EXHIBIT 10.28
R&B FALCON CORPORATION
1998 ACQUISITION OPTION PLAN
1. Purpose. Reference is made to the Agreement and Plan of
Merger dated as of August 21, 1998 (the "Merger Agreement"),
among R&B Falcon Corporation (the "Company"), RBF Cliffs
Acquisition Corp. and Cliffs Drilling Company ("Cliffs").
Pursuant to the Merger Agreement, the Company agreed to grant to
certain Cliffs employees options to acquire R&B Falcon Common
Stock. The Merger Agreement provided such options would be
granted pursuant to the R&B Falcon Corporation 1998 Employee
Long-Term Incentive Plan. The Company has determined that it
would be desirable to grant such options under a separate plan
having terms that are in all material respects the same as the
R&B Falcon 1998 Corporation Employee Long-Term Incentive Plan.
Cliffs Drilling Company has agreed that such options may be
granted under a separate plan. This R&B Falcon Corporation 1998
Acquisition Option Plan (the "Plan") is established and adopted
for the purpose of fulfilling the Company's obligations to grant
stock options to Cliffs employees pursuant to the Merger
Agreement.
2. Definitions. As used herein, the terms set forth
below -shall have the following respective meanings:
"Award" means the grant of a non-qualified stock option
pursuant hereto.
"Award Agreement" means a written agreement between the
Company and a Participant that sets forth the terms, conditions
and limitations applicable to an Award.
"Board" means the Board of Directors of the Company.
"Common Stock" means the Common Stock, par value $0.01
per share, of the Company.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Committee" means such committee of the Board as is
designated by the Board to administer the Plan. The Committee
shall be constituted to permit the Plan to comply with Rule 16b-3
and shall initially consist of not less than two members of the
Board who are "disinterested persons" within the meaning of such
Rule.
"Director" means an individual serving as a member of
the Board.
"Effective Time" has the meaning given to it in the
Merger Agreement.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time,
"Fair Market Value" means, as of a particular date, (i)
if the shares of Common Stock are listed on the New York Stock
Exchange, the mean between the highest and lowest sales price per
share of Common Stock on such national securities exchange on
such date, or if there shall have been no such sale so reported
on that date, on the last preceding date on which such sale was
so reported, (ii) if the shares of Common Stock are not so listed
but are quoted in the NASDAQ National Market System, the mean
between the highest and lowest sales price per share of Common
Stock on the NASDAQ National Market System on that date, or, if
there shall have been no such sale so reported on that date, on
the last preceding date on which such a sale was so reported or
(iii) if the Common Stock is not so listed or quoted, the mean
between the closing bid and asked price on that date, or, if
there are no quotations available for such date, on the last
preceding date on which such quotations shall be available, as
reported by NASDAQ, or, if not reported by NASDAQ, by the
National Quotation Bureau, Inc.
"Participant" means an employee of the Company or any
of its Subsidiaries to whom an Award has been made under this
Plan.
"Rule 16b-3" means Rule l6b-3 promulgated under the
Exchange Act, or any successor rule.
"Subsidiary" means any corporation of which the Company
directly or indirectly owns shares representing more than 50% of
the voting power of all classes or series of capital stock of
such corporation which have the right to vote generally on
matters submitted to a vote of the stockholders of such
corporation.
3. Eligibility. Persons identified in Schedule 5. 10 of
the Merger Agreement shall be eligible for an Award under this
Plan.
4. Common Stock Available for Awards. There shall be
available for Awards granted wholly or partly in Common Stock
(including rights or options which may be exercised for or
settled in Common Stock) during the term of this Plan an
aggregate of 1,000,000 shares of Common Stock. The Board of
Directors and the appropriate officers of the Company shall from
time to time take whatever actions are necessary to file required
documents with governmental authorities and stock exchanges and
transaction reporting systems to make shares of Common Stock
available for issuance pursuant to Awards.
5. Administration. This Plan shall be administered by the
Committee, which shall have full and exclusive power to interpret
this Plan, to grant waivers of the restrictions set forth in this
Plan and to adopt such rule, regulations and guidelines for
carrying out this Plan as it may deem necessary or proper, all of
which powers shall be exercised in the best interests of the
Company and in keeping with the objectives of this Plan. The
Committee may correct any defect or supply any omission or
reconcile any inconsistency in this Plan or in any Award in the
manner and to the extent the Committee deems necessary or
desirable to carry it into effect. Any decision of the Committee
in the interpretation and administration of this Plan shall lie
within its sole and absolute discretion and shall be final,
conclusive and binding on all parties concerned. No member of the
Committee or officer of the Company to whom it has delegated
authority in accordance with the provisions of Paragraph 6 of
this Plan shall be liable for anything done or committed to be
done by him or her, by any member of the Committee or by any
officer of the Company in connection with the performance of any
duties under this Plan, except for his or her own willful
misconduct or as expressly provided by statute.
6. Delectation of Authority. The Committee may delegate to
the Chief Executive Officer and to other senior officers of the
Company its duties under this Plan pursuant to such conditions or
limitations as the Committee may establish, except that the
Committee may not delegate to any person the authority to grant
Awards to, or take other action with respect to, Participants who
are subject to Section 16 of the Exchange Act.
7. Awards.
(a) Awards hereunder shall consist of a right to purchase
shares of Common Stock at a price equal to the closing sales
price of the Common Stock, as reported on the New York Stock
Exchange, on the date on which the Effective Time occurs. Such
options shall be granted to each person identified in Schedule 5.
10; to the Merger Agreement in the amount set forth beside each
such person's name in said Schedule 5. 10; provided, however, if
any such person is no longer employed by Cliffs Drilling Company
or an affiliate thereof at the Effective Time, no options shall
be granted to such person. The options shall have a term of ten
years from the Effective Time and shall vest as to 50% of such
options on the first anniversary of the Effective Time, as to an
additional 25% on the second anniversary of the Effective Time,
and as to the remaining 25% on the third anniversary of the
Effective Time. Each Award made hereunder shall he embodied in an
Award Agreement which shall be signed by the Participant and by
the Chief Executive Officer or any Vice President of the Company
for and on behalf of the Company. Except as specified above,
Award Agreements shall be in form and substance consistent with
those used in employee stock option grants by R&B Falcon
Corporation prior to the Effective Time.
(b) Notwithstanding anything to the contrary in the Plan or
any Award Agreement, any shares of Common Stock received by a
Participant who is an officer or director of the Company pursuant
to an Award hereunder (other than shares of Common Stock received
in connection with the Participants death, disability, retirement
or termination of employment or as required to be made pursuant
to a provision of the Code) must be held by such officer or
director for a period of six months following such acquisition
[such condition may be satisfied with respect to a derivative
security (as defined in Rule 16b-3) if at least six months elapse
from the date of acquisition of the derivative security to the
date of disposition of the derivative security (other than upon
exercise or conversion) or its underlying security].
8. Stock Option Exercise. The price at which shares of
Common Stock may be purchased under a stock option shall be paid
in full at the time of exercise in cash or, if permitted by the
Committee, by means of tendering Common Stock or surrendering
another award, including restricted stock, valued at Fair Market
Value on the date of exercise, or any combination thereof the
Committee shall determine acceptable methods for tendering Common
Stock or other Awards to exercise a stock option as it deems
appropriate. The Committee may provide for loans from the Company
to permit the exercise or purchase of Awards and may provide for
procedures to permit the exercise or purchase of Awards by use of
the proceeds to be received from the sale of Common Stock
issuable pursuant to an Award. Unless otherwise provided in the
applicable Award Agreement, in the event shares of restricted
stock are tendered as consideration for the exercise of a stock
option, a number of the shares issued upon the exercise of the
stock option, equal to the number of shares of restricted stock
used as consideration therefor, shall be subject to the same
restrictions as the restricted stock so submitted as well as any
additional restrictions that may be imposed by the Committee.
9. Tax Withholding. The Company shall have the right to
deduct applicable taxes from any Award payment and withhold at
the time of delivery or vesting of shares of Common Stock under
this Plan, an appropriate number of shares of Common Stock for
payment of taxes required by law or to take such other action as
may be necessary in the opinion of the Company to satisfy all
obligations for withholding of such taxes. The Committee may also
permit withholding to be satisfied by the transfer to the Company
of shares of Common Stock theretofore owned by the holder of the
Award with respect to which withholding is required. If shares of
Common Stock are used to satisfy tax withholding, such shares
shall be valued based on the Fair Market Value when the tax
withholding is required to be made.
10. Amendment, Modification, Suspension or Termination. The
Board may amend, modify, suspend or terminate this Plan for the
purpose of meeting or addressing any changes in legal
requirements or for any other purpose permitted by law except
that (i) no amendment or alteration that would impair the rights
of any Participant under any Award granted to such Participant
shall be made without such Participant's consent and (ii) no
amendment or alteration shall be effective prior to approval by
the Company's stockholders to the extent such approval is then
required pursuant to Rule 16b-3 in order to preserve the
applicability of any exemption provided by such rule to any Award
then outstanding (unless the holder of such Award consents) or to
the extent stockholder approval is otherwise required by
applicable legal requirements.
11. Termination of Employment. Upon the termination of
employment by a Participant, any unexercised, deferred or unpaid
Awards shall be treated as provided in the specific Award
Agreement evidencing the Award. In the event of such a
termination, the Committee may, in its discretion, provide for
the extension of the exercisability of an Award, accelerate the
vesting of an Award, eliminate or make less restrictive any
restrictions contained in an Award or otherwise amend or modify
the Award in any manner not adverse to such Participant.
12. Assignability. No Award or any other benefit under this
Plan constituting a stock option or other derivative security
within the meaning of Rule 16b-3 shall be assignable or otherwise
transferable except by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order
as defined by the Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder. However, an officer
or director may designate a beneficiary for any Award made to
such officer or director.
13. Adjustments.
(a) The existence of outstanding Awards shall not affect in
any manner the right or power of the Company or its stockholders
to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the capital stock of the
Company or its business or any merger or consolidation of the
Company, or any issue of bonds, debentures, or preferred stock
(whether or not such issue is prior to, on a parity with or
junior to the Common Stock) or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding of
any kind, whether or not of a character similar to that of the
acts or proceedings enumerated above.
(b) In the event of any subdivision or consolidation of
outstanding shares of Common Stock or declaration of a dividend
payable in shares of Common Stock or capital reorganization or
reclassification or other transaction involving an increase or
reduction in the number of outstanding shares of Common Stock,
the Committee may adjust proportionally (i) the number of shares
of Common Stock reserved under this Plan and covered by
outstanding Awards denominated in Common Stock or units of Common
Stock; (ii) the exercise or other price in respect of such
Awards; and (iii) the appropriate Fair Market Value and other
price determinations of such Awards. In the event of any
consolidation or merger of the Company with another corporation
or entity or the adoption by the Company of a plan of exchange
affecting the Common Stock or any distribution to holders of
Common Stock of securities or property (other than normal cash
dividends or dividends payable in Common Stock), the Committee
shall make such adjustments or other provisions as it my deem
equitable, including adjustments to avoid fractional shares, to
give proper effect to such event. In the event of a corporate
merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation, the Committee shall be
authorized to issue or assume stock options, regardless of
whether in a transaction to which Section 425(a) of the Code
applies, by means of substitution of new options for previously
issued options or an assumption of previously issued options, or
to make provision for the acceleration of the exercisability of,
or lapse of restrictions with respect to, Awards and the
termination of unexercised options in connection with such
transaction
14. Restrictions. No Common Stock or other form of payment
shall be issued with respect to any Award unless the Company
shall be satisfied based on the advice of its counsel that such
issuance will be in compliance with applicable federal and state
securities laws. It is the intent of the Company that this Plan
comply in all respects with Rule 16b-3, that any ambiguities or
inconsistencies in the construction of this Plan be interpreted
to give effect to such intention, and that if any provision of
this Plan is found not to be in compliance with Rule 16b-3, such
provision shall be null and void to the extent required to permit
this Plan to comply with Rule 16b-3. Certificates evidencing
shares of Common Stock delivered under this Plan may be subject
to such stop 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
securities exchange or transaction reporting system upon which
the Common Stock is then listed and any applicable federal and
state securities law. The Committee may cause a legend or legends
to be placed upon any such certificates to make appropriate
reference to such restrictions.
15. Unfunded Plan. Insofar as it provides for Awards of
cash, Common Stock or rights thereto, this Plan shall be
unfunded. Although bookkeeping accounts may be established with
respect to Participants who are entitled to cash, Common Stock or
rights thereto under this Plan, any such accounts shall be used
merely as a bookkeeping convenience. The Company shall not be
required to segregate any assets that may at any time be
represented by cash, Common Stock or rights thereto, nor shall
this Plan be construed as providing for such segregation, nor
shall the Company nor the Board nor the Committee be deemed to be
a trustee of any cash, Common Stock or rights thereto to be
granted under this Plan. Any liability or obligation of the
Company to any Participant with respect to a grant of cash,
Common Stock or rights thereto under this Plan shall be based
solely upon any contractual obligations that may be created by
this Plan and any Award Agreement, and no such liability or
obligation of the Company shall be deemed to be secured by any
pledge or other encumbrance on any property of the Company.
Neither the Company nor the Board nor the Committee shall be
required to give any security or bond for the performance of any
obligation that may be created by this Plan.
16. Governing Law. This Plan and all determinations made and
actions taken pursuant hereto, to the extent not otherwise
governed by mandatory provisions of the Code or the securities
laws of the United States, shall be governed by and construed in
accordance with the laws of the State of Delaware,
17. Effective Date of Plan. This Plan shall be effective as
of December 1, 1998.
