EXHIBIT 10.6
SECOND AMENDED AND RESTATED
DIAMOND OFFSHORE DRILLING, INC.
2000 STOCK OPTION PLAN
SECTION 1
GENERAL
1.1. Purpose . The Diamond
Offshore 2000 Stock Option Plan, which became effective as of
May 15, 2000 and was amended and restated effective as of
May 18, 2004 and, as herein further amended and restated, will
become effective on the Effective Date (as so amended and restated,
the “Plan”), has been established by Diamond Offshore
Drilling, Inc. (the “Company”) to (i) attract and
retain persons eligible to participate in the Plan,
(ii) motivate Participants, by means of appropriate
incentives, to achieve long-term Company goals, and reward
Participants for achievement of those goals, and (iii) provide
incentive compensation opportunities that are competitive with
those of other similar companies, and thereby promote the financial
interest of the Company and its Subsidiaries.
1.2. Operation and
Administration . The operation and administration of the Plan
shall be subject to the provisions of Section 4 (relating to
operation and administration). Capitalized terms in the Plan shall
be defined as set forth in the Plan (including the definition
provisions of Section 7 of the Plan).
SECTION 2
OPTIONS
2.1. Option Grant . The Board
may grant Options in accordance with this Section 2.
2.2. Definitions . The grant
of an “Option” permits the Participant to purchase
shares of Stock at an Exercise Price established by the Board. Any
Option granted under the Plan may be either an incentive stock
option (an “ISO”) or a non-qualified option (an
“NQO”), as determined in the discretion of the Board.
An “ISO” is an Option that is intended to be an
“incentive stock option” described in section 422(b) of
the Code and does in fact satisfy the requirements of that section.
An “NQO” is an Option that is not intended to be an
“incentive stock option” as that term is described in
section 422(b) of the Code, or that fails to satisfy the
requirements of that section.
2.3. Exercise Price . The
“Exercise Price” of each Option granted under this
Section 2 shall be established by the Board or shall be
determined by a method established by the Board at the time the
Option is granted; except that the Exercise Price shall not be less
than 100% of the Fair Market Value of a share of Stock on the date
of grant (or, if greater, the par value of a share of Stock). In no
event may any Option granted under this Plan be amended, other than
pursuant to Section 4.2(e), to decrease the exercise price
thereof, be cancelled in conjunction with the
grant of
any new Option with a lower exercise price, or otherwise be subject
to any action that would be treated, for accounting purposes, as a
“repricing” of such Option, unless such amendment,
cancellation, or action is approved by the Company’s
stockholders.
2.4. Vesting and Exercise . An
Option shall be exercisable in accordance with such terms and
conditions and during such periods as may be established by the
Board.
| (a) |
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Unless otherwise provided by the Board at the time of grant or
thereafter, each Option shall vest and become exercisable in four
equal annual installments beginning on the first anniversary of the
date of grant, and shall thereafter remain exercisable during the
Term. |
| (b) |
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Unless otherwise provided by the Board at the time of grant or
thereafter, the Term of each Option shall end on the earliest of
(1) the date on which such Option has been exercised in full,
(2) the date on which the Participant experiences a
Termination for Cause or a voluntary Termination, (3) the
one-year anniversary of the date on which the Participant
experiences a Termination due to death or Disability, (4) the
three-year anniversary of the date on which the Participant
experiences a Termination due to such person’s Retirement,
and (5) the 90 th day after the
Participant experiences a Termination for any other reason;
provided , that in no event may the Term exceed ten
(10) years from the date of grant of the Option. Except as
otherwise determined by the Board at the time of grant or
thereafter, upon the occurrence of a Termination of a Participant
for any reason, the Term of all outstanding Options held by the
Participant that are unvested as of the date of such Termination
shall thereupon end and such unvested Options shall be forfeited
immediately; provided , however , that the Board may,
in its sole discretion, accelerate the vesting of any Option and/or
extend the exercise period of any Option (but not beyond the
ten-year anniversary of the grant date). |
| (c) |
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An Option may be exercised and the underlying shares purchased
in accordance with this Section 2 at any time after the Option
with respect to those shares vests and before the expiration of the
Term. To exercise an Option, the Participant shall give written
notice to the Company stating the number of shares with respect to
which the Option is being exercised. |
| (d) |
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The full Exercise Price for shares of Stock purchased upon the
exercise of any Option shall be paid at the time of such exercise
(except that, in the case of an exercise arrangement approved by
the Board and described in the last sentence of this
Section 2.4(d), payment may be made as soon as practicable
after the exercise). The Exercise Price shall be payable by check,
or such other instrument as the Board may accept. The Board may
permit a Participant to elect to pay the Exercise Price upon the
exercise of an Option by irrevocably authorizing a third party to
sell shares of Stock (or a sufficient portion of the shares)
acquired upon exercise of the Option and remit to the Company a
sufficient portion of the sale proceeds to pay the entire Exercise
Price and any tax withholding resulting from such exercise. In the
case of any ISO such permission must be provided for at the time of
grant and set forth in an Award Certificate. In addition, if
approved by the Board, payment, in full or in part, may also be
made in the form of unrestricted Mature Shares, based on the Fair
Market Value of the Mature Shares on the date the Option is
exercised; provided , however , that,
in the case of an ISO the right to |
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make a payment in such Mature Shares may be authorized only at
the time the Option is granted. |
SECTION 3
STOCK APPRECIATION RIGHTS
3.1. Types and Nature of Stock
Appreciation Rights . Stock Appreciation Rights may be
“Tandem SARs,” which are granted in conjunction with an
Option, or “Free-Standing SARs,” which are not granted
in conjunction with an Option. Upon the exercise of a Stock
Appreciation Right, the Participant shall be entitled to receive an
amount equal to the product of (i) the excess of the Fair
Market Value of one share of Stock over the exercise price of the
applicable Stock Appreciation Right, multiplied by (ii) the
number of shares of Stock in respect of which the Stock
Appreciation Right has been exercised. Such amount shall be paid in
cash, Stock, or a combination thereof (with the amount of such cash
being determined based upon the Fair Market Value of the Stock on
the date of exercise). As determined by the Board, the applicable
Award Certificate shall specify whether such payment is to be made
in cash or Stock or both, or shall reserve to the Board or the
Participant the right to make that determination prior to or upon
the exercise of the Stock Appreciation Right.
3.2. Tandem SARs . A Tandem
SAR may be granted on the grant date of the related Option or, in
the case of a related NQO, at any time after the grant date thereof
while the related NQO remains outstanding. A Tandem SAR shall be
exercisable only at such time or times and to the extent that the
related Option is exercisable in accordance with the provisions of
Section 2, and shall at all times have the same exercise price
as the related Option. A Tandem SAR shall terminate or be forfeited
upon the exercise or forfeiture of the related Option, and the
related Option shall terminate or be forfeited upon the exercise or
forfeiture of the Tandem SAR.
3.3. Exercise Price . The
“Exercise Price” per share of Stock subject to a
Free-Standing SAR shall be determined by the Board and set forth in
the applicable Award Certificate, and shall not be less than the
Fair Market Value of a share of Stock on the applicable grant date.
In no event may any Free-Standing SAR granted under this Plan be
amended, other than pursuant to Section 4.2(e), to decrease
the exercise price thereof, be cancelled in conjunction with the
grant of any new Option or Free-Standing SAR with a lower exercise
price, or otherwise be subject to any action that would be treated,
for accounting purposes, as a “repricing” of such
Free-Standing SAR, unless such amendment, cancellation or action is
approved by the Company’s stockholders.
3.4. Term . Unless otherwise
provided by the Board at the time of grant or thereafter, the Term
of each Free-Standing SAR shall end on the earliest of (1) the
date on which such Free-Standing SAR has been exercised in full,
(2) the date on which the Participant experiences a
Termination for Cause or a voluntary Termination, (3) the
one-year anniversary of the date on which the Participant
experiences a Termination due to death or Disability, (4) the
three-year anniversary of the date on which the Participant
experiences a Termination due to such person’s Retirement,
and (5) the 90 th day after the
Participant experiences a Termination for any other reason;
provided , that in no event may the Term exceed ten
(10) years from the date of grant of the Free-Standing SAR.
Except as otherwise determined by the Board at the time of grant,
upon
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occurrence of a Termination of a Participant for any reason, the
Term of all outstanding Free-Standing SARs held by the Participant
that are unvested as of the date of such Termination shall
thereupon end and such unvested Free-Standing SARs shall be
forfeited immediately; provided , however , that the
Board may, in its sole discretion, accelerate the vesting of any
Stock Appreciation Right and/or extend the exercise period of any
Stock Appreciation Right (but not beyond the ten-year anniversary
of the grant date).
3.5. Vesting and Exercise .
Except as otherwise provided herein, Free-Standing SARs shall vest
and be exercisable at such time or times and subject to such terms
and conditions as shall be determined by the Board and set forth in
the applicable Award Certificate.
SECTION 4
OPERATION AND ADMINISTRATION
4.1. Effective Date . Subject
to the approval of the stockholders of the Company at the
Company’s 2005 annual meeting of its stockholders, the Plan
shall be effective as of May 23, 2005 (the “Effective
Date”); provided , however , that to the extent
that Options or Stock Appreciation Rights are granted under the
Plan prior to its approval by stockholders, the Options and Stock
Appreciation Rights shall be contingent on approval of the Plan by
the stockholders of the Company at such annual meeting. The Plan
shall be unlimited in duration and, in the event of Plan
termination, shall remain in effect as long as any Options and
Stock Appreciation Rights under it are outstanding.
4.2. Shares Subject to Plan .
The shares of Stock for which Options and Stock Appreciation Rights
may be granted under the Plan shall be subject to the
following:
| (a) |
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The shares of Stock with respect to which Options and Stock
Appreciation Rights may be granted under the Plan shall be shares
currently authorized but unissued or currently held or subsequently
acquired by the Company as treasury shares, including shares
purchased in the open market or in private transactions. |
| (b) |
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Subject to the following provisions of this Section 4.2,
the maximum number of shares of Stock that may be delivered to
Participants and their beneficiaries under the Plan shall be
1,500,000 shares of Stock. |
| (c) |
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To the extent any shares of Stock covered by an Option are not
delivered to a Participant or beneficiary because the Option is
forfeited or canceled, such shares shall not be deemed to have been
delivered for purposes of determining the maximum number of shares
of Stock available for delivery under the Plan. |
| (d) |
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Subject to Section 4.2(e), the maximum number of shares
that may be covered by Options and/or Stock Appreciation Rights
granted to any one individual during any one calendar year period
shall be 200,000 shares. |
| (e) |
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In the event of a corporate transaction involving the Company
(including, without limitation, any stock dividend, stock split,
extraordinary cash dividend, recapitalization, reorganization,
merger, consolidation, split-up, spin-off, combination or exchange
of |
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shares), the Board shall make adjustments to preserve the
benefits or potential benefits of the Plan and outstanding Options
and/or Stock Appreciation Rights. Action by the Board may include:
(i) adjustment of the number and kind of shares which may be
delivered under the Plan; (ii) adjustment of the number and
kind of shares referred to in Sections 4.2(b) and (d);
(iii) adjustment of the number and kind of shares subject to
outstanding Options and Stock Appreciation Rights;
(iv) adjustment of the Exercise Price of outstanding Options
and Stock Appreciation Rights; (v) settlement in cash or Stock
in an amount equal to the excess of the value of the Stock subject
to such Options and Stock Appreciation Rights over the aggregate
Exercise Price (as determined by the Board) of such Options and
Stock Appreciation Rights; and (vi) any other adjustments that
the Board determines to be equitable. The Board shall make all such
adjustments, and its determination as to what adjustments shall be
made, and the extent thereof, shall be final. |
4.3. General Restrictions .
Delivery of shares of Stock or other amounts under the Plan shall
be subject to the following:
| (a) |
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Notwithstanding any other provision of the Plan, the Company
shall have no liability to deliver any sha |
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