Document:

ex10_1.htm

     

    
      

      

    

     

     

    Exhibit 10.1

    

      ENERGY
XXI SERVICES, LLC

       

      EMPLOYEE
STOCK PURCHASE PLAN

       

      

       

      ARTICLE
I

       

      

       

      PURPOSE

       

      The
purposes of this Energy XXI Services, LLC Employee Stock Purchase Plan (the
“Plan”) are
to assist Eligible Employees of Energy XXI Services, LLC, a Delaware limited
liability corporation (the “Employer”),
and its Parent and Subsidiaries in acquiring a stock ownership interest in
Energy XXI (Bermuda) Limited, a Bermuda corporation (the “Company”)
pursuant to a plan which is intended to qualify as an “employee stock purchase
plan” within the meaning of Section 423(b) of the Code, and to help Eligible
Employees provide for their future security and to encourage them to remain in
the employment of the Company, the Employer and its Subsidiaries.

       

      ARTICLE
II

       

      

       

      DEFINITIONS
AND CONSTRUCTION

       

      Wherever
the following terms are used in the Plan they shall have the meanings specified
below, unless the context clearly indicates otherwise.  The singular
pronoun shall include the plural where the context so indicates.

       

      2.1 “Administrator”
means the entity that conducts the general administration of the Plan as
provided herein.  The term “Administrator”
shall refer to the Committee unless the Board has assumed the authority for
administration of the Plan generally as provided in
Article III.

       

      2.2 “Board”
shall mean the Board of Directors of the Company.

       

      2.3 “Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time, and
the regulations issued thereunder.

       

      2.4 “Committee”
means the committee of the Board described in Article III.

       

      2.5 “Company”
shall mean Energy XXI (Bermuda) Limited, a Bermuda corporation.

       

      2.6 “Compensation”
of an Eligible Employee shall mean the gross base compensation received by such
Eligible Employee as compensation for services to the Company, the Employer or
any Designated Subsidiary, excluding overtime payments, sales commissions,
incentive compensation, bonuses, contributions to pension, profit sharing,
health and life insurance and other plans, expense reimbursements, fringe
benefits and other special payments.

       

      2.7 “Designated
Subsidiary” shall mean any Subsidiary designated by the Administrator in
accordance with Section 3.3(ii).

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      2.8 “Eligible
Employee” shall mean an Employee of the Company, the Employer or a
Designated Subsidiary: (i) who does not, immediately after any rights under
this Plan are granted, own (directly or through attribution) stock possessing 5%
or more of the total combined voting power or value of all classes of Stock or
other stock of the Employer, a Parent or a Subsidiary (as determined under
Section 423(b)(3) of the Code).  For purposes of clause (i) above, the
rules of Section 424(d) of the Code with regard to the attribution of stock
ownership shall apply in determining the stock ownership of an individual, and
stock which an Employee may purchase under outstanding options shall be treated
as stock owned by the Employee.  For purposes of the Plan, the
employment relationship shall be treated as continuing intact while the
individual is on sick leave or other leave of absence approved by the Company,
the Employer or a Designated Subsidiary and meeting the requirements of Treasury
Regulation Section 1.421-7(h)(2).

       

      2.9 “Employee”
means any officer or other employee (as defined in accordance with Section
3401(c) of the Code) of the Company, the Employer or any Designated
Subsidiary.

       

      2.10 “Employer”
shall mean Energy XXI Services, LLC, a Delaware limited liability
corporation.

       

      2.11 “Enrollment
Date” shall mean the first day of each Offering Period.

       

      2.12 “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended from time
to time.

       

      2.13 “Fair Market
Value” means, as of any given date, the fair market value of a share of
Stock on the date determined by such methods or procedures as may be established
from time to time by the Administrator.  Unless otherwise determined
by the Administrator, the Fair Market Value of a share of Stock as of any given
date shall be (a) if Stock is traded on any established stock exchange, the
closing price of a share of Stock as reported in the Wall Street Journal (or
such other source as the Administrator may deem reliable for such purposes) for
the first Trading Day immediately prior to such date during which a sale
occurred; or (b) if Stock is not traded on an exchange but is quoted on a
national market or other quotation system, the last sales price on the date
immediately prior to such date on which sales price are reported.

       

      2.14 “Offering
Document” shall have the meaning given to such term in Section
5.1.

       

      2.15 “Offering
Period” shall mean each Offering Period designated by the Administrator
in the applicable Offering Document pursuant to Section 5.1 or otherwise
established in accordance with Section 5.1.

       

      2.16 “Parent”
means any corporation, other than the Employer, in an unbroken chain of
corporations ending with the Employer if, at the time of the determination, each
of the corporations other than the Employer owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.  The definition of “Parent” is intended
to, and shall be construed and applied, to coincide and conform with the
definition of “parent” under Section 424(e) of the Code.

       

      
        
           

        

        
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      2.17 “Participant”
means any Eligible Employee who has executed a participation agreement and been
granted rights to purchase Stock pursuant to the Plan.

       

      2.18 “Plan”
shall mean this Energy XXI Services, LLC Employee Stock Purchase Plan, as it may
be amended from time to time.

       

      2.19 “Purchase
Date” shall mean the last Trading Day of each Offering
Period.

       

      2.20 “Purchase
Price” shall mean the purchase price designated by the Administrator in
the applicable Offering Document (which purchase price shall not be less than
85% of the Fair Market Value of a share of Stock for the Enrollment Date or for
the Purchase Date, whichever is lower); provided, however, that, in the event
no purchase price is designated by the Administrator in the applicable Offering
Document, the purchase price for the Offering Periods covered by such Offering
Document shall be 85% of the Fair Market Value of a share of Stock for the
Enrollment Date or for the Purchase Date, whichever is lower; provided, further, that the Purchase
Price may be adjusted by the Administrator pursuant to Article IX; and provided, and further, that the
Purchase Price shall not be less than the par value of a share of
Stock.

       

      2.21 “Securities
Act” shall mean the Securities Act of 1933, as amended from time to
time.

       

      2.22 “Stock”
means the common stock, $0.001 par value, of the Company and such other
securities of the Company that may be substituted for Stock pursuant to Article
IX.

       

      2.23 “Subsidiary”
shall mean any corporation, other than the Employer, in an unbroken chain of
corporations beginning with the Employer if, at the time of the determination,
each of the corporations other than the last corporation in an unbroken chain
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.  The
definition of “Subsidiary” is intended to, and shall be construed and applied,
to coincide and conform with the definition of “subsidiary” under Section 424(f)
of the Code.

       

      2.24 “Trading
Day” shall mean any day on which the Stock is actually
traded.

       

      ARTICLE
III

       

      

       

      ADMINISTRATION

       

      3.1 Administrator.  The
Administrator of the Plan shall be the Compensation Committee of the Board (or
another committee or a subcommittee of the Board to which the Board delegates
administration of the Plan) (such committee, the “Committee”),
which Committee shall consist solely of two or more members of the Board each of
whom is a “non-employee director” within the meaning of Rule 16b-3 which has
been adopted by the Securities and Exchange Commission under the Exchange Act
and which Committee is otherwise constituted to comply with applicable
law.  Appointment of Committee members shall be effective upon
acceptance of appointment.  The Board may abolish the Committee at any
time and revest in the Board the administration of the
Plan.  Committee members may resign at any time by delivering written
notice to the Board.  Vacancies in the Committee may only be filled by
the Board.

       

      
        
           

        

        
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      3.2 Action by the
Administrator.  A majority of the Administrator shall
constitute a quorum.  The acts of a majority of the members present at
any meeting at which a quorum is present, and, subject to applicable law and the
Bylaws of the Company, acts approved in writing by a majority of the
Administrator in lieu of a meeting, shall be deemed the acts of the
Administrator.  Each member of the Administrator is entitled to, in
good faith, rely or act upon any report or other information furnished to that
member by any officer or other employee of the Company, the Employer or any
Designated Subsidiary, the Company’s independent certified public accountants,
or any executive compensation consultant or other professional retained by the
Company to assist in the administration of the Plan.

       

      3.3 Authority of
Administrator.  The Administrator shall have the power, subject
to, and within the limitations of, the express provisions of the
Plan:

       

      (i) To
determine when and how rights to purchase stock of the Company shall be granted
and the provisions of each offering of such rights (which need not be
identical).

       

      (ii) To
designate from time to time which Subsidiaries of the Employer shall be
Designated Subsidiaries, which designation may be made without the approval of
the stockholders of the Company.

       

      (iii) To
construe and interpret the Plan and rights granted under it, and to establish,
amend and revoke rules and regulations for its administration.  The
Administrator, in the exercise of this power, may correct any defect, omission
or inconsistency in the Plan, in a manner and to the extent it shall deem
necessary or expedient to make the Plan fully effective.

       

      (iv) To amend
the Plan as provided in Article X.

       

      (v) Generally,
to exercise such powers and to perform such acts as the Administrator deems
necessary or expedient to promote the best interests of the Company, the
Employer, and its Subsidiaries and to carry out the intent that the Plan be
treated as an “employee stock purchase plan” within the meaning of Section 423
of the Code.

       

      The
Administrator shall have the authority to delegate routine day-to-day
administration of the Plan to such officers and employees of the Company or
Employer as the Administrator deems appropriate.

      

      3.4 Decisions
Binding.  The Administrator’s interpretation of the Plan, any
rights granted pursuant to the Plan, any participation agreement and all
decisions and determinations by the Administrator with respect to the Plan are
final, binding, and conclusive on all parties.

       

      
        
           

        

        
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      ARTICLE
IV

       

      

       

      SHARES
SUBJECT TO THE PLAN

       

      4.1 Number of
Shares.  Subject to Article IX, the aggregate number of shares
of Stock which may be issued pursuant to rights granted under the Plan shall be
5,000,000 shares.  If any right granted under the Plan shall for any
reason terminate without having been exercised, the Stock not purchased under
such right shall again become available for the Plan.

       

      4.2 Stock
Distributed.  Any Stock distributed pursuant to the Plan may
consist, in whole or in part, of authorized and unissued Stock, treasury stock
or Stock purchased on the open market.

       

      ARTICLE
V

       

      

       

      OFFERING
PERIODS; OFFERING DOCUMENTS; PURCHASE DATES

       

      5.1 Offering
Periods.  Commencing with the Effective Date (as defined in
Article XI) of the Plan and continuing while the Plan remains in force, the
Administrator may from time to time grant or provide for the grant of rights to
purchase Stock of the Company under the Plan to Eligible Employees during one or
more periods (each, an “Offering
Period”) selected by the Administrator commencing on such dates (each, an
“Enrollment
Date”) selected by the Administrator.  The terms and conditions
applicable to each Offering Period shall be set forth in an “Offering
Document” adopted by the Administrator, which Offering Document shall be
in such form and shall contain such terms and conditions as the Administrator
shall deem appropriate and shall be incorporated by reference into and made part
of the Plan and shall be attached hereto as part of the Plan; provided however, that in the
event an Offering Period is not designated by the Administrator in the Offering
Documents, the right to purchase Stock of the Company under the Plan shall be
granted twice each year on January 1 and July 1 of each calendar year and the
term of the Offering Period shall be six months.  The provisions of
separate Offering Periods under the Plan need not be
identical.  Notwithstanding the foregoing, the first Offering Period
shall begin on December 1, 2008 and end on June 30, 2009.

       

      5.2 Offering
Documents.  Each Offering Document with respect to an Offering
Period shall specify (through incorporation of the provisions of this Plan by
reference or otherwise):

       

      (i) the
length of the Offering Period, which period shall not exceed twenty-seven
months;

       

      (ii) the
Enrollment Date for such Offering Period;

       

      (iii) the
Purchase Date for such Offering Period;

       

      (iv) the
maximum number of shares, if any, that may be purchased by any Eligible Employee
during such Offering Period; and

       

      (v) such
other provisions as the Administrator determines are appropriate, subject to the
Plan.

       

      
        
           

        

        
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      ARTICLE
VI

       

      

       

      PARTICIPATION

       

      6.1 Eligibility.  Any
Eligible Employee who shall be employed by the Company, the Employer or a
Designated Subsidiary on the day immediately preceding a given Enrollment Date
for an Offering Period shall be eligible to participate in the Plan during such
Offering Period, subject to the requirements of this Article VI and the
limitations imposed by Section 423(b) of the Code.

       

      6.2 Enrollment in
Plan.  Except as otherwise set forth in an Offering Document,
an Eligible Employee may become a Participant in the Plan for an Offering Period
by delivering a participation agreement to the Company or the Employer prior to
the Enrollment Date for such Offering Period (or such other date specified in
the Offering Document), in such form as the Administrator
provides.  Except as provided in Section 6.7 below, an Eligible
Employee may participate in the Plan only by means of payroll
deduction.  Each such participation agreement shall designate a stated
amount of such Eligible Employee’s Compensation to be withheld by the Company,
the Employer or the Designated Subsidiary employing such Eligible Employee on
each payday during the Offering Period as payroll deductions under the
Plan.  The stated amount may not be less than $10.00 per pay period,
and may not exceed either of the following:  (i) 70% of the
Compensation from which the deduction is made, or (ii) an amount which will
result in noncompliance of the $25,000 limit stated in
Section 6.5.  A Participant may elect to have all payroll
deductions completely discontinued at any time, but an election to discontinue
payroll deductions shall be deemed to be an election to withdraw pursuant to
Section 8.1.  No change in payroll deductions other than complete
discontinuance can be made during an Offering Period, and, specifically, once an
Offering Period has commenced, a Participant may not alter the rate of his or
her payroll deductions for such offering.

       

      6.3 Payroll
Deductions.  Except as otherwise provided in the applicable
Offering Document, payroll deductions for a Participant shall commence on the
first payroll following the Enrollment Date and shall end on the last payroll in
the Offering Period to which such authorization is applicable, unless sooner
terminated by the Participant as provided in Article VIII.

       

      6.4 Effect of
Enrollment.  A Participant’s completion of a participation
agreement will enroll such Participant in the Plan for each subsequent Offering
Period on the terms contained therein until the Participant either submits a new
participation agreement, withdraws from participation under the Plan as provided
in Article VIII or otherwise becomes ineligible to participate in the
Plan.

       

      6.5 Limitation on Purchase of
Stock.  An Eligible Employee may be granted rights under the
Plan only if such rights, together with any other rights granted to such
Eligible Employee under “employee stock purchase plans” of the Employer, any
Parent or any Subsidiary, as specified by Section 423(b)(8) of the Code, do not
permit such employee’s rights to purchase stock of the Employer or any Parent or
Subsidiary to accrue at a rate which exceeds $25,000 of fair market value of
such stock (determined as of the first day of the Offering Period during which
such rights are granted) for each calendar year in which such rights are
outstanding at any time.  This limitation shall be applied in
accordance with Section 423(b)(8) of the Code.

       

      
        
           

        

        
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      6.6 Decrease of Payroll
Deductions.  Notwithstanding the foregoing, to the extent
necessary to comply with Section 423(b)(8) of the Code and Section 6.5, a
Participant’s payroll deductions may be suspended by the Administrator at any
time during an Offering Period.

       

      6.7 Leaves of
Absence.  During a paid leave of absence approved by the
Company or the Employer and meeting the requirements of U.S. Treasury
Regulation Section 1.421-1(h)(2), a Participant’s elected payroll
deductions shall continue.  If a Participant takes an unpaid leave of
absence that is approved by the Company or the Employer and meets the
requirements of Treasury Regulation Section 1.421-1(h)(2), then such
Participant may contribute amounts to the Plan in lieu of his elected payroll
deductions or contributions in accordance with procedures established by the
Administrator; provided,
however, that a Participant’s contributions while on such an unpaid leave
of absence may not exceed the total amount of payroll deductions that would have
been made had such Participant not taken such an unpaid leave of
absence.  If a Participant takes a leave of absence that is not
described in the preceding sentences of this Section 6.7, then he shall be
considered to have withdrawn from the Plan in accordance with Section 8.1
hereof.  Further, notwithstanding the preceding provisions of this
Section 6.7, if a Participant takes a leave of absence that is described in
the first or second sentence of this Section 6.7, and such leave of absence
exceeds 90 days, then he shall be considered to have withdrawn from the Plan in
accordance with Section 8.1 hereof on the 91st day of
such leave of absence; provided, however, that if
the Participant’s right to employment is guaranteed either by statute or
contract, then such 90-day period shall be extended until the last day upon
which such reemployment rights are so guaranteed.

       

      ARTICLE
VII

       

      

       

      GRANT
AND EXERCISE OF RIGHTS

       

      7.1 Grant of
Rights.  On the Enrollment Date of each Offering Period, each
Eligible Employee participating in such Offering Period shall, subject to the
maximum number of shares of Stock specified under Section 5.2(iv) (provided that
if no maximum number is specified in the Offering Document, then the maximum
number shall be 15,000 shares of Stock) and the provisions of Section 6.5
above, be granted a right to purchase that number of shares of the Company’s
Stock equal to the quotient of (i) the aggregate payroll deductions
authorized to be withheld by such Participant in accordance with
Section 6.2 hereof for such Offering Period, divided by (ii) the
applicable Purchase Price of the Stock.

       

      7.2 Exercise of
Rights.  Subject to the limitations set forth in Section 6.5
hereof, each Participant in the Plan automatically and without any act on his
part will be deemed to have exercised his right on each Purchase Date, to the
extent that the balance then in his account under the Plan is sufficient, to
purchase at the Purchase Price the whole number of shares of Stock subject to
the right granted to such Participant under this Plan for such Offering
Period.  No fractional shares shall be issued on the exercise of
rights granted under this Plan.  The amount, if any, of accumulated
payroll deductions remaining in each Participant’s account after the purchase of
shares on each Purchase Date shall be distributed in full to the Participant
after such Purchase Date.

       

      
        
           

        

        
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      7.3 Pro Rata Allocation of
Shares.  If the Administrator determines that, on a given
Purchase Date, the number of shares of Stock with respect to which rights are to
be exercised may exceed (i) the number of shares of Stock that were
available for issuance under the Plan on the Enrollment Date of the applicable
Offering Period, or (ii) the number of shares of Stock available for
issuance under the Plan on such Purchase Date, the Administrator may in its sole
discretion provide that the Company shall make a pro rata allocation of the
shares of Stock available for purchase on such Enrollment Date or Purchase Date,
as applicable, in as uniform a manner as shall be practicable and as it shall
determine in its sole discretion to be equitable among all Participants for whom
rights to purchase Stock are to be exercised pursuant to this Article VII on
such Purchase Date, and shall either (x) continue all Offering Periods then
in effect, or (y) terminate any or all Offering Periods then in effect
pursuant to Article X.  The Company may make pro rata allocation of
the shares available on the Enrollment Date of any applicable Offering Period
pursuant to the preceding sentence, notwithstanding any authorization of
additional shares for issuance under the Plan by the Company’s stockholders
subsequent to such Enrollment Date.  The balance of the amount
credited to the account of each Participant which has not been applied to the
purchase of shares of stock shall be paid to such Participant in one lump sum in
cash as soon as reasonably practicable after the Purchase Date.

       

      7.4 Withholding.  At
the time a Participant’s rights under the Plan are exercised, in whole or in
part, or at the time some or all of the Stock issued under the Plan is disposed
of, the Participant must make adequate provision for the Company’s or the
Employer’s federal, state, or other tax withholding obligations, if any, which
arise upon the exercise of the right or the disposition of the
Stock.  At any time, the Company or Employer may, but shall not be
obligated to, withhold from the Participant’s compensation the amount necessary
for the Company or the Employer to meet applicable withholding obligations,
including any withholding required to make available to the Company or the
Employer any tax deductions or benefits attributable to sale or early
disposition of Stock by the Participant.

       

      7.5 Conditions to Issuance of
Stock.

       

      (a) Except as
provided below, the Company will deliver to each Participant a certificate
issued in his name for the number of shares of Stock with respect to which his
rights were exercised and for which he has paid the Purchase
Price.  The certificate will be delivered as soon as practicable
following the Purchase Date.

       

      In lieu
of delivering share certificates directly to Participants, the Company in its
discretion may take such steps as it deems necessary or advisable (including,
without limitation, the execution of service agreements and contracts) to effect
the delivery of shares to a broker-dealer or similar custodian designated by the
Company (the “Plan
Broker”) on such terms and conditions as the Company determines in its
discretion.  In such event, as soon as practicable following the
Purchase Date, the Company, on behalf of each Participant, shall deliver to the
Plan Broker a certificate for (or shall otherwise cause to be credited with the
Plan Broker) the number of shares of Stock with respect to which such
Participant’s right was exercised and for which such Participant has paid the
Purchase Price.  The Plan Broker shall keep accurate records of the
beneficial interests of each Participant in such shares by means of the
establishment and maintenance of an account for each
Participant.  Fees and expenses of the Plan Broker shall be paid by
the Company and/or allocated among the respective Participants in such manner as
the Company determines in its discretion.  During any period that the
Plan Broker arrangement described above is utilized in connection with the Plan,
Participants shall be required, at such time or times as may be designated by
the Company, to enter into such agreements and authorizations (the terms of
which may include, without limitation, restrictions on the transfer of shares
from Participants’ Plan Broker accounts) with the Plan Broker and the Company as
the Company may prescribe.

       

      
        
           

        

        
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      (b) The
Company shall not be required to issue or deliver any certificate or
certificates for shares of Stock purchased upon the exercise of rights under the
Plan prior to fulfillment of all of the following conditions:

       

      (i) The
admission of such shares to listing on all stock exchanges, if any, on which the
Stock is then listed; and

       

      (ii) The
completion of any registration or other qualification of such shares under any
state or federal law or under the rulings or regulations of the Securities and
Exchange Commission or any other governmental regulatory body, which the
Administrator shall, in its absolute discretion, deem necessary or advisable;
and

       

      (iii) The
obtaining of any approval or other clearance from any state or federal
governmental agency which the Administrator shall, in its absolute discretion,
determine to be necessary or advisable; and

       

      (iv) The
payment to the Company or Employer of all amounts which it is required to
withhold under federal, state or local law upon exercise of the rights, if any;
and

       

      (v) The lapse
of such reasonable period of time following the exercise of the rights as the
Administrator may from time to time establish for reasons of administrative
convenience.

       

      ARTICLE
VIII

       

      

       

      WITHDRAWAL;
TERMINATION OF EMPLOYMENT OR ELIGIBILITY

       

      8.1 Withdrawal.  A
Participant may withdraw all but not less than all of the payroll deductions
credited to his or her account and not yet used to exercise his or her rights
under the Plan at any time by giving written notice to the Company or the
Employer in a form acceptable to the Administrator.  All of the
Participant’s payroll deductions credited to his or her account during the
Offering Period shall be paid to such Participant as soon as reasonably
practicable after receipt of notice of withdrawal and such Participant’s rights
for the Offering Period shall be automatically terminated, and no further
payroll deductions for the purchase of shares shall be made for such Offering
Period.  If a Participant withdraws from an Offering Period, payroll
deductions shall not resume at the beginning of the next Offering Period unless
the Participant delivers to the Company or the Employer a new participation
agreement.

       

      
        
           

        

        
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      8.2 Future
Participation.  A Participant’s withdrawal from an Offering
Period shall not have any effect upon his or her eligibility to participate in
any similar plan which may hereafter be adopted by the Company, the Employer or
a Designated Subsidiary or in subsequent Offering Periods which commence after
the termination of the Offering Period from which the Participant
withdraws.

       

      8.3 Termination of
Employment.

       

      (a) If the
employment of a Participant terminates prior to the Purchase Date relating to a
particular Offering Period, other than by death as addressed in Section 8.3(b)
below, his participation in the Plan automatically and without any act on his
part shall terminate as of the date of the termination of his employment;
provided, however, that if the Purchase Date for the Offering Period during
which such termination of employment occurs is not a Business Day and the
Participant’s employment terminates on the last Business Day of the Offering
Period, then such Participant will be considered to have terminated employment,
for purposes of this Section 8.3(a), on the Purchase Date. For purposes of the
preceding sentence, the term “Business
Day” shall mean any day except a Saturday, Sunday or other day on which national
banking associations in the State of Texas are generally closed for the conduct
of commercial banking business.  Following the Participant’s
termination of employment as described above, the Company or Employer promptly
will refund to him the amount of the balance in his account under the Plan, and
thereupon his interest in the Plan and in any right under the Plan shall
terminate.

       

      (b) If the
employment of a Participant terminates due to such Participant’s death, then
such Participant’s personal representative shall have the right to elect either
to:

       

      (i) withdraw
the amount of the balance in the Participant’s account under the Plan at the
date of such Participant’s termination of employment; or

       

      (ii) exercise
such Participant’s right to purchase Stock on the applicable Purchase Date of
the Offering Period during which termination of employment occurs, in which
event such personal representative shall be permitted to purchase the number of
whole shares of Stock which the amount of the balance in the Participant’s
account under the Plan at the date of such Participant’s termination of
employment will purchase at the applicable Purchase Price (subject to Section
6.5), with any balance remaining in the Participant’s account under the Plan to
be returned to such personal representative.

       

      Such
personal representative must make such election by giving notice to the Company
or the Employer at such time and in such manner as the Administrator
prescribes.  In the event that no such notice of election is timely
received by the Company or the Employer, the personal representative will
automatically be deemed to have elected as set forth in clause (i) above,
and the balance in such Participant’s account under the Plan shall be promptly
distributed to such personal representative.

      

      
        
           

        

        
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      ARTICLE
IX

       

      

       

      ADJUSTMENTS
UPON CHANGES IN STOCK

       

      9.1 Changes in Capitalization;
Other Adjustments.

       

      (a) Subject
to Section 9.3, whenever any change is made in the Stock by reason of any stock
dividend or by reason of subdivision, stock split, reverse stock split,
combination or exchange of shares, recapitalization, reorganization,
reclassification of shares, or any other similar corporate event affecting the
Stock, appropriate action will be taken by the Board to make such proportionate
adjustments, if any, as the Board in its discretion may deem appropriate to
reflect such change with respect to (i) the aggregate number and type of
shares of Stock (or other securities or property) that may be issued under the
Plan (including, but not limited to, adjustments of the limitations established
in each Offering Document pursuant to Section 5.2 on the maximum number of
shares of Stock that may be purchased); (ii) the class(es) and number of
shares and price per share of Stock subject to outstanding rights; and
(iii) the Purchase Price with respect to any outstanding
rights.

       

      (b) If the
Company shall not be the surviving corporation in any merger or consolidation
(or survives only as a subsidiary of another entity), or if the Company is to be
dissolved or liquidated, then unless a surviving corporation assumes or
substitutes new options (within the meaning of Section 424(a) of the Code)
for all rights then outstanding under this Plan, (i) the Purchase Date for
all rights then outstanding under this Plan shall be accelerated to dates fixed
by the Administrator or the Board prior to the effective date of such merger or
consolidation or such dissolution or liquidation, (ii) a Participant (or
his legal representative) may make a lump-sum deposit prior to the Purchase Date
in lieu of the remaining payroll deductions (or remaining Participant
contributions under Section 6.7) which otherwise would have been made, and
(iii) upon such effective date any unexercised rights shall
expire.

       

      9.2 No Adjustment Under Certain
Circumstances.  No adjustment or action described in this
Article IX or in any other provision of the Plan shall be authorized to the
extent that such adjustment or action would cause the Plan to fail to satisfy
the requirements of Section 423 of the Code.

       

      9.3 No Other
Rights.  Except as expressly provided in the Plan, no
Participant shall have any rights by reason of any subdivision or consolidation
of shares of stock of any class, the payment of any dividend, any increase or
decrease in the number of shares of stock of any class or any dissolution,
liquidation, merger, or consolidation of the Company or any other
corporation.  Except as expressly provided in the Plan or pursuant to
action of the Administrator or the Board under the Plan, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number of shares of Stock subject to an outstanding
right or the Purchase Price of the Stock subject to an outstanding
right.

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      ARTICLE
X

       

      

       

      AMENDMENT,
MODIFICATION AND TERMINATION

       

      10.1 Amendment, Modification and
Termination.  The Board may amend, suspend or terminate the
Plan at any time and from time to time; provided, however, that approval by a
vote of the holders of the outstanding shares of the Company’s capital stock
entitled to vote shall be required to amend the Plan to: (a) change the
aggregate number of shares that may be sold pursuant to rights under the Plan
under Section 4.1 (other than any adjustment as provided by Article IX);
(b) materially increase the benefits accruing to Participants under the
Plan; (c) change the class of individuals who may be granted rights under the
Plan; (d) extend the term of the Plan; or (e) change the Plan in any manner
that would cause the Plan to no longer be an “employee stock purchase plan”
within the meaning of Section 423(b) of the Code.

       

      10.2 Rights Previously
Granted.  Except as provided in Article IX or this Article X,
no termination, amendment or modification may make any change in any right
theretofore granted which adversely affects the rights of any Participant
without the consent of such Participant, provided that an Offering
Period may be terminated, amended or modified by the Administrator if the
Administrator determines that the termination of the Offering Period or the Plan
is in the best interests of the Company and its stockholders.

       

      10.3 Certain Changes to
Plan.  Without stockholder consent and without regard to
whether any Participant rights may be considered to have been adversely
affected, to the extent permitted by Section 423 of the Code, the Administrator
shall be entitled to change the Offering Periods, limit the frequency and/or
number of changes in the amount withheld during an Offering Period, permit
payroll withholding in excess of the amount designated by a Participant in order
to adjust for delays or mistakes in the Company’s or the Employer’s processing
of properly completed withholding elections, establish reasonable waiting and
adjustment periods and/or accounting and crediting procedures to ensure that
amounts applied toward the purchase of Stock for each Participant properly
correspond with amounts withheld from the Participant’s Compensation, and
establish such other limitations or procedures as the Administrator determines
in its sole discretion advisable which are consistent with the
Plan.

       

      ARTICLE
XI

       

      

       

      TERM
OF PLAN

       

      The Plan
shall become effective on the first December 1 following its adoption by the
Board and the Employer, subject to approval by the stockholders in accordance
with U.S. Treasury Regulation Section 1.423-2(c) within twelve months after its
adoption by the Board (the “Effective
Date”).  No right may be granted under the Plan prior to such
stockholder approval.  The Plan shall be in effect until November 30,
2018, unless sooner terminated under Article X.  No rights may be
granted under the Plan during any period of suspension of the Plan or after
termination of the Plan.

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      ARTICLE
XII

       

      

       

      MISCELLANEOUS

       

      12.1 Restriction upon
Assignment.  A right granted under the Plan shall not be
transferable other than by will or the laws of descent and distribution, and is
exercisable during the Participant’s lifetime only by the
Participant.  Except as provided in Section 12.4 hereof, a right under
the Plan may not be exercised to any extent except by the
Participant.  The Company or the Employer shall not recognize and
shall be under no duty to recognize any assignment or alienation of the
Participant’s interest in the Plan, the Participant’s rights under the Plan or
any rights thereunder.

       

      12.2 Rights as a
Stockholder.  With respect to shares of Stock subject to a
right granted under the Plan, a Participant shall not be deemed to be a
stockholder of the Company, and the Participant shall not have any of the rights
or privileges of a stockholder, until such shares have been issued to the
Participant or his or her nominee following exercise of the Participant’s rights
under the Plan.  No adjustments shall be made for dividends (ordinary
or extraordinary, whether in cash securities, or other property) or distribution
or other rights for which the record date occurs prior to the date of such
issuance, except as otherwise expressly provided herein.

       

      12.3 Interest.  No
interest shall accrue on the payroll deductions or lump sum contributions of a
Participant under the Plan.

       

      12.4 Designation of
Beneficiary.

       

      (a) A
Participant may, in the manner determined by the Administrator, file a written
designation of a beneficiary who is to receive any shares and cash, if any, from
the Participant’s account under the Plan in the event of such Participant’s
death subsequent to a Purchase Date on which the Participant’s rights are
exercised but prior to delivery to such Participant of such shares and
cash.  In addition, a Participant may file a written designation of a
beneficiary who is to receive any cash from the Participant’s account under the
Plan in the event of such Participant’s death prior to exercise of the
Participant’s rights under the Plan.  If the Participant is married
and resides in a community property state, a designation of a person other than
the Participant’s spouse as his or her beneficiary shall not be effective
without the prior written consent of the Participant’s spouse.

       

      (b) Such
designation of beneficiary may be changed by the Participant at any time by
written notice to the Company or the Employer.  In the event of the
death of a Participant and in the absence of a beneficiary validly designated
under the Plan who is living at the time of such Participant’s death, the
Company shall deliver such shares and/or cash to the executor or administrator
of the estate of the Participant, or if no such executor or administrator has
been appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such shares and/or cash to the spouse or to any one or
more dependents or relatives of the Participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the Company may
designate.

       

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      12.5 Notices.  All
notices or other communications by a Participant to the Company or the Employer
under or in connection with the Plan shall be deemed to have been duly given
when received in the form specified by the Company or the Employer at the
location, or by the person, designated by the Company or the Employer for the
receipt thereof.

       

      12.6 Equal Rights and
Privileges.  All Eligible Employees of the Company, the
Employer or any Designated Subsidiary will have equal rights and privileges
under this Plan so that this Plan qualifies as an “employee stock purchase plan”
within the meaning of Section 423 of the Code.  Any provision of this
Plan that is inconsistent with Section 423 of the Code will, without further act
or amendment by the Company, the Board or the Administrator, be reformed to
comply with the equal rights and privileges requirement of Section 423 of the
Code.

       

      12.7 Use of
Funds.  All payroll deductions received or held by the Company
or the Employer under the Plan may be used by the Company or the Employer for
any corporate purpose, and the Company or the Employer shall not be obligated to
segregate such payroll deductions.

       

      12.8 Reports.  Statements
of account shall be given to participating Employees at least annually, which
statements shall set forth the amounts of payroll deductions, the Purchase
Price, the number of shares purchased and the remaining cash balance, if
any.

       

      12.9 No Employment
Rights.  Nothing in the Plan shall be construed to give any
person (including any Eligible Employee or Participant) the right to remain in
the employ of the  Employer or any Parent or Subsidiary or to affect
the right of the Employer or any Parent or Subsidiary to terminate the
employment of any person (including any Eligible Employee or Participant) at any
time, with or without cause.

       

      12.10 Notice of Disposition of
Shares.  Each Participant shall give prompt notice to the
Company or the Employer of any disposition or other transfer of any shares of
Stock purchased upon exercise of a right under the Plan if such disposition or
transfer is made: (a) within two years from the Enrollment Date of the
Offering Period in which the shares were purchased or (b) within one year
after the Purchase Date on which such shares were purchased.  Such
notice shall specify the date of such disposition or other transfer and the
amount realized, in cash, other property, assumption of indebtedness or other
consideration, by the Participant in such disposition or other
transfer.

       

      12.11 Severability.  If
any provision of the Plan shall be held illegal or invalid for any reason, said
illegality or invalidity shall not affect the remaining provisions hereof;
instead, the provisions shall be fully severable and the Plan shall be construed
and enforced as if said illegal or invalid provision had never been included
herein.

       

      12.12 Governing
Law.  The validity and enforceability of this Plan shall be
governed by and construed in accordance with the laws of the State of Texas
without regard to otherwise governing principles of conflicts of
law.

       

      

      
        
          
            HOU:2834367.4

            

          

           

        

        
          14ex10_1.htm

     

     

    
      

      

    

     

    Exhibit 10.1

    
 

    
      INDEMNIFICATION
AND HOLD HARMLESS AGREEMENT

      

      THIS INDEMNIFICATION AND HOLD
HARMLESS AGREEMENT (this “Agreement”) is made as
of November ____, 2008, by and between Energy XXI (Bermuda) Limited, a company
formed under the laws of Bermuda (the “Company”), and ______________
(“Indemnitee”).

      

      WHEREAS, in order to incentivize
Indemnitee to serve, or to continue to serve, as a director and/or officer of
the Company (in any such case, the “Service”), the Company has agreed to
indemnify Indemnitee as set forth below; and

      

      WHEREAS, the Company recognizes that
the increasing difficulty in obtaining directors’ and officers’ liability
insurance, the increases in the cost of such insurance and the general
reductions in the coverage of such insurance have increased the difficulty of
attracting and retaining such persons; and

      

      WHEREAS, the Board of Directors of
the Company has determined that it is in the best interests of the Company and
its shareholders that the Company act to assure such persons that there will be
increased certainty of such protection in the future; and

      

      WHEREAS, it is reasonable, prudent
and necessary for the Company to contractually obligate itself to indemnify such
persons to the fullest extent permitted by applicable law so that they will
continue to serve the Company free from undue concern that they will not be so
indemnified;

      

      NOW, THEREFORE, in consideration of
the foregoing and certain other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties, intending to be legally bound, hereby
agree as follows:

      

      1. Indemnification.
Effective as of the original date of Indemnitee’s beginning Service, the Company
shall indemnify Indemnitee and hold Indemnitee harmless if the Indemnitee is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative, and in any appeal in such action, suit or
proceeding, and in any inquiry or investigation that could lead to such an
action, suit or proceeding, against any and all liabilities, obligations
(whether known or unknown, or due or to become due or otherwise), judgments,
fines, fees, penalties, interest obligations, deficiencies, other actual losses
(for example, verifiable lost income related to time spent defending such claim
or action) and reasonable expenses (including, without limitation amounts paid
in settlement, interest, court costs, costs of investigators, reasonable fees
and expenses of attorneys, accountants, financial advisors and other experts)
incurred or suffered by Indemnitee or on Indemnitee’s behalf in connection with
such action, suit or proceeding arising out of or pertaining to any actual or
alleged action or omission which arises out of or relates to the fact that
Indemnitee is, was or has agreed to serving as a director or officer of the
Company or at the request of the Company as a director, officer, trustee,
employee, or agent of or in any other capacity for another corporation,
partnership, joint venture, trust or other enterprise, to the fullest extent
permitted by then applicable law, including the Companies Act 1981 of Bermuda
(“Companies Act”),  the Company’s Memorandum of Association
(“Memorandum”) and the Company’s Bye-laws, each as may be amended from time to
time (but in the case of any such amendment, only to the extent that such
amendment permits the Company to provide the same or broader indemnification
rights than permitted prior thereto) (each such liability, obligation, judgment,
fine, fee, penalty, interest obligation, deficiency, other actual losses, and
reasonable expenses being referred to herein as a “Loss,” and collectively, as
“Losses”).

      

      2. Payment.
Any Loss incurred by Indemnitee shall be paid in full by the Company on a
regular monthly basis. This indemnity applies even if the Indemnitee caused the
Loss through his or her negligence, strict liability or other fault; however, if
any Losses for which Indemnitee received payment from the Company

      under
this Agreement are determined by final judicial decision from which there is no
further right to appeal, to have been caused by Indemnitee under circumstances
with respect to which indemnification is not permitted by applicable law or this
Agreement (any such Loss, a “Non-Indemnification Loss”), Indemnitee shall repay
to the Company such Losses paid on behalf of Indemnitee hereunder.

      

      3. Term.
The indemnification rights provided hereby to Indemnitee shall continue even
though he or she may have ceased to be a director, officer, trustee, employee,
or agent of or in any other capacity for the applicable entity.

      

      4. Notice
and Coverage Prior to Notice. Indemnitee shall give notice (the “Notice”)
to the Company within five days after actual receipt of service or summons
related to any action begun in respect of which indemnity may be sought
hereunder or actual notice of assertion of a claim with respect to which
he

      seeks
indemnification; provided, however, that the Indemnitee’s failure to give such
notice to the Company within such time shall not relieve the Company from any of
its obligations under Section 1 of this Agreement except to the extent the
Company has been materially prejudiced by Indemnitee’s failure to give such
notice within such time period. Upon receipt of the Notice, the Company shall
assume the defense of such action, whereupon the Indemnitee shall not be liable
for any reasonable fees or expenses of counsel for Indemnitee or any other
Losses incurred thereafter with respect to the matters set forth in the Notice
and the Company shall reimburse the Indemnitee for all reasonable expenses
related to the action or claim incurred by the Indemnitee prior to the
Indemnitee’s giving of the Notice.

      

      5. Non-Exclusivity.
The rights of Indemnitee hereunder shall be in addition to any rights that
Indemnitee may have under the Company’s governance documents (e.g. Memorandum,
Bye-laws, etc.) (the “Governance Documents”), applicable law or otherwise and
shall survive any termination, resignation, death or other dismissal of
Indemnitee. No amendment or alteration of the Company’s Governance Documents
shall adversely affect Indemnitee’s rights under the Governance Documents or
this Agreement.

      

      6. Insurance.
To the extent the Company maintains, at its expense, an insurance policy or
policies providing liability insurance with respect to the acts or omissions
covered by this Agreement, Indemnitee shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum extent of the
coverage available there under.

      

      7. Payment.
The Company shall not be liable to Indemnitee under this Agreement to make any
payment in connection with any claim against Indemnitee to the extent the
Indemnitee has otherwise actually received, and is entitled to retain, payment
(under any insurance policy or otherwise) of the amounts

      otherwise
indemnifiable hereunder.

      

      8. Enforceability.
The indemnification contained in this Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their respective
successors, assigns (including any direct or indirect successor by purchase,
merger, consolidation, liquidation or otherwise to all or substantially all of
the business and/or assets of the Company), spouses, heirs and personal and
legal representatives.

      

      9. Binding
Obligation. If this Agreement or any portion hereof shall be found to be
invalid on any ground by any court of competent jurisdiction, then the Company
shall nevertheless indemnify and hold harmless Indemnitee, as to costs, charges
and expenses (including court costs and attorneys’ fees), judgments, fines,
penalties and amounts paid in settlement with respect to any action, suit or
proceeding, whether civil, criminal, administrative, arbitrative or
investigative, and in any appeal in such action, suit or proceeding, and in any
inquiry or investigation that could lead to such an action, suit or
proceeding,

      to the
full extent permitted by any applicable portion of this Agreement that shall not
have been invalidated and to the fullest extent permitted by applicable
law.

      

      10. Governing
Law; Venue; Interpretation. This Agreement shall be construed in
accordance with and governed by the laws of Bermuda, without regard to the
principles of conflicts of laws. The parties agree that any litigation directly
or indirectly relating to this Agreement must be brought before and determined
by a court of competent jurisdiction within Harris County, Texas, and the
parties hereby agree to waive any rights to object to, and hereby agree to
submit to, the jurisdiction of such courts.  It is understood that the
parties hereto intend this Agreement to be interpreted and enforced so as to
provide indemnification to Indemnitee to the fullest extent now or hereafter
permitted by law.

      

      11. Right to
Sue; Attorneys’ Fees and Costs. If a claim by Indemnitee for payment of
Losses hereunder is not paid in full by the Company within forty-five (45) days
after a written claim has been delivered to the Company, Indemnitee may at any
time thereafter bring suit against the Company to recover the unpaid amount of
the claim. If successful in whole or in part in any such suit, Indemnitee shall
be entitled to be paid also the reasonable costs and expenses of prosecuting
such suit. In any suit brought by Indemnitee to enforce any right hereunder
(including, without limitation, the right to indemnification), the

      burden of
proving that Indemnitee is not entitled to such right shall be borne by the
Company. If a claim by the Company for repayment of any Non-Indemnification
Losses previously paid on behalf of Indemnitee hereunder is not repaid in full
to the Company within forty-five (45) days after such ruling has been delivered
to Indemnitee, the Company may at any time thereafter bring suit against the
Indemnitee to recover the unpaid amount.

      

      12. Successors
and Assigns. This Agreement shall be binding upon and shall inure to the
benefit of the heirs, successors and assigns of each party to this
Agreement.

      

      13. Amendment.
This Agreement may be amended, modified or supplemented only by a written
instrument executed by each of the parties hereto.

      

      14. Facsimile
and Counterpart Signature. This Agreement may be executed by facsimile
signature and in one or more counterparts, each of which shall for all purposes
be deemed an original and all of which shall constitute the same instrument, but
only one of which need be produced.

      

      

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

      

      ENERGY XXI (BERMUDA)
LIMITED

      

      By:                                         

      Name:                                         

      Title:                                         

      

      

      INDEMNITEE

      

      

      By:                                         

                      
Name

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