Document:

ex10_26.htm

    
      

      

    

    EXHIBIT
10.26

    
 

    2008
PERFORMANCE SHARES

    GRANT
AGREEMENT

    

    Amended
and Restated 2001 Directors and Officers Long-Term Incentive Plan

    

    

    On
______, 2008 (the “Date of Grant”), the Compensation Committee of the Board of
Directors (the “Committee”) of McDermott International, Inc. (the “Company”)
selected you to receive a grant of Performance Shares under the Company’s
amended and restated 2001 Directors and Officers Long-Term Incentive Plan (the
“Plan”) upon the terms and conditions set forth in this Grant Agreement (the
“Agreement”).  The provisions of the Plan are incorporated herein by
reference.  A copy of the Plan is attached for your
reference.

    

    Performance
Shares

    

    Performance Shares
Award.  You have been awarded an initial grant (the “Initial
Grant”) of Performance Shares.  This grant represents a right to
receive shares of common stock of the Company, provided the applicable
performance measures and vesting requirements set forth in this Agreement have
been satisfied.  No shares are awarded or issued to you on the Date of
Grant.

    

    Vesting
Requirements.  Except as provided in the following paragraphs,
Performance Shares do not provide you with any rights or interest therein until
they become vested on the third anniversary of the Date of Grant (the “Vesting
Date”), provided you are still employed by the Company or one of its
subsidiaries.

    

    In the
event you terminate employment prior to the third anniversary of the Date of
Grant due to “Retirement,” 33% of the Initial Grant will continue to vest
provided your termination date is on or after the first anniversary of the Date
of Grant, and 66% of the Initial Grant will continue to vest provided your
termination date is on or after the second anniversary of the Date of
Grant.

    

    For this
purpose, the term “Retirement” means (a) voluntary termination of employment
after attaining age 60 and completing at least 10 years of service with the
Company or its subsidiaries, or (b) involuntary termination in connection with a
reduction in force.

    

    In the
event your employment terminates by reason of your death or disability prior to
the third anniversary of the Date of Grant, 100% of the Initial Grant shall
continue to vest.

    

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

    

    Forfeiture of Performance
Shares.  Except as otherwise provided above, Performance Shares
which are not vested at your termination of employment for any reason shall,
coincident therewith, be forfeited.

    

    In
addition, in the event that (a) you are convicted of (i) a felony or (ii) a
misdemeanor involving fraud, dishonesty or moral turpitude, or (b) you engage in
conduct that adversely affects or may reasonably be expected to adversely affect
the business reputation or economic interests of the Company, as determined in
the sole judgment of the Committee, then all Performance Shares and all rights
or benefits awarded to you under this grant of Performance Shares are forfeited,
terminated and withdrawn immediately upon such conviction or notice of such
determination.  The Committee shall have the right to suspend any and
all rights or benefits awarded to you hereunder pending its investigation and
final determination with regard to such matters.

    

    Number of Performance
Shares.  The percentage of Performance Shares in your Initial
Grant in which you will vest shall be determined based on the Cumulative
Operating Income of the Company on December 31, 2010 as illustrated in the
schedule set forth below.  The actual vested percentage above 25% will
be determined by linear interpolation.  For this purpose, the term
“Cumulative Operating Income” means operating income determined in accordance
with U.S. Generally Accepted Accounting Principles (“GAAP”) for the period
beginning on January 1, 2008 and ending on December 31, 2010.  For
purposes of determining Cumulative Operating Income, the Committee may adjust
the GAAP results for unusual or non-recurring items in the Committee’s
discretion.

    

                Cumulative Operating
Income                                                                              Vested
Percentage

    

    $_____                                                                  25%

    $_____                                                                100%

    $_____                                                                150%

    

    For
example, if the Cumulative Operating Income determined is $____ million, you
will vest in 125% of the Performance Shares in your Initial
Grant.  The number of shares of common stock of the Company you
receive shall be equal to the number of your vested Performance
Shares.  No Performance Shares will vest if the Cumulative Operating
Income on December 31, 2010 is below $____ million.  In no event will
the vested percentage be greater than 150%.

    

    Payment of Performance
Shares.  Except as otherwise provided below in the section
entitled “Change in Control,” you (or your beneficiary, if applicable) will
receive one share of common stock of the Company for each Performance Share that
vests. Shares shall be distributed as soon as administratively practicable after
the Vesting Date.  If any calculation of common stock to be awarded
hereunder would result in a fraction, any fraction of 0.5 or greater will be
rounded to one, and any fraction of less than 0.5 will be rounded to
zero.

    

    Change in
Control.  If a Change in Control (as defined in the Plan) of
the Company occurs, all outstanding Performance Shares granted hereunder shall
immediately vest.  The number of Performance Shares that vest in
connection with a Change in Control shall be the greater of (i) 100% of the
Initial Grant or (ii) the vested percentage determined in accordance with the
schedule set forth above, based on Cumulative Operating Income earned as of the
end of the fiscal quarter immediately prior to the date the Change in Control
occurs and Adjusted Cumulative Operating Income targets, and the Vesting Date
shall be the date such Change in Control occurs.  The Adjusted
Cumulative Operating Income target shall be determined by multiplying the
targets set forth above by a fraction, the numerator of which is the number of
months from the Date of Grant through the end of the fiscal quarter immediately
prior to the date the Change in Control occurs and the denominator of which is
36.  Shares of common stock of the Company shall be distributed within
90 days following the date of the Change in Control.

    

    Tax
Consequences.  The Company has been advised that, in the
opinion of counsel, the grants awarded hereunder will have the following tax
consequences under the present U. S. Federal tax laws and
regulations:

    

    You will
not realize income on the grant of Performance Shares.  For U.S.
federal income tax purposes, you will be deemed to have received compensation
taxable as ordinary income equal to the fair market value, as of the Vesting
Date, of the shares you receive, which will be included in your taxable income
and reported on IRS Form W-2 in the tax year in which they vest.

    

    By
acceptance of this letter you agree that, upon vesting in the shares, you will
promptly pay to the Company the amount of income tax which the Company is
required to withhold in connection with the income realized by you and that,
failing such payment by you, the Company is authorized to withhold such amount
from subsequent salary payments.

    

    Transferability.  Performance
Shares granted hereunder are non-transferable other than by will or by the laws
of descent and distribution or pursuant to a qualified domestic relations
order.

    

    Securities and Exchange
Commission Requirements.  If you are a Section 16 insider, this
grant of Performance Shares is not reportable on a Form 4 unless and until they
become vested.  At that time, the number of Performance Shares
ultimately awarded to you must be reported on a Form 4 before the end of the
second (2nd)
business day following the Vesting Date.  Please be aware that if you
are going to reject the grant, you should do so immediately after the Date of
Grant.  Please advise Kathy Peres and Renee Hack immediately by
e-mail, fax or telephone if you intend to reject this grant.

    

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

    

    Other
Information.  Neither the action of the Company in establishing
the Plan, nor any action taken by it, by the Committee or by your employer, nor
any provision of the Plan or this Agreement shall be construed as conferring
upon you the right to be retained in the employ of the Company or any of its
subsidiaries or affiliates.ex10_27.htm

    
      

      

    

    EXHIBIT
10.27

    
 

    2008
RESTRICTED STOCK

    GRANT
AGREEMENT

    

    Amended
and Restated 2001 Directors and Officers Long-Term Incentive Plan

    

    On
______, 2008 (the “Date of Grant”), the Compensation Committee of the Board of
Directors (the “Committee”) of McDermott International, Inc. (the “Company”)
selected you to receive a grant of Restricted Stock under the Company’s amended
and restated 2001 Directors and Officers Long-Term Incentive Plan (the “Plan”)
upon the terms and conditions set forth in this Grant Agreement (the
“Agreement”).  The provisions of the Plan are incorporated herein by
reference.  A copy of the Plan is attached for your
reference.

    

    Restricted
Stock

    

    Restricted Stock
Award.  You have been awarded a grant of restricted
stock.  This grant represents a right to be issued the number of
shares of common stock of the Company as shown on the attached Notice of Grant
on the Date of Grant, subject to the restrictions contained in this Agreement
(“Restricted Stock”).  Shares evidencing the Restricted Stock will be
issued in your name as of the Date of Grant.

    

    Restrictions.  Unless
and until the vesting requirements and other terms set forth in this Agreement
have been satisfied, the Restricted Stock may not be sold, transferred, pledge,
assigned or otherwise alienated (the “Restrictions”).

    

    Vesting
Requirements.  Subject to the “Forfeiture of Restricted Stock”
and “Change in Control” sections below, the Restricted Stock will vest in
one-third (1/3) increments on the first, second and third anniversaries of the
Date of Grant.  Upon vesting, shares of Restricted Stock will be
released to you as soon as administratively practicable and the Restrictions
with respect thereto will be removed.  If the vesting of any shares of
Restricted Stock hereunder would result in a fraction, any fraction of 0.5 or
greater will be rounded to one, and any fraction of less than 0.5 will be
rounded to zero.

    

    Forfeiture of Restricted
Stock.  Except as provided below, shares of Restricted Stock
which are not vested at your termination of employment with the Company or its
subsidiaries for any reason shall, coincident therewith, be forfeited and such
shares shall be returned to the Company.

    

    In
addition, in the event that (a) you are convicted of (i) a felony or (ii) a
misdemeanor involving fraud, dishonesty or moral turpitude, or (b) you engage in
conduct that adversely affects or may reasonably be expected to adversely affect
the business reputation or economic interests of the Company, as determined in
the sole judgment of the Committee, then all outstanding Restricted Stock
awarded to you under this grant of Restricted Stock are forfeited, terminated
and withdrawn immediately upon such conviction or notice of such
determination.  The Committee shall have the right to suspend any and
all rights or benefits awarded to you hereunder pending its investigation and
final determination with regard to such matters.

    

    In the
event you terminate employment prior to the third anniversary of the Date of
Grant due to “Retirement,” 25% of the then outstanding Restricted Stock will
immediately vest provided your termination date is on or after the first
anniversary of the Date of Grant, and 50% of the then outstanding Restricted
Stock will immediately vest provided your termination date is on or after the
second anniversary of the Date of Grant.

    

    For this
purpose, the term “Retirement” means (a) voluntary termination of employment
after attaining age 60 and completing at least 10 years of service with the
Company or its subsidiaries, or (b) involuntary termination in connection with a
reduction in force.

    

    In the
event your employment terminates by reason of your death or disability prior to
the third anniversary of the Date of Grant, 100% of the then outstanding
Restricted Stock shall immediately vest.

    

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

    

    Change in
Control.  If a Change in Control (as defined in the Plan) of
the Company occurs, all outstanding Restricted Stock granted hereunder shall
immediately vest as of the date such Change in Control occurs.  The
vested shares of Restricted Stock shall be released as soon as administratively
practicable.

    

    Voting Rights and
Dividends.  Beginning on the Grant Date and subject to the
forfeiture provisions of this Agreement, you will have full voting rights and
will be credited with cash dividends, if any, with respect to the Restricted
Stock granted hereunder.

    

    Tax
Consequences.  The Company has been advised that, in the
opinion of counsel, the grant awarded hereunder will have the following tax
consequences under the present U. S. Federal tax laws and
regulations:

    

    For U.S.
federal income tax purposes, you will be deemed to have received compensation
taxable as ordinary income equal to you will be deemed to have received
compensation taxable as ordinary income equal to the fair market value, as of
the date of vesting, of the shares of Restricted Stock which
vest.  Such income will be included in your taxable income and
reported on IRS Form W-2 in the tax year in which the shares
vest.  Alternatively, you may elect to have the Fair Market Value of
the shares included in your taxable income and reported on IRS Form W-2 as of
the Date of Grant.

    

    In
addition, all dividends paid, if any, to you with respect to unvested shares of
Restricted Stock shall be considered wages paid to you by your employer and,
therefore, shall be included in your taxable income and reported on IRS Form W-2
in the year in which such shares vest.

    

    By
acceptance of this letter, you agree that upon the vesting of any shares of
Restricted Stock issued to you, you will promptly pay to the Company the amount
of income tax which the Company is required to withhold in connection with the
income realized by you as a result of such lapse of the restrictions (unless you
have previously made the election, and paid the tax, referred to above) and
that, failing such payment by you, the Company is authorized to withhold such
amount from subsequent salary payments.

    

    Securities and Exchange
Commission Requirements.  If you are a Section 16 insider, this
grant of Restricted Stock 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 of Restricted Stock hereunder, 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, we will prepare and file the required Form 4 on your
behalf within the required two business day deadline.

    

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

    

    Other
Information.  Neither the action of the Company in establishing
the Plan, nor any action taken by it, by the Committee or by your employer, nor
any provision of the Plan or this Agreement shall be construed as conferring
upon you the right to be retained in the employ of the Company or any of its
subsidiaries or affiliates.

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