Exhibit 10.38
 
Execution Copy
 
FIFTH AMENDMENT TO AMENDED AND RESTATED
FIRST LIEN CREDIT AGREEMENT
 
This FIFTH AMENDMENT TO AMENDED AND RESTATED FIRST LIEN CREDIT AGREEMENT
(“Amendments”), dated as of December 11, 2009, is by and among Energy XXI Gulf
Coast, Inc., a Delaware corporation (the “Borrower”), the lenders party to the
First Lien Credit Agreement described below (the “Lenders”), and The Royal Bank
of Scotland plc, as administrative agent for the Lenders (in such capacity, the
“Administrative Agent”), and the other parties in the capacities herein
identified.
 
RECITALS
 
WHEREAS, the Borrower, the Lenders, the Administrative Agent and certain other
Persons are parties to the Amended and Restated First Lien Credit Agreement,
dated as of June 8, 2007, as modified by the Consent Regarding Amended and
Restated First Lien Credit Agreement dated as of July 27, 2007, as amended by
that certain First Amendment to Amended and Restated First Lien Credit Agreement
dated effective as of November 19, 2007, as amended by that certain Waiver,
Consent and Second Amendment to Amended and Restated First Lien Credit Agreement
dated effective as of December 1, 2008, as amended by the Third Amendment to
Amended and Restated First Lien Credit Agreement dated as of April 6, 2009, as
modified by the Waiver and Consent to Amended and Restated First Lien Credit
Agreement dated as of June 30, 2009 and as amended and modified by the Waiver,
Consent and Fourth Amendment to Amended and Restated First Lien Credit Agreement
dated as of September 11, 2009 (as so modified, and as amended, supplemented,
amended and restated or otherwise modified from time to time, the “First Lien
Credit Agreement”); and
 
WHEREAS, the Borrower has requested that the Administrative Agent, the Issuer,
and the Lenders amend the First Lien Credit Agreement in certain respects as set
forth herein.
 
NOW Therefore, in consideration of the premises and the mutual covenants,
representations and warranties contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
 
AGREEMENT
 
Section 1.             Definitions. Capitalized terms used herein but not
defined herein shall have the meanings as given them in the First Lien Credit
Agreement, unless the context otherwise requires.
 
Section 2.             Amendments to First Lien Credit Agreement. The First Lien
Credit Agreement is hereby amended as follows:
 
(a)           Section 2.2. The first sentence of Section 2.2 of the First Lien
Credit Agreement is hereby amended and restated in its entirety as follows:
 
“Unless previously terminated, the Loan Commitments shall terminate on the Loan
Commitment Termination Date and on such date the Loan Commitment Amount shall be
zero and the Letter of Credit Commitment shall terminate on the Letter of Credit
Commitment Termination Date and on such date the Letter of Credit Commitment
Amount shall be zero.
 

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(b)           Section 2.6. Section 2.6 of the First Lien Credit Agreement is
hereby amended and restated in its entirety as follows:
 
“SECTION 2.6.             Issuance Procedures and Provisions. By delivering to
the Administrative Agent an Issuance Request on or before noon, New York time,
on a Business Day, the Borrower may from time to time irrevocably request on not
less than three nor more than ten Business Days’ notice, in the case of an
initial issuance of a Letter of Credit and not less than three Business Days’
prior notice, in the case of a request for the extension of the Stated Expiry
Date of a standby Letter of Credit (in each case, unless a shorter notice period
is agreed to by the Issuer, in its sole discretion), that an Issuer issue, or
extend the Stated Expiry Date of, a Letter of Credit in such form as may be
requested by the Borrower and approved by such Issuer, solely for the purposes
described in Section 7.1.7; provided that no extension shall (i) cause a Letter
of Credit to expire on a date that is later than the Letter of Credit Commitment
Termination Date or (ii) (unless otherwise agreed to by the Issuer in its sole
discretion) be for a period in excess of one year. Each Letter of Credit shall
by its terms be stated to expire on a date (its “Stated Expiry Date”) no later
than the earlier to occur of (a) the Letter of Credit Commitment Termination
Date or (b) (unless otherwise agreed to by an Issuer, in its sole discretion),
one year from the date of its issuance; provided, however, that a Letter of
Credit may, upon the request of the Borrower and subject to the agreement of the
Issuer to the terms thereof, include a provision whereby unless the Issuer shall
notify the beneficiary to the contrary such Letter of Credit may be renewed
automatically for additional consecutive periods of 12 months or less (but in no
event beyond the Letter of Credit Commitment Termination Date). Each Issuer will
make available to the beneficiary thereof the original of the Letter of Credit
that it issues.”
 
(c)          The Disclosure Schedule to the First Lien Credit Agreement is
hereby amended by deleting Item 6.19(a) thereof in its entirety and replacing it
in its entirety with Item 6.19(a) to the Disclosure Schedule attached hereto as
Annex I.
 
Section 3.             Conditions to Effectiveness. This Amendment shall be
deemed effective (subject to the conditions herein contained) as of the date
(the “Effective Date”) upon the Administrative Agent’s receipt of counterparts
hereof duly executed by the Borrower, the Administrative Agent, the Issuers and
the Required Lenders.
 
Section 4.             Redetermination of Borrowing Base. The Borrower and the
Lenders hereby agree that effective as of the Effective Date, the Borrowing Base
shall be equal to $199,000,000 until such time as the Borrowing Base is
redetermined or otherwise adjusted pursuant to the terms of the First Lien
Credit Agreement. The Borrower and the Lenders hereby agree that this
determination of the Borrowing Base shall be deemed to be the determination as
required under Section 2.8.2 of the First Lien Credit Agreement in regards to
the Reserve Report dated June 30, 2009.

 
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Section 5.             Representations and Warranties.  The Borrower hereby
represents and warrants that after giving effect hereto:
 
(a)           the representations and warranties of the Obligors contained in
the Loan Documents (other than Section 6.17 of the First Lien Credit Agreement
solely with respect to the Lehman Hedging Agreement (as defined in the Second
Amendment)) are true and correct in all material respects, other than those
representations and warranties that expressly relate solely to a specific
earlier date, which shall remain correct in all material respects as of such
earlier date;
 
(b)           the execution, delivery and performance by the Borrower and each
other Obligor of this Amendment and the other Loan Documents have been duly
authorized by all necessary corporate or other action required on their part and
this Amendment, along with the First Lien Credit Agreement and other Loan
Documents, constitutes the legal, valid and binding obligation of each Obligor a
party thereto enforceable against them in accordance with its terms, except as
its enforceability may be affected by the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting the rights or remedies of creditors generally;
 
(c)           neither the execution, delivery and performance of this Amendment
by the Borrower and each other Obligor, the performance by them of the First
Lien Credit Agreement nor the consummation of the transactions contemplated
hereby does or shall contravene, result in a breach of, or violate (i) any
provision of any Obligor’s certificate or articles of incorporation or bylaws or
other similar documents, or agreements, (ii) any law or regulation, or any order
or decree of any court or government instrumentality, or (iii) any indenture,
mortgage, deed of trust, lease, agreement or other instrument to which any
Obligor or any of its Subsidiaries is a party or by which any Obligor or any of
its Subsidiaries or any of their property is bound, except in any such case to
the extent such conflict or breach has been waived by a written waiver document,
a copy of which has been delivered to Administrative Agent on or before the date
hereof;
 
(d)           no Material Adverse Effect has occurred since June 30, 2009; and
 
(e)           no Default or Event of Default or Borrowing Base Deficiency has
occurred and is continuing.
 
Section 6.             Loan Document: Ratification.
 
(a)           This Amendment is a Loan Document.
 
(b)           The Borrower and each other Obligor hereby ratifies, approves and
confirms in every respect all the terms, provisions, conditions and obligations
of the First Lien Credit Agreement and each of the other Loan Documents (other
than the Lehman Hedging Agreement (as defined in the Second Amendment)),
including without limitation all Mortgages, Security Agreements, Guaranties,
Control Agreements and other Security Documents, to which it is a party.

 
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Section 7.             Costs And Expenses. As provided in Section 10.3 of the
First Lien Credit Agreement, the Borrower agrees to reimburse Administrative
Agent for all fees, costs, and expenses, including the reasonable fees, costs,
and expenses of counsel or other advisors for advice, assistance, or other
representation, in connection with this Amendment and any other agreements,
documents, instruments, releases, terminations or other collateral instruments
delivered by the Administrative Agent in connection with this Amendment.
 
Section 8.             GOVERNING LAW. THIS AMENDMENT SHALL BE DEEMED A CONTRACT
AND INSTRUMENT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK AND THE LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
 
Section 9.             Severability. Any provision of this Amendment that is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Amendment
or affecting the validity or enforceability of such provision in any other
jurisdiction.
 
Section 10.           Counterparts. This Amendment may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any party hereto may execute this Amendment by signing one or
more counterparts. Any signature hereto delivered by a party by facsimile or
electronic transmission shall be deemed to be an original signature hereto.
 
Section 11.           No Waiver. The express waivers set forth herein are
limited to the extent expressly provided in this Amendment and, except as
expressly set forth in this Agreement, the execution, delivery and effectiveness
of this Amendment shall not operate as a waiver of any default of the Borrower
or any other Obligor or any right, power or remedy of the Administrative Agent
or the other Secured Parties under any of the Loan Documents, nor constitute a
waiver of (or consent to departure from) any terms, provisions, covenants,
warranties or agreements of any of the Loan Documents. The parties hereto
reserve the right to exercise any rights and remedies available to them in
connection with any present or future defaults with respect to the First Lien
Credit Agreement or any other provision of any Loan Document.
 
Section 12.           Successors and Assigns.  This Amendment shall be binding
upon the Borrower and its successors and permitted assigns and shall inure,
together with all rights and remedies of each Secured Party hereunder, to the
benefit of each Secured Party and the respective successors, transferees and
assigns.
 
Section 13.           Entire Agreement. THIS AMENDMENT, THE FIRST LIEN CREDIT
AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT OF THE
PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.
 
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
 
[Signature Pages Follow]

 
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In Witness Whereof, the parties hereto have caused this Amendment to be duly
executed and delivered by their respective duly authorized officers as of the
date first written above.

 
BORROWER:
     
ENERGY XXI GULF COAST, INC.
     
By:
/s/ Ben Marchive
  Name: 
Ben Marchive
  Title:
President

 
Annex I

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ADMINISTRATIVE AGENT, ISSUERS AND LENDERS:
 
THE ROYAL BANK OF SCOTLAND plc, as
Administrative Agent, Issuer and Lender
 
By:
/s/ Mark Lumpkin
Name:  
Mark Lumpkin
Title:
Vice President

 
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BNP PARIBAS, as Issuer and Lender
 
By:
/s/ Douglas R. Liftman
Name:  
Douglas R. Liftman
Title:
Managing Director
   
By:
/s/ GREG SMOTHERS
Name:  
GREG SMOTHERS
Title:
DIRECTOR

 
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BMO CAPITAL MARKETS FINANCING, INC., as Lender
 
By:
     
Name:  
 
Title:
 

 
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COMPASS BANK (as successor in interest to Guaranty Bank, FSB), as Lender
 
By:
     
Name:  
 
Title:
 

 
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AMEGY BANK NATIONAL ASSOCIATION, as Lender
 
By:
/s/ Reid Springmeyer
Name:  
Reid Springmeyer
Title:
Assistant Vice President

 
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THE BANK OF NOVA SCOTIA, as Lender
 
By:
/s/ David G. Mills
Name:  
David G. Mills
Title:
Managing Director

 
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LEHMAN COMMERCIAL PAPER INC., as Lender
 
By:
      
Name:  
 
Title:
 

 
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TORONTO DOMINION (TEXAS) LLC, as Lender
 
By:
/s/ DEBBI L. BRITO
Name:  
DEBBI L. BRITO
Title:
AUTHORIZED SIGNATORY

 
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CAPITAL ONE, NATIONAL ASSOCIATION,
as Lender
 
By:
/s/ David Reid
Name:  
David Reid
Title:
Senior Vice President

 
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NATIXIS, as Lender
       
By:
/s/ Liana Tchernysheva
   
Liana Tchernysheva
   
Director
       
By:
/s/ Louis P. Laville, III
   
Louis P. Laville, III
   
Managing Director

 
 
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ALLIED IRISH BANKS p.l.c., as Lender
       
By:
/s/ Edward Fenk
 
Name:
Edward Fenk
 
Title:
Vice President
       
By:
/s/ James Giordano
 
Name:
James Giordano
 
Title:
Assistant Vice President

 
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CREDIT SUISSE AG, CAYMAN ISLANDS
BRANCH as Lender
       
By:
/s/ Mikhail Faybusovich
 
Name:
Mikhail Faybusovich
 
Title:
Vice President
       
By:
/s/ Kevin Buddhdew
 
Name:
Kevin Buddhdew
 
Title:
Associate

 
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UBS LOAN FINANCE LLC, as Lender
       
By:
/s/ Marie Haddad
 
Name:
Marie Haddad
 
Title:
Associate Director
       
By:
/s/ Mary E. Evans
 
Name:
Mary E. Evans
 
Title:
Associate Director

 
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WHITNEY NATIONAL BANK, as Lender
       
By:
/s/ William Jochetz
 
Name:
William Jochetz
 
Title:
Officer

 
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ACKNOWLEDGED AND AGREED AS OF
THE DATE FIRST ABOVE WRITTEN:
       
ENERGY XXI GOM, LLC
       
By:
/s/ Ben Marchive
 
Name:
Ben Marchive
 
Title:
President
       
ENERGY XXI TEXAS ONSHORE, LLC
       
By:
/s/ Ben Marchive
 
Name:
Ben Marchive
 
Title:
President

 

 
ENERGY XXI ONSHORE, LLC
       
By:
/s/ Ben Marchive
 
Name:
Ben Marchive
 
Title:
President

 
 
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ACKNOWLEDGED AND AGREED AS OF
THE DATE FIRST ABOVE WRITTEN IN ITS
CAPACITY AS GUARANTOR UNDER ITS
LIMITED RECOURSE GUARANTY AND
GRANTOR UNDER ITS PLEDGE
AGREEMENT AND IRREVOCABLE PROXY
DELIVERED IN CONNECTION WITH THE
FIRST LIEN CREDIT AGREEMENT:
       
ENERGY XXI U.S.A., INC
       
By:
/s/ Ben Marchive
 
Name:
Ben Marchive
 
Title:
President

 
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ANNEX I  
 
Item 6.19(a) of Disclosure Schedule
 
DEPOSIT ACCOUNTS OF BORROWER AND EACH SUBSIDIARY
 
Obligor
 
Depository Institution
 
Account Number
         
Borrower
 
Compass Bank
 
3804623571
         
Borrower
 
Amegy Bank National Association
 
0053059839
         
Borrower
 
Amegy Bank National Association
 
0953059839
         
EXXI GOM
 
Compass Bank
 
3804623704
         
EXXI GOM
 
Compass Bank
 
3804629479
         
EXXI GOM
 
Compass Bank
 
3804626392
         
Energy XXI Onshore, LLC
 
Compass Bank
 
3804623696
         
Energy XXI Gulf Coast, Inc.
 
The Royal Bank of Scotland plc
 
RBSEXC

 
Annex I

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