Document:

exv10w6

 

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)	 	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)	 	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
90th 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)	 	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)	 	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

-2-

 

	 	 	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 90th 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

-3-

 

the 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)	 	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)	 	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)	 	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)	 	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)	 	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

-4-

 

	 	 	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)	 	Notwithstanding any other provision of the Plan, the Company shall have no liability to
deliver any shares of Stock under 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 and Code
Section 409A), and the applicable requirements of any securities exchange or similar entity.

	(b)	 	To the extent that the Plan provides for issuance of stock certificates to reflect the
issuance of shares of Stock, the issuance may be effected on a non-certificated basis, to the
extent not prohibited by applicable law or the applicable rules of any stock exchange.

     4.4. Tax Withholding. All distributions under the Plan are subject to withholding of
all applicable taxes, and the delivery of any shares or other benefits under the Plan shall be
conditioned on satisfaction of the applicable withholding obligations. The Board, in its
discretion, and subject to such requirements as the Board may impose prior to the occurrence of
such withholding, may permit such withholding obligations to be satisfied through cash payment by
the Participant, through the surrender of shares of Stock which the Participant already owns, or
through the surrender of shares of Stock to which the Participant is otherwise entitled under the
Plan; provided that surrender of shares may be used only to satisfy the minimum withholding
required by law.

     4.5. Grant and Use of Options. In the discretion of the Board, more than one Option
and/or Stock Appreciation Right may be granted to a Participant. Options and Stock Appreciation
Rights may be granted as alternatives to or replacements of Options and Stock Appreciation Rights
granted or outstanding under the Plan, or any other plan or arrangement of the Company or a
Subsidiary (including a plan or arrangement of a business or entity, all or a portion of which is
acquired by the Company or a Subsidiary). Subject to the overall limitation on the number of
shares of Stock that may be delivered under the Plan, the Board 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 a Subsidiary, including the plans and
arrangements of the Company or a Subsidiary assumed in business combinations.

-5-

 

Notwithstanding the foregoing, the assumption by the Company of options in connection with the
acquisition of a business or other entity and the conversion of such options into options to
acquire Stock shall not be treated as a new grant of Options under the Plan unless specifically so
provided by the Board.

     4.6. Settlement of Options. Subject to the provisions of Section 4.7, the Board may
from time to time establish procedures pursuant to which a Participant may elect to defer, until a
time or times later than the exercise of an Option or Stock Appreciation Right, receipt of all or a
portion of the shares of Stock subject to such Option or Stock Appreciation Right and/or to receive
cash at such later time or times in lieu of such deferred shares, all on such terms and conditions
as the Board shall determine. If any such deferrals are permitted, then a Participant who elects
such deferral shall not have any rights as a stockholder with respect to such deferred shares
unless and until shares are actually delivered to the Participant with respect thereto, except to
the extent otherwise determined by the Board.

     4.7. Code Section 409A.

	(a)	 	It is the intention of the Company that no grant, exercise or settlement of Options or Stock
Appreciation Rights (including Tandem SARs) shall constitute or give rise to “deferred
compensation” subject to tax under Code Section 409A(a)(1), unless and to the extent that the
Board specifically determines otherwise as provided below, and the Plan and the terms and
conditions of all grants of Options and Stock Appreciation Rights shall be established and
interpreted accordingly.

	(b)	 	The terms and conditions governing any grants of Options and Stock Appreciation Rights that
the Board determines will be subject to Code Section 409A, including any rules for elective or
mandatory deferral of the delivery of cash pursuant thereto, shall be set forth in writing,
and shall comply in all respects with Code Section 409A.

     4.8. Other Plans. Amounts payable under this Plan shall not be taken into account as
compensation for purposes of any other employee benefit plan or program of the Company or any of
its Subsidiaries, except to the extent otherwise provided by such plans or programs, or by an
agreement between the affected Participant and the Company.

     4.9. Heirs and Successors. The terms of the Plan shall be binding upon, and inure to
the benefit of, the Company and its successors and assigns, and upon any person acquiring, whether
by merger, consolidation, purchase of assets or otherwise, all or substantially all of the
Company’s assets and business.

     4.10. Transferability. Options and Stock Appreciation Rights granted under the Plan
are not transferable except (i) as designated by the Participant by will or by the laws of descent
and distribution or (ii) in the case of a Free-Standing SAR of NQO and any associated Tandem SAR,
as otherwise expressly permitted by the Board including, if so permitted, pursuant to a transfer to
such Participant’s immediate family, whether directly or indirectly or by means of a trust or
partnership or otherwise. If any rights exercisable by a Participant or benefits deliverable to a
Participant under any Award Certificate under the Plan have not been exercised or delivered,
respectively, at the time of the Participant’s death, such rights shall be exercisable

-6-

 

by the Designated Beneficiary, and such benefits shall be delivered to the Designated
Beneficiary, in accordance with the provisions of the applicable terms of the Award Certificate and
the Plan. The “Designated Beneficiary” shall be the beneficiary or beneficiaries designated by the
Participant to receive benefits under the Company’s group term life insurance plan or such other
person or persons as the Participant may designate by notice to the Company. If a deceased
Participant fails to have designated a beneficiary, or if the Designated Beneficiary does not
survive the Participant, any rights that would have been exercisable by the Participant and any
benefits distributable to the Participant shall be exercised by or distributed to the legal
representative of the estate of the Participant. If a deceased Participant designates a
beneficiary and the Designated Beneficiary survives the Participant but dies before the Designated
Beneficiary’s exercise of all rights under the Award Certificate or before the complete
distribution of benefits to the Designated Beneficiary under the Award Certificate, then any rights
that would have been exercisable by the Designated Beneficiary shall be exercised by the legal
representative of the estate of the Designated Beneficiary, and any benefits distributable to the
Designated Beneficiary shall be distributed to the legal representative of the estate of the
Designated Beneficiary. All Options and Stock Appreciation Rights shall be exercisable, subject to
the terms of this Plan, only by the Participant or any person to whom such Option or Stock
Appreciation Right is transferred pursuant to this Section 4.10, it being understood that the term
Participant shall include such transferee for purposes of the exercise provisions contained herein.

     4.11. Notices. Any written notices provided for in the Plan or under any Award
Certificate shall be in writing and shall be deemed sufficiently given if either hand delivered or
if sent by confirmed fax or overnight courier, or by postage paid first class mail. Notice and
communications shall be effective when actually received by the addressee. Notices shall be
directed, if to the Participant, at the Participant’s address indicated in the Award Certificate,
or if to the Company, at the Company’s principal executive office to the attention of the Company’s
Corporate Secretary.

     4.12. Action by Company. Any action required or permitted to be taken by the Company
shall be by resolution of the Board of Directors, or by action of one or more members of the Board
(including a committee of the Board) who are duly authorized to act for the Board, or by a duly
authorized officer of the Company.

     4.13. Limitation of Implied Rights.

	(a)	 	Neither a Participant nor any other person shall, by reason of participation in the Plan,
acquire any right in or title to any assets, funds or property of the Company whatsoever,
including, without limitation, any specific funds, assets, or other property which the
Company, in its sole discretion, may set aside in anticipation of a liability under the Plan.
A Participant shall have only a contractual right to the amounts, if any, payable under the
Plan, unsecured by any assets of the Company, and nothing contained in the Plan shall
constitute a guarantee that the assets of the Company shall be sufficient to pay any benefits
to any person.

	(b)	 	The Plan does not constitute a contract of employment, and selection as a Participant will
not give any Participant the right to be retained in the employ of, or as a director or

-7-

 

	 	 	consultant to, the Company or any Subsidiary, nor any right or claim to any benefit under
the Plan, unless such right or claim has specifically accrued under the terms of the Plan.

     4.14. Gender and Number. Where the context admits, words in any gender shall include
any other gender, words in the singular shall include the plural and the plural shall include the
singular.

     4.15. Laws Applicable to Construction. The interpretation, performance and
enforcement of this Plan and all Award Certificates shall be governed by the laws of the State of
Delaware without reference to principles of conflict of laws, as applied to contracts executed in
and performed wholly within the State of Delaware.

     4.16. Evidence. Evidence required of anyone under the Plan may be by certificate,
affidavit, document or other information which the person acting on it considers pertinent and
reliable, and signed, made or presented by the proper party or parties.

SECTION 5

BOARD OF DIRECTORS

     5.1. Administration. The authority to control and manage the operation and
administration of the Plan shall be vested in the Board in accordance with this Section 5;
provided, however, that with respect to any Participant under this Plan who (i) is
at such time a participant in the Company’s Incentive Compensation Plan for Executive Officers, as
it may be amended from time to time (the “Incentive Compensation Plan”), or (ii) is, with respect
to the Company, a “covered employee” within the meaning of Section 1.162-27(c)(2) of the
Regulations under the Code, then the authority to control and manage the operation and
administration of the Plan with respect to such Participant shall be vested in the Committee (as
such term is defined in the Incentive Compensation Plan) (the “Incentive Compensation Committee”),
and otherwise in accordance with this Section 5 and, notwithstanding anything in this Plan to the
contrary, with respect to any such Participant, any reference in this Plan to the “Board” (except
in connection with the right of the Board to amend or terminate the Plan pursuant to Section 6)
shall be deemed to refer to the Incentive Compensation Committee.

     5.2. Powers of Board. The Board’s administration of the Plan shall be subject to the
following:

	(a)	 	Subject to the provisions of the Plan, the Board will have the authority and discretion to
select from among the Eligible Grantees those persons who shall receive Options and/or Stock
Appreciation Rights, to determine the grant date of, the number of shares subject to and the
Exercise Price of those Options and Stock Appreciation Rights, to establish all other terms
and conditions of such Options, and (subject to the restrictions imposed by Section 6) to
cancel or suspend Options and Stock Appreciation Rights.

	(b)	 	The Board will have the authority and discretion to interpret the Plan, to establish, amend,
and rescind any rules and regulations relating to the Plan, and to make all other
determinations that may be necessary or advisable for the administration of the Plan.

-8-

 

	(c)	 	Any interpretation of the Plan by the Board and any decision made by it under the Plan is
final and binding on all persons.
	 
	(d)	 	In controlling and managing the operation and administration of the Plan, the Board shall
take action in a manner that conforms to the articles and by-laws of the Company, and
applicable state corporate law.

     5.3. Delegation by Board. Except to the extent prohibited by applicable law or the
applicable rules of a stock exchange, the Board may allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate all or any part of
its responsibilities and powers to any person or persons selected by it. Any such allocation or
delegation may be revoked by the Board at any time.

     5.4. Information to be Furnished to Board. The Company and Subsidiaries shall furnish
the Board with such data and information as it determines may be required for it to discharge its
duties. The records of the Company and Subsidiaries as to an employee’s or Participant’s
employment, engagement, Termination, leave of absence, reemployment and compensation shall be
conclusive on all persons unless determined to be incorrect. Participants and other persons
eligible for benefits under the Plan must furnish the Board such evidence, data or information as
the Board considers desirable to carry out the terms of the Plan.

SECTION 6

AMENDMENT AND TERMINATION

     The Board may, at any time, amend or terminate the Plan; provided that no amendment or
termination may, in the absence of written consent to the change by the affected Participant (or,
if the Participant is not then living, the affected beneficiary), adversely affect the rights of
any Participant or beneficiary under any Option or Stock Appreciation Right granted under the Plan
prior to the date such amendment is adopted by the Board; and further provided that
adjustments pursuant to Section 4.2(e) shall not be subject to the foregoing limitations of this
Section 6.

SECTION 7

DEFINED TERMS

     In addition to the other definitions contained herein, the following definitions shall apply:

	(a)	 	Award Certificate. The term “Award Certificate” shall mean a written Option
certificate setting forth the terms and conditions of an Option, in the form the
Board may from time to time prescribe or a written
Stock Appreciation Right certificate setting forth the terms and conditions of a Stock
Appreciation Right, in the form the Board may from time to time prescribe.
	 
	(b)	 	Board. The term “Board” means the Board of Directors of the Company;
provided, however, that with respect to any Participant under this Plan who is
also at such time a

-9-

 

	 	 	participant in the Incentive Compensation Plan, any reference in this Plan to the “Board”
(except in connection with the right of the Board to amend or terminate the Plan pursuant to
Section 6) shall be deemed to refer to the Incentive Compensation Committee, in accordance
with Section 5.1.

	(c)	 	Cause: The term “Cause” shall have the meaning set forth in the employment or
engagement agreement between a Participant and the Company or any Subsidiary thereof, if such
an agreement exists and contains a definition of Cause; otherwise Cause shall mean (1)
conviction of the Participant for committing a felony under Federal law or the law of the
state in which such action occurred, (2) dishonesty in the course of fulfilling a
Participant’s employment, engagement or directorial duties, (3) willful and deliberate failure
on the part of a Participant to perform the Participant’s employment, engagement or
directorial duties in any material respect or (4) such other events as shall be determined in
good faith by the Board. The Board shall, unless otherwise provided in an Award Certificate
or employment agreement with the Participant, have the sole discretion to determine whether
Cause exists, and its determination shall be final.

	(d)	 	Code. The term “Code” means the Internal Revenue Code of 1986, as amended, the
Treasury Regulations thereunder and other relevant interpretive guidance issued by the
Internal Revenue Service or the Treasury Department. Reference to any specific section of the
Code shall be deemed to include such regulations and guidance, as well as any successor
provision of the Code.
	 
	(e)	 	Company. The term “Company” shall have the meaning set forth in Section 1.1.

	(f)	 	Designated Beneficiary. The term “Designated Beneficiary” shall have the meaning set
forth in Section 4.10.

	(g)	 	Disability. The term “Disability” shall mean, unless otherwise provided by the
Board, (1) “Disability” as defined in any individual Award Certificate to which the
Participant is a party, or (2) if there is no such Award Certificate or it does not define
“Disability,” permanent and total disability as determined under the Company’s long-term
disability plan applicable to the Participant.

	(h)	 	Effective Date. The term “Effective Date” shall have the meaning set forth in
Section 4.1.

	(i)	 	Eligible Grantee. The term “Eligible Grantee” shall mean any individual who is
employed on a full-time or part-time basis by, or who serves as a consultant to, the Company
or a Subsidiary and any non-employee director of the Company. An Option or Stock Appreciation
Right may be granted to an individual in connection with such individual’s hiring or
engagement prior to the date the individual first performs services for the Company or the
Subsidiaries, provided that the individual will be an Eligible Grantee upon his hiring
or engagement, and further provided that such Options and/or Stock
Appreciation Rights shall not become vested prior to the date the individual first performs
such services.

-10-

 

	(j)	 	Exercise Price. The term “Exercise Price” shall have the meaning set forth in
Section 2.3 (in the case of any Option or Tandem SAR) and Section 3.3 (in the case of any
Free-Standing SAR).

	(k)	 	Fair Market Value. The “Fair Market Value” of a share of Stock shall be, as of any
given date, the mean between the highest and lowest reported sales prices on the immediately
preceding date (or, if there are no reported sales on such immediately preceding date, on the
last date prior to such date on which there were sales) of the Stock on the New York Stock
Exchange Composite Tape or, if not listed on such exchange, on any other national securities
exchange on which the Stock is listed or on NASDAQ. If there is no regular public trading
market for such Stock, the Fair Market Value of the Stock shall be determined by the Board in
good faith.
	 
	(l)	 	ISO. The term “ISO” shall have the meaning set forth in Section 2.2.

	(m)	 	Mature Shares. The term “Mature Shares” shall mean shares of Stock that have been
owned by the Participant in question for at least six months.
	 
	(n)	 	NQO. The term “NQO” shall have the meaning set forth in Section 2.2.
	 
	(o)	 	Option. The term “Option” shall have the meaning set forth in Section 2.2.
	 
	(p)	 	Plan: The term “Plan” shall have the meaning set forth in Section 1.1.
	 
	(q)	 	Retirement: The term “Retirement” shall mean retirement from active employment with
the Company pursuant to any retirement plan or program of the Company or any Subsidiary in
which the Participant participates. A Termination by a consultant or non-employee director
shall in no event be considered a Retirement.
	 
	(r)	 	Term: The term “Term” shall mean the period beginning on the date of grant of an
Option or Stock Appreciation Right and ending on the date the Option or Stock Appreciation
Right expires pursuant to the Plan and the relevant Award Certificate.
	 
	(s)	 	Stock. The term “Stock” shall mean shares of common stock of the Company.
	 
	(t)	 	Subsidiary. The term “Subsidiary” means any business or entity in which at any
relevant time the Company holds at least a 50% equity (voting or non-voting) interest.
	 
	(u)	 	Termination. A Participant shall be considered to have experienced a Termination if
he or she ceases, for any reason, to be an employee, consultant or non-employee director of
the Company or any of its Subsidiaries, including, without limitation, as a result of the fact
that the entity by which he or she is employed or engaged or of which he or she is a director
has ceased to be affiliated with the Company.

-11-exv10w21

 

Exhibit 10.21

Summary Sheet of Base Salary Increases

Effective October 1, 2007 for

Certain Named Executive Officers

     On October 22, 2007, the Compensation Committee of the Board of Directors of Diamond Offshore
Drilling, Inc. (the “Company”) increased the base salaries of the following executive officers of
the Company, in accordance with the terms of their respective employment agreements, effective as
of October 1, 2007, as follows:

	 	 	 	 	 
	Named Executive Officer	 	Base Salary

Effective October 1, 2007
	 
	 	 	 	 
	Lawrence R. Dickerson
	 	$	720,000	 
	 
	 	 	 	 
	Gary T. Krenek
	 	$	338,880	 
	 
	 	 	 	 
	John L. Gabriel, Jr.
	 	$	425,600	 
	 
	 	 	 	 
	John M. Vecchio
	 	$	374,150

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}]]