As filed with the Securities and Exchange Commission on November 30, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
R&B FALCON CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 76-0544217
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
901 Threadneedle
Houston, Texas 77079
(281) 496-5000
(Address of Principal Executive Offices)
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CLIFFS DRILLING COMPANY 1988 INCENTIVE EQUITY PLAN
CLIFFS DRILLING COMPANY 1998 INCENTIVE EQUITY PLAN
(Full Title of Plans)
----------------
Leighton E. Moss
R&B Falcon Corporation
901 Threadneedle
Houston, Texas 77079
(Name and Address of Agent For Service)
(281) 496-5000
(Telephone Nnumber, Including Area Code, of Agent For Service)
-----------------
Copies to:
W. Mark Young
Gardere Wynne Sewell & Riggs, L.L.P.
Three Allen Center
333 Clay Avenue, Suite 800
Houston, Texas 77002-4086
(713) 308-5864
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CALCULATION OF REGISTRATION FEE
============================================================================
| | Proposed | Proposed |
| | Maximum | Maximum |
Title of each class | Amount to | Offering | Aggregate | Amount of
of Securities to be | be | Price per | Offering | Registration
Registered | Registered (2) | Share (3) | Price (3) | Fee
- ----------------------------------------------------------------------------
Common Stock, $0.01 | | | |
par value (1) | 1,052,300 | $10.2188 |$10,753,191 | $2,990
============================================================================
(1) Includes associated Rights to purchase shares of the Registrant's
Series A Junior Participating Preferred Stock, which Rights are not
currently separable from the shares of Common Stock and are not
currently exercisable.
(2) The amount being registered represents 1,052,300 authorized and
unissued shares reserved for issuance upon the exercise of options
under the Plans that are outstanding as of November 23, 1998. The
options were assumed by the Registrant pursuant to the terms of an
Agreement and Plan of Merger dated August 21, 1998 among the
Registrant, a wholly owned subsidiary of the Registrant, and Cliffs
Drilling Company. Pursuant to Rule 416(a), this Registration
Statement covers, in addition to the above 1,052,300 shares of Common
Stock, an indeterminate number of shares that may become subject to
the assumed options pursuant to certain anti-dilution provisions.
(3) Estimated solely for purpose of calculating the registration fee
in accordance with Rules 457(c) and 457(h) on the basis of the average
of the high and low price of the Registrant's common stock as reported
on the New York Stock Exchange, Inc. on November 27, 1998.
===========================================================================
EXPLANATORY STATEMENT
R&B Falcon Corporation, a Delaware corporation ("R&B Falcon"), is
filing this Registration Statement on Form S-8 relating to R&B Falcon
Common Stock, par value $0.01 per share ("R&B Falcon Common Stock"),
issuable pursuant to options granted under the Cliffs Drilling Company
1988 Incentive Equity Plan and the Cliffs Drilling Company 1998 Incentive
Equity Plan (the "Plans").
The terms of an Agreement and Plan of Merger dated August 21, 1998
(the "Merger Agreement") among R&B Falcon, RBF Cliffs Acquisition Corp.,
a Delaware corporation and a wholly owned subsidiary of R&B Falcon
("Merger Sub"), and Cliffs Drilling Company, a Delaware corporation
("Cliffs Drilling"), provide that Merger Sub will be merged with and into
Cliffs Drilling, with Cliffs Drilling surviving as a wholly owned
subsidiary of R&B Falcon (the "Merger"). Pursuant to the terms of the
Merger Agreement, upon consummation of the Merger, each outstanding share
of common stock, par value $0.01 per share, of Cliffs Drilling (the
"Cliffs Drilling Common Stock") will be converted into the right to
receive 1.7 shares of R&B Falcon Common Stock (the "Exchange Ratio").
Additionally, Section 5.9 of the Merger Agreement provides that all
options issued under the Plans will be assumed by R&B Falcon, with the
terms of such options to be adjusted to reflect the Exchange Ratio.
This Registration Statement relates only to the R&B Falcon Common
Stock issuable upon exercise of outstanding options granted under the
Plans. No additional options will be granted under either of the Plans.
PART I
INFORMATION REQUIRED IN THE SECTION 10 PROSPECTUS
Note: The document(s) containing the plan information required by Item
1 of Form S-8 and the statement of availability of registrant information
and any other information required by Item 2 of Form S-8 will be sent or
given to participants as specified by Rule 428 under the Securities Act
of 1933, as amended (the "Securities Act"). In accordance with Rule 428
and the requirements of Part I of Form S-8, such documents are not being
filed with the Securities and Exchange Commission (the "Commission")
either as part of this Registration Statement or as prospectuses or
prospectus supplements pursuant to Rule 424 under the Securities Act. R&B
Falcon shall maintain a file of such documents in accordance with the
provisions of Rule 428. Upon request, the Registrant shall furnish to the
Commission or its staff a copy or copies of all of the documents included
in such file.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
The following documents filed by R&B Falcon Corporation (the
"Registrant") with the Securities and Exchange Commission (File No.
1-13729) are incorporated in this registration statement by reference and
shall be deemed to be a part hereof.
(1) The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 filed pursuant to Section 13(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(2) The Registrant's Quarterly Reports on Form 10-Q for the
fiscal quarters ended March 31, 1998, June 30, 1998 and September 30,
1998.
(3) The Registrant's Current Reports on Form 8-K dated March 25,
1998, August 11, 1998, October 16, 1998 and October 16, 1998 filed
pursuant to Section 12 of the Exchange Act.
(4) The description of the Company's common stock, par value $.01
per share, contained under the caption "Description of Parent Capital
Stock-Parent Common Stock;-Parent Rights" in the Joint Proxy
Statement/Prospectus forming a part of the Registration Statement on
Form S-4 of the Registrant (File No. 333-40627), filed with the
Commission on November 20, 1997.
In addition, all documents subsequently filed by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all securities
then remaining unsold under this registration statement, shall be deemed
to be incorporated by reference in this registration statement and to be
a part hereof from the date of filing of such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Amended and Restated Certificate of Incorporation and Bylaws of
R&B Falcon Corporation require the indemnification of directors and
officers to the fullest extent permitted by law.
Section 145 of the Delaware General Corporation Law authorizes and
empowers R&B Falcon Corporation to indemnify the directors, officers,
employees and agents of R&B Falcon Corporation against liabilities
incurred in connection with, and related expenses resulting from, any
claim, action or suit brought against any such person as a result of his
relationship with R&B Falcon Corporation, provided that such person acted
in good faith and in a manner such person reasonably believed to be in,
and not opposed to, the best interests of R&B Falcon Corporation in
connection with the acts or events on which such claim, action or suit is
based. The finding of either civil or criminal liability on the part of
such persons in connection with such acts or events is not necessarily
determinative of the question of whether such persons have met the
required standard of conduct and are, accordingly, entitled to be
indemnified. The foregoing statements are subject to the detailed
provisions of Section 145 of the General Corporation law of the State of
Delaware.
Article 6.1 of the Bylaws of R&B Falcon Corporation provides that R&B
Falcon Corporation shall indemnify to the fullest extent authorized or
permitted by law, any person made, or threatened to be made, a party to
or otherwise involved in any action or proceeding by reason of the fact
that he or she is or was a director or officer of R&B Falcon Corporation,
at the request of R&B Falcon Corporation or by reason of the fact that
such director or officer at the request of R&B Falcon Corporation, is or
was serving any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, in any capacity.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
4.1 -- Rights Agreement dated as of December 23, 1997 between
the Registrant and American Stock Transfer & Trust
Company, as Rights Agent (incorporated by reference to
Exhibit 4.2 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1997).
4.2* -- Cliffs Drilling Company 1988 Incentive Equity Plan.
4.3* -- Cliffs Drilling Company 1998 Incentive Equity Plan.
5* -- Opinion of Leighton E. Moss.
15* -- Letter regarding unaudited interim financial
information.
23.1* -- Consent of Arthur Andersen LLP.
23.2* -- Consent of Leighton E. Moss (included in Exhibit 5).
24* -- Powers of Attorney (included on signature page).
__________________
* Filed herewith.
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule
424(b) of the Securities Act of 1933 if, in the aggregate, the
changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the
?Calculation of Registration Fee? table in the effective
Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the Registration Statement is on Form S-3 or Form S-8, and
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection
with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of
Texas, on November 30, 1998.
R&B FALCON CORPORATION
By:/s/Steven A. Webster
--------------------
Steven A. Webster
Chief Executive Officer and President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Steven A. Webster, Robert F.
Fulton and Leighton E. Moss, and each of them, each of whom may act
without joinder of the other, his or her true and lawful attorneys and
agents, with full power of substitution and resubstitution, for him or
her and in his or her name, place and stead, in any and all capacities,
to sign any or all pre- and post-effective amendments to this
Registration Statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agents, and
each of them, full power and authority to do and perform each and every
act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, and each of them, or the substitute or
substitutes of any or all of them, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/Steven A. Webster Chief Executive Officer, November 30, 1998
- ------------------------ President and Director
Steven A. Webster (Principal Executive Officer)
/s/Paul B. Loyd, Jr. Chairman of the Board and November 30, 1998
- ------------------------ Director
Paul B. Loyd, Jr.
/s/Robert F. Fulton Executive Vice President November 30, 1998
- ------------------------ (Principal Financial Officer)
Robert F. Fulton
/s/Tim W. Nagle Executive Vice President November 30, 1998
- ------------------------ (Principal Accounting Officer)
Tim W. Nagle
/s/Purnendu Chatterjee Director November 30, 1998
- ------------------------
Purnendu Chatterjee
/s/Arnold L. Chavkin Director November 30, 1998
- ------------------------
Arnold L. Chavkin
/s/Charles A. Donabedian Director November 30, 1998
- ------------------------
Charles A. Donabedian
/s/Douglas A.P. Hamilton Director November 30, 1998
- ------------------------
Douglas A.P. Hamilton
/s/Macko A.E. Laqueur Director November 30, 1998
- ------------------------
Macko A.E. Laqueur
/s/Michael E. Porter Director November 30, 1998
- ------------------------
Michael E. Porter
/s/Robert L. Sandmeyer Director November 30, 1998
- ------------------------
Robert L. Sandmeyer
/s/William R. Ziegler Director November 30, 1998
- ------------------------
William R. Ziegler
EXHIBIT INDEX
Item Exhibits
4.1 -- Rights Agreement dated as of December 23,
1997 between the Registrant and American
Stock Transfer & Trust Company, as Rights
Agent (incorporated by reference to Exhibit
4.2 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1997).
4.2 -- Cliffs Drilling Company 1988 Incentive
Equity Plan.
4.3 -- Cliffs Drilling Company 1998 Incentive
Equity Plan.
5 -- Opinion of Leighton E. Moss.
15 -- Letter regarding unaudited interim
financial information.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Leighton E. Moss (included in
Exhibit 5).
24 -- Powers of Attorney (included on signature
page).
Exhibit 4.2
CLIFFS DRILLING COMPANY
1988 INCENTIVE EQUITY PLAN
Section 1. Purpose.
The 1988 Incentive Equity Plan (the "Plan") is intended to encourage
key executives and managerial employees of Cliffs Drilling Company (the
"Company") and its Subsidiaries or Affiliates to become owners of Stock
of the Company in order to increase their interest in the Company's long-
term success, to provide incentive equity opportunities which are
competitive with other similarly situated corporations and to stimulate
the efforts of such employees by giving suitable recognition for services
which contribute materially to the Company's success.
Section 2. Definitions.
For purposes of the Plan, the following terms shall be defined as
set forth below:
(a) "Affiliate" means any entity other than the Company and its
Subsidiaries which the Board designates as an "Affiliate" for the
purposes of this Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means a felony conviction of a participant or the
failure of a participant to contest prosecution for a felony, or a
participant's willful misconduct or dishonesty, any of which is
directly and materially harmful to the business or reputation of the
Company or any Subsidiary or Affiliate.
(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
(e) "Committee" means the Committee referred to in Section 3 of the
Plan. If at any time a Committee shall not be in existence, then
the functions of the Committee specified in the Plan shall be
exercised by the Board.
(f) "Company" means Cliffs Drilling Company, a corporation
organized under the laws of the State of Delaware, or any successor
corporation.
(g) "Deferral Period" means the initial period of time during which
shares of Deferred Stock awarded pursuant to Section 8 are subject
to deferral limitations under Section 8(c).
(h) "Deferred Stock" means an award made pursuant to Section 8 of
the right to receive Stock at the end of a specified deferral
period.
(i) "Disability" means permanent and total disability as determined
under the Company's long-term disability program.
(j) "Disinterested Person" shall have the meaning set forth in Rule
16b-3(d)(3) as promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, or any successor
definition adopted by the Commission.
(k) "Early Retirement" means retirement, with the consent for
purposes of this Plan of the Committee (or any officer designated by
the Committee) at or prior to the time of retirement, from active
employment with the Company or any Subsidiary or Affiliate pursuant
to the early retirement provisions of the applicable pension plan of
such employer.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(m) "Elective Deferral Period" means the deferral period described
in Section 8(c)(v).
(n) "Fair Market Value" means, as of any given date the fair market
value of the Stock as determined by the Committee in good faith;
provided, however, that (a) as to any grants made pursuant to
Section 15 or otherwise pursuant to the Plan, effective on or before
June 21, 1988, "Fair Market Value" means the lesser of (i) the
closing price of the Stock on such date as reported on the principal
United States securities exchange on which the Stock is listed, or
if the Stock is not so listed, the closing price as quoted on the
NASDAQ National Market System, or if the Stock is not so listed or
quoted, the closing bid as quoted on the NASDAQ over-the-counter
market, and (ii) the average of the closing prices or closing bids,
as the case may be, for the 20 trading days following such date, as
so listed or quoted, as the case may be, on such principal United
States securities exchange, the NASDAQ National Market System, or
the NASDAQ over-the-counter market, and (b) as to any grants made
pursuant to Section 15 only, effective after such date, "Fair Market
Value" means the closing price or closing bid, as the case may be,
on the applicable date of grant, as so listed or quoted, as the case
may be, on such principal United States securities exchange, the
NASDAQ National Market System, or the NASDAQ over-the-counter
market.
(o) "Incentive Stock Option" means any Stock Option intended to be
and designated as an "incentive stock option" within the meaning of
Section 422A of the Code.
(p) "Non-Qualified Stock Option" means any Stock Option that is not
an Incentive Stock Option.
(q) "Normal Retirement" means retirement from active employment
with the Company or any Subsidiary or Affiliate on or after the
normal retirement date specified in the applicable pension plan of
such employer.
(r) "Plan" means the Cliffs Drilling Company 1988 Incentive Equity
Plan, as hereafter amended from time to time.
(s) "Restriction Period" means the period of time during which
shares of Stock awarded to a participant pursuant to Sections 8(a)
and (b) remain subject to the restrictions referred to in Section
8(b).
(t) "Restricted Stock" means an award of shares of stock that is
subject to restrictions under Section 8.
(u) "Retirement" means Normal or Early Retirement.
(v) "Rule 16b-3" as promulgated and amended from time to time by
the Securities and Exchange Commission pursuant to Section 16(b) of
the Exchange Act.
(w) "Stock" means the shares of Common Stock, par value $.01 per
share, of the Company.
(x) "Stock Appreciation Right" means the right granted under
Section 7 to surrender to the Company all or a portion of a Stock
Option in exchange for a payment in cash or Stock.
(y) "Stock Option" or "Option" means any option to purchase shares
of Stock granted pursuant to Section 6.
(z) "Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if each
of the corporations (other than the last corporation in the unbroken
chain) owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other
corporations in the chain.
In addition, the terms "Approval Date," "Change in Control," "Potential
Change in Control" and "Change in Control Price" shall have meanings set
forth in Section 9.
Section 3. Administration.
The Plan shall be administered by the Compensation Committee of the
Board of Directors, which shall consist of not less than three
Disinterested Persons who are appointed by, and serve at the pleasure of,
the Board.
The Committee shall have the power and authority to grant to
eligible employees Stock Options, Stock Appreciation Rights, Restricted
Stock and Deferred Stock.
In particular, the Committee shall have the authority:
(i) to select the key employees of the Company, its
Subsidiaries and Affiliates to whom Stock Options and other awards
may from time to time be granted;
(ii) to determine whether and to what extent Stock Options,
Stock Appreciation Rights, Restricted Stock and Deferred Stock are
granted;
(iii) to determine the number of shares to be covered by each
such award granted;
(iv) to determine the terms and conditions, not inconsistent
with the terms hereof, of any award granted (including, but not
limited to, the share price and any restriction or limitation on, or
any vesting, acceleration or forfeiture waiver regarding, any award,
based on such factors and criteria as the Committee shall determine,
in its sole discretion);
(v) to determine and adjust the performance goals and
measurements applicable to performance-based Deferred Stock and
Restricted Stock awards to include or exclude the impact of
extraordinary or unusual items, events or circumstances and/or to
reflect change in applicable tax or accounting rules and other
developments;
(vi) to determine whether and under what circumstances a Stock
Option may be settled in cash, Deferred Stock and/or Restricted
Stock under Section 6(j); and
(vii) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with respect to an
award shall be deferred.
The Committee shall have the authority to adopt, alter and repeal
such administrative rules, guidelines and practices governing the Plan as
it shall, from time to time, deem advisable; to interpret the terms and
provisions of the Plan and any Stock Option or other award granted and
any agreements relating thereto; and to otherwise supervise the
administration of the Plan.
All decisions made by the Committee pursuant to the provisions
hereof shall be made in the Committee's sole discretion and shall be
final and binding on all persons.
Section 4. Eligibility.
Officers and key employees of the Company, its Subsidiaries and its
Affiliates (but, subject to Section 15, excluding members of the
Committee and any person who serves only as a director) who are
responsible for or contribute to the management, growth and/or
profitability of the business of the Company, its Subsidiaries or its
Affiliates are eligible to be granted Stock Options, Stock Appreciation
Rights, Restricted Stock or Deferred Stock Awards.
The participants under the Plan shall be selected from time to time
by the Committee, in its sole discretion, from among those eligible.
Section 5. Stock Subject to Plan.
The total number of shares of Stock reserved and available for
distribution pursuant to Stock Options or other awards hereunder shall be
180,000 shares. Such shares may consist, in whole or in part, of
authorized and unissued shares or treasury shares.
Subject to Section 7(b)(iv), if any shares of Stock that have been
optioned cease to be subject to a Stock Option, or if any such shares of
Stock that are subject to any Restricted Stock or Deferred Stock award
granted hereunder are forfeited or any such Option or other award
otherwise terminates without a payment being made to the participant in
the form of Stock, such shares shall again be available for distribution
in connection with future awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, Stock dividend, or other change in corporate structure
affecting the Stock, a substitution or adjustment shall be made in the
aggregate number of shares reserved for issuance under the Plan, in the
number and option price of shares subject to outstanding Options granted
under the Plan, and in the number of shares subject to other outstanding
awards granted under the Plan as may be determined to be appropriate by
the Board, provided that the number of shares subject to any award shall
always be a whole number. Such adjusted option price shall also be used
to determine the amount payable by the Company upon the exercise of any
Stock Appreciation Right associated with any Stock Option.
Section 6. Stock Options.
Stock Options may be granted alone or in addition to other awards
granted under the Plan. Any Stock Option granted under the Plan shall be
in such form as the Committee may from time to time approve and the
provisions of Stock Option awards need not be the same with respect to
each optionee.
Stock Options granted under the Plan may be of two types: (i)
Incentive Stock Options; and (ii) Non-Qualified Stock Options (provided
that Incentive Stock Options may not be granted to employees of
Affiliates). The Committee may grant to any optionee Incentive Stock
Options, Non-Qualified Stock Options, or both types of Stock Options (in
each case with or without Stock Appreciation Rights). To the extent that
any Stock Option does not qualify as an Incentive Stock Option, it shall
constitute a separate Non-Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of
this Plan relating to Incentive Stock Options shall be interpreted,
amended or altered, nor shall any discretion or authority granted under
the Plan be so exercised, so as to disqualify the Plan under Section 422A
of the Code, or, without the consent of the optionee(s) affected, to
disqualify any Incentive Stock Option under such Section 422A.
Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and
conditions not inconsistent with the terms of the Plan, as the Committee
deems appropriate:
(a) Exercise Price. The exercise price per share of Stock
purchasable under a Stock Option shall be not less than the Fair
Market Value on the day the Option is granted.
(b) Option Term. The term of each Stock Option shall be fixed
by the Committee, but no Incentive Stock Option shall be exercisable
more than ten years after the date such Option is granted and no Non-
Qualified Stock Option shall be exercisable more than ten years and
one day after the date such Option is granted.
(c) Exercise of Options. Options shall become exercisable at
such time or times and subject to such terms and conditions
(including, without limitation, installment exercise provisions) as
shall be determined by the Committee, provided, however, that,
except as provided in Section 6(f) or (g) (in the case of
Disability) and Section 9, unless otherwise determined by the
Committee at or after grant, no Stock Option shall be exercisable
prior to the first anniversary date of the granting of the option.
If the Committee provides that any Stock Option is exercisable only
in installments, the Committee may waive such installment exercise
provisions at any time in whole or in part based on performance
and/or such other factors as the Committee may determine.
(d) Method of Exercise. Options may be exercised in whole or
in part by giving written notice of exercise to the Company
specifying the number of shares to be purchased. Such notice shall
be accompanied by payment in full of the purchase price, either by
certified or bank check, or such other instrument as may be
permitted in accordance with rules or procedures adopted by the
Committee.
As determined by the Committee, at or after grant, payment in
full or in part may also be made in the form of unrestricted Stock
already owned by the optionee or, in the case of the exercise of a
Non-Qualified Stock Option, Restricted Stock or Deferred Stock
subject to an award hereunder (based in each case, on the Fair
Market Value on the date the Option is exercised, as determined by
the Committee), provided, however, that, in the case of an Incentive
Stock Option, the right to make a payment in the form of already
owned shares may be authorized only at the time the Option is
granted.
If payment of the option exercise price of a Non-Qualified
Stock Option is made in whole or in part in the form of Restricted
Stock or Deferred Stock, the shares received upon the exercise of
such Stock Option shall be restricted or deferred (as the case may
be, in accordance with the original terms of the Restricted Stock
award or Deferred Stock award in question) and equal in number to
the number of shares of Restricted Stock or Deferred Stock
surrendered upon the exercise of such Option.
No shares of Stock shall be transferred until full payment
therefor has been made. An optionee shall generally have the rights
of a shareholder with respect to shares subject to the Option only
when the optionee has given written notice of exercise, has paid in
full for such shares and, if requested, given the representation
described in Section 12(a).
(e) Non-Transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by laws of
descent and distribution, and all Stock Options shall be
exercisable, during the optionee's lifetime, only by the optionee.
At the request of an optionee, Stock purchased upon exercise of
an Option may be issued or transferred into the name of the optionee
and another person jointly with rights of survivorship.
(f) Termination by Death. Subject to Section 6(i), if an
optionee's employment by the Company or any Subsidiary or Affiliate
terminates by reason of death, any Stock Option held by such
optionee may thereafter be exercised, to the extent it was
exercisable at the time of death or on such accelerated basis as the
Committee may determine at or after grant, by the legal
representative of the estate or by the legatee of the optionee under
the will of the optionee, for a period of one year (or such other
period up to three years as the Committee may specify) from the date
of death or until the expiration of the stated term of such Stock
Option, whichever period is shorter.
(g) Termination by Reason of Disability or Retirement.
Subject to Section 6(i), if an optionee's employment by the Company
or any Subsidiary or Affiliate terminates by reason of Disability or
Retirement, any Stock Option held by such optionee may thereafter be
exercised as the optionee, to the extent it was exercisable at the
time of such termination or on such accelerated basis as the
Committee may determine at or after grant, for a period of three
years (or such shorter period as the Committee may specify at grant)
from the date of such termination of employment or until the
expiration of the stated term of such Stock Option, whichever period
is shorter, provided, however, that, if the optionee dies within
such three-year period (or such shorter period), any unexercised
Stock Option held by such optionee shall thereafter be exercisable,
to the extent to which it was exercisable at the time of death, for
a period of one year from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period
is the shorter. In the event of termination of employment by reason
of Disability or Retirement, if an Incentive Stock Option is
exercised after the expiration of the exercise periods that apply
for purposes of Section 422A of the Code, such Stock Option shall
thereafter be treated as a Non-Qualified Stock Option.
(h) Other Termination of Employment. Unless otherwise
determined by the Committee at or after grant, if an optionee's
employment by the Company or any Subsidiary or Affiliate terminates
for any reason other than death, Disability or Retirement, the
optionee will have three months from the date of termination to
exercise any and all Stock Options that are then exercisable, except
that, if the termination was for Cause, any and all Options shall be
immediately cancelled.
(i) Incentive Stock Option Limitations. To the extent
required for "incentive stock option" status under Section 422A of
the Code, the aggregate Fair Market Value (determined as of the time
of grant) of the Stock with respect to which Incentive Stock Options
granted after 1986 are exercisable for the first time by the
optionee during any calendar year under the Plan and any other stock
option plan of the Company or any Subsidiary or parent corporation
(within the meaning of Section 425 of the Code) or any predecessor
of any such corporation, in each case after 1986 shall not exceed
$100,000.
The Committee may provide at grant, to the extent permitted
under Section 422A of the Code, that, if (i) a participant's
employment with the Company or its Subsidiaries is terminated by
reason of death, Disability or Retirement and (ii) the portion of
any Incentive Stock Option that is otherwise exercisable during the
post-termination period specified under Section 6(f), (g) or (h),
applied without regard to this Section 6(i), is greater than the
portion of such Option that is exercisable as an "incentive stock
option" during such post-termination period under Section 422A, such
post-termination period shall automatically be extended (but not
beyond the original option term) to the extent necessary to permit
the optionee to exercise such Incentive Stock Option either as an
Incentive Stock Option or, if exercised after the expiration of the
applicable exercise periods under Section 422A(a), as a Non-
Qualified Stock Option. The Committee is also authorized to provide
a grant for a similar extension of the post-termination exercise
period in the event of a Change in Control or a Potential Change in
Control.
(j) Cashout of Option; Settlement of Spread Value in Deferred
or Restricted Stock. On receipt of written notice to exercise, the
Committee may, in its sole discretion, elect to cashout all or part
of the portion of the Stock Option(s) to be exercised with respect
to Deferred or Restricted Stock by paying the optionee an amount, in
cash or Stock, equal to the excess of the Fair Market Value of the
Stock over the option price (the "Spread Value") on the effective
date of such cashout.
Cashouts relating to options held by optionees who are actually
or potentially subject to Section 16(b) of the Exchange Act shall
comply with the "window period" provisions of Rule 16b-3 referred to
in Section 7(b)(ii), to the extent applicable; in addition, in the
case of cashouts of Non-Qualified Stock Options held by such
optionees, the Committee may determine Fair Market Value under the
pricing rule set forth in Section 7(b)(ii)(B).
In addition, if the option agreement so provides at grant or is
amended after grant and prior to exercise to so provide (with the
optionee's consent), the Committee may require that all or part of
the shares to be issued with respect to (i) the Spread Value payable
in the event of a cashout of an unexercised Stock Option or (ii) the
Spread Value portion of an exercised Stock Option take the form of
Deferred or Restricted Stock, which shall be valued on the date of
the cashout or exercise on the basis of the Fair Market Value of
such Deferred or Restricted Stock determined without regard to the
deferral limitations and/or forfeiture restrictions involved.
Section 7. Stock Appreciation Rights.
(a) Grant and Exercise. Stock Appreciation Rights may be granted
in conjunction with all or part of any Stock Option granted under the
Plan. In the case of a Non-Qualified Stock Option, such rights may be
granted either at or after the time of the grant of such Stock Option.
In the case of an Incentive Stock Option, such rights may be granted only
at the time of the grant of such Stock Option.
A Stock Appreciation Right or applicable portion thereof granted
with respect to a given Stock Option shall terminate and no longer be
exercisable upon the termination or exercise of the related Stock Option,
except that, unless otherwise determined by the Committee at the time of
grant, a Stock Appreciation Right granted with respect to less than the
full number of shares covered by a related Stock Option shall not be
reduced until the number of shares covered by an exercise or termination
of the related Stock Option exceeds the number of shares not covered by
the Stock Appreciation Right.
A Stock Appreciation Right may be exercised by an optionee, in
accordance with Section 7(b), by surrendering the applicable portion of
the related Stock Option in accordance with procedures established by the
Committee for such purposes. Upon such exercise and surrender, the
optionee shall be entitled to receive an amount determined in the manner
prescribed in Section 7(b). Stock Options which have been so surrendered
shall no longer be exercisable to the extent the related Stock
Appreciation Rights have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be
subject to such terms and conditions, not inconsistent with the
provisions of the Plan, as shall be determined from time to time by
the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only at
such times and to the extent that the Stock Options to which they
relate are exercisable, in accordance with the provisions of Section
6 and this Section 7 of the Plan, provided that a Stock Appreciation
Right shall not be exercisable during the first six months of its
term by any optionee except in the event of death or Disability of
the optionee prior to the expiration of the six-month period.
(ii) Upon the exercise of a Stock Appreciation Right, an
optionee shall be entitled to receive an amount in cash and/or
shares of Stock in the aggregate equal in value to the excess of the
Fair Market Value of one share of Stock over the option price per
share specified in the related Stock Option multiplied by the number
of shares in respect of which the Stock Appreciation Right shall
have been exercised, with the Committee having the right to
determine the form of payment.
(iii) Stock Appreciation Rights shall be transferable only
when and to the extent that the underlying Stock Option would be
transferable under Section 6(e) of the Plan.
(iv) Upon the exercise of a Stock Appreciation Right, the
Stock Option or part thereof to which Stock Appreciation Right is
related shall be deemed to have been exercised for the purpose of
the limitation set forth in Section 3 of the Plan on the number of
shares of Stock to be issued under the Plan, but only to the extent
of the number of shares of Stock issued under the Stock Appreciation
Right based on the value of the Stock Appreciation Right.
(v) The Committee may provide, at the time of grant, that such
Stock Appreciation Right can be exercised only in the event of a
Change in Control and/or a Potential Change in Control, subject to
such terms and conditions as the Committee may specify at grant.
Section 8. Awards of Restricted Stock and Deferred Stock.
(a) Administration. Shares of Restricted Stock and/or Deferred
Stock may be issued either alone or in addition to other awards granted
under the Plan. The Committee shall determine the officers and key
employees of the Company and its Subsidiaries or Affiliates to whom, and
the time or times at which, such grants will be made, the number of
shares to be awarded, the price (if any) to be paid under Section 8(b)(i)
by the recipient of a Restricted Stock award, the time or times within
which such awards may be subject to forfeiture, and all other conditions
of the awards.
The Committee may condition grants of Restricted Stock and/or
Deferred Stock upon the attainment of specified performance goals or such
other factors or criteria as the Committee may determine.
The provisions of Restricted Stock and Deferred Stock awards need
not be the same with respect to each recipient.
(b) Restrictions and Conditions Applicable to Restricted Stock
Awards. Restricted Stock awards shall be subject to the following
restrictions and conditions:
(i) The purchase price for shares of Restricted Stock shall be
not less than their par value.
(ii) Awards of Restricted Stock must be accepted within a
period of 60 days (or such shorter periods as the Committee may
specify at grant) after the award date, by executing a Restricted
Stock Award Agreement and paying whatever price (if any) is required
under Section 8(b)(i).
The prospective recipient of a Restricted Stock award shall not
have any rights with respect to such award, unless and until such
recipient has executed an agreement evidencing the award and has
delivered a fully executed copy thereof of the Company, and has
otherwise complied with the applicable terms and conditions of such
award.
(iii) Each participant receiving a Restricted Stock award
shall be issued a stock certificate in respect of such shares of
Restricted Stock. Such certificate shall be registered in the name
of such participant, and shall bear an appropriate legend referring
to the terms, conditions, and restrictions applicable to such award,
substantially in the following form:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and conditions
(including forfeiture) of the Cliffs Drilling Company 1988 Incentive
Equity Plan and an Agreement entered into between the registered
owner and Cliffs Drilling Company. Copies of such Plan and
Agreement are on file in the offices of Cliffs Drilling Company,
Houston, Texas."
The Committee may require that the stock certificates
evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of
any Restricted Stock award, the participant shall have delivered a
stock power, endorsed in blank, relating to the Stock covered by
such award.
(iv) Subject to the provisions of this Plan and the applicable
award agreement, during a period set by the Committee commencing
with the date of such award (the "Restriction Period"), the
participant shall not be permitted to sell, transfer, pledge, assign
or otherwise encumber shares of Restricted Stock awarded under the
Plan.
Based on service, performance and/or such other factors or
criteria as the Committee may determine, the Committee may, however,
at or after grant provide for the lapse of such restrictions in
installments and/or may accelerate or waive such restrictions in
whole or in part.
(v) Except as provided in this Section 8(b), the recipient
shall have, with respect to the shares of Restricted Stock covered
by any award, all of the rights of a shareholder of the Company,
including the right to vote the shares, and the right to receive any
dividend, provided, however, that unless otherwise determined by the
Committee, any dividends on such shares shall be automatically
deferred and reinvested in additional Restricted Stock subject to
the same restrictions as the underlying award, to the extent shares
are available under Section 3.
(vi) Except as otherwise provided in this Section 8(b) and in
the applicable award agreement, upon termination of a participant's
employment with the Company or any Subsidiary or Affiliate for any
reason during the Restriction Period for a given award, all shares
still subject to restriction shall be forfeited by the participant,
provided, however, the Committee may provide for waiver of the
restrictions in the event of termination of employment due to death,
Disability or Retirement.
(vii) In the event of hardship or other special circumstances
of a participant whose employment with the Company or any Subsidiary
or Affiliate is involuntarily terminated (other than for Cause), the
Committee may waive in whole or in part any or all remaining
restrictions with respect to any or all of the participant's
Restricted Stock, based on such factors and criteria as the
Committee may deem appropriate.
(viii) If and when the Restriction Period expires without a
prior forfeiture of the Restricted Stock subject to such Restriction
Period, unrestricted certificates for such shares shall be delivered
to the participant.
(c) Terms and Conditions Applicable to Deferred Stock Awards.
Deferred Stock awards shall be subject to the following terms and
conditions:
(i) Subject to the provisions of this Plan and the applicable
award agreement, Deferred Stock awards may not be sold, transferred,
pledged, assigned or otherwise encumbered during the period
specified by the Committee for purposes of such award (the "Deferral
Period"). At the expiration of the Deferral Period (or the Elective
Deferral Period defined in Section 8(c)(v), where applicable), share
certificates shall be delivered to the participant, or his legal
representative, in a number equal to the number of shares covered by
the Deferred Stock award.
Based on service, performance and/or such other factors or
criteria as the Committee may determine, the Committee may, however,
at or after grant, accelerate the vesting of all or any part of any
Deferred Stock award and/or waive the deferral limitations for all
or any part of such award.
(ii) Unless otherwise determined by the Committee, amounts
equal to any dividends that would have been payable during the
Deferral Period with respect to the number of shares covered by a
Deferred Stock award if such shares had been outstanding shall be
automatically deferred and deemed to be reinvested in additional
Deferred Stock, subject to the same deferral limitations as the
underlying award.
(iii) Except to the extent otherwise provided in this Section
8(c) and in the applicable award agreement, upon termination of a
participant's employment with the Company or any Subsidiary or
Affiliate for any reason during the Deferral Period for a given
award, the Deferred Stock covered by such award shall be forfeited
by the participant, provided, however, the Committee may provide for
accelerated vesting in the event of termination of employment due to
death, Disability or Retirement.
(iv) In the event of hardship or other special circumstances
of a participant whose employment with the Company or any Subsidiary
or Affiliate is involuntarily terminated (other than for Cause), the
Committee may waive in whole or in part any or all of the remaining
deferral limitations imposed hereunder with respect to any or all of
the participant's Deferred Stock, based on such factors and criteria
as the Committee deems appropriate.
(v) A participant may elect to further defer receipt of
Deferred Stock for a specified period or until a specified event
(the "Elective Deferral Period"), subject in each case to the
Committee's approval and to such terms as are determined by the
Committee. Subject to any exceptions adopted by the Committee, such
election must generally be made at least twelve months prior to
completion of the Deferral Period for the Deferred Stock award in
question (or for the applicable installment of such award).
(vi) Each award shall be confirmed by, and subject to the
terms of, a Deferred Stock agreement executed by the Company and the
participant.
Section 9. Change in Control Provisions.
(a) Impact of Event. In the event of:
(x) a "Change in Control" as defined in Section 9(b), or
(y) a "Potential Change in Control" as defined in Section 9(c),
the Committee or the Board may provide that one or more of the following
acceleration and valuation provisions shall apply:
(i) Any or all Stock Appreciation Rights outstanding for at
least six months on the date that such Change in Control or
Potential Change in Control is determined to have occurred and any
or all Stock Options awarded under this Plan not previously
exercisable and vested shall become fully exercisable and vested.
(ii) The restrictions and deferral limitations applicable to
any or all Restricted Stock and Deferred Stock awards shall lapse
and such shares and awards shall be fully vested.
(iii) The value of any or all outstanding Stock Options,
Restricted Stock and Deferred Stock awards shall be cashed out on
the basis of the "Change in Control Price" as defined in Section
9(d) as of the date such Change in Control or Potential Change in
Control is determined to have occurred or such other date as the
Committee may determine prior to the Change in Control.
(b) Definition of "Change in Control." For purposes of Section
9(a), a "Change in Control" means the happening of any of the following:
(i) A tender offer is made and consummated for the ownership
of 30% or more of the outstanding voting securities of the Company;
(ii) The Company shall merge or consolidate with another
corporation and as a result of such merger or consolidation less
than 75% of the outstanding voting securities of the surviving or
resulting corporation shall be owned in the aggregate by the former
shareholders of the Company, other than affiliates (within the
meaning of the Exchange Act as in effect on the date the Plan was
first approved by the shareholders of the Company (the "Approval
Date")) of any party to such merger or consolidation, as the same
shall have existed immediately prior to such merger or
consolidation;
(iii) The Company shall sell substantially all of its assets
to another corporation which is not a Subsidiary; or
(iv) A person, within the meaning of Section 3(a)(9) or of
Section 13(d)(3) (as in effect on the Approval Date) of the Exchange
Act, shall acquire 30% or more of the outstanding voting securities
of the Company (whether directly, indirectly, beneficially or of
record).
For purposes hereof, ownership of voting securities shall take into
account and shall include ownership as determined by applying the
provisions of Rule 13d-3(d)(1)(i) (as in effect on the Approval Date)
pursuant to the Exchange Act.
(c) Definition of "Potential Change in Control". For purposes of
Section 9(a), a "Potential Change in Control" means the happening of any
one of the following:
(i) The entering into an agreement by the Company, the
consummation of which would result in a Change in Control of the
Company as defined in Section 9(b); or
(ii) The acquisition of beneficial ownership, directly or
indirectly, by any entity, person or group (other than the Company
or a Subsidiary or any Company employee benefit plan) (including any
trustee of such plan acting as such trustee) of securities of the
Company representing 5% or more of the combined voting power of the
Company's outstanding securities, and the adoption by the Board of a
resolution to the effect that a "Potential Change in Control" of the
Company has occurred for the purposes of this Plan.
(d) Change in Control Price. For the purposes of this Section 9,
"Change in Control Price" means the highest price per share paid in any
transaction reported on the principal United States securities exchange,
the NASDAQ National Market System or other principal market on which the
stock is traded, or paid or offered in any bona fide transaction related
to an actual or Potential Change in Control of the Company, at the time
during the preceding sixty-day period as determined by the Committee,
except that, in the case of Incentive Stock Options and Stock
Appreciation Rights relating to Incentive Stock Options, such price shall
be based only on transactions reported for the date as of which the
Committee decides to cashout such options.
Section 10. Amendments and Termination.
The Board may amend, alter, or discontinue the Plan, but no
amendment, alteration, of discontinuation shall be made which would
impair the rights of an optionee or participant under a Stock Option,
Stock Appreciation Right or Deferred Stock award theretofore granted,
without the optionee's or participant's consent, or which, without the
approval of the Company's stockholders, would:
(a) except as expressly provided in the Plan, increase the
total number of shares reserved for purposes of the Plan;
(b) change the class of employees eligible to participate in
the Plan;
(c) extend the maximum option period under Section 6(b) of the
Plan; or
(d) increase materially the benefits under the Plan.
The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but no such
amendment shall impair the rights of any holder without the holder's
consent. The Committee may also substitute new Stock Options for
previously granted Stock Options, including previously granted Stock
Options having higher option prices.
Subject to the above provisions, the Board shall have the authority
to amend the Plan to take into account changes in applicable tax and
securities law and accounting rules, as well as other developments.
Section 11. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive
and deferred compensation. With respect to any payments not yet made to
a participant or optionee by the Company, nothing contained herein shall
give any such participant or optionee any rights that are greater than
those of a general creditor of the Company. The Committee may authorize
the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Stock or payments hereunder consistent
with the foregoing.
Section 12. General Provisions.
(a) The Committee may require each person purchasing shares
pursuant to a Stock Option or Restricted Stock award under the Plan to
represent to and agree with the Company in writing that the optionee or
participant is acquiring the shares without a view to distribution
thereof. The certificates for such shares may include any legend which
the Committee deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such stock-transfer orders and other
restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Stock is then listed and
any applicable Federal or state securities law, and the Committee may
cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Company, a
subsidiary or an Affiliate from adopting other or additional compensation
arrangements for its employees.
(c) The adoption of the Plan shall not confer upon any employee of
the Company or any Subsidiary or Affiliate any right to continued
employment with the Company or a Subsidiary or Affiliate, as the case may
be, nor shall it interfere in any way with the right of the Company or
any Subsidiary or Affiliate to terminate the employment of any of its
employees at any time.
(d) No later than the date as of which an amount first becomes
includible in the gross income of the optionee for Federal income tax
purposes with respect to any Stock Option or other award under the Plan,
the participant shall pay to the Company, or make any arrangements
satisfactory to the Committee regarding the payment of any Federal, state
or local taxes of any kind required by law to be withheld with respect to
such amount. Unless otherwise determined by the Company, withholding
obligations may be settled with Stock, including Stock that is part of
the award that gives rise to the withholding requirement.
The obligations of the Company under the Plan shall be conditional
on such payment or arrangements and the Company and its Subsidiaries or
Affiliates shall, to the extent permitted by law, have the right to
deduct any such taxes from the payment(s) otherwise due to the
participant.
(e) The Committee shall establish such procedures as it deems
appropriate for a participant to designate a beneficiary to whom any
amounts payable in the event of the participant's death are to be paid.
(f) The Plan and all awards made and actions taken thereunder shall
be governed by and construed in accordance with the laws of the State of
Texas.
Section 13. Effective Date of Plan.
The Plan shall be effective on the date it is approved by the
stockholders of the Company. Grants made prior to such stockholder
approval shall be contingent on such approval.
Section 14. Term of Plan.
No Stock Option, Stock Appreciation Right, Restricted Stock or
Deferred Stock shall be granted pursuant to the Plan on or after the
tenth anniversary of the effective date of the plan, but awards granted
prior to such tenth anniversary may extend beyond that date.
Section 15. Automatic Award of Stock Options to Certain Persons.
Subject to stockholder approval of the Plan, Non-Qualified Stock
Options for a total of 2,000 shares of Stock (subject to any adjustments
pursuant to Section 5) are hereby granted automatically pursuant to the
Plan, and without any action by the Committee, (a) to each of the
Company's initial three non-employee directors, David M. Carmichael,
Christie S. Flanagan and Joseph S. Reid, to be effected as of, and deemed
to be granted on, July 21, 1988, and (b) to each of the next two non-
employee directors of the Company, if any, who is elected for a term
commencing within the 2-year period following such date, to be effective
as of, and deemed granted on, the date of commencement of such director's
term. Each such option will be for a term of 10 years from the date of
grant, with 50% of the shares becoming exercisable after 1 year and 25%
after each of the succeeding 2 years; provided, however, that such
options shall become immediately exercisable upon a "Change of Control"
or "Potential Change of Control" as and to the extent provided in Section
9.
AMENDMENT NO. 1
TO THE
CLIFFS DRILLING COMPANY
1988 INCENTIVE EQUITY PLAN
Pursuant to the terms and provisions of Section 10 of the Cliffs
Drilling Company 1988 Incentive Equity Plan (the "Plan"), Cliffs Drilling
Company, a Delaware corporation (the "Company"), hereby adopts the
following Amendment No. 1 to the Plan (the "Amendment No. 1").
I.
The first sentence of Section 5 of the Plan is hereby amended in its
entirety by substituting the following therefor:
"The total number of shares of Stock reserved and available for
distribution pursuant to Stock Options or other awards hereunder shall be
380,000 shares. Such shares may consist, in whole or in part, of
authorized and unissued shares or treasury shares"
II.
Each amendment made by this Amendment No. 1 to the Plan has been
effected in conformity with the provisions of the Plan. This Amendment
No. 1 was adopted by the Board of Directors of the Company on April 9,
1990 and approved by the shareholders of the Company on May 17, 1990.
III.
At the time of the adoption of this Amendment No. 1 to the Plan,
2,963,079 shares of the Company's common stock, $0.01 par value per
share, were outstanding and entitled to vote, 2,412,159 were represented
in person or by proxy, of which 1,531,848 shares were voted for this
Amendment No. 1, and 558,837 shares were voted against this Amendment No.
1.
Dated: May 17, 1990
CLIFFS DRILLING COMPANY
By: /s/ James E. Mitchell, Jr.
---------------------------------
James E. Mitchell, Jr., Secretary
AMENDMENT NO. 2
TO THE
CLIFFS DRILLING COMPANY
1988 INCENTIVE EQUITY PLAN
Pursuant to the terms and provisions of Section 10 of the Cliffs
Drilling Company 1988 Incentive Equity Plan (the "Plan"), Cliffs Drilling
Company, a Delaware corporation (the "Company"), hereby adopts the
following Amendment No. 2 to the Plan (the "Amendment No. 2").
I.
The first sentence of Section 5 of the Plan is hereby amended in its
entirety by substituting the following therefor:
"The total number of shares of Stock reserved and available for
distribution pursuant to Stock Options or other awards hereunder shall be
490,000 shares. Such shares may consist, in whole or in part, of
authorized and unissued shares or treasury shares"
II.
Each amendment made by this Amendment No. 2 to the Plan has been
effected in conformity with the provisions of the Plan. This Amendment
No. 2 was adopted by the Compensation Committee of the Board of Directors
of the Company on March 3, 1993 and approved by the shareholders of the
Company on May 20, 1993.
III.
At the time of the adoption of this Amendment No. 2 to the Plan,
4,510,604 shares of the Company's common stock, $0.01 par value per
share, were outstanding and entitled to vote, 3,852,646 were represented
in person or by proxy, of which 3,457,153 shares were voted for this
Amendment No. 2, and 213,982 shares were voted against this Amendment No.
2.
Dated: May 20, 1993
CLIFFS DRILLING COMPANY
By: /s/ James E. Mitchell, Jr.
----------------------------
James E. Mitchell, Jr., Secretary
AMENDMENT NO. 3
TO THE
CLIFFS DRILLING COMPANY
1988 INCENTIVE EQUITY PLAN
Pursuant to the terms and provisions of Section 10 of the Cliffs
Drilling Company 1988 Incentive Equity Plan (the "Plan"), Cliffs Drilling
Company, a Delaware corporation (the "Company"), hereby adopts the
following Amendment No. 3 to the Plan (the "Amendment No. 3").
1.
The first sentence of Section 5 of the Plan is hereby amended in its
entirety by substituting the following therefor:
"The total number of shares of Stock reserved and
available for distribution pursuant to Stock Options or
other awards hereunder shall be 650,000 shares. Such
shares may consist, in whole or in part, of authorized and
unissued shares or treasury shares."
2.
Each amendment made by this Amendment No. 3 to the Plan has been
effected in conformity with the provisions of the Plan. This Amendment
No. 3 was adopted by the Compensation Committee of the Board of Directors
of the Company on April 24, 1996 and approved by the shareholders of the
Company on May 22, 1996.
3.
At the time of the adoption of this Amendment No. 3 to the Plan,
6,189,930 shares of the Company's common stock, $0.01 par value per
share, were outstanding and entitled to vote, 5,209,869 were represented
in person or by proxy, of which 3,781,508 shares were voted for this
Amendment No. 3, 1,026,179 shares were voted against this Amendment No. 3
and 402,182 shares abstained from voting.
Dated: May 22, 1996.
CLIFFS DRILLING COMPANY
By: /s/ James E. Mitchell, Jr.
---------------------------
James E. Mitchell, Jr.
Secretary
Exhibit 4.3
CLIFFS DRILLING COMPANY
1998 INCENTIVE EQUITY PLAN
Section 1. Purpose.
This Cliffs Drilling Company 1998 Incentive Equity Plan is intended
to encourage Eligible Participants to become owners of Stock of Cliffs
Drilling Company in order to increase their interest in the Company's
long-term success, to provide incentive equity opportunities which are
competitive with other similarly situated corporations and to stimulate
the efforts of Eligible Participants by giving suitable recognition for
services which contribute materially to the Company's success.
Section 2. Definitions.
For purposes of the Plan, the following terms shall be defined as
set forth below:
(a) "Affiliate" means any entity other than the Company and its
Subsidiaries which the Board designates as an "Affiliate" for the
purposes of this Plan.
(b) "Award" means any award or benefit granted to any Eligible
Participant pursuant to the Plan, including without limitation, any Stock
Option, Stock Appreciation Right, Restricted Stock or Deferred Stock.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means a felony conviction of a participant or the
failure of a participant to contest prosecution for a felony, or a
participant's willful misconduct or dishonesty, or a participant's
failure to perform his work in accordance with reasonable standards
established by the Company, any of which is directly and materially
harmful to the business or reputation of the Company or any Subsidiary or
Affiliate.
(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
(f) "Committee" means the Committee referred to in Section 3 of the
Plan. If at any time a Committee shall not be in existence, then the
functions of the Committee specified in the Plan shall be exercised by
the Board.
(g) "Company" means Cliffs Drilling Company, a corporation
organized under the laws of the State of Delaware, or any successor
corporation.
(h) "Deferral Period" means the initial period of time during which
shares of Deferred Stock awarded pursuant to Section 8 are subject to
deferral limitations under Section 8(c).
(i) "Deferred Stock" means an Award made pursuant to Section 8 of
the right to receive Stock at the end of a specified deferral period.
(j) "Disability" means permanent and total disability as determined
under the Company's long-term disability program.
(k) "Eligible Participant" means (i) any employee of the Company or
a Subsidiary or Affiliate of the Company, (ii) any individual to whom a
bona fide written offer of employment from the Company or a Subsidiary or
Affiliate of the Company has been extended, and (iii) any Non-Employee
Director of the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(m) "Fair Market Value" means, as of any given date, the closing
price of the Stock on such date as reported on the principal United
States securities exchange on which the Stock is listed, or if the Stock
is not so listed, the closing price as quoted on the NASDAQ National
Market System, or if the Stock is not so listed or quoted, the closing
bid as quoted on the NASDAQ over-the-counter market; provided, that if no
such prices are so reported or quoted on that date or if, in the
discretion of the Committee, another means of determining the Fair Market
Value of a share of Stock at such date is deemed necessary or advisable,
the Committee may provide for another means for determining such Fair
Market Value.
(n) "Incentive Stock Option" means any Stock Option intended to be
and designated as an "incentive stock option" within the meaning of
Section 422(b) of the Code.
(o) "Non-Qualified Stock Option" means any Stock Option that is not
an Incentive Stock Option.
(p) "Non-Employee Director" means any director of the Company who
at the time of his or her service is not an employee of the Company or
any Subsidiary or Affiliate of the Company.
(q) "Plan" means the Cliffs Drilling Company 1998 Incentive Equity
Plan, as hereafter amended from time to time.
(r) "Restriction Period" means the period of time during which
shares of Stock awarded to a participant pursuant to Sections 8(a) and
(b) remain subject to the restrictions referred to in Section 8(b).
(s) "Restricted Stock" means an award of shares of Stock that is
subject to restrictions under Section 8.
(t) "Retirement" means retirement from active employment or service
with the Company or any Subsidiary or Affiliate on or after the normal
retirement date specified in, or pursuant to the early retirement
provisions of, such employer's retirement policy.
(u) "Stock" means the shares of Common Stock, par value $.01 per
share, of the Company.
(v) "Stock Appreciation Right" means the right granted under
Section 7 to surrender to the Company all or a portion of a Stock Option
in exchange for a payment in cash or Stock.
(w) "Stock Option" or "Option" means any option (including
Incentive Stock Options and Non-Qualified Stock Options) to purchase
shares of Stock granted pursuant to Section 6.
(x) "Subsidiary" means any corporation (other than the Company)
during any period in which it is a "subsidiary corporation," as defined
in Section 424(f) of the Code, with respect to the Company.
In addition, the terms "Approval Date," "Change in Control," "Potential
Change in Control" and "Change in Control Price" shall have meanings set
forth in Section 9.
Section 3. Administration.
(a) The Plan shall be administered by the Compensation Committee of
the Board of Directors, which shall consist of two or more members of the
Board of Directors who are appointed by, and serve at the pleasure of,
the Board.
(b) The Committee shall have the power and authority to grant
Awards pursuant to, and to manage and control the operation and
administration of, the Plan. In particular, the Committee shall have the
authority:
(i) to select from among the Eligible Participants those
persons to whom Awards may from time to time be granted;
(ii) to determine whether, when, and to what extent Awards are
granted;
(iii) to determine the types of Awards and the number of
shares to be covered by each such Award;
(iv) to determine the terms and conditions, not inconsistent
with the terms hereof, of any Award (including, but not limited to,
the share price and any restriction or limitation on, or any
vesting, acceleration or forfeiture waiver regarding, any Award,
based on such factors and criteria as the Committee shall determine,
in its sole discretion), and subject to the terms hereof, to cancel
or suspend Awards;
(v) to determine the extent to which Awards under the Plan
will be structured to conform to the requirements applicable to
performance-based compensation as described in Section 162(m) of the
Code, and to take action, establish such procedures, and impose such
restrictions at the time such Awards are granted as the Committee
determines to be necessary or appropriate to conform to such
requirements; and
(vi) to determine the performance goals and measurements (based
on specified levels of, or growth in, one or more of the following
business criteria: net income, pre-tax income, earnings per share,
revenues, return on investment, return on net assets, return on
equity, operating ratio, cash flow, stockholder return, market
capitalization, total equity, economic profit (defined as the
difference between (A) after-tax earnings and (B) the cost of
capital multiplied by total capital used), economic value added
(defined as economic profit for the current year minus economic
profit for the prior year), quality improvements, market share,
strategic positioning, systems improvement or customer satisfaction)
applicable to performance-based Awards and to adjust any such
performance goals and measurements to include or exclude the impact
of extraordinary or unusual items, events or circumstances, to
reflect change in applicable tax or accounting rules and other
developments, or as otherwise deemed advisable by the Committee;
(vii) to determine whether and under what circumstances an
Award may be settled in cash, Stock or otherwise pursuant to Section
12(g) of the Plan.
(c) The Committee shall have the authority to adopt, alter and
repeal such administrative rules, guidelines and practices governing the
Plan as it shall, from time to time, deem advisable; to interpret the
terms and provisions of the Plan and any Award and any agreements
relating thereto; and to otherwise supervise the administration of the
Plan. All decisions made by the Committee pursuant to the provisions
hereof shall be made in the Committee's sole discretion and shall be
final and binding on all persons.
Section 4. Eligibility.
Eligible Participants may be granted Awards pursuant to the Plan, at
the discretion of the Committee. The individuals to whom Awards are
granted under the Plan shall be selected from time to time by the
Committee, in its sole discretion, from among the Eligible Participants.
Section 5. Stock Subject to Plan.
(a) Subject to the following provisions of this Section 5, the
maximum number of shares of Stock that may be delivered pursuant to the
Plan shall be equal to the sum of (i) 1,000,000 shares, (ii) any shares
remaining available for future awards under the 1988 Incentive Equity
Plan as of the effective date of this Plan, and (iii) any shares that are
represented by awards granted under the 1988 Incentive Equity Plan which
are forfeited, expire or are canceled without delivery of shares of Stock
or which result in the forfeiture of shares back to the Company. Such
shares may consist, in whole or in part, of authorized and unissued
shares or treasury shares.
(b) Any shares of Stock granted pursuant to the Plan that are
forfeited because of the failure to meet an Award contingency or
condition shall again be available for delivery pursuant to new Awards
granted under the Plan. To the extent any shares of Stock covered by an
Award are not delivered to a participant or beneficiary because the Award
is forfeited or canceled, or the shares of Stock are not delivered
because the Award is settled in cash, such shares shall not be deemed to
have been delivered for purposes of determining the maximum number of
shares of Stock available for delivery pursuant to the Plan.
(c) If the exercise price of any Stock Option or the withholding
obligation of the participant in connection with any Award granted
pursuant to the Plan is satisfied by tendering shares of Stock to the
Company, only the number of shares of Stock issued, net of the shares of
Stock tendered, shall be deemed delivered for purposes of determining the
maximum number of shares of Stock available for delivery pursuant to the
Plan.
(d) Shares of Stock delivered under the Plan in settlement,
assumption or substitution of outstanding Awards (or obligations to grant
future awards) under the plans or arrangements of another entity shall
not reduce the maximum number of shares of Stock available for delivery
under the Plan, to the extent that such settlement, assumption or
substitution is a result of the Company or any Subsidiary or Affiliate
acquiring another entity (or an interest in another entity).
(e) In the event of any merger, reorganization, consolidation,
recapitalization, Stock dividend, Stock split, split-up, spin-off,
combination, exchange of shares, or other change in corporate structure
affecting the Stock, a substitution or adjustment shall be made (i) in
the aggregate number and kind of shares which may be delivered pursuant
to the Plan, (ii) in the number and kind of shares subject to outstanding
Awards granted pursuant to the Plan, and (iii) in the exercise price of
outstanding Stock Options granted pursuant to the Plan, in each case as
may be determined to be appropriate by the Board, provided that the
number of shares subject to any Award shall always be a whole number.
(f) Subject to the foregoing provisions of Section 5, the following
additional maximums are imposed under the Plan:
(i) The maximum aggregate number of shares of Stock that may
be covered by Stock Options and SARs granted to any one individual
during any three consecutive calendar years pursuant to the Plan
shall be 200,000 shares
(ii) The maximum aggregate number of shares of Restricted Stock
and Deferred Stock that may be granted to any one individual during
any three consecutive calendar years pursuant to the Plan shall be
100,000 shares.
Section 6. Stock Options.
Stock Options may be granted alone or in addition to other Awards
granted under the Plan. Any Stock Option granted under the Plan shall be
in such form as the Committee may from time to time approve, and the
provisions of Stock Option Awards need not be the same with respect to
each optionee.
The Committee may grant Incentive Stock Options, Non-Qualified Stock
Options, or both types of Stock Options (in each case with or without
Stock Appreciation Rights) to any Eligible Participant; provided,
however, that Incentive Stock Options may be granted only to employees of
the Company or its Subsidiaries. To the extent that any Stock Option
does not qualify as an Incentive Stock Option, it shall constitute a
separate Non-Qualified Stock Option.
Stock Options granted under the Plan shall be subject to the
following terms and conditions and shall contain such additional terms
and conditions not inconsistent with the terms of the Plan, as the
Committee deems appropriate:
(a) Exercise Price. The exercise price per share of Stock
purchasable under a Stock Option shall be not less than the Fair
Market Value on the day the Option is granted.
(b) Option Term. The term of each Stock Option shall be fixed
by the Committee, but no Stock Option shall be exercisable more than
ten years after the date such Option is granted.
(c) Exercise of Options. Stock Options shall become
exercisable at such time or times and subject to such terms and
conditions (including, without limitation, installment exercise
provisions) as shall be determined by the Committee, provided,
however, that, except as provided in Section 6(f) or (g) (in the
case of Disability) and Section 9, unless otherwise determined by
the Committee at or after grant, no Stock Option shall be
exercisable prior to the first anniversary date of the granting of
the option. If the Committee provides that any Stock Option is
exercisable only in installments, the Committee may waive such
installment exercise provisions at any time in whole or in part
based on performance and/or such other factors as the Committee may
determine.
(d) Method of Exercise. Stock Options may be exercised in
whole or in part by giving written notice of exercise to the Company
specifying the number of shares to be purchased. Such notice shall
be accompanied by payment in full of the purchase price. As
determined by the Committee, at or after grant, payment of the
exercise price, in whole or in part, may be made as follows:
(i) by certified or bank check;
(ii) by delivery to the Company of an executed irrevocable
option exercise form together with irrevocable instructions to
a broker-dealer to (A) sell a sufficient portion of the shares
acquired upon exercise of the Option and (B) remit directly to
the Company a sufficient portion of the sale proceeds to pay
the entire exercise price and any tax withholding resulting
from such exercise;
(iii) by tendering shares of Stock (either by actual
delivery or by attestation), with such shares valued at Fair
Market Value as of the date of exercise, upon terms and
conditions as determined by the Committee; or
(iv) by such other instrument as may be permitted in
accordance with rules or procedures adopted by the Committee.
An optionee shall generally have the rights of a shareholder with
respect to shares subject to the Option only when the optionee has
given written notice of exercise, has paid in full for such shares
and, if requested, given the representation described in Section
12(a).
(e) Non-Transferability of Options. Except as set forth in
this Section 6(e) and in the applicable stock option agreement, no
Stock Option shall be transferable by the optionee otherwise than by
will or by laws of descent and distribution or pursuant to a
"domestic relations order" as defined in the Code or Title I of the
Employee Retirement Income Security Act (or the rules promulgated
thereunder), and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee. At the request of an
optionee, Stock purchased upon exercise of an Option may be issued
or transferred into the name of the optionee and another person
jointly with rights of survivorship. The Committee may, in its
discretion, authorize all or a portion of any Non-Qualified Stock
Options to be granted on terms which permit transfer by the optionee
to (i) the spouse, children, stepchildren, siblings or grandchildren
of the optionee, (ii) a trust or trusts for the exclusive benefit of
the spouse, children, stepchildren, siblings or grandchildren of the
optionee, or (iii) a partnership or limited liability company in
which the spouse, children, stepchildren, siblings or grandchildren
of the optionee are the only partners or members, as applicable;
provided in each case that (x) there may be no consideration for any
such transfer (other than in the case of Clause (iii), units in the
partnership or membership interests in the limited liability
company), (y) the stock option agreement pursuant to which such
Stock Options are granted must be approved by the Committee, and
must expressly provide for transferability in a manner consistent
with this Section 6(e), and (z) subsequent transfers of transferred
options shall be prohibited except those made in accordance with
this Section 6(e) or by will or by the laws of descent and
distribution or pursuant to a "domestic relations order" as defined
in the Code or Title I of the Employee Retirement Income Security
Act (or the rules promulgated thereunder). Following transfer, any
such Stock Options shall continue to be subject to the same terms
and conditions as were applicable immediately prior to transfer.
The provisions with respect to expiration and termination of
employment or service with the Company set forth in subsections (f),
(g) and (h) of this Section 6 shall continue to apply with respect
to the original optionee, in which event the Stock Options shall be
exercisable by the transferee only to the extent and for the periods
specified herein. The original optionee will remain subject to
withholding taxes upon exercise of any such Stock Option by the
transferee. The Company shall have no obligation whatsoever to
provide notice to any transferee of any matter, including without
limitation, early termination of a Stock Option on account of
termination of the original optionee's employment or service with
the Company.
(f) Termination by Death. Subject to Section 6(i), if an
optionee's employment or service with the Company or any Subsidiary
or Affiliate terminates by reason of death, any Stock Option
previously granted to such optionee which remains unexercised may
thereafter be exercised, to the extent it was exercisable at the
time of death or on such accelerated basis as the Committee may
determine at or after grant, for a period of one year (or such other
period up to three years as the Committee may specify) from the date
of death or until the expiration of the stated term of such Stock
Option, whichever period is shorter.
(g) Termination by Reason of Disability or Retirement.
Subject to Section 6(i), if an optionee's employment or service with
the Company or any Subsidiary or Affiliate terminates by reason of
Disability or Retirement, any Stock Option previously granted to
such optionee which remains unexercised may thereafter be exercised,
to the extent it was exercisable at the time of such termination or
on such accelerated basis as the Committee may determine at or after
grant, for a period of three years (or such shorter period as the
Committee may specify at grant) from the date of such termination of
employment or service or until the expiration of the stated term of
such Stock Option, whichever period is shorter, provided, however,
that, if the optionee dies within such three-year period (or such
shorter period), any unexercised Stock Option shall thereafter be
exercisable, to the extent it was exercisable at the time of death,
for a period of one year from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period
is the shorter.
(h) Other Termination of Employment or Service. Unless
otherwise determined by the Committee at or after grant, if an
optionee's employment or service with the Company or any Subsidiary
or Affiliate terminates for any reason other than death, Disability
or Retirement, any Stock Option previously granted to such optionee
which remains unexercised may thereafter be exercised, to the extent
it was exercisable at the time of such termination, for a period of
three months from the date of such termination of employment or
service or until the expiration of the stated term of such Stock
Option, whichever period is shorter, except that, if the termination
was for Cause, any and all unexercised Stock Options previously
granted to such optionee shall be immediately canceled.
(i) Incentive Stock Option Limitations.
(i) To the extent that the aggregate Fair Market Value
(determined as of the time of grant) of the Stock with respect
to which Incentive Stock Options granted after 1986 are
exercisable for the first time by the optionee during any
calendar year under the Plan and any other stock option plan of
the Company or any Subsidiary or Affiliate exceeds $100,000,
such Options shall be treated as Non-Qualified Stock Options,
to the extent required by Section 422 of the Code.
(ii) The Committee may provide at grant, to the extent
permitted under Section 422 of the Code, that, if (i) a
participant's employment or service with the Company or its
Subsidiaries is terminated by reason of death, Disability or
Retirement and (ii) the portion of any Incentive Stock Option
that is otherwise exercisable during the post-termination
period specified under Section 6(f), (g) or (h), applied
without regard to this Section 6(i), is greater than the
portion of such Option that is exercisable as an "incentive
stock option" during such post-termination period under Section
422, such post-termination period shall automatically be
extended (but not beyond the original option term) to the
extent necessary to permit the optionee to exercise such
Incentive Stock Option either as an Incentive Stock Option or,
if exercised after the expiration of the applicable exercise
periods under Section 422(a) of the Code, as a Non-Qualified
Stock Option. The Committee is also authorized to provide at
grant for a similar extension of the post-termination exercise
period in the event of a Change in Control or a Potential
Change in Control.
(iii) In the event of a participant's termination of
employment or service with the Company or its Subsidiaries by
reason of death, Disability or Retirement, if an Incentive
Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code,
such Stock Option shall thereafter be treated as a Non-
Qualified Stock Option.
Section 7. Stock Appreciation Rights.
(a) Grant and Exercise. Stock Appreciation Rights may be granted
in conjunction with all or part of any Stock Option granted under the
Plan. In the case of a Non-Qualified Stock Option, such rights may be
granted either at or after the time of the grant of such Stock Option.
In the case of an Incentive Stock Option, such rights may be granted only
at the time of the grant of such Stock Option. Stock Appreciation Rights
are exercisable as follows:
(i) A Stock Appreciation Right may be exercised by
surrendering the applicable portion of the related Stock Option in
accordance with procedures established by the Committee for such
purposes. Upon such exercise and surrender, the optionee shall be
entitled to receive an amount determined in the manner prescribed in
Section 7(b). Stock Options which have been so surrendered shall no
longer be exercisable to the extent the related Stock Appreciation
Rights have been exercised.
(ii) A Stock Appreciation Right or applicable portion thereof
granted with respect to a given Stock Option shall terminate and no
longer be exercisable upon the termination or exercise of the
related Stock Option, except that, unless otherwise determined by
the Committee at the time of grant, a Stock Appreciation Right
granted with respect to less than the full number of shares covered
by a related Stock Option shall not be reduced until the number of
shares covered by an exercise or termination of the related Stock
Option exceeds the number of shares not covered by the Stock
Appreciation Right.
(b) Terms and Conditions. Stock Appreciation Rights shall be
subject to such terms and conditions, not inconsistent with the
provisions of the Plan, as shall be determined from time to time by the
Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only at
such times and to the extent that the Stock Options to which they
relate are exercisable, in accordance with the provisions of Section
6 and this Section 7 of the Plan, provided that a Stock Appreciation
Right shall not be exercisable during the first six months of its
term by any optionee except in the event of death or Disability of
the optionee prior to the expiration of the six-month period.
(ii) Upon the exercise of a Stock Appreciation Right, an
optionee shall be entitled to receive an amount in cash and/or
shares of Stock in the aggregate equal in value to the excess of the
Fair Market Value of one share of Stock over the option price per
share specified in the related Stock Option multiplied by the number
of shares in respect of which the Stock Appreciation Right shall
have been exercised, with the Committee having the right to
determine the form of payment.
(iii) Stock Appreciation Rights shall be transferable only
when and to the extent that the underlying Stock Option would be
transferable under Section 6(e) of the Plan.
(iv) The Committee may provide, at the time of grant, that such
Stock Appreciation Right can be exercised only in the event of a
Change in Control and/or a Potential Change in Control, subject to
such terms and conditions as the Committee may specify at grant.
Section 8. Restricted Stock and Deferred Stock.
(a) Authorization. Shares of Restricted Stock and/or Deferred
Stock may be issued either alone or in addition to other Awards granted
under the Plan, and upon terms and conditions established at the
discretion of the Committee. The provisions of Restricted Stock and
Deferred Stock Awards need not be the same with respect to each
recipient.
(b) Restrictions and Conditions Applicable to Restricted Stock
Awards. Restricted Stock Awards shall be subject to the following
restrictions and conditions:
(i) The consideration for issuance of shares of Restricted
Stock pursuant to the Plan shall be not less than their par value,
payable in cash or in services performed to or for the benefit of
the Company or its Subsidiaries or Affiliates, in the discretion of
the Committee.
(ii) Awards of Restricted Stock must be accepted within a
period of 60 days (or such shorter periods as the Committee may
specify at grant) after the Award date, by executing a Restricted
Stock Award Agreement and paying whatever price (if any) is required
under Section 8(b)(i). The prospective recipient of an Award of
Restricted Stock shall not have any rights with respect to such
Award, unless and until such recipient has executed an agreement
evidencing the Award and has delivered a fully executed copy thereof
of the Company, and has otherwise complied with the applicable terms
and conditions of such Award.
(iii) Each participant receiving an Award of Restricted
Stock shall be issued a stock certificate in respect of such shares
of Restricted Stock. Such certificate shall be registered in the
name of such participant, and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to
such Award, substantially in the following form:
"The transferability of this certificate and the
shares of stock represented hereby are subject to the
terms and conditions (including forfeiture) of the Cliffs
Drilling Company 1988 Incentive Equity Plan and an
Agreement entered into between the registered owner of
the shares and Cliffs Drilling Company. Copies of such
Plan and Agreement are on file in the offices of Cliffs
Drilling Company, Houston, Texas."
The Committee may require that the stock certificates evidencing
such shares be held in custody by the Company until the restrictions
thereon shall have lapsed, and that, as a condition of any
Restricted Stock Award, the participant shall have delivered a stock
power, endorsed in blank, relating to the Stock covered by such
Award.
(iv) Subject to the provisions of this Plan and the applicable
Award agreement, during a period set by the Committee commencing
with the date of such Award (the "Restriction Period"), the
participant shall not be permitted to sell, transfer, pledge, assign
or otherwise encumber shares of Restricted Stock awarded under the
Plan. Based on service, performance and/or such other factors or
criteria as the Committee may determine, the Committee may, however,
at or after grant, provide for the lapse of such restrictions in
installments and/or may accelerate or waive such restrictions in
whole or in part.
(v) Except as provided in this Section 8(b), the recipient
shall have, with respect to the shares of Restricted Stock covered
by any Award, all of the rights of a shareholder of the Company,
including the right to vote the shares, and the right to receive any
dividends, provided, however, that unless otherwise determined by
the Committee, any dividends on such shares shall be automatically
deferred and reinvested in additional Restricted Stock subject to
the same restrictions as the underlying Award, to the extent shares
are available under Section 5.
(vi) Except as otherwise provided in this Section 8(b) and in
the applicable Award agreement, upon termination of a participant's
employment or service with the Company or any Subsidiary or
Affiliate for any reason during the Restriction Period for any given
Award of Restricted Stock, all shares still subject to restriction
shall be forfeited by the participant, provided, however, the
Committee may provide for waiver of the restrictions in the event of
termination of employment or service due to death, Disability or
Retirement.
(vii) In the event of hardship or other special
circumstances of a participant whose employment or service with the
Company or any Subsidiary or Affiliate is involuntarily terminated
(other than for Cause), the Committee may waive in whole or in part
any or all remaining restrictions with respect to any or all of the
participant's Restricted Stock, based on such factors and criteria
as the Committee may deem appropriate.
(viii) If and when the Restriction Period expires without a
prior forfeiture of the Restricted Stock subject to such Restriction
Period, unrestricted certificates for such shares shall be delivered
to the participant.
(c) Terms and Conditions Applicable to Deferred Stock Awards.
Deferred Stock Awards shall be subject to the following terms and
conditions:
(i) Each Award of Deferred Stock shall be confirmed by, and
subject to the terms of, a Deferred Stock agreement executed by the
Company and the participant.
(ii) Subject to the provisions of this Plan and the applicable
Award agreement, the participant shall not be permitted to sell,
transfer, pledge, assign or otherwise encumber shares covered by an
Award of Deferred Stock during the period, commencing with the date
of such Award, specified by the Committee for purposes of such Award
(the "Deferral Period"). Based on service, performance and/or such
other factors or criteria as the Committee may determine, the
Committee may, however, at or after grant, accelerate the vesting of
all or any part of any Deferred Stock Award and/or waive the
deferral limitations for all or any part of such Award.
(iii) Unless otherwise determined by the Committee, amounts
equal to any dividends that would have been payable during the
Deferral Period with respect to the number of shares covered by a
Deferred Stock Award if such shares had been outstanding shall be
automatically deferred and deemed to be reinvested in additional
Deferred Stock, subject to the same deferral limitations as the
underlying Award.
(iv) Except to the extent otherwise provided in this Section
8(c) and in the applicable Award agreement, upon termination of a
participant's employment or service with the Company or any
Subsidiary or Affiliate for any reason during the Deferral Period
for a given Award, the Deferred Stock covered by such Award shall be
forfeited by the participant, provided, however, the Committee may
provide for accelerated vesting in the event of termination of
employment or service due to death, Disability or Retirement.
(v) In the event of hardship or other special circumstances of
a participant whose employment or service with the Company or any
Subsidiary or Affiliate is involuntarily terminated (other than for
Cause), the Committee may waive in whole or in part any or all of
the remaining deferral limitations imposed hereunder with respect to
any or all of the participant's Deferred Stock, based on such
factors and criteria as the Committee deems appropriate.
(vi) At the expiration of the Deferral Period, share
certificates shall be delivered to the participant, or his legal
representative, in a number equal to the number of shares covered by
the Award.
Section 9. Change in Control Provisions.
(a) Impact of Event. In the event of:
(x) a "Change in Control" as defined in Section 9(b), or
(y) a "Potential Change in Control" as defined in Section
9(c),
the Committee or the Board may provide that one or more of the following
acceleration and valuation provisions shall apply:
(i) Any or all Stock Appreciation Rights outstanding for at
least six months on the date that such Change in Control or
Potential Change in Control is determined to have occurred and any
or all Stock Options awarded under this Plan not previously
exercisable and vested shall become fully exercisable and vested.
(ii) The restrictions and deferral limitations applicable to
any or all Restricted Stock and Deferred Stock Awards shall lapse
and such shares and Awards shall be fully vested.
(iii) The value of any or all outstanding Stock Options,
Restricted Stock and Deferred Stock Awards shall be cashed out on
the basis of the "Change in Control Price" as defined in Section
9(d) as of the date such Change in Control or Potential Change in
Control is determined to have occurred or such other date as the
Committee may determine prior to the Change in Control.
(b) Definition of "Change in Control." For purposes of Section
9(a), a "Change in Control" means the happening of any of the following:
(i) A tender offer is made and consummated for the ownership
of 30% or more of the outstanding voting securities of the Company;
(ii) The Company shall merge or consolidate with another
corporation and as a result of such merger or consolidation less
than 75% of the outstanding voting securities of the surviving or
resulting corporation shall be owned in the aggregate by the former
shareholders of the Company, other than affiliates (within the
meaning of the Exchange Act as in effect on the date the Plan was
first approved by the shareholders of the Company (the "Approval
Date")) of any party to such merger or consolidation, as the same
shall have existed immediately prior to such merger or
consolidation;
(iii) The Company shall sell substantially all of its
assets to another corporation which is not a Subsidiary; or
(iv) A person, within the meaning of Section 3(a)(9) or of
Section 13(d)(3) (as in effect on the Approval Date) of the Exchange
Act, shall acquire 30% or more of the outstanding voting securities
of the Company (whether directly, indirectly, beneficially or of
record).
For purposes hereof, ownership of voting securities shall take into
account and shall include ownership as determined by applying the
provisions of Rule 13d-3(d)(1)(i) (as in effect on the Approval Date)
pursuant to the Exchange Act.
(c) Definition of "Potential Change in Control". For purposes of
Section 9(a), a "Potential Change in Control" means the happening of any
one of the following:
(i) The entering into an agreement by the Company, the
consummation of which would result in a Change in Control of the
Company as defined in Section 9(b); or
(ii) The acquisition of beneficial ownership, directly or
indirectly, by any entity, person or group (other than the Company
or a Subsidiary or any Company employee benefit plan) (including any
trustee of such plan acting as such trustee) of securities of the
Company representing 5% or more of the combined voting power of the
Company's outstanding securities, and the adoption by the Board of a
resolution to the effect that a "Potential Change in Control" of the
Company has occurred for the purposes of this Plan.
(d) Change in Control Price. For the purposes of this Section 9,
"Change in Control Price" means the highest price per share paid in any
transaction reported on the principal United States securities exchange,
the NASDAQ National Market System or other principal market on which the
stock is traded, or paid or offered in any bona fide transaction related
to an actual or Potential Change in Control of the Company, at the time
during the preceding sixty-day period as determined by the Committee,
except that, in the case of Incentive Stock Options and Stock
Appreciation Rights relating to Incentive Stock Options, such price shall
be based only on transactions reported for the date as of which the
Committee decides to cashout such options.
Section 10. Amendments and Termination.
The Board may amend, alter, or discontinue the Plan, including
without limitation, the automatic grant provisions set forth in Section
13 of the Plan, at any time, but no amendment, alteration, or
discontinuation shall be made which would impair the rights of a
participant under an Award theretofore granted without the written
consent of the affect participant (or if not then living, the affected
beneficiary), or which, without the approval of the Company's
stockholders, would, except as expressly provided in the Plan, increase
the total number of shares reserved for delivery pursuant to the Plan.
The Committee may amend the terms of any outstanding Award theretofore
granted, prospectively or retroactively, but no such amendment shall
impair the rights of any holder without the holder's consent.
Section 11. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive
and deferred compensation. With respect to any payments not yet made to
a participant by the Company, nothing contained herein shall give any
such participant any rights that are greater than those of a general
creditor of the Company. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the
Plan to deliver Stock or payments hereunder consistent with the
foregoing.
Section 12. General Provisions.
(a) Notwithstanding any other provision of the Plan, the Company
shall have no liability to deliver any shares of Stock pursuant to the
Plan or make any other distribution of benefits under the Plan unless
such delivery or distribution would comply with all applicable laws
(including without limitation, the requirements of the Securities Act of
1933, as amended), and the applicable requirements of any securities
exchange or similar entity. The Committee may require each person
acquiring shares pursuant to an Award under the Plan to represent to and
agree with the Company in writing that such person is acquiring the
shares without a view to distribution thereof. The certificates for such
shares may include any legend which the Committee deems appropriate to
reflect any restrictions on transfer. All certificates for shares of
Stock or other securities delivered under the Plan shall be subject to
such stock transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the
Stock is then listed and any applicable Federal or state securities law,
and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Company, a
Subsidiary or an Affiliate from adopting other or additional compensation
arrangements for its employees.
(c) The adoption of the Plan shall not confer upon any individual
any right to continued employment or service with the Company or a
Subsidiary or Affiliate, as the case may be, nor shall it interfere in
any way with the right of the Company or any Subsidiary or Affiliate to
terminate the employment or service of any individual at any time.
(d) No later than the date as of which an amount first becomes
includible in the gross income of a participant for Federal income tax
purposes with respect to any Award under the Plan, the participant shall
pay to the Company, or make any arrangements satisfactory to the
Committee regarding the payment of any Federal, state or local taxes of
any kind required by law to be withheld with respect to such amount.
Unless otherwise determined by the Company, withholding obligations may
be settled with Stock, including Stock that is part of the Award that
gives rise to the withholding requirement. The obligations of the
Company under the Plan shall be conditional on such payment or
arrangements, and the Company and its Subsidiaries or Affiliates shall,
to the extent permitted by law, have the right to deduct any such taxes
from the payment(s) otherwise due to the participant.
(e) The Committee shall establish such procedures as it deems
appropriate for a participant to designate a beneficiary to whom any
amounts payable in the event of the participant's death are to be paid.
(f) Subject to the overall limitation of the maximum number of
shares of Stock that may be delivered pursuant to the Plan, the Committee
may use available shares of Stock as the form of payment for
compensation, grants or rights earned or due under any other compensation
plans or arrangements of the Company or any Subsidiary or Affiliate,
including the plans and arrangements of the Company or any Subsidiary or
Affiliate acquiring another entity (or any interest in another entity).
(g) Awards may be settled through cash payments, the delivery of
shares of Stock, the granting of replacement Awards, or any combination
thereof as the Committee shall determine. Any Award settlement may be
subject to such conditions, restrictions and contingencies as the
Committee shall determine.
Section 13. Automatic Award of Stock Options to Certain Persons.
Subject to stockholder approval of the Plan and subject to the
availability of a sufficient number of shares of Stock for delivery
pursuant to the Plan, (a) Non-Qualified Stock Options to purchase an
aggregate of 4,000 shares of Stock (subject to adjustment pursuant to
Section 5) shall automatically be granted pursuant to the Plan, without
the need for any further any action by the Committee, to each of the
Company's Non-Employee Directors, on the date of their initial election
to the Board of Directors of the Company, and (b) Non-Qualified Stock
Options to purchase an aggregate of 2,000 shares of Stock (subject to
adjustment pursuant to Section 5) shall automatically be granted pursuant
to the Plan, without the need for any further action by the Committee, to
each of the Company's continuing or re-elected Non-Employee Directors, on
the date of each annual meeting of shareholders of the Company; in each
case commencing with the election of directors at the annual meeting of
shareholders of the Company to be held in 1998. Each such Stock Option
shall have an exercise price equal to the Fair Market Value of the Stock
on the date of grant, and will be for a term of ten years from the date
of grant, subject to earlier termination as set forth in Sections 6(f),
(g) and (h), with 50% of the shares becoming exercisable after one year
and 25% after each of the succeeding two years; provided, however, that
such options shall become immediately exercisable upon a "Change of
Control" or "Potential Change of Control" as and to the extent provided
in Section 9.
Section 14. Effective Date.
The Plan shall be effective on the date it is approved by the
stockholders of the Company.
AMENDMENT NO. 1
TO THE
CLIFFS DRILLING COMPANY
1998 INCENTIVE EQUITY PLAN
Pursuant to the terms and provisions of Section 10 of the Cliffs
Drilling Company 1998 Incentive Equity Plan (the "Plan"), Cliffs Drilling
Company, a Delaware corporation (the "Company"), hereby adopts the
following Amendment No. 1 to the Plan (the "Amendment No. 1").
The last sentence of Section 10 of the Plan is hereby amended in its
entirety by substituting the following therefor:
"The Committee may amend the terms of any outstanding
Award theretofore granted, prospectively or retroactively, but
no such amendment shall impair the rights of any holder without
the holder's consent, and no such amendment shall reduce the
exercise price of any outstanding stock option other than in
accordance with Section 5(e) of the Plan."
Each amendment made by this Amendment No. 1 to the Plan has been
effected in conformity with the provisions of the Plan.
This Amendment No. 1 was adopted by the Board of Directors of the
Company on May 13, 1998. Approval of this Amendment No. 1 by the
shareholders of the Company is not required pursuant to the terms and
provisions of the Plan.
Dated: May 14, 1998.
CLIFFS DRILLING COMPANY
By: /s/ Cindy B. Taylor
----------------------
Cindy B. Taylor
Vice President-Controller and
Secretary
EXHIBIT 5
November 30,1998
R&B Falcon Corporation
901 Threadneedle
Houston, Texas 77079
Gentlemen:
As Senior Vice President and Co-Counsel of R&B Falcon Corporation, a
Delaware corporation (the "Company"), I have participated in the
preparation of a Registration Statement on Form S-8 (the "Registration
Statement") to be filed with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, with respect to the offering of
1,052,300 shares of its common stock, par value $.01 per share (the
"Common Stock"), to be sold pursuant to the Cliffs Drilling Company 1988
Incentive Equity Plan and the Cliffs Drilling Company 1998 Incentive
Equity Plan (the "Plans"), which Plans will be assumed by the Company.
In my capacity as Co-Counsel of the Company, I have examined the current
Certificate of Incorporation and Bylaws of the Company, each as amended
and restated to date, and the originals, or copies certified or otherwise
identified, of such corporate records of the Company, certificates of
public officials and of representatives of the Company, statutes and
other instruments and documents as I have deemed relevant and necessary
as the basis for the opinions hereinafter expressed.
Based upon my examination as aforesaid, it is my opinion that:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware;
and
2. 1,052,300 shares of Common Stock reserved for issuance pursuant
to the Plans have been duly authorized and, when sold in
connection with awards granted pursuant to the provisions of the
Plans, will be validly issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to being named in the Registration Statement,
and the prospectus or prospectuses prepared and delivered in connection
therewith.
Very truly yours,
/s/Leighton E. Moss
---------------------
Leighton E. Moss
Senior Vice President
and Co-Counsel
EXHIBIT 15
R&B Falcon Corporation:
We are aware that R&B Falcon Corporation has incorporated by
reference in this registration statement on Form S-8 its Form 10-Q for
the quarters ended March 31, 1998, June 30, 1998 and September 30, 1998,
which include our reports dated April 20, 1998, July 28, 1998 and
November 4, 1998, respectively, covering the unaudited interim financial
information contained therein. Pursuant to Regulation C of the
Securities Act of 1933, those reports are not considered a part of the
registration statement prepared or certified by our Firm or reports
prepared or certified by our Firm within the meaning of Sections 7 and 11
of the Act.
/s/ARTHUR ANDERSEN LLP
Houston, Texas
November 30, 1998
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement on Form S-8 of
our report dated March 24, 1998 included in R&B Falcon Corporation's Form
10-K for the year ended December 31, 1997, and to all references to our
Firm in this registration statement.
/s/ARTHUR ANDERSEN LLP
Houston, Texas
November 30, 1998
