Exhibit 10.14

 

ENERGY XXI SERVICES, LLC
2006 LONG-TERM INCENTIVE PLAN
PERFORMANCE UNIT AWARDS AGREEMENT

 

This Performance Unit Awards Agreement (the “Agreement”), made as of the 21st
day of July, 2013 (the “Grant Date”), by and between Energy XXI Services, LLC
(the “Employer”), Energy XXI (Bermuda) Limited, a Bermuda entity (the “Company”)
and                                      (the “Grantee”), evidences the grant by
the Employer of (“Performance Units” or “Award”) to the Grantee on such date and
the Grantee’s acceptance of the Award in accordance with the provisions of the
Energy XXI Services, LLC 2006 Long-Term Incentive Plan, as amended or restated
from time to time (the “Plan”). All capitalized terms not otherwise defined
herein shall have the meanings set forth in the Plan. The Employer, the Company
and the Grantee agree as follows:

 

1.           Purpose for Award. The Grantee hereby receives as of the date
hereof a Performance Unit Award of                             Performance Units
pursuant to the terms of this Agreement (the “Grant”). This Grant is intended to
reward the Grantee for future increases in the value of the Company’s Common
Stock. All calculations required pursuant to this Agreement shall be made by the
Committee and shall be final and binding on the Grantee. The Grant is comprised
of both Time-Based Performance Units (25% of total award) and TSR Modified
Performance Units (75% of total award).

 

(a)         Calculation of Time-Based Units. The amount payable to the Grantee
pursuant to the Time-Based Performance Units shall be determined as of the
applicable Vesting Date pursuant to Section 3(a) or the payment event pursuant
to Section 3(b), and shall be based upon the number of Time-Based Performance
Units which vest/are payable as of such date multiplied by the Adjusted Notional
Value (defined below). This calculation will be made by the Committee.

 

(b)          Calculation of TSR Modified Performance Units.

 

(i)           Basic calculation of TSR Modified Performance Units. The amount
payable to the Grantee pursuant to the TSR Modified Performance Units shall be
determined as of the applicable Vesting Date pursuant to Section 3(a) or the
payment event pursuant to Section 3(b). Such amount shall be based upon the
number of TSR Modified Performance Units which vest/are payable as of such date
multiplied by the Adjusted Notional Value. This amount shall then be multiplied
by the appropriate “TSR Unit Number Modifier” set forth on Exhibit A to
determine the amount (if any) payable as of such date.

 

 

 

 

FY14 Performance Unit Award Agreement

 

(ii)           Make-up calculation of TSR Modified Performance Units. In
addition, solely in the event of vesting pursuant to Section 3(a) below on July
21, 2016, the following special “make-up” adjustment will apply if either of the
prior two Vesting Dates (defined below), the TSR Unit Number Modifier was lower
than the TSR Unit Number Modifier on July 21, 2016 (respectively, the “2014 TSR
Unit Number Modifier,” the “2015 TSR Unit Number Modifier,” and the “2016 TSR
Unit Number Modifier”). In the event the “make-up” adjustment described in the
preceding sentence is appropriate, an amount in addition to the amount set forth
in Section 1(b)(i) will be payable to the Grantee pursuant to Section 4 with
respect to the TSR Modified Performance Units at the time provided with respect
to the Vesting Date occurring on July 21, 2016 (the “Make-Up Adjustment”). The
Make-Up Adjustment is equal to the difference in the number of units that
originally vested on July 21, 2014 or July 21, 2015 and the number of units that
would have vested if the third year Unit Number Modifier had been applied,
multiplied by the ending unit value.

 

(iii)           Calculation of TSR Modified Performance Units upon a Change of
Control. Upon the occurrence of a Change in Control (as defined in the Plan),
all Performance Units shall become 100% vested upon the Change in Control and
paid out based on actual performance, after adjusting the Performance Period to
end on the last business day immediately prior to the Change in Control.

 

2.            Performance Units Value.

 

(a)            Performance Unit Value. Each Performance Unit will have an
initial notional value of five dollars ($5.00) per Performance Unit. At the
applicable Vesting Date under Section 3(a) or the payment event under Section
3(b), the notional value of each Performance Unit shall be adjusted by the
Committee to reflect the appreciation (if any) of the Common Stock (the
“Adjusted Notional Value”), determined as follows:

 

$5.00 + ($5.00 x [appreciation of the Common Stock above $      24.50/share,
expressed as a percentage]) = Adjusted Notional Value.

 

The grant date Common Stock Price is determined by using a simple average of the
closing EXXI stock price for the twenty (20) trading days ending the day
immediately preceding the grant date of July 21, 2013. The grant date stock
price is $24.50.

 

The vesting date Common Stock Price is determined by using a simple average of
the closing EXXI stock price for the twenty (20) trading days ending the day
immediately preceding the vesting dates of July 21, 2014, 2015, and 2016.

 

If the value of the Common Stock has not increased above $       24.50 /share as
of the applicable determination date, then the Adjusted Notional Value shall be
five dollars ($5.00).

 

(b)            Accounts. The Employer shall in accordance with the Plan
establish and maintain a bookkeeping account for the Grantee (the “Performance
Unit Account”), and such account shall be credited with the number of
Performance Units granted to the Grantee. The Employer may establish separate
bookkeeping accounts for the Time-Based Performance Units and the TSR Modified
Performance Units which collectively will constitute the Performance Unit
Account.

 

 

 

 

FY14 Performance Unit Award Agreement

 

(c)           Transfer. Until the Performance Units awarded to the Grantee shall
have vested, the Performance Units nominally credited to the Grantee’s
Performance Unit Account shall not be sold, transferred, or otherwise disposed
of and shall not be pledged or otherwise hypothecated.

 

3.             Vesting.

 

(a)           Vesting Dates. The Performance Units covered by this Agreement
shall vest ratably over three (3) years, provided that Grantee is still employed
by the Employer (or the Company or any Affiliate) on such each of these dates as
follows: July 21, 2014, 2015; and 2016 (the “Vesting Dates”). Except as provided
in Section 3(b) below, if the Grantee ceases to be employed by the Employer (or
the Company or any Affiliate) for any other reason at any time prior to the
applicable Vesting Date, the unvested Performance Units shall automatically be
forfeited upon such cessation of employment.

 

(b)           Additional Vesting Events. Notwithstanding Section 3(a) above, all
outstanding Performance Units that have not previously been forfeited pursuant
to Section 3(a) shall become immediately payable upon: (i) the death of the
Grantee; (ii) Disability of the Grantee; or (iii) a Change of Control of the
Company.

 

4.            Time and Form of Payment.

 

(a)           Generally. Except as provided below, payment shall be made in cash
or Common Stock to the Grantee (at the sole discretion of the Committee) in a
lump sum as soon as practicable after the Vesting Date, or event set forth in
Section 3(b), and in any event, within 2 weeks after such date or event. To the
extent that payment is made in Common Stock, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such Common Stock
free of all restrictions hereunder, except for applicable federal securities
laws restrictions.

 

(b)           Deferrable Units. Notwithstanding Section 4(a) above, settlement
with respect to the value of the Performance Units awarded pursuant to this
Agreement may be deferred pursuant to this Section 4(b) (the “Deferrable
Performance Units”). In the event that the value of Performance Units to be paid
with respect to the Deferrable Performance Units in connection with any Vesting
Date is more than two-times the Grant Date Value, such excess may, at the option
of the Committee, not be paid pursuant to Section 4(a) but shall instead be paid
pursuant to this Section 4(b) (the “Deferred Portion”). The Deferred Portion
will be paid in cash or Common Stock (at the sole discretion of the Committee)
in substantially equal installments on the first and second annual anniversaries
of such Vesting Date regardless of continued employment of the Grantee. In the
event vesting of the Deferrable Performance Units results from an event set
forth in Section 3(b), this Section 4(b) will not apply and payment with respect
to the Deferrable Performance Units will be made pursuant to Section 4(a);
provided, however, in the event of a Change of Control of the Company that does
not constitute a distribution event under Section 409A(a)(2)(A)(v) of the Code,
the Deferrable Performance Units will vest upon the occurrence of such Change of
Control but the deferred payment provisions of this Section 4(b) will apply to
payment of the Deferred Portion. To the extent that payment is made in Common
Stock, the Committee shall cause a stock certificate to be delivered to the
Grantee with respect to such Common Stock free of all restrictions hereunder,
except for applicable federal securities laws restrictions. For purposes of
clarity, the Deferred Portion is intended to constitute a “payment” within the
meaning of Treasury Regulation § 1.409A-2(b)(2) separate from the remaining
amounts payable pursuant to this Agreement, which remaining amounts are intended
to constitute a “payment,” within the meaning of Treasury Regulation §
1.409A-2(b)(2), separate from the Deferred Portion and a “short term deferral”
within the meaning of Treasury Regulation § 1.409A-1(b)(4).

 

 

 

 

FY14 Performance Unit Award Agreement

  

5.             Compliance with Laws and Regulations. The issuance of shares of
Common Stock upon vesting of the Performance Units shall be subject to
compliance by the Employer, the Company and the Grantee with all applicable
requirements of securities laws, other applicable laws and regulations of any
stock exchange on which the shares of Common Stock may be listed at the time of
such issuance or transfer. The Grantee understands that the Company is under no
obligation to register or qualify the shares of Common Stock with the Securities
and Exchange Commission (“SEC”), any state securities commission or any stock
exchange to effect such compliance.

 

6.             Tax Withholding. The Employer and the Company may deduct from any
payment of any kind otherwise due to the Grantee (including payments due when
the Performance Units vest) any federal, state or local taxes of any kind
required by law to be withheld with respect to the payment of Performance Units.
Alternatively, the Grantee may no later than the date as of which the
Performance Units vest, pay to the Employer or the Company (in cash or to the
extent permitted by the Committee, Common Stock held by the Grantee whose Fair
Market Value on the day preceding the date the Performance Units vests or is
payable is equal to the amount of the Grantee’s tax withholding liability) any
federal, state or local taxes of any kind required by law to be withheld, if
any, with respect to the Performance Units that vest or become payable.

 

7.             Non-transferability. This Award is not transferable.

 

8.             No Right to Continued Employment. Nothing in this Agreement shall
be deemed by implication or otherwise to impose any limitation on the right of
the Employer or the Company or any of its Affiliates to terminate the Grantee’s
employment at any time, in absence of a specific written agreement to the
contrary.

 

9.             Severability. In the event that any provision of this Agreement
shall be held illegal, invalid, or unenforceable for any reason, such provision
shall be fully severable and shall not affect the remaining provisions of this
Agreement, and the Agreement shall be construed and enforced as if the illegal,
invalid, or unenforceable provision had never been included herein.

 

10.           Certain Restrictions. By executing this Agreement, Grantee
acknowledges that he will enter into such written representations, warranties
and agreements and execute such documents as the Employer or the Company may
reasonably request in order to comply with the terms of this Agreement or the
Plan, or securities laws or any other applicable laws, rules or regulations.

 

 

 

 

FY14 Performance Unit Award Agreement

 

11.            Amendment and Termination. Except as otherwise provided in the
Plan or this Agreement, no amendment or termination of this Agreement shall be
made by the Employer or the Company without the written consent of the Grantee.

 

12.            No Guarantee of Tax Consequences. Neither the Employer nor the
Company makes any commitment or guarantee to Grantee that any federal or state
tax treatment will apply or be available to any person eligible for benefits
under this Agreement.

 

13.            Binding Effect. This Agreement shall be binding upon and inure to
the benefit of any successors to the Employer, the Company and all persons
lawfully claiming under Participant.

 

14.            Committee Determinations. Every interpretation, decision or
determination made by Committee pursuant to this Award shall be final and
binding upon the Grantee, and may not be challenged or overturned, in whole or
in part, except upon clear and convincing proof that such interpretation,
decision or determination is an abuse of discretion.

 

15.             Governing Law and Venue. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Texas. The courts in
Harris County, Texas shall be the exclusive venue for any dispute regarding the
Plan or this Agreement.

 

[Signatures on following page]

 

 

 

 

FY14 Performance Unit Award Agreement

 

IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date
first above written.

 

  ENERGY XXI SERVICES, LLC       By:       D. West Griffin     Chief Financial
Officer           ENERGY XXI (BERMUDA) LIMITED, a Bermuda entity           By:  
    John D. Schiller, Jr.     Chairman and CEO           GRANTEE:        

 

 

 

 

Exhibit A

  

   TSR Performance Goal  TSR Unit Number
Modifier  Below Threshold  Below 5%   0% Threshold  5% to below 10%   50% to
100%  Target  10% to below 20%   100% to 200%  Maximum  20% and above   200%

 

“Total Shareholder Return” (“TSR”) will be determined using the average closing
price of the relevant share during the 20 business day period leading up to the
first and last business days of the Performance Period, and assuming that any
dividends paid are reinvested as of the ex-dividend date.

 

If the TSR is greater than 5% and less than 20%, the TSR Unit Number Modifier
will be prorated between 50% and 200%.