Exhibit 10.1

 

INTERIM CHIEF STRATEGIC OFFICER AGREEMENT

 

THIS AGREEMENT (“Agreement”), effective as of January 15, 2015 (“Effective
Date”), is between James LaChance (hereinafter “Executive”) and Energy XXI
Services, LLC (hereinafter the “Company”).

 

WHEREAS, the Company desires to contract with Executive to provide consulting
services in addition to the services provided by Executive as a member of the
Board of Directors (the “Board”) of Energy XXI Ltd, a Bermuda entity (“Parent”);
and

 

WHEREAS, Executive has agreed to perform consulting services for the Company
contemplated by this Agreement;

 

NOW THEREFORE, in consideration of the mutual covenants contained herein, and
intending to be legally bound hereby, the parties hereby agree as follows:

 

1.               ENGAGEMENT. The Company will engage Executive as consultant and
Executive accepts such engagement subject to the provisions of this Agreement.
Executive agrees to perform the duties and responsibilities as specified in this
Agreement.

 

1.1.            Term. This Agreement shall commence on the Effective Date and
shall terminate on July 15, 2015 (such period the “Consulting Period”). To the
extent the Refinancing (as defined below) has not been completed by July 15,
2015, the Company and Executive may mutually agree to extend the Consulting
Period for additional non-recurring one month periods.

 

1.2.            Termination.

 

A.             This Agreement is subject to termination:

 

(i)by either Executive or the Company, upon 30 days’ prior written notice to the
other party;

 

(ii)by the mutual written agreement of Executive and the Company;

 

(iii)by either Executive or the Company, upon the material breach of the other
party of the terms of this Agreement; or

 

(iv)automatically upon the Closing (as defined below) of the Refinancing.

 

B.              Upon the termination of this Agreement, the Company will pay to
Executive the amount of any Consulting Fee or Success Fee that has accrued and
not been paid up to the date of such termination at the time and in the manner
set forth in Section 2, and will have no further obligation to pay the remaining
amount of any such fees; provided, however, that if (i) this Agreement is
terminated by the Company pursuant to clause (A)(i) of this Section 1.2 and
(ii) the Closing of all or any part of the Refinancing occurs within 30 days
after such termination, Executive will also be entitled to receive any
incremental Success Fee attributable to any part of the Refinancing (x) with
respect to which Executive played a significant role or (y) that was completed
by the Company instead of substantially similar transaction with respect to
which Executive played a significant role, in each case as determined by the
Board in its reasonable judgment.

 

 

Specific terms in this Exhibit have been redacted because confidential treatment
for those terms has been requested. The redacted material has been separately
filed with the Securities and Exchange Commission, and the terms have been
marked at the appropriate place with three asterisks [***].

 

 

 

 

C.                 Notwithstanding anything to the contrary contained herein,
the provisions set forth in Section 3 hereof shall survive the termination of
this Agreement.

 

1.3.            Duties and Responsibilities.

 

A.                While engaged by the Company as a consultant, Executive shall
serve as the Company’s interim Chief Strategic Officer and shall perform all
duties and accept all responsibilities associated with that capacity as may be
specified by the Chief Executive Officer (“CEO”) of Parent, in consultation with
the Board (the “Consulting Services”). Consulting project work and scope of work
must be approved by, and Executive shall report to, the CEO.

 

B.              Executive represents that Executive is not subject nor a party
to any agreement, covenant, understanding or restriction which would prohibit
Executive from entering this Agreement and performing Executive’s duties to the
Company.

 

C.              Executive represents that Executive’s duties and
responsibilities under this Agreement are separate from, and in addition to,
Executive’s responsibilities to Parent as a member of the Board.

 

2.               COMPENSATION FOR CONSULTING SERVICES.

 

A.              Executive will receive a monthly fee of $200,000 (the
“Consulting Fee”) for each full 30 day period worked (for a total of $1.2
million to the extent Executive continues to providing the Consulting Services
through July 15, 2015). To the extent this Agreement is terminated prior to the
15th of any calendar month during the Consulting Period, Executive will be
entitled to a prorated payment of the Consulting Fee for such month. The
Consulting Fee is payable to Executive by the Company within 15 days after the
end of the applicable month in which such fee is earned. When Executive is
required to travel for business in his role as interim Chief Strategic Officer,
all reasonable and documented business expenses incurred in connection with such
travel will be reimbursed by the Company, in accordance with Parent’s travel and
expense documentation and reimbursement policies.

 

B.              To the extent (i) Parent or an affiliate of Parent completes one
or a series of transactions to provide Parent and its affiliates (together, the
“Parent Group”) with additional capital of more than $1 billion (which may
include, without limitation, securities offerings, refinancing or debt
improvement) prior to the end of the Consulting Period (such transactions,
collectively, the “Refinancing”) and (ii) Executive continuously provides the
Consulting Services through the closing of the last event constituting the
Refinancing (the “Closing”), Executive will be entitled to receive the right to
payment described in this Section 2.B. (the “Success Fee”), in accordance with
and subject to the terms and conditions set forth herein. Notwithstanding any
provision in this Agreement to the contrary, and for the avoidance of doubt, the
Refinancing and each material component thereof shall be subject to the approval
of the Board.

 

 

Specific terms in this Exhibit have been redacted because confidential treatment
for those terms has been requested. The redacted material has been separately
filed with the Securities and Exchange Commission, and the terms have been
marked at the appropriate place with three asterisks [***].

 

 

 

 

C.              Objective Criteria Portion of Success Fee. Executive will be
eligible to receive, subject to this Section 2.C., up to $5 million (the “Cap”)
upon the achievement of one or more of the criteria (the “Objective Success Fee
Criteria”) set forth in Schedule 2.C.

 

D.              Board-Determined Portion of Success Fee. The Board may award up
to an additional $1 million to Executive, based upon qualitative factors to be
determined by the Board including, without limitation, the nature of any
maturity or amortization extension and the relaxation of financial covenants in
any of the Parent Group’s debt documents.

 

E.               For the avoidance of doubt, in no event will the Success Fee be
more than $6 million.

 

F.              The Success Fee, if any, will be paid to Executive as follows:

 

(i)Fifty percent of the Success Fee will be paid to the Executive in a lump sum
cash payment at the time specified in Section 2.G. (the “Cash Component”), if
and to the extent that Executive does not make the RSU Election (as defined
below). Executive may, on or before five days after Closing, elect by written
notice to the Company (the “RSU Election”) to receive all or a portion of the
Cash Component in the form of restricted stock units (“RSUs”) in which case
Parent will cause to be issued to Executive the number of cash-settled RSUs
equal to that portion of the Cash Component for which Executive made an RSU
Election divided by $3.04, which is the value weighted average price (Bloomberg)
of the Company’s Stock common stock, par value $0.005 per share (the “Stock”),
for the period beginning on December 1, 2014 and ending on January 31, 2015 (the
“Per Share Price”).

 

(ii)The remaining fifty percent of the Success Fee (the “Mandatory RSU
Component”) will be converted into the right to receive the number of
cash-settled RSUs equal to (x) the Mandatory RSU Component divided by (y) the
Per Share Price.

 

(iii)The RSUs will be granted pursuant to the form of agreement approved by the
Compensation Committee of Parent (the “Award Agreement”) at least 15 days prior
to Closing and settled at the time and in the manner provided in Section 2.G.
For the avoidance of doubt, nothing in this Agreement will require Parent to
issue any shares of Stock to Executive under the Energy XXI Services, LLC 2006
Long- Term Incentive Plan.

 

G.              The RSUs will become vested and nonforfeitable on the date
granted and will be settled on the earliest to occur of: (x) the 12-month
anniversary of the Closing, (y) a “change in the ownership or effective control”
or “a change in the ownership of a substantial portion of the assets” of Parent
(as defined in Treasury Regulation § 1.409A-3(i)(5)) and (z) the date that
Executive incurs a “separation from service” with Parent (as defined in Treasury
Regulation § 1.409A-1(h)) (“Separation from Service” and such date or event set
forth in clause (x), (y) or (z), the “Settlement Date”). In the event Executive
is a “specified employee” within the meaning of Treasury Regulation
§ 1.409A-1(i) as of the date of the Executive’s Separation from Service,
Executive shall not be entitled to any settlement pursuant to clause (z) of this
Section 2.G. until the earlier of (i) the date that is six months after his
Separation from Service for any reason other than death, and (ii) the date of
Executive’s death. All RSUs granted to Executive hereunder will be settled in a
lump sum cash payment in an amount equal to the number of RSUs multiplied by the
per share closing price of the Stock on the Settlement Date (the “RSU Settlement
Payment”); provided, however, Executive may elect, prior to the Settlement Date,
to purchase from Parent, in lieu of receipt of all or a portion of the RSU
Settlement Payment in cash, a number of shares of Stock equal to (m) all or such
portion, as applicable, of the RSU Settlement Payment divided by (n) the closing
price of the Stock on the Settlement Date.

 

 

Specific terms in this Exhibit have been redacted because confidential treatment
for those terms has been requested. The redacted material has been separately
filed with the Securities and Exchange Commission, and the terms have been
marked at the appropriate place with three asterisks [***].

 

 

 

 

H.              Executive acknowledges that the issuance of any shares of Stock
acquired by Executive pursuant to Section 2.G. will not be registered under the
Securities Act of 1933, as amended (the “Securities Act”), and will therefore be
“restricted securities” within the meaning of Rule 144 under the Securities Act
and may bear a legend indicating the same. As a result, no such shares of Stock
may be resold by Executive unless such resale is registered on an effective
registration statement under the Securities Act or, based on the advice of legal
counsel to the Company, an exemption from such registration is available.
Executive acknowledges that the Company is not obligated to file a registration
statement for any such resale. Executive represents to the Company that he is,
and will be on the Settlement Date, an “accredited investor” within the meaning
of the Regulation D under the Securities Act. Any RSUs issued to Executive will
be subject to the terms and conditions of the agreement evidencing such award.

 

I.                For the avoidance of doubt, any Consulting Fees paid to
Executive hereunder will not be credited against any Success Fee.

 

J.               Parent represents and warrants that actions by Executive as
interim Chief Strategic Officer shall be covered and insured by the insurance
which Parent maintains to indemnify its directors and officers and that
Executive will be entitled to indemnification from Parent comparable to that
provided to officers of Parent.

 

3.              RESTRICTIVE COVENANTS. Executive acknowledges and agrees that
the provisions hereunder are reasonable and necessary to protect the Company’s
legitimate interests, and that the Company would not have entered into this
Agreement without such provisions.

 

3.1.            Non-Disclosure. Executive acknowledges and agrees that any and
all information relating to the Company (which shall include any and all
information relating to any of the Company’s related or affiliated entities at
any level), including without limitation its (i) business plans, (ii) present
and potential customers and/or contracting counter-parties, (iii) financial,
operational, marketing, personnel, and management procedures, strategies, and
tactics, (iv) computerized data, (v) developments, (vi) official documents,
brochures, and disclosures, (vii) contractual agreements, (viii) software,
(ix) training procedures, and (x) trade secrets are “Proprietary Information” of
the Company. Executive agrees that Executive will not use this Proprietary
Information for Executive’s own benefit or otherwise, and will not disclose this
Proprietary Information or any of Executive’s Work (defined below) to any
person, firm, corporation, or any other entity for any reason during the term of
this Agreement and any time thereafter, without prior written consent of the
Company.

 

 

Specific terms in this Exhibit have been redacted because confidential treatment
for those terms has been requested. The redacted material has been separately
filed with the Securities and Exchange Commission, and the terms have been
marked at the appropriate place with three asterisks [***].

 

 

 

 

3.2.            Non Solicitation of Employees. During the term of this Agreement
and for two (2) years thereafter, without prior written consent of the Company,
Executive will not in any way, directly or indirectly, for himself or on behalf
of any other person or entity, associate in business as an employer, employee or
in any other manner, with any person who is or was an employee, officer or agent
of the Company unless such person has not been employed by the Company for a
period of one year.

 

3.3.            Ownership of Work. Executive agrees that the products and
results of Executive’s service for the Company and the rest of the Parent Group
(“Work”) is considered a work made for hire within the meaning of Title 17 of
the United States Code. Executive agrees that the Work belongs to the Company
and is the Company’s sole and exclusive property. If any Work is not considered
a work made for hire, then Executive hereby assigns to the Company all rights to
such Work, including without limitation all patent rights, copyrights and trade
secret rights.

 

3.4.            Adjudication. If any court or competent jurisdiction shall
determine that the duration, geographic limit, or any other aspect of any
covenant contained in Section 3 of this Agreement is unenforceable, then it is
the intention of the parties that the covenant shall not be terminated but shall
be deemed amended to the extent required to render it valid and enforceable.
Such amendment shall apply only with respect to the operation of such covenant
in the jurisdiction of the court that has made the adjudication.

 

3.5.            Violation; Relief. Executive acknowledges that any violation of
Sections 3.1 and 3.2 above will result in irreparable injury to the Company.
Executive also acknowledges that the Company shall be entitled to preliminary
emergency and permanent injunctive relief, without the need for proving actual
damages, in addition to any other rights or remedies to which the Company may be
entitled. In the event of such violation, Executive and the Company agree to the
exclusive jurisdiction and venue of any court of general jurisdiction of Harris
County, Texas or the United States District Court for the Southern District of
Texas.

 

3.6.            Provision of Documentation. Executive agrees that until the
expiration of the Section 3 covenants that Executive will provide, and that the
Company may similarly provide, a copy of these covenants to any business or
enterprise that Executive may directly or indirectly own, manage, operate,
finance, join, control, participate in, or be connected with.

 

3.7.            United States Securities Laws. Executive agrees that he is aware
that United States securities laws prohibit any person who has material
non-public information concerning a publicly traded company or entity from
purchasing or selling securities of such company or entity, or from
communicating such information to any other person under circumstances in which
it is reasonably foreseeable that such person is likely to purchase or sell such
securities. Executive acknowledges and agrees that he has received and will
comply with the insider trading policy adopted by Parent.

 

 

Specific terms in this Exhibit have been redacted because confidential treatment
for those terms has been requested. The redacted material has been separately
filed with the Securities and Exchange Commission, and the terms have been
marked at the appropriate place with three asterisks [***].

 

 

 

 

3.8.            Survival. The restrictive covenants and remedies of Section 3 of
this Agreement shall survive the termination of this Agreement.

 

4.               GOVERNING LAW. This Agreement has been entered into in the
State of Texas, and any matter pertaining to or arising out of the Agreement
shall be governed by and construed in accordance with the internal laws of the
State of Texas, without giving effect to principles of conflicts of law.

 

5.               NOTICE. All notices and other communications necessary in
connection herewith shall be in writing and shall be deemed to have been given
when mailed by registered or certified mail, return receipt requested, as
follows (provided that notice of change of address shall be deemed given only
when received):

 

If to the Company:Energy XXI Services, LLC

1021 Main Street, Suite 2626

Houston, Texas 77002 

Attention: Legal Department

or the Company’s then current address

 

If to Executive:James LaChance

At the address set forth in the Company’s records

 

6.              CONTENTS OF AGREEMENT. This Agreement set forth the entire
agreement between Executive and the Company regarding the subject matter hereof,
and supersedes all prior and contemporaneous discussions, negotiations and
agreements, written or oral, between Executive and the Company and its
affiliates regarding Executive’s services to the Company; provided, however,
that nothing in this Agreement is intended to alter the services, duties,
obligations or compensation contemplated with respect to Executive in his
capacity as a member of the Board of Parent.

 

7.               MODIFICATION. This Agreement can be modified only by a written
agreement signed by both parties.

 

8.              EVERABILITY. If any provision of this Agreement, or the
application thereof to any person or any circumstance, is invalid or
unenforceable, (a) a the parties shall negotiate n good faith a suitable and
equitable provision in substitution therefor in order to carry out, so far as
may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.

 

9.               REMEDIES CUMULATIVE; NO WAIVER. No remedy conferred upon the
Company by this Agreement is intended to be exclusive of any other remedy. No
delay or omission by the Company in exercising any right, remedy or power
hereunder or existing at law or in equity shall be construed as a waiver
thereof, and any such right, remedy or power may be exercised by the Company
from time to time and as often as may be deemed expedient or necessary by the
Company in its sole discretion.

 

 

Specific terms in this Exhibit have been redacted because confidential treatment
for those terms has been requested. The redacted material has been separately
filed with the Securities and Exchange Commission, and the terms have been
marked at the appropriate place with three asterisks [***].

 

 

 

 

10.            INDEPENDENT CONTRACTOR. In the performance of services hereunder,
Executive shall be and act as an independent contractor. Nothing in this
Agreement, or in the relationship between Executive and the Company, shall be
deemed to constitute a partnership, joint venture or other similar relationship,
and Executive agrees not to make any contrary assertion, claim or counterclaim
in any action, suit or other legal proceeding involving Executive and the
Company. Executive is responsible for all losses, damages, judgments,
liabilities, claims, injuries, costs, and expenses arising directly or
indirectly from the ownership and operation of Executive’s business, Executive’s
motor vehicles, Executive’s property, and Executive’s performance of services
under this Agreement. Executive is not authorized to make any promise,
agreement, or contract on the Company’s behalf, to bind the Company in any
manner, or to hold herself out as anything but an independent businessperson.
Executive has full responsibility for all debts and obligations of Executive’s
business including without limitation all bills, invoices, debts, taxes,
payroll, and insurance costs. None of the Company or its affiliates will
withhold federal, state or local income or employment taxes from amounts payable
to Executive and Executive will be individually liable for payment of such
amounts. Executive will not be required to devote a specified amount of time to
the services to be provided to the Company and will be free to pursue other
business activities outside of the Company, provided that such activities do not
contravene the terms and conditions of this Agreement or otherwise interfere
with the performance by Executive of his duties as a consultant.

 

11.             ACCOUNTING TERMS. Each accounting term not otherwise defined in
this Agreement has the meaning commonly applied to it in accordance with
generally accepted accounting principles in the United States, as in effect from
time to time.

 

12.            NON-DISPARAGEMENT. Executive shall refrain from publishing any
oral or written statements about the Company or any of its parent, predecessor,
successor, subsidiary, and affiliate companies, past and present, as well as
their respective employees, officers, directors, stockholders or shareholders
(collectively, the “Company Parties”), to any of the Company’s employees,
officers, directors, stockholders, shareholders, clients, threatened violation
of this prohibition may be enjoined by the courts. The rights afforded to the
Company and the Company Parties under this provision are in addition to any and
all rights and remedies otherwise afforded by law.

 

13.             WAIVER OF PUNITIVE DAMAGES. Both Executive and the Company waive
to the fullest extent permitted by law, any right or claim for any punitive,
exemplary, consequential, or speculative damages against the other and agree
that in a dispute between them, except as otherwise provided herein, each is
limited to the actual damages sustained.

 

14.             VENUE. All proceedings arising out of or relating to this
Agreement, any of the other Refinancing documents or the consummation of the
Refinancings shall be heard and determined exclusively in the state courts or
federal courts in Harris County, Texas. Consistent with the preceding sentence,
Executive and the Company (x) irrevocably submit to the exclusive jurisdiction
of the state courts and federal courts in Texas (and of the appropriate
appellate courts therefrom) for the purpose of any proceeding arising out of or
relating to this Agreement, (y) irrevocably waive, and agree not to assert by
way of motion, defense or otherwise, in any such proceeding, any claim that it
is not subject personally to the jurisdiction of the above-named courts, that
its property is exempt or immune from attachment or execution, that the
proceeding is brought in an inconvenient forum, that the venue of the proceeding
is improper, or that this Agreement may not be enforced in or by any of the
above-named courts and (z) irrevocably consent to and grant any such court
exclusive jurisdiction over the person of such parties and over the subject
matter of such proceeding and agree that mailing of process or other papers in
connection with any such proceeding in the manner provided in Section 5.

 

15.            WAIVER OF JURY TRIAL. EXECUTIVE AND THE COMPANY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY
RIGHT HE OR IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION, SUIT OR
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT.

 

 

Specific terms in this Exhibit have been redacted because confidential treatment
for those terms has been requested. The redacted material has been separately
filed with the Securities and Exchange Commission, and the terms have been
marked at the appropriate place with three asterisks [***].

 

 

 

 

IN WITNESS WHEREOF the undersigned have executed this Agreement as of the date
first above written.

 

James LaChance Energy XXI Services, LLC                   /s/ James LaChance By:
/s/ Antonio de Pinho     Name: Antonio de Pinho     Title: President  

 

 

Specific terms in this Exhibit have been redacted because confidential treatment
for those terms has been requested. The redacted material has been separately
filed with the Securities and Exchange Commission, and the terms have been
marked at the appropriate place with three asterisks [***].

 

 

 

 

Schedule 2.C.

 

Objective Success Fee Criteria

 

Confidential

 

[***]

 

 

 

 

 

 

Specific terms in this Exhibit have been redacted because confidential treatment
for those terms has been requested. The redacted material has been separately
filed with the Securities and Exchange Commission, and the terms have been
marked at the appropriate place with three asterisks [***].