to the extent
not previously exercised, will expire on such date.


 


6.                                       Exercise. The Option, to the extent
exercisable, may be exercised in whole or in part by delivering to the Secretary
of LST (a) a written notice specifying the number of shares to be purchased and
(b) payment in full of the exercise price per share multiplied by the number of
shares with respect to which the Option is being exercised, together with the
amount (if any) deemed necessary by LST to enable it to satisfy any income tax
withholding obligations attributable to the exercise (unless other arrangements
acceptable to LST are made for the satisfaction of such withholding
obligations). The exercise price shall be payable in one or more of the
following forms: (i) cash, (ii) shares of Common Stock having a fair market
value on the date of exercise at least equal to the exercise price, (iii) while
the Common Stock is publicly traded, through a cashless exercise procedure
permitted by LST in accordance with Regulation T of the Federal Reserve Board
and other applicable law, or (iv) by any other means as LST may permit.


 


7.                                       Transferability. Except for inter
vivos transfers to “family members” as may be permitted by the Human Resources
Committee pursuant to Section 5(f) of the Plan, the Option is not assignable or
transferable other than to a beneficiary designated to receive the Option upon
the Optionee’s death in a manner acceptable to the LST or by will or the laws
of descent and distribution, and the Option shall be exercisable during the
lifetime of the Optionee only by the Optionee (or, in the event of the
Optionee’s incapacity, the Optionee’s legal representative or guardian). Any
attempt by the Optionee or any other person claiming against, through or under
the Optionee to cause the Option or any part of it to be transferred or
assigned in any manner and for any purpose (other than as expressly permitted
by this instrument or the Plan) will be null and void and without effect upon
LST, the Optionee and any other person.


 


8.                                       Rights of Optionee. Nothing herein
contained shall confer on the Optionee any right with respect to the
continuation of directorship or employment or interfere with the right of LST
to terminate such directorship or the right of LST or any subsidiary of LST to
terminate such employment or, except as to shares actually issued, confer any
rights as a shareholder upon the holder hereof.


 


9.                                       Provisions of the Plan Control.
This Option is subject to all the terms, conditions and provisions of the Plan,
a copy which has been furnished or made available to the Optionee, and to such
rules, regulations and interpretations as may be established or made by the
Human Resources Committee acting within the scope of its authority and
responsibility under the Plan. The applicable provisions of the Plan shall
govern in any situation where this instrument is silent or where the applicable
provisions of this instrument are contrary to or not reconcilable with such
Plan provisions.


 


10.                                 Miscellaneous.
LST may affix to certificates representing shares issued pursuant to this
instrument any legend that LST determines to be necessary or advisable to
reflect any


 


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restrictions to which the shares may be subject, whether by agreement
or otherwise. LST may advise the transfer agent to place a stop order against
any legended shares. LST shall have the right to offset against its obligation
to issue and  deliver shares under this
instrument any outstanding amounts owed by the Optionee to LST at the time
those shares would otherwise be issued and delivered. This Option shall be
governed by and construed in accordance with the laws of the State of Delaware,
without regard to its principles of conflict of laws. The terms of this Option
may not be amended, except as provided in the Plan or by a written instrument
executed by LST and the Optionee.


 


 


	
   

  	
  LONE STAR TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					



 


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