EMPLOYMENT AGREEMENT
Exhibit
10.3
THIS
EMPLOYMENT AGREEMENT
(“Agreement”) is made by and between Energy XXI (Bermuda) Limited, a
Bermuda corporation (“Company”), and Xxxxx Xxxxx (“Executive”).
WITNESSETH:
WHEREAS,
Company
is
desirous of employing Executive in an executive capacity on the terms and
conditions, and for the consideration, hereinafter set forth and Executive
is
desirous being employed by Company on such terms and conditions and for such
consideration;
NOW,
THEREFORE, for
and in consideration of the mutual promises, covenants and obligations contained
herein, Company and Executive agree as follows:
ARTICLE
1: DEFINITIONS
AND INTERPRETATIONS
1.1
Definitions.
(a)
“Annual
Base
Salary” shall mean, as of a specified date, Executive’s annual base
salary as of such date determined pursuant to Section 4.1.
(b)
“Annual
Bonus”
shall mean the annual bonus paid by Company to Executive pursuant
to
Company’s annual incentive plan, as provided in Section 4.2(a); provided,
however, that if Executive was employed by Company for only a portion of the
year with respect to which any such annual bonus was paid, then the “Annual
Bonus” for such year shall equal an amount determined by annualizing the bonus
received by Executive based on the ratio of the number of days Executive was
employed by Company during such year to 365 days. In the event that any Annual
Bonus included in the computation of Executive’s Severance Amount was paid to
Executive in a form other than cash, the amount of Executive’s Annual Bonus for
purposes of determining his Severance Amount shall be determined in the
discretion of the Board; provided, however, that if such Annual Bonus was paid
to Executive in shares of Company’s common stock, then the value of such Annual
Bonus used to calculate Executive’s Severance Amount shall be the fair market
value of such Annual Bonus on the date of payment, determined in accordance
with
the terms of the Company’s stock incentive plan approved by the Board.
(c)
“Board”
shall
mean the Board of Directors of Company.
(d)
“Cause”
shall
mean Executive (i) has engaged in gross negligence, gross incompetence or
willful misconduct in the performance of his duties, (ii) has refused,
without proper reason, to perform his duties, (iii) has willfully engaged
in conduct which is materially injurious to Company or its subsidiaries
(monetarily or otherwise), (iv) has committed an act of fraud, embezzlement
or willful breach of a fiduciary duty to Company or an affiliate of the Company
(including the unauthorized disclosure of confidential or proprietary material
information of Company or an affiliate), or (v) has been convicted
of (or pleaded no
contest to) a crime involving fraud, dishonesty or moral turpitude or any
felony.
(e)
“Change
in Duties”
shall mean:
(i)
The occurrence, prior to the
date that a Change of Control Period begins or after the expiration of a Change
of Control Period, of any one or more of the following without the consent
of
Executive:
(1)
a material reduction in the
nature or scope of Executive’s authorities or duties from those previously
applicable to him;
(2)
a reduction in Executive’s
Annual Base Salary not in accordance with Section 4.1; or
(3)
a material diminution in
employee benefits (including but not limited to medical, dental, life insurance
and long-term disability plans) and perquisites applicable to Executive from
those substantially similar to the employee benefits and perquisites provided
by
Company (including its subsidiaries) to executives with comparable duties;
or
(ii)
The occurrence, within a Change
of Control Period, of any one or more of the following without the consent
of
Executive:
(1)
a material reduction in the
nature or scope of Executive’s authorities or duties from those applicable to
him immediately prior to the date on which a Change of Control Period begins;
(2)
a reduction in Executive’s
Annual Base Salary, not in accordance with Section 4.1, from that provided
to him immediately prior to the date on which a Change of Control Period begins;
(3)
a diminution in Executive’s
eligibility to participate in bonus, stock option, incentive award and other
compensation plans which provide opportunities to receive compensation which
are
the greater of (A) the opportunities provided by Company (including its
subsidiaries) for executives with comparable duties or (B) the
opportunities under any such plans under which he was participating immediately
prior to the date on which a Change of Control Period begins; or
(4)
a material diminution in
employee benefits (including but not limited to medical, dental, life insurance
and long-term disability plans) and perquisites applicable to Executive from
the
greater of (A) the employee benefits and perquisites provided by Company
(including its subsidiaries) to executives with comparable duties or
(B) the employee benefits and perquisites to which he was entitled
immediately prior to the date on which a Change of Control Period begins.
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(f)“Change
of Control”
shall mean:
(i)
a merger of Company with another
entity, a consolidation involving Company, or the sale of all or substantially
all of the assets of Company to another entity if, in any such case,
(1) the holders of equity securities of Company immediately prior to such
transaction or event do not beneficially own immediately after such transaction
or event equity securities of the resulting entity entitled to 50% or more
of
the votes then eligible to be cast in the election of directors generally (or
comparable governing body) of the resulting entity in substantially the same
proportions that they owned the equity securities of Company immediately prior
to such transaction or event or (2) the persons who were members of the
Board immediately prior to such transaction or event shall not constitute at
least a majority of the board of directors of the resulting entity immediately
after such transaction or event;
(ii)
the dissolution or liquidation
of Company;
(iii)
when any person or entity,
including a “group” as contemplated by Section 13(d)(3) of the Securities
Exchange Act of 1934, acquires or gains ownership or control (including, without
limitation, power to vote) of more than 50% of the combined voting power of
the
outstanding securities of Company; or
(iv)
as a result of or in connection
with a contested election of directors, the persons who were members of the
Board immediately before such election shall cease to constitute a majority
of
the Board.
For
purposes of the preceding
sentence, (1) “resulting entity” in the context of a transaction or event
that is a merger, consolidation or sale of all or substantially all assets
shall
mean the surviving entity (or acquiring entity in the case of an asset sale)
unless the surviving entity (or acquiring entity in the case of an asset sale)
is a subsidiary of another entity and the holders of common stock of Company
receive capital stock of such other entity in such transaction or event, in
which event the resulting entity shall be such other entity, and
(2) subsequent to the consummation of a merger or consolidation that does
not constitute a Change of Control, the term “Company” shall refer to the
resulting entity and the term “Board” shall refer to the board of directors (or
comparable governing body) of the resulting entity.
(g)
“Change
of Control
Period” shall mean, with respect to a Change of Control, the period
beginning 90 days prior to the date that a definitive agreement concerning
such
Change of Control is executed and ending on the date that is one year following
the date upon which such Change of Control occurs.
(h)
“Code”
shall
mean the Internal Revenue Code of 1986, as amended.
(i)
“Disability”
shall mean that, as a result of Executive’s incapacity due to physical
or mental illness, he shall have been absent from the full-time performance
of
his duties for
six
consecutive months and he shall not have returned to full-time performance
of
his duties within 30 days after written notice of termination is given to
Executive by Company (provided, however, that such notice may not be given
prior
to 30 days before the expiration of such six-month period).
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(j)
“Effective
Date”
shall mean the date of the closing of the transactions contemplated
in
that certain Purchase and Sale Agreement dated February 21, 2006, by and
between Energy XXI Gulf Coast, Inc. and Xxxxxx Energy, L.L.C., as amended.
(k)
“Involuntary
Termination” shall mean any termination of Executive’s employment with
Company which:
(i)
does not result from a
resignation by Executive (other than a resignation pursuant to clause
(ii) of this Section 1.1(k)); or
(ii)
results from a resignation by
Executive on or before the date which is 60 days after the date upon which
Executive receives notice of a Change in Duties;
provided,
however, the term
“Involuntary Termination” shall not include a termination for Cause or any
termination as a result of death or Disability.
(l)
“Remuneration
Committee”
shall mean the Remuneration Committee of the Board.
(m)
“Severance
Amount”
shall mean A multiplied by B,
where:
| A | equals the sum of (i) Executive’s Annual Base Salary at the annual rate in effect at the date of Executive’s Involuntary Termination and (ii) the average of the Annual Bonuses, if any, earned by Executive with respect to the two most recent fiscal years ending on or before the date of such Involuntary Termination; provided, however, that for purposes of determining the amount described in clause (ii) of this sentence, (x) if Executive was not employed by Company at any time during the earlier of such two fiscal years, then the amount described in such clause shall be equal to the Annual Bonus, if any, earned by Executive with respect to the most recent fiscal year ending on or before the date of such Involuntary Termination, and (y) if Executive was not employed by Company at any time during either of such two fiscal years, then the amount described in such clause shall be equal to Executive’s target annual bonus under Section 4.2(a) for the fiscal year in which such Involuntary Termination occurs; and |
| B |
equals
a
fraction, the numerator of which is the number of full and partial
months
in the period beginning on the date of Executive’s Involuntary Termination
and ending on the last day of the remaining term of Executive’s employment
under this Agreement under Section 3.1 as of the date of such
termination (but in no event shall the numerator be less than 12),
and the
denominator of which is 12.
|
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1.2
Interpretations.
In this Agreement, unless a clear contrary intention appears,
(a) the words “herein,” “hereof” and “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision, (b) reference to any Article or Section,
means such Article or Section hereof, (c) the words “including” (and with
correlative meaning “include”) means including, without limiting the generality
of any description preceding such term, and (d) where any provision of this
Agreement refers to action to be taken by either party, or which such party
is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such party.
ARTICLE
2: EMPLOYMENT AND
DUTIES
2.1
Employment.
Effective as of the Effective Date and continuing for the period of
time set forth in Section 3.1 of this Agreement, Executive’s employment by
Company shall be subject to the terms and conditions of this
Agreement.
2.2
Positions. From
and after the Effective Date, Company shall employ Executive in the positions
of
President and Chief Operating Officer of Company, or in such other positions
as
the parties mutually may agree.
2.3
Duties and Services.
Executive agrees to serve in the positions referred to in
Section 2.2 and to perform diligently and to the best of his abilities the
duties and services appertaining to such offices, as well as such additional
duties and services appropriate to such offices which the parties mutually
may
agree upon from time to time. Executive’s employment shall also be subject to
the policies maintained and established by Company that are of general
applicability to Company’s executive employees, as such policies may be amended
from time to time.
2.4
Other Interests.
Executive agrees, during the period of his employment by Company,
to
devote substantially all of his business time, energy and best efforts to the
business and affairs of Company and its affiliates and not to engage, directly
or indirectly, in any other business or businesses, whether or not similar
to
that of Company, except with the consent of the Board. The foregoing
notwithstanding, the parties recognize and agree that Executive may engage
in
passive personal investment and charitable activities that do not conflict
with
the business and affairs of Company or interfere with Executive’s performance of
his duties hereunder, which shall be at the sole determination of the
Board.
2.5
Duty of Loyalty.
Executive acknowledges and agrees that Executive owes a fiduciary
duty
of loyalty to act at all times in the best interests of Company. In keeping
with
such duty, Executive shall make full disclosure to Company of all business
opportunities pertaining to Company’s business and shall not appropriate for
Executive’s own benefit business opportunities concerning Company’s
business.
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ARTICLE
3: TERM AND
TERMINATION OF EMPLOYMENT
3.1
Term. Unless
sooner terminated pursuant to other provisions hereof, Company agrees to employ
Executive for the period beginning on the Effective Date and ending on
October 20, 2008 (the “Initial Expiration Date”);
provided, however, that beginning on the Initial Expiration Date, and on each
anniversary of the Initial Expiration Date thereafter, if Executive’s employment
under this Agreement has not been terminated pursuant to Section 3.2 or
3.3, then said term of employment shall automatically be extended for an
additional one-year period unless on or before the date that is 90 days prior
to
the first day of any such extension period either party shall give written
notice to the other that no such automatic extension shall occur.
3.2
Company’s Right to
Terminate. Notwithstanding the provisions of Section 3.1, Company
shall have the right to terminate Executive’s employment under this Agreement at
any time for any of the following reasons:
(a)
upon Executive’s death;
(b)
upon Executive’s Disability;
(c)
for Cause; or
(d)
at any time, for any other
reason whatsoever, in the sole discretion of the Board; provided, however,
that
Company may not terminate Executive’s employment pursuant to this
Section 3.2(d) prior to the date that is four months after the Effective
Date.
3.3
Executive’s Right to
Terminate. Notwithstanding the provisions of Section 3.1 Executive
shall have the right to terminate his employment under this Agreement for any
of
the following reasons:
(a)
as a result of a Change in
Duties; provided, however, that prior to Executive’s termination as a result of
a Change of Duties, Executive must give written notice to Company of the
specific occurrence that resulted in the Change in Duties and such occurrence
must remain uncorrected for 10 days following delivery of such written notice;
or
(b)
at any time for any other reason
whatsoever, in the sole discretion of Executive.
3.4
Notice of Termination.
If Company desires to terminate Executive’s employment hereunder at any
time prior to expiration of the term of employment as provided in
Section 3.1, it shall do so by giving written notice to Executive that it
has elected to terminate Executive’s employment hereunder and stating the
effective date and reason for such termination, provided that no such action
shall alter or amend any other provisions hereof or rights arising hereunder.
If
Executive desires to terminate his employment hereunder at any time prior to
expiration of the term of employment as provided in Section 3.1, he shall
do so by giving a 30-day written notice to Company that he has elected to
terminate his employment hereunder and stating the
effective date and
reason for such termination, provided that no such action shall alter or amend
any other provisions hereof or rights arising hereunder.
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3.5
Deemed Resignations.
Any termination of Executive’s employment shall constitute an automatic
resignation of Executive as an officer of Company and each affiliate of Company,
and an automatic resignation of Executive from the Board (if applicable) and
from the board of directors or similar governing body of any affiliate of
Company and from the board of directors or similar governing body of any
corporation, limited liability company or other entity in which Company or
any
affiliate holds an equity interest and with respect to which board or similar
governing body Executive serves as Company’s or such affiliate’s designee or
other representative.
ARTICLE
4: COMPENSATION
AND BENEFITS
4.1
Base Salary.
During the period of this Agreement, Executive shall receive a minimum
Annual Base Salary of $395,000.00. Executive’s Annual Base Salary shall be
reviewed by the Remuneration Committee on an annual basis, and, in the sole
discretion of the Remuneration Committee, such Annual Base Salary may be
increased, but not decreased (except with the prior written consent of
Executive), effective as of any date determined by the Remuneration Committee.
Executive’s Annual Base Salary shall be paid in equal installments in accordance
with Company’s standard policy regarding payment of compensation to executives
but no less frequently than monthly.
4.2
Bonuses and Long-Term
Incentive.
(a)
Annual
Bonus–
Executive shall have the opportunity to receive an annual target incentive
bonus, based upon criteria established by the Board or the Remuneration
Committee, of 75 percent of Executive’s annual base salary, pursuant to the
terms of an incentive compensation plan approved by the Board or the
Remuneration Committee and implemented by Company, or such other amount as
the
parties mutually may agree upon from time to time.
(b)
Long-Term
Incentive Plan
– Subject to the sole discretion of the Board or the Remuneration
Committee, Executive shall be eligible for participation in any long-term
incentive arrangement of Company as may from time to time be made available
to
other executive officers (and such other executives as may be selected for
participation by the Board or Remuneration Committee) of Company.
4.3
Other Perquisites.
During his employment hereunder, Executive shall be afforded the
following benefits as incidences of his employment:
(a)
Business
and
Entertainment Expenses - Subject to Company’s standard policies and
procedures with respect to expense reimbursement as applied to its executive
employees generally, Company shall reimburse Executive for, or pay on behalf
of
Executive, reasonable and appropriate expenses incurred by Executive for
business related purposes, including dues and fees to industry and professional
organizations and costs of entertainment and business development.
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(b)
Club
Memberships
– Company shall obtain memberships providing Executive access to a
country club and a health club, each as approved by the Remuneration Committee
or the Board, and Company shall pay the initiation fees and monthly dues
associated with such memberships. Executive’s membership in such country club
and health club shall cease upon Executive’s termination of employment
hereunder, and, to the extent applicable, such membership shall be transferred
to Company (or its designee) upon such termination.
(c)
Automobile
–
Company shall provide Executive with an automobile (or an automobile allowance)
that is determined by the Remuneration Committee or the Board to be appropriate
for the needs and requirements of Executive’s employment, and Company shall
reimburse Executive for, or pay on behalf of Executive, reasonable and
appropriate expenses incurred by Executive for maintaining and operating such
automobile. Such automobile shall be available to Executive and his spouse
for
personal use.
(d)
Vacation–
During his employment hereunder, Executive shall be entitled to six weeks of
paid vacation each calendar year (or a pro rata portion of such six-week
vacation period for any partial year) and to all holidays provided to executives
of Company generally.
(e)
Life
Insurance–
During Executive’s employment hereunder, Company shall maintain one or more
policies of life insurance on the life of Executive providing an aggregate
death
benefit in an amount not less than $2 million (the “Minimum Death Benefit”).
Executive shall have the right to designate the beneficiary or beneficiaries
of
the death benefit payable pursuant to such policy or policies up to an aggregate
death benefit in an amount equal to the Minimum Death Benefit. The provisions
of
this Section 4.3(e) can be satisfied in whole or in part by any group life
insurance policy provided by Company in accordance with Section 4.3(f)
hereof. Executive shall (i) furnish any and all information reasonably
requested by Company or the insurer to facilitate the issuance of the life
insurance policy or policies described in this Section 4.3(e) or any
adjustment to any such policy, and (ii) take such physical examinations as
Company or the insurer deems necessary. If Executive refuses to cooperate or
makes any material misstatement of information or nondisclosure of medical
history, then Company shall have no further obligation to provide the benefit
described in this Section 4.3(e).
(f)
Other
Company
Benefits– Executive and, to the extent applicable, Executive’s spouse,
dependents and beneficiaries, shall be allowed to participate in all benefits,
plans and programs, including improvements or modifications of the same, which
are now, or may hereafter be, available to other executive employees of Company.
Such benefits, plans and programs shall include, without limitation, any profit
sharing plan, thrift plan, health insurance or health care plan, life insurance,
disability insurance, pension plan, supplemental retirement plan, vacation
and
sick leave plan, and the like which may be maintained by Company. Company shall
not, however, by reason of this paragraph be obligated to institute, maintain,
or refrain from changing, amending, or discontinuing, any such benefit plan
or
program, so long as such changes are similarly applicable to executive employees
generally.
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ARTICLE
5: EFFECT OF
TERMINATION ON COMPENSATION; ADDITIONAL PAYMENTS
5.1
Termination Other Than
an Involuntary Termination. If Executive’s employment hereunder shall
terminate upon expiration of the term provided in Section 3.1 hereof
because either party has provided the notice contemplated in such paragraph,
or
if Executive’s employment hereunder shall terminate for any other reason except
those described in Section 5.2, then all compensation and all benefits to
Executive hereunder shall continue to be provided until the date of such
termination of employment, and such compensation and benefits shall terminate
contemporaneously with such termination of employment.
5.2
Involuntary Termination.
Subject to the provisions of Sections 5.5 and 5.6 hereof, if
Executive’s employment by Company or any subsidiary thereof or successor thereto
shall be subject to an Involuntary Termination, then Company shall, as
additional compensation for services rendered to Company (including its
subsidiaries), pay to Executive the following amounts and take the following
actions after the last day of Executive’s employment with Company:
(a)
Pay Executive a lump sum cash
payment in an amount equal to the Severance Amount on or before the 30th day
after the last day of Executive’s employment with Company.
(b)
Cause Executive and those of
Executive’s dependents (including Executive’s spouse) who were covered under
Company’s medical, dental and life insurance benefit plans on the day prior to
Executive’s Involuntary Termination to continue to be covered under such plans
(or to receive equivalent benefits, including the life insurance benefits
described in Section 4.3(e)) throughout the three-year period beginning on
the date of such Involuntary Termination at no greater cost to Executive than
that applicable to Executive immediately prior to such Involuntary Termination;
provided, however, that (i) such coverage shall terminate if and to the
extent Executive becomes eligible to receive medical, dental and/or life
insurance coverage from a subsequent employer (and any such eligibility shall
be
promptly reported to Company by Executive), and (ii) such coverage to
Executive (or the receipt of equivalent benefits) shall be provided under one
or
more insurance policies so that reimbursement or payment of benefits to
Executive thereunder shall not result in taxable income to Executive (or, if
any
such reimbursement or payment of benefits is taxable (including subject to
any
additional tax under Section 409A of the Code), then Company shall pay to
Executive an amount as shall be required to hold Executive harmless from any
additional tax liability resulting from the failure by Company to so provide
insurance policies so that reimbursement or payment of benefits to Executive
thereunder shall not result in taxable income to Executive).
(c)
If Executive’s employment with
Company is subject to an Involuntary Termination during a Change of Control
Period or to a termination due to Executive’s death or Disability, cause any and
all outstanding options to purchase common stock of Company held by Executive
to
become immediately exercisable in full, cause any and all restricted shares
of
the Company’s common stock held by Executive to become immediately nonforfeitable,
and
cause Executive’s accrued benefits under any and all nonqualified deferred
compensation plans sponsored by Company to become immediately nonforfeitable.
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5.3
Interest on Late
Payments. If any payment provided for in Section 5.2 hereof is not
made when due (applying the deferred payment date provided for in
Section 5.6 as the due date, if applicable), then Company shall pay to
Executive interest on the amount payable from the date that such payment should
have been made under such Section until such payment is made, which interest
shall be calculated at the prime or base rate of interest announced by JPMorgan
Chase Bank (or any successor thereto) at its principal office in New York,
and
shall change when and as any such change in such prime or base rate shall be
announced by such bank.
5.4
Parachute Payments.
Notwithstanding anything to the contrary in this Agreement, in the
event that any payment or distribution by Company to or for the benefit of
Executive, whether paid or payable or distributed or distributable pursuant
to
the terms of this Agreement or otherwise (a “Payment”), would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties
with respect to such excise tax (such excise tax, together with any such
interest or penalties, are hereinafter collectively referred to as the “Excise
Tax”), Company shall pay to Executive an additional payment (a “Gross-up
Payment”) in an amount such that after payment by Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax imposed on any Gross-up Payment, Executive retains
an
amount of the Gross-up Payment equal to the Excise Tax imposed upon the
Payments. Company and Executive shall make an initial determination as to
whether a Gross-up Payment is required and the amount of any such Gross-up
Payment. Executive shall notify Company in writing of any claim by the Internal
Revenue Service which, if successful, would require Company to make a Gross-up
Payment (or a Gross-up Payment in excess of that, if any, initially determined
by Company and Executive) within ten days of the receipt of such claim. Company
shall notify Executive in writing at least ten days prior to the due date of
any
response required with respect to such claim if it plans to contest the claim.
If Company decides to contest such claim, Executive shall cooperate fully with
Company in such action; provided, however, Company shall bear and pay directly
or indirectly all costs and expenses (including additional interest and
penalties) incurred in connection with such action and shall indemnify and
hold
Executive harmless, on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result
of
Company’s action. If, as a result of Company’s action with respect to a claim,
Executive receives a refund of any amount paid by Company with respect to such
claim, Executive shall promptly pay such refund to Company. If Company fails
to
timely notify Executive whether it will contest such claim or Company determines
not to contest such claim, then Company shall immediately pay to Executive
the
portion of such claim, if any, which it has not previously paid to
Executive.
5.5
Release and Full
Settlement. As a condition to the receipt of any severance compensation
and benefits under this Agreement, Executive must first execute a release and
agreement, in a form reasonably satisfactory to Company, which shall release
and
discharge Company and its affiliates, and their officers, directors, employees
and agents, from any and all claims or causes of action of any kind or
character, including all claims or causes of action arising out of Executive’s
employment with Company or its affiliates or the termination of such
employment. If
Executive is entitled to and receives the benefits provided hereunder,
performance of the obligations of Company hereunder will constitute full
settlement of all claims that Executive might otherwise assert against Company
on account of his termination of employment.
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5.6
Payments Subject to
Section 409A of the Code. Notwithstanding the foregoing provisions
of this Article 5, if the payment of any severance compensation or severance
benefits under this Agreement would be subject to additional taxes and interest
under Section 409A of the Code because the timing of such payment is not
delayed as provided in Section 409A(a)(2)(B) of the Code, then any such
payments that Executive would otherwise be entitled to during the first six
months following the date of Executive’s termination of employment shall be
accumulated and paid on the date that is six months after the date of
Executive’s termination of employment (or if such payment date does not fall on
a business day of the Company, the next following business day of the Company),
or such earlier date upon which such amount can be paid under Section 409A
of the Code without being subject to such additional taxes and
interest.
5.7
Liquidated Damages.
In light of the difficulties in estimating the damages for an early
termination of Executive’s employment under this Agreement, Company and
Executive hereby agree that the payments, if any, to be received by Executive
pursuant to this Article 5 shall be received by Executive as liquidated
damages.
5.8
Other Benefits.
This Agreement governs the rights and obligations of Executive and
Company with respect to Executive’s base salary and certain perquisites of
employment. Except as expressly provided herein, Executive’s rights and
obligations both during the term of his employment and thereafter with respect
to stock options, restricted stock, incentive and deferred compensation, life
insurance policies insuring the life of Executive, and other benefits under
the
plans and programs maintained by Company shall be governed by the separate
agreements, plans and other documents and instruments governing such
matters.
ARTICLE
6: PROTECTION OF
CONFIDENTIAL INFORMATION
6.1
Disclosure to and
Property of Company. All information, designs, ideas, concepts,
improvements, product developments, discoveries and inventions, whether
patentable or not, that are conceived, made, developed or acquired by Executive,
individually or in conjunction with others, during the period of Executive’s
employment by Company (whether during business hours or otherwise and whether
on
Company’s premises or otherwise) that relate to Company’s (or any of its
affiliates’) business, trade secrets, products or services (including, without
limitation, all such information relating to corporate opportunities, product
specification, compositions, manufacturing and distribution methods and
processes, research, financial and sales data, pricing terms, evaluations,
opinions, interpretations, acquisitions prospects, the identity of customers
or
their requirements, the identity of key contacts within the customer’s
organizations or within the organization of acquisition prospects, marketing
and
merchandising techniques, business plans, computer software or programs,
computer software and database technologies, prospective names and marks)
(collectively, “Confidential Information”) shall be disclosed to Company and are
and shall be the sole and exclusive property of Company (or its affiliates).
Moreover, all documents, videotapes, written presentations, brochures, drawings,
memoranda, notes, records, files, correspondence, manuals, models,
specifications, computer programs, E-mail,
voice mail, electronic databases, maps, drawings,
architectural renditions, models and all other writings or materials of any
type
embodying any of such information, ideas, concepts, improvements, discoveries,
inventions and other similar forms of expression (collectively, “Work Product”)
are and shall be the sole and exclusive property of Company (or its affiliates).
Upon Executive’s termination of employment with Company, for any reason,
Executive promptly shall deliver such Confidential Information and Work Product,
and all copies thereof, to Company.
11
6.2
Disclosure to Executive.
Company will disclose to Executive, or place Executive in a position
to
have access to or develop, Confidential Information and Work Product of Company
(or its affiliates); and/or will entrust Executive with business opportunities
of Company (or its affiliates); and/or will place Executive in a position to
develop business good will on behalf of Company (or its affiliates). Executive
agrees to preserve and protect the confidentiality of all Confidential
Information or Work Product of Company (or its affiliates).
6.3
No Unauthorized Use or
Disclosure. Executive agrees that he will not, at any time during or
after Executive’s employment by Company, make any unauthorized disclosure of,
and will prevent the removal from Company premises of, Confidential Information
or Work Product of Company (or its affiliates), or make any use thereof, except
in the carrying out of Executive’s responsibilities during the course of
Executive’s employment with Company. Executive shall use commercially reasonable
efforts to cause all persons or entities to whom any Confidential Information
shall be disclosed by him hereunder to observe the terms and conditions set
forth herein as though each such person or entity was bound hereby. Executive
shall have no obligation hereunder to keep confidential any Confidential
Information if and to the extent disclosure thereof is specifically required
by
law; provided, however, that in the event disclosure is required by applicable
law, Executive shall provide Company with prompt notice of such requirement
prior to making any such disclosure, so that Company may seek an appropriate
protective order. At the request of Company at any time, Executive agrees to
deliver to Company all Confidential Information that he may possess or control.
Executive agrees that all Confidential Information of Company (whether now
or
hereafter existing) conceived, discovered or made by him during the period
of
Executive’s employment by Company exclusively belongs to Company (and not to
Executive), and Executive will promptly disclose such Confidential Information
to Company and perform all actions reasonably requested by Company to establish
and confirm such exclusive ownership. Affiliates of Company shall be third
party
beneficiaries of Executive’s obligations under this Article 6. As a result of
Executive’s employment by Company, Executive may also from time to time have
access to, or knowledge of, Confidential Information or Work Product of third
parties, such as customers, suppliers, partners, joint venturers, and the like,
of Company and its affiliates. Executive also agrees to preserve and protect
the
confidentiality of such third party Confidential Information and Work Product
to
the same extent, and on the same basis, as Company’s Confidential Information
and Work Product.
6.4
Ownership by Company.
If, during Executive’s employment by Company, Executive creates any
work of authorship fixed in any tangible medium of expression that is the
subject matter of copyright (such as videotapes, written presentations, or
acquisitions, computer programs, E-mail, voice mail, electronic databases,
drawings, maps, architectural renditions, models, manuals, brochures, or the
like) relating to Company’s business, products, or services, whether such work
is created solely by Executive or jointly with others (whether during business
hours or otherwise
and
whether on Company’s premises or otherwise), including any Work Product, Company
shall be deemed the author of such work if the work is prepared by Executive
in
the scope of Executive’s employment; or, if the work is not prepared by
Executive within the scope of Executive’s employment but is specially ordered by
Company as a contribution to a collective work, as a part of a motion picture
or
other audiovisual work, as a translation, as a supplementary work, as a
compilation, or as an instructional text, then the work shall be considered
to
be work made for hire and Company shall be the author of the work. If such
work
is neither prepared by Executive within the scope of Executive’s employment nor
a work specially ordered that is deemed to be a work made for hire, then
Executive hereby agrees to assign, and by these presents does assign, to Company
all of Executive’s worldwide right, title, and interest in and to such work and
all rights of copyright therein.
12
6.5
Assistance by Executive.
During the period of Executive’s employment by Company and thereafter,
Executive shall assist Company and its nominee, at any time, in the protection
of Company’s (or its affiliates’) worldwide right, title and interest in and to
Work Product and the execution of all formal assignment documents requested
by
Company or its nominee and the execution of all lawful oaths and applications
for patents and registration of copyright in the United States and foreign
countries.
6.6
Remedies.
Executive acknowledges that money damages would not be sufficient
remedy for any breach of this Article 6 by Executive, and Company or its
affiliates shall be entitled to enforce the provisions of this Article 6 by
terminating payments then owing to Executive under this Agreement or otherwise
and to specific performance and injunctive relief as remedies for such breach
or
any threatened breach. Such remedies shall not be deemed the exclusive remedies
for a breach of this Article 6 but shall be in addition to all remedies
available at law or in equity, including the recovery of damages from Executive
and his agents.
ARTICLE
7:
NON-DISPARAGEMENT
7.1
Non-Disparagement.
During Executive’s employment with Company and following any
termination of employment with Company, Executive agrees not to disparage,
either orally or in writing, Company, any of its business, products, services
or
practices, or any of their directors, officers, agents, representatives,
stockholders, employees or affiliates.
ARTICLE
8:
MISCELLANEOUS
8.1
Indemnification.
Company agrees that, in the event Executive’s employment by Company or
any subsidiary thereof or successor thereto shall be subject to an Involuntary
Termination, Company shall continue to indemnify Executive following such
Involuntary Termination to the fullest extent permitted by applicable law
consistent with the Articles of Incorporation and By-Laws of Company in effect
as of the date of the Involuntary Termination with respect to Executive’s sole,
joint or concurrent negligence and any acts of or omissions he may have
committed during the period during which he was an officer, director and/or
employee of (a) Company, (b) any subsidiary thereof for which he
served as an officer, director or employee at the request of Company, or
(c) any successor thereto.
13
8.2
Payment Obligations
Absolute. Except as specifically provided in Section 6.6,
Company’s obligation to pay (or cause one of its subsidiaries to pay) Executive
the amounts and to make the arrangements provided herein shall be absolute
and
unconditional and shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
Company (including its subsidiaries) may have against him or anyone else. All
amounts payable by Company (including its subsidiaries hereunder) shall be
paid
without notice or demand. Executive shall not be obligated to seek other
employment in mitigation of the amounts payable or arrangements made under
any
provision of this Agreement, and, except as provided in Section 5.2(b)
hereof, the obtaining of any such other employment shall in no event effect
any
reduction of Company’s obligations to make (or cause to be made) the payments
and arrangements required to be made under this Agreement.
8.3
Notices. For
purposes of this Agreement, notices and all other communications provided for
herein shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by United States registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
| If to Company to: |
Energy
XXI (Bermuda)
Limited
Canon’s
Court
00
Xxxxxxxx
Xxxxxx
Xxxxxxxx
HMEX
Bermuda
Attention:
Chairman of the
Board of Directors
|
|
| with a copy to: | ||
|
Energy
XXI (Bermuda)
Limited
c/o
Energy XXI U.S.A.,
Inc.
0000
Xxxx Xxxxxx, Xxxxx
0000
Xxxxxxx,
Xxxxx
00000
Xxxxxx
Xxxxxx of
America
Attention:
Chairman of the
Board of Directors
|
||
| If to Executive to: |
Xxxxx
Xxxxx
0000
Xxxxxxxxx
Xxxxxxx,
Xxxxx
00000
|
|
or
to such other address as either
party may furnish to the other in writing in accordance herewith, except that
notices or changes of address shall be effective only upon receipt.
8.4
Applicable Law.
This Agreement is entered into under, and shall be governed for all purposes
by,
the laws of the State of Texas.
8.5
No Waiver. No
failure by either party hereto at any time to give notice of any breach by
the
other party of, or to require compliance with, any condition or provision of
this Agreement shall be deemed a waiver of similar or dissimilar provisions
or
conditions at the same or at any prior or subsequent time.
14
8.6
Severability.
Any provision in this Agreement which is prohibited or unenforceable
in
any jurisdiction by reason of applicable law shall, as to such jurisdiction,
be
ineffective only to the extent of such prohibition or unenforceability without
invalidating or affecting the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
8.7
Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.
8.8
Withholding of Taxes and
Other Employee Deductions. Company may withhold from any benefits and
payments made pursuant to this Agreement all federal, state, city and other
taxes as may be required pursuant to any law or governmental regulation or
ruling and all other normal employee deductions made with respect to Company’s
employees generally.
8.9
Headings. The
paragraph headings have been inserted for purposes of convenience and shall
not
be used for interpretive purposes.
8.10
Gender and Plurals.
Wherever the context so requires, the masculine gender includes the
feminine or neuter, and the singular number includes the plural and
conversely.
8.11
Assignment.
This Agreement shall be binding upon and inure to the benefit of
Company and any successor of Company, by merger or otherwise. This Agreement
shall also be binding upon and inure to the benefit of Executive and his estate.
If Executive shall die prior to full payment of amounts due pursuant to this
Agreement, such amounts shall be payable pursuant to the terms of this Agreement
to his estate (other than amounts payable pursuant to Section 4.3(e), which
shall be paid to Executive’s designated beneficiary or beneficiaries). Executive
shall not have any right to pledge, hypothecate, anticipate or assign this
Agreement or the rights hereunder, except by will or the laws of descent and
distribution.
8.12
Term. This
Agreement has a term co-extensive with the term of employment provided in
Section 3.1. Termination shall not affect any right or obligation of any
party which is accrued or vested prior to such termination. The provisions
of
Section 3.5 and Articles 6 and 7 shall survive the termination of this
Agreement.
8.13
Entire Agreement.
This Agreement constitutes the entire agreement of the parties with
regard to the subject matter hereof, and contains all the covenants, promises,
representations, warranties and agreements between the parties with respect
to
such subject matter. Without limiting the scope of the preceding sentence,
all
understandings and agreements preceding the date of execution of this Agreement
and relating to the subject matter hereof are hereby null and void and of no
further force and effect, including, without limitation, all prior employment
and severance agreements, if any, by and between Company and Executive. Any
modification of this Agreement will be effective only if it is in writing and
signed by the party to be charged.
[Signatures
begin on next page.]
15
IN
WITNESS WHEREOF,
the parties hereto have executed this Agreement on the 4th
day of April, 2006, to be effective as of the Effective
Date.
| Energy XXI (Bermuda) Limited | ||||
| By: | /s/ Xxxx X. Xxxxxxxx Xx | |||
| Name: | Xxxx X. Xxxxxxxx Xx | |||
| Title: | Chairman & CEO | |||
| COMPANY |
| Xxxxx Xxxxx |
|
/s/
Xxxxx
Xxxxx
|
| EXECUTIVE |
16
