Exhibit 10.6

 

ENERGY XXI GULF COAST, INC.

2016 LONG TERM INCENTIVE PLAN

 

NOTICE OF GRANT OF OPTION

 

[Name of Grantee]

 

You have been awarded an option to purchase shares of common stock, par value
$0.01 per share (“Stock”), of Energy XXI Gulf Coast, Inc., a Delaware
corporation (the “Company”), pursuant to the terms and conditions of the Energy
XXI Gulf Coast, Inc. 2016 Long Term Incentive Plan (the “Plan”) and the Option
Agreement attached hereto (together with this Notice of Grant, the “Agreement”).
Capitalized terms not defined herein shall have the respective meanings
specified in the Plan or the Agreement, as applicable.

 

Options:   You have been awarded a Nonstatutory Option to purchase from the
Company ______ shares of Stock, subject to adjustment as provided in the Plan
(the “Option”).       Grant Date:   ________(“Grant Date”)       Exercise Price:
  $_______, subject to adjustment as provided in the Plan.       Vesting
Schedule:   Except as otherwise provided in the Plan,  the Agreement or any
other agreement between you and the Company, the Option shall vest and become
exercisable as follows:  (i) 33% of the shares of Stock subject to the Option on
the Grant Date shall vest and become exercisable on the first anniversary of the
Grant Date; (ii) 33% of the shares of Stock subject to the Option on the Grant
Date shall vest and become exercisable on the second anniversary of the Grant
Date; and (iii) the remaining 34% of the shares of Stock subject to the Option
on the Grant Date shall vest and become exercisable on the third anniversary of
the Grant Date, in each case provided you remain continuously in service with
the Company through the applicable vesting date (each, a “Vesting Date”).      
Change of Control:   In the event of a Change of Control, the Option, to the
extent it is then outstanding, shall become fully vested and be subject to
Section 8(e) of the Plan and, to the extent the Option remains outstanding after
such Change of Control, the Option may thereafter be exercised by you until and
including the Expiration Date.       Expiration Date:   Except to the extent
earlier terminated pursuant to Section 3(b) of the Agreement or earlier
exercised pursuant to Section 4 of the Agreement, the Option shall terminate at
5:00 p.m., U.S. Central time, on [tenth anniversary of Grant Date].

 

  

 

 

  ENERGY XXI GULF COAST, INC.       By:         Name:     Title:

 

Acknowledgment, Acceptance and Agreement:

 

By accepting this Notice of Grant, I hereby acknowledge receipt of the Agreement
and the Plan, accept the Option granted to me and agree to be bound by the terms
and conditions of this Notice of Grant, the Agreement and the Plan.

 

By:          [Name of Grantee]  

 

 

  

 

 

ENERGY XXI GULF COAST, INC.

2016 LONG TERM INCENTIVE PLAN

OPTION AGREEMENT

 

This Agreement is made and entered into as of the Date of Grant set forth in the
Notice of Grant of Option (“Notice of Grant”) by and between Energy XXI Gulf
Coast, Inc., a Delaware corporation (the “Company”), and you;

 

WHEREAS, the Company in order to induce you to enter into and to continue and
dedicate service to the Company and to materially contribute to the success of
the Company agrees to grant you this option award;

 

WHEREAS, the Company adopted the Energy XXI Gulf Coast, Inc. 2016 Long Term
Incentive Plan, as it may be amended from time to time (the “Plan”), under which
the Company is authorized to grant options to certain employees, directors and
other service providers of the Company and certain Affiliates;

 

WHEREAS, a copy of the Plan has been furnished to you and shall be deemed a part
of this Option Agreement (“Agreement”) as if fully set forth herein and the
terms capitalized but not defined herein shall have the respective meanings set
forth in the Plan or the Notice of Grant; and

 

WHEREAS, you desire to accept the option awarded pursuant to this Agreement.

 

NOW, THEREFORE, in consideration of and mutual covenants set forth herein and
for other valuable consideration hereinafter set forth, the parties agree as
follows:

 

1.          The Grant. Subject to the conditions set forth below, the Company
hereby grants you, effective as of the Date of Grant set forth in the Notice of
Grant, an option to purchase shares of Stock, in accordance with the terms and
conditions set forth herein and in the Plan and the Notice of Grant (the
“Option”).

 

2.          No Shareholder Rights. The Options granted pursuant to this
Agreement do not and shall not entitle you to any rights of a holder of Stock
prior to the date that the Options are exercised and shares of Stock pursuant to
such Options are purchased and issued to you upon the exercise of such Option.
You shall not be considered a stockholder of the Company with respect to any
shares of Stock subject to the Option not so purchased and issued.

 

3.          Time and Manner of Exercise of Option.

 

(a)          Maximum Term of Option. In no event may the Option be exercised, in
whole or in part, after the expiration date set forth in the Notice of Grant
(the “Expiration Date”).

 

(b)          Vesting and Exercise of Option. The Option shall become vested and
exercisable in accordance with the vesting schedule set forth in the Notice of
Grant. The Option shall be vested and exercisable following a termination of
your employment according to the following terms and conditions:

 

  

 

 

(i)          Termination of Employment due to Death or Disability. If your
employment with the Company terminates by reason of your death or Disability,
the Option, to the extent vested on the effective date of such termination of
employment, may thereafter be exercised by you or your executor, administrator,
legal representative, guardian or similar person until and including the earlier
to occur of (i) the date that is one year after the date of termination of
employment and (ii) the Expiration Date. Except to the extent the Option is
vested and exercisable as of the date of your death or termination due to
Disability, the Option shall terminate as of the date of your termination of
employment.

 

(ii)          Termination by the Company Other than for Cause, Death or
Disability or by You. If your employment with the Company is terminated (i) by
the Company for any reason other than for Cause, death or Disability or (ii) by
you by reason of your resignation from employment for any reason, the Option, to
the extent vested on the effective date of such termination of employment, may
thereafter be exercised by you until and including the earlier to occur of
(i) the date that is ninety (90) days after the date of such termination of
employment and (ii) the Expiration Date.

 

(iii)          Termination by the Company for Cause. If your employment with the
Company terminates by reason of the Company’s termination of your employment for
Cause, then the Option, regardless of whether vested, shall terminate
immediately upon such termination of employment.

 

(c)          Definitions.

 

(i)          Cause. For purposes of this Option, “Cause” shall have the meaning
set forth in your employment agreement, dated as of ____________.

 

(ii)          Disability. For purpose of this Option, “Disability” shall have
the meaning set forth in your employment agreement, dated as of ____________.

 

4.          Method of Exercise. Subject to the limitations set forth in this
Agreement, the Option, to the extent vested, may be exercised by you (a) by
delivering to the Company an exercise notice in the form prescribed by the
Company specifying the number of whole shares of Stock to be purchased and by
accompanying such notice with payment therefor in full (or by arranging for such
payment to the Company’s satisfaction) either (i) in cash, (ii) by delivery to
the Company (either actual delivery or by attestation procedures established by
the Company) of shares of Stock having an aggregate Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price
payable pursuant to the Option by reason of such exercise, (iii) by authorizing
the Company to withhold whole shares of Stock that would otherwise be delivered
having an aggregate Fair Market Value, determined as of the date of exercise,
equal to the amount necessary to satisfy such obligation, (iv) except as may be
prohibited by applicable law, in cash by a broker-dealer acceptable to the
Company to whom you have submitted an irrevocable notice of exercise or (v) by a
combination of subparagraphs (i), (ii) and (iii), and (b) by executing such
documents as the Company may reasonably request. Any fraction of a share of
Stock that would be required to pay such purchase price shall be disregarded and
the remaining amount due shall be paid in cash by you. No certificate
representing a share of Stock shall be issued or delivered until the full
purchase price therefor and any withholding taxes thereon, as described in
Section 6, have been paid.

 

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5.          Leave of Absence. With respect to the Option, the Company may, in
its sole discretion, determine that if you are on an approved leave of absence
for any reason you will be considered to still be in the employ of, or providing
services for, the Company, provided that rights to the Options during a leave of
absence will be limited to the extent to which those rights were vested when the
leave of absence began.

 

6.          Payment of Taxes. The Company may require you to pay to the Company
(or the Company’s Subsidiary if you are an employee of a Subsidiary of the
Company) an amount the Company deems necessary or appropriate to satisfy its (or
its Subsidiary’s) current or future obligation to withhold federal, state or
local income or other taxes that you incur as a result of the Option. With
respect to any tax withholding, you may (a) direct the Company to withhold from
the shares of Stock to be issued to you under this Agreement the number of
shares necessary to satisfy the Company’s obligation to withhold taxes, which
determination will be based on the shares’ Fair Market Value at the time such
determination is made; (b) deliver to the Company shares of Stock sufficient to
satisfy the Company’s tax withholding obligations, based on the shares’ Fair
Market Value at the time such determination is made; (c) deliver cash to the
Company sufficient to satisfy its tax withholding obligations; (d) except as may
be prohibited by applicable law, a cash payment by a broker-dealer acceptable to
the Company to whom you have submitted an irrevocable notice of exercise or (e)
satisfy such tax withholding through any combination of subparagraphs (a), (b)
and (c). If you desire to elect to use the stock withholding option described in
subparagraph (a), you must make the election at the time and in the manner the
Company prescribes. If such tax obligations are satisfied under subparagraph (a)
or (b), the maximum number of shares of Stock that may be so withheld or
surrendered shall be the number of shares of Stock that have an aggregate Fair
Market Value on the date of withholding or repurchase equal to the aggregate
amount of such tax liabilities determined based on the greatest withholding
rates for federal, state, foreign and/or local tax purposes, including payroll
taxes, that may be utilized without creating adverse accounting treatment with
respect to such Option. If you are not subject to Section 16 of the Exchange
Act, the Company, in its discretion, may deny your request to satisfy its tax
withholding obligations using a method described under subparagraph (a), (b), or
(d). In the event the Company determines that the aggregate Fair Market Value of
the shares of Stock withheld as payment of any tax withholding obligation is
insufficient to discharge that tax withholding obligation, then you must pay to
the Company, in cash, the amount of that deficiency immediately upon the
Company’s request.

 

7.          Compliance with Securities Law. Notwithstanding any provision of
this Agreement to the contrary, the issuance of Stock will be subject to
compliance with all applicable requirements of federal, state, or foreign law
with respect to such securities and with the requirements of any stock exchange
or market system upon which the Stock may then be listed. No Stock will be
issued hereunder if such issuance would constitute a violation of any applicable
federal, state, or foreign securities laws or other law or regulations or the
requirements of any stock exchange or market system upon which the Stock may
then be listed. In addition, Stock will not be issued hereunder unless (a) a
registration statement under the Securities Act is, at the time of issuance, in
effect with respect to the shares issued or (b) in the opinion of legal counsel
to the Company, the shares issued may be issued in accordance with the terms of
an applicable exemption from the registration requirements of the Securities
Act. YOU ARE CAUTIONED THAT ISSUANCE OF STOCK UPON THE EXERCISE OF OPTIONS
GRANTED PURSUANT TO THIS AGREEMENT MAY NOT OCCUR UNLESS THE FOREGOING CONDITIONS
ARE SATISFIED. The inability of the Company to obtain from any regulatory body
having jurisdiction the authority, if any, deemed by the Company’s legal counsel
to be necessary to the lawful issuance and sale of any shares subject to the
Option will relieve the Company of any liability in respect of the failure to
issue such shares as to which such requisite authority has not been obtained. As
a condition to any issuance hereunder, the Company may require you to satisfy
any qualifications that may be necessary or appropriate to evidence compliance
with any applicable law or regulation and to make any representation or warranty
with respect to such compliance as may be requested by the Company. From time to
time, the Board and appropriate officers of the Company are authorized to take
the actions necessary and appropriate to file required documents with
governmental authorities, stock exchanges, and other appropriate Persons to make
shares of Stock available for issuance.

 

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8.           Adjustments. The terms of the Option, including the number,
exercise price and type of shares subject to the Option, shall be subject to
adjustment in accordance with Section 8 of the Plan.

 

9.           Right of First Refusal. Stock acquired pursuant hereto is subject
to the provisions of Section 9(b) of the Plan.

 

10.          Purchase Option. Stock acquired pursuant hereto is subject to the
provisions of Section 9(c) of the Plan.

 

11.          Legends. The Company may at any time place legends referencing any
restrictions imposed on the shares pursuant to this Agreement on all
certificates representing shares issued with respect to this Option.

 

12.          Right of the Company and Subsidiaries to Terminate Services.
Nothing in this Agreement confers upon you the right to continue in the employ
of or performing services for the Company or any Subsidiary, or interferes in
any way with the rights of the Company or any Subsidiary to terminate your
employment or service relationship at any time.

 

13.          Furnish Information. You agree to furnish to the Company all
information requested by the Company to enable it to comply with any reporting
or other requirements imposed upon the Company by or under any applicable
statute or regulation.

 

14.          No Liability for Good Faith Determinations. The Company and the
members of the Board shall not be liable for any act, omission or determination
taken or made in good faith with respect to the Plan, this Agreement or the
Options granted hereunder.

 

15.          Execution of Receipts and Releases. Any payment of cash or any
issuance or transfer of shares of Stock or other property to you, or to your
legal representative, heir, legatee or distributee, in accordance with the
provisions hereof, shall, to the extent thereof, be in full satisfaction of all
claims of such Persons hereunder. The Company may require you or your legal
representative, heir, legatee or distributee, as a condition precedent to such
payment or issuance, to execute a release and receipt therefor in such form as
it shall determine.

 

16.          No Guarantee of Interests. The Board and the Company do not
guarantee the Stock of the Company from loss or depreciation.

 

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17.          Company Records. Records of the Company or its Subsidiaries
regarding your period of service, termination of service and the reason(s)
therefor, and other matters shall be conclusive for all purposes hereunder,
unless determined by the Company to be incorrect.

 

18.          Notice. All notices required or permitted under this Agreement must
be in writing and personally delivered or sent by mail and shall be deemed to be
delivered on the date on which it is actually received by the person to whom it
is properly addressed or if earlier the date it is sent via certified United
States mail.

 

19.          Waiver of Notice. Any person entitled to notice hereunder may waive
such notice in writing.

 

20.          Successors. This Agreement shall be binding upon you, your legal
representatives, heirs, legatees and distributees, and upon the Company, its
successors and assigns.

 

21.          Severability. If any provision of this Agreement is held to be
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining provisions hereof, but such provision shall be fully severable and
this Agreement shall be construed and enforced as if the illegal or invalid
provision had never been included herein.

 

22.          Company Action. Any action required of the Company shall be by
resolution of the Board, an authorized committee of the Board or by a person or
entity authorized to act by resolution of the Board.

 

23.          Headings. The titles and headings of Sections are included for
convenience of reference only and are not to be considered in construction of
the provisions hereof.

 

24.          Governing Law. All questions arising with respect to the provisions
of this Agreement shall be determined by application of the laws of Delaware,
without giving any effect to any conflict of law provisions thereof, except to
the extent Delaware state law is preempted by federal law. The obligation of the
Company to sell and deliver Stock hereunder is subject to applicable laws and to
the approval of any governmental authority required in connection with the
authorization, issuance, sale, or delivery of such Stock.

 

25.          Consent to Texas Jurisdiction and Venue. You hereby consent and
agree that state courts located in Harris County, Texas and the United States
District Court for the Southern District of Texas each shall have personal
jurisdiction and proper venue with respect to any dispute between you and the
Company arising in connection with the Options or this Agreement. In any dispute
with the Company, you will not raise, and you hereby expressly waive, any
objection or defense to such jurisdiction as an inconvenient forum.

 

26.          Amendment. This Agreement may be amended the Board or by the
Committee at any time (a) without your consent, so long as the amendment does
not materially and adversely affect your rights under the Option, or (b) with
your consent. For purposes of clarity, any adjustment made to the Option
pursuant to Section 8 of the Plan will be deemed not to materially and adversely
affect your rights under this Option.

 

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27.          Clawback. This Agreement and your Option is subject to any written
clawback policies of the Company. Any such policy may subject your Option and
amounts paid or realized with respect to your Option to reduction, cancelation,
forfeiture or recoupment if certain specified events or wrongful conduct occur,
including but not limited to an accounting restatement due to the Company’s
material noncompliance with financial reporting regulations or other events or
wrongful conduct specified in any such clawback policy adopted to conform to the
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules
promulgated thereunder by the Securities and Exchange Commission and that the
Company determines should apply to this Option.

 

28.          The Plan. This Agreement and the Notice of Grant are subject to all
the terms, conditions, limitations and restrictions contained in the Plan. In
the event of any conflict or inconsistency between any terms and conditions of
this Agreement, the Notice of Grant, and the terms and provisions of an
employment agreement, consulting agreement, severance or change in control
agreement, if any, between you and the Company or any Subsidiary or other
Affiliate (the “Employment Agreement”), the terms and conditions of the
Employment Agreement shall be controlling. Taking into account the provisions of
Section 6(a) of the Plan, if there is any conflict or inconsistency between the
Plan and the Notice of Grant, this Agreement, or the Employment Agreement, then
you acknowledge and agree that those terms of the Plan shall control and, if
necessary, the applicable terms of the Notice of Grant, this Agreement, or the
Employment Agreement shall be deemed amended so as to carry out the purpose and
intent of the Plan.

 

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