EXHIBIT 10.4
R&B FALCON CORPORATION
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") between R&B Falcon
Corporation, a Delaware corporation ("Company") and Charles Donabedian
("Optionee"),
WITNESSETH:
WHEREAS, Optionee, being a duly elected or appointed member of
the Board of Directors of the Company, is entitled to receive a non-
qualified stock option award under the Company's 1999 Director Long-
Term Incentive Plan ("Plan"), as an incentive to the Optionee to
remain a director of the Company and contribute to the performance of
the Company, on the terms and subject to the conditions provided
herein;
NOW THEREFORE, for and in consideration of these premises, it is
hereby agreed as follows:
1. The Option is issued in accordance with and subject to all
of the terms, conditions and provisions of the Plan and
administrative interpretations thereunder, if any, which
have been adopted by the Committee and are in effect on the
date hereof. Capitalized terms used (but not otherwise
defined herein) shall have the meanings assigned to such
terms in the Plan.
2. On the terms and subject to the conditions contained herein,
the Committee hereby grants to the Optionee an option
("Option") for a term of ten years ending on January 28,
2010 ("Option Period") to purchase from the Company 5,500
shares ("Option Shares") of the Company's Common Stock, at a
price equal to $12.656 per share.
3. This Option shall not be exercisable until after 6 months
immediately following the Effective Date, and thereafter on
January 1, 2001 shall be exercisable for any number of
shares up to and including, but not in excess of, 100% of
the aggregate number of shares subject to this Option,
provided the number of shares as to which this Option
becomes exercisable shall, in each case, be reduced by the
number of shares theretofore purchased pursuant to the terms
hereof.
4. The Option herein granted may be exercised by the Optionee
by giving written notice to the Secretary of the Company
setting forth the number of Option Shares with respect to
which the option is to be exercised, accompanied by payment
for the shares to be purchased and any appropriate
withholding taxes, and specifying the address to which the
certificate for such shares is to be mailed. Payment shall
be by means of cash, certified check, bank draft or postal
money order payable to the order of the Company. As
promptly as practicable after receipt of such written
notification and payment, the Company shall deliver to the
Optionee certificates for the number of Option Shares with
respect to which such option has been so exercised.
5. Optionee may pay for any Option Shares with respect to which
the Option herein granted is exercised by tendering to the
Company other shares of Common Stock at the time of the
exercise or partial exercise hereof. The certificates
representing such other shares of Common Stock must be
accompanied by a stock power duly executed with signature
guaranteed. The value of the Common Stock so tendered shall
be its Fair Market Value.
6. The Option herein granted shall not be transferable by the
Optionee otherwise than as permitted by Section 13 of the
Plan. During the lifetime of the Optionee, such Option shall
be exercisable only by him. No transfer of the Option herein
granted shall be effective to bind the Company unless the
Company shall have been furnished with written notice
thereof and a copy of such evidence as the Committee may
deem necessary to establish the validity of the transfer and
the acceptance by the transferee or transferees of the terms
and conditions hereof.
7. (a) Upon the first to occur during the Option Period of:
(i) Change of Control; or
(ii) the termination of the Optionee's service as
a member of the board of directors of the
Company due to (A) death or disability or (B)
retirement at age 60 or over;
the applicable restrictions on exercise set out in Section 3
above (other than the initial six months immediately
following the Effective Date) shall terminate and the
Optionee's right to exercise this Option thereafter shall no
longer be subject to such restrictions on exercise.
(b) If the Optionee's service as a member of the
board of directors of the Company terminates prior to the
occurrence of a date set forth in Section 7(a)(i) above for
any reason (other than any of the reasons expressly set out
in Section 7(a)(ii) above), then the Option granted herein
shall immediately terminate and thereafter may not be
exercised in whole or in part by Optionee.
8. The Optionee shall have no rights as a stockholder with
respect to any Option Shares until the date of issuance of a
certificate for Option Shares purchased pursuant to this
Agreement. Until such time, the Optionee shall not be
entitled to dividends or to vote at meetings of the
stockholders of the Company.
9. The Company may make such provisions as it may deem
appropriate for the withholding of any taxes which it
determines is required in connection with the option herein
granted. The Optionee may pay all or any portion of the
taxes required to be withheld by the Company or paid by the
Optionee in connection with the exercise of all or any
portion of the option herein granted by electing to have the
Company withhold shares of Common Stock, or by delivering
previously owned shares of Common Stock, having a Fair
Market Value equal to the amount required to be withheld or
paid. The Optionee must make the foregoing election on or
before the date that the amount of tax to be withheld is
determined ("Tax Date"). Any such election is irrevocable
and subject to disapproval by the Committee. If the
Optionee is subject to the short-swing profits recapture
provisions of Section 16(b) of the Exchange Act, any such
election shall be subject to the following additional
restrictions:
(a) Such election may not be made within six months of the
grant of this option, provided that this limitation
shall not apply in the event of death or disability.
(b) Such election must be made either in an Election Window
(as hereinafter defined) or at such other time as may
be consistent with Section 16(b)(3) of the Exchange
Act. Where the Tax Date in respect of the exercise of
all or any portion of this Option is deferred until
after such exercise and the Optionee elects stock
withholding, the full amount of shares of Common Stock
will be issued or transferred to the Optionee upon
exercise of this Option, but the Optionee shall be
unconditionally obligated to tender back to the Company
on the Tax Date the number of shares necessary to
discharge with respect to such Option exercise the
greater of (i) the Company's withholding obligation and
(ii) all or any portion of the holder's federal and
state tax obligation attributable to the Option
exercise. An Election Window is any period commencing
on the third business day following the Company's
release of a quarterly or annual summary statement of
sales and earnings and ending on the twelfth business
day following such release.
10. Upon the acquisition of any shares pursuant to the exercise
of the Option herein granted, the Optionee will enter into
such written representations, warranties and agreements as
the Company may reasonably request in order to comply with
applicable securities laws or with this Agreement.
11. The certificates representing the Option Shares purchased by
exercise of an option will be stamped or otherwise imprinted
with a legend in such form as the Company or its counsel may
require with respect to any applicable restrictions on sale
or transfer, and the stock transfer records of the Company
will reflect stop-transfer instructions, as appropriate,
with respect to such shares.
12. Unless otherwise provided herein, every notice hereunder
shall be in writing and shall be given by registered or
certified mail. All notices of the exercise by the Optionee
of any option hereunder shall be directed to R&B Falcon
Corporation, Attention: Secretary, at the Company's then
current address of its principal office. Any notice given
by the Company to the Optionee directed to him at his
address on file with the Company shall be effective to bind
any other person who shall acquire rights hereunder. The
Company shall be under no obligation whatsoever to advise
the Optionee of the existence, maturity or termination of
any of the Optionee's rights hereunder and the Optionee
shall be deemed to have familiarized himself with all
matters contained herein and in the Plan which may affect
any of the Optionee's rights or privileges hereunder.
13. Whenever the term "Optionee" is used herein under
circumstances applicable to any other person or persons to
whom this Award, in accordance with the provisions of
Paragraph 6, may be transferred, the word "Optionee" shall
be deemed to include such person or persons. References to
the masculine gender herein also include the feminine gender
for all purposes.
14. Notwithstanding any of the other provisions hereof, the
Optionee agrees that he will not exercise the option herein
granted, and that the Company will not be obligated to issue
any shares pursuant to this Agreement, if the exercise of
the option or the issuance of such shares of Common Stock
would constitute a violation by the Optionee or by the
Company of any provision of any law or regulation of any
governmental authority or any national securities exchange.
15. For the purpose of this Agreement, a "Change of Control"
shall mean: (a) any "Person", as such term is used in
Section 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (other than (i) the
Optionee, (ii) the Company or any of its subsidiaries or
Affiliates (as that term is defined in the Exchange Act),
(iii) any Person subject, as of the date of this Agreement
or at any prior time, to the reporting or filing
requirements of Section 13(d) of the Exchange Act with
respect to the securities of the Company or any Affiliate,
(iv) any trustee or other fiduciary holding or owning
securities under an employee benefit plan of the Company,
(v) any underwriter temporarily holding or owning securities
of the Company, or (vi) any corporation owned directly or
indirectly by the current stockholders of the Company in
substantially the same proportion as their then ownership of
stock of the Company) becomes, after the date of this
Agreement, the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of the Company representing forty percent (40%)
or more of the combined voting power of the Company's then
outstanding securities; or (b) at any time a majority of
the members of the board of directors of the Company is
comprised of other than Continuing Directors (and for this
purpose "Continuing Directors" shall mean members of the
board of directors of the Company who were directors as of
the date of this Agreement, or who were nominated by a
majority of the members of the board of directors of the
Company and such majority was comprised only of Continuing
Directors at the time of such nomination).
IN WITNESS WHEREOF, this Agreement is executed this ____ day of
March, 2000, effective as of the 28th day of January, 2000.
R&B FALCON CORPORATION
By: _______________________
Paul B. Loyd, Jr. - Chairman and
Chief Executive Officer
OPTIONEE
___________________________
Charles Donabedian
