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EXHIBIT 10.5
NON-QUALIFIED STOCK OPTION AGREEMENT
MARINER ENERGY, INC.
STOCK INCENTIVE PLAN
Optionee: ______________
Date of Grant: March 11, 2005
NQO Number: ______________
1. Grant of Options. Mariner Energy, Inc. (the "Company") hereby grants to you
the right and option ("Options") to purchase all or any part of an
aggregate of [____] Common Shares ("Shares") of Mariner Energy, Inc. on the
terms and conditions set forth herein and in the Mariner Energy, Inc. Stock
Incentive Plan (the "Plan"), which is incorporated herein by reference as a
part of this Agreement. This grant of Options is not intended to qualify as
incentive stock options. In the event of any conflict between the terms of
this Agreement and the Plan, the Plan shall control. Capitalized terms used
but not defined in this Agreement shall have the meaning attributed to such
terms under the Plan, unless the context requires otherwise.
2. Exercise Price. The exercise price per Share purchased pursuant to the
exercise of the Options shall be $14.00, subject to adjustment as provided
in the Plan.
3. Vesting and Exercise of Option. Subject to the further provisions of this
Agreement, the Options shall become vested and may be exercised in
accordance with the following schedule, by written notice to the Company at
its principal executive office addressed to the attention of its Secretary
(or such other officer or employee of the Company as the Company may
designate from time to time):
Anniversary of Cumulative
Date of Grant Vested Percentage
---------------- -----------------
Less than 1 year 0%
1 year 33 1/3%
2 years 66 2/3%
3 years or more 100%
Notwithstanding the above schedule, but subject to the further provisions
hereof, upon the occurrence of the following events the Options shall vest
and become exercisable as provided below:
(a) Disability. If your employment with the Company terminates by reason
of a disability that entitles you to benefits under the Company's or a
Subsidiary's long-term disability plan, the Options shall become fully
vested and, subject to the further provisions of this Agreement, may
be exercised at any time during the one-year period following such
termination by you or by your guardian or legal representative (or, if
you die during such one-year period, by your estate or the person who
acquires the Options by will or the laws of descent and distribution).
(b) Death. If you die while in the employ of the Company, the Options
shall become fully vested and, subject to the further provisions of
this Agreement, your estate (or the person who acquires the Options by
will or the laws of descent and distribution) may exercise the Options
at any time during the one-year period following the date of your
death.
(c) Termination For Cause. If your employment with the Company is
terminated by the Company for Cause (as defined below), the Options,
whether or not then vested, shall immediately cease to be exercisable
upon such termination and shall be cancelled automatically without
payment. Cause shall mean (i) your material failure to perform your
duties, (ii) your conviction of or plea of nolo contendere for any
felony or any misdemeanor involving moral turpitude, dishonesty, fraud
or breach of trust, (iii) your willful engagement in gross misconduct
in the performance of your duties, (iv) your substance abuse, (v) your
misappropriation of funds, or (vi) your disparagement of the Company
or any Subsidiary or any of their respective managements or employees.
(d) Other Terminations. If your employment with the Company is terminated
for any reason other than as provided in paragraphs 3(a), (b) and (c)
above, the Options, to the extent vested on the date of your
termination, may be exercised, subject to the further provisions of
this Agreement, at any time during the three month period following
such termination by you or by your guardian or legal representative
(or by your estate or the person who acquires the Options by will or
the laws of descent and distribution or otherwise by reason of your
death if you die during such period), but only as to the vested number
of Shares, if any, that you were entitled to purchase hereunder as of
the date your employment so terminates.
(e) Change of Control. If you have been continuously employed by the
Company from the Date of Grant to the date upon which a Change of
Control occurs, then the Options shall become fully vested and
exercisable upon the date of such Change of Control.
For purposes of this Agreement, "Change of Control" shall mean (i) after
the Date of Grant, any person or group of affiliated or associated persons
acquires more than 35% of the voting power in the Company; (ii) the
consummation of a sale of all or substantially all of the assets of the
Company; or (iii) the dissolution of the Company; or (iv) the consummation
of any merger, consolidation, or reorganization involving the Company in
which, immediately after giving effect to such merger, consolidation or
reorganization,
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less than 51% of the total voting power of outstanding stock of the
surviving or resulting entity is then "beneficially owned" (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) in the aggregate by the stockholders of the Company immediately
prior to such merger, consolidation or reorganization. Notwithstanding the
foregoing, a Change of Control shall not include any acquisition resulting
from the consummation of the private placement offering of common stock of
the Company under Rule 144A and/or Regulation D prior to March 31, 2005.
For purposes of this Agreement, "employment with the Company" shall include
being an employee or a director of the Company or a Subsidiary.
There is no minimum or maximum number of Shares that must be purchased upon
exercise of the Options. Instead, the Option may be exercised, at any time
and from time to time, to purchase any number of Shares that are then
vested and exercisable according to the provisions of this Agreement.
All Options that are not vested on your termination of employment as
provided above shall be automatically cancelled without payment upon your
termination.
4. Term. Notwithstanding any of the foregoing, the Options shall not be
exercisable in any event after the expiration of 10 years from the Date of
Grant.
5. Payment of Exercise Price. The purchase price of the Shares as to which the
Options are exercised shall be paid in full at the time of exercise (a) in
cash (including by check acceptable to the Company), (b) if the Shares are
readily tradable on a national securities market or exchange, through a
"cashless broker exercise" program approved in advance by the Company, (c)
any other method approved by the Company, including, with the consent of
the Committee, by withholding a number of Shares that would otherwise be
delivered on exercise of the Option that have an aggregate Fair Market
Value that does not exceed the aggregate exercise price for the Options
being then exercised, or (d) any combination of the foregoing. No fraction
of a Share shall be transferred upon exercise of the Options. Unless and
until a certificate or certificates representing such Shares shall have
been transferred by the Company to you, you (or the person permitted to
exercise the Options in the event of your death) shall not be or have any
of the rights or privileges of a shareholder of the Company with respect to
Shares acquirable upon an exercise of the Options.
6. Withholding of Tax. To the extent that the exercise of an Option results in
the receipt of compensation by you with respect to which the Company or a
Subsidiary has a tax withholding obligation pursuant to applicable law,
unless other arrangements have been made by you that are acceptable to the
Company or such Subsidiary, you shall either deliver to the Company or the
Subsidiary such amount of money as the Company or the Subsidiary may
require to meet its withholding obligations under such applicable law or
have the Company withhold a number of Shares that would otherwise be
delivered on exercise or vesting that have an aggregate Fair Market Value
that does not exceed the amount of taxes to be withheld; provided, however,
that if you fail to satisfy the Company's or the Subsidiary's tax
withholding obligations, the Company, in its sole
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discretion, may withhold a number of Shares that would otherwise be
delivered on exercise or vesting that have an aggregate Fair Market Value
equal to the amount of taxes required to be withheld. No delivery of Shares
shall be made pursuant to the exercise of an Option under this Agreement
until you have paid or made arrangements approved by the Company or the
Subsidiary to satisfy in full the applicable tax withholding requirements
of the Company or Subsidiary.
7. Restrictions. By accepting this grant, you agree that the Shares which you
may acquire by exercising the Options will not be sold or otherwise
disposed of in any manner which would constitute a violation of any
applicable federal or state securities laws. You also agree that (i) the
book entry made (or the certificates, if any are issued) representing the
Shares purchased under the Options may bear such restriction, restrictions,
legend or legends as the Committee deems appropriate in order to assure
compliance with applicable securities laws, (ii) the Company may refuse to
register the transfer of the Shares purchased under the Options on the
transfer records of the Company if such proposed transfer would in the
opinion of counsel satisfactory to the Company constitute a violation of
any applicable securities law, and (iii) the Company may give related
instructions to its transfer agent, if any, to stop registration of the
transfer of the Shares purchased under the Options.
8. Limitations Upon Transfer. All rights under this Agreement shall belong to
you alone and may not be transferred, assigned, pledged, or hypothecated by
you in any way (whether by operation of law or otherwise), other than by
will or the laws of descent and distribution and shall not be subject to
execution, attachment, or similar process. Upon any attempt by you to
transfer, assign, pledge, hypothecate, or otherwise dispose of such rights
contrary to the provisions in this Agreement or the Plan, or upon the levy
of any attachment or similar process upon such rights, such rights shall
immediately become null and void.
9. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of any successors to the Company and all persons lawfully claiming
under you.
10. Entire Agreement. This Agreement and the Plan constitute the entire
agreement of the parties with regard to the subject matter hereof and
thereof, and contain all the covenants, promises, representations,
warranties and agreements between the parties with respect to the Option
granted hereby. Without limiting the scope of the preceding sentence, all
prior understandings and agreements, if any, among the parties hereto
relating to the subject matter hereof and thereof are hereby null and void
and of no further force and effect.
11. Modifications. Except as provided below, any modification of this Agreement
shall be effective only if it is in writing and signed by both you and an
authorized officer of the Company. Notwithstanding anything in the Plan or
this Agreement to the contrary, if the Committee determines that the terms
of this grant do not, in whole or in part, satisfy the requirements of new
Section 409A of the Internal Revenue Code, the Committee, in its sole
discretion, may unilaterally modify this Agreement in such manner as it
deems
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appropriate to comply with such section and any regulations or guidance
issued thereunder.
12. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas, without regard to
conflicts of laws principles thereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer all effective as of the day and year first above
written.
MARINER ENERGY, INC.
By:
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Xxxxx X. Xxxxx
Chief Executive Officer and President
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