WAIVER REGARDING AMENDED AND RESTATED
FIRST LIEN CREDIT AGREEMENT

This WAIVER REGARDING AMENDED AND RESTATED FIRST LIEN CREDIT AGREEMENT
(“Waiver”), dated effective as of November 17, 2010 (the “Effective Date”), 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”).
 
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, 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 and as amended and modified by the Fifth
Amendment to Amended and Restated First Lien Credit Agreement dated as of
December 11, 2009, as amended and modified by the Sixth Amendment to Amended and
Restated First Lien Credit Agreement dated as of February 5, 2010, and as
amended and modified by the Seventh Amendment to Amended and Restated First Lien
Credit Agreement dated as of October 15, 2010 (as so modified, and as amended,
supplemented and amended, and restated or otherwise modified from time to
time, the “First Lien Credit Agreement”);
 
WHEREAS, Section 7.2.15 of the First Lien Credit Agreement imposes certain
limitations on the Borrower’s ability to pay, prepay, redeem, defease, purchase,
acquire or otherwise retire the any PP Debt;
 
WHEREAS, Section 7.2.21 of the First Lien Credit Agreement imposes certain
limitations on the Borrower’s ability to pay, prepay, redeem, defease, purchase,
acquire or otherwise retire any Second Lien Indebtedness;
 
WHEREAS, the Borrower has requested that the Lenders waive the requirements of
Sections 7.2.15 and 7.2.21 of the First Lien Credit Agreement so that the
Borrower can use proceeds of an issuance of its Capital Securities, on or about
November 8, 2010, to Intermediate Holdco (the “Issuance”), to pay, prepay,
redeem, defease, purchase, acquire and/or otherwise retire Second Lien Notes
and/or PP Notes and pay any premium and any accrued and unpaid interest with
respect thereto (the “Specified Redemptions”); and
 
WHEREAS, the undersigned Secured Parties are willing to agree to such waiver and
to provide certain other consents as provided herein, on the terms and
conditions set forth herein.
 

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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. Waiver.
 
(a) Subject to the other terms and conditions of this Waiver, the Administrative
Agent, the Swing Line Lender, the Issuers and the undersigned Lenders hereby (i)
waive the limitations of Section 7.2.21 of the First Lien Credit Agreement that
restrict the Borrower’s ability to pay, prepay, redeem, defease, purchase,
acquire or otherwise retire any Second Lien Indebtedness, but only to the extent
(x) the amounts used by the Borrower for such actions arise from proceeds of the
Issuance, (y) such Specified Redemptions of Second Lien Indebtedness may only be
made until March 31, 2011 and (z) after giving effect to each Specified
Redemption, the Borrower shall have unused availability under the Borrowing Base
of at least $100,000,000, (ii) waive the limitations of Section 7.2.15 of the
First Lien Credit Agreement that restrict the Borrower’s ability to pay, prepay,
redeem, defease, purchase, acquire or otherwise retire any PP Debt, but only to
the extent (w) the amounts used by the Borrower for such actions arise from
proceeds of the Issuance, (x) such Specified Redemptions of PP Debt may only be
made until September 30, 2011, (y) any such payment, prepayment, redemption,
defeasance, purchase, acquisition or other retirement of PP Debt occurs only
upon the Second Lien Indebtedness having been paid, prepaid, redeemed, defeased,
purchased, acquired or otherwise retired in full, and (z) after giving effect to
each Specified Redemption, the Borrower shall have unused availability under the
Borrowing Base of at least $100,000,000, and (iii) agree that the Borrower’s
undertaking of the Specified Redemptions in accordance with and as contemplated
by this Waiver shall not constitute a Default or Event of Default as a result of
a violation of such Sections 7.2.15 and 7.2.21 of the First Lien Credit
Agreement.
 
(b) The express waiver set forth in this Section 2 is limited to the extent
described herein and shall not be construed to be a consent to or a waiver of
any terms, provisions, covenants, warranties or agreements contained in the
First Lien Credit Agreement or in any of the other Loan Documents, unless
expressly provided so herein.  The Lenders 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 3. Conditions to Effectiveness.  This Waiver shall be deemed effective
as of the Effective Date when the Administrative Agent shall have received
counterparts hereof duly executed by the Borrower, the Administrative Agent, the
Swing Line Lender, the Issuers and the Required Lenders.
 
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Section 4. 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 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 Waiver have been duly authorized by all necessary corporate or
other action required on their part and this Waiver, 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 Waiver 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, 2010; and
 
(e) no Default or Event of Default or Borrowing Base Deficiency has occurred and
is continuing.
 
Section 5. Loan Document; Ratification.
 
(a) This Waiver 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, including
without limitation all Mortgages, Security Agreements, Guaranties, Control
Agreements and other Security Documents, to which it is a party.
 
Section 6. 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 Waiver and any other agreements, documents, instruments,
releases, terminations or other collateral instruments delivered by the
Administrative Agent in connection with this Waiver.
 
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Section 7. GOVERNING LAW.  THIS WAIVER 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 8. Severability.  Any provision of this Waiver 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 Waiver or
affecting the validity or enforceability of such provision in any other
jurisdiction.
 
Section 9. Counterparts.  This Waiver 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 Waiver 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 10. No Waiver.  The express waivers set forth herein are limited to the
extent expressly provided in this Waiver and, except as expressly set forth in
this Waiver, the execution, delivery and effectiveness of this Waiver 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 11. Successors and Assigns.  This Waiver shall be binding upon the
Borrower and its successors and permitted assigns and shall inure, together with
all rights and remedies of each Lender Party hereunder, to the benefit of each
Lender Party and the respective successors, transferees and assigns.
 
Section 12. Entire Agreement.  THIS WAIVER, 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.
 
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[Signature Pages Follow]
 
 
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Waiver to be duly
executed and delivered by their respective duly authorized officers as of the
Effective Date.

 
BORROWER:
         
ENERGY XXI GULF COAST, INC.
                    By:     /s/ Rick Fox     Name:  Rick Fox     Title:   Chief
Financial Officer           

 
 

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ADMINISTRATIVE AGENT, ISSUERS AND LENDERS:
         
THE ROYAL BANK OF SCOTLAND plc, as Administrative Agent, Issuer and Lender
                    By:     /s/ Phillip R. Ballard     Name: Phillip R. Ballard
    Title:  Managing Director          

 

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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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AMEGY BANK NATIONAL ASSOCIATION, as Lender
                  By:     /s/ Charles W. Patterson     Name: Charles W.
Patterson     Title:   Senior Vice President          

 
 

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THE BANK OF NOVA SCOTIA, as Lender
                  By:     /s/ J Frazell     Name:  J Frazell     Title:   
Director          

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TORONTO DOMINION (TEXAS) LLC, as Lender
                  By:    /s/ Debbie L. Brito     Name:  Debbie L. Brito    
Title:   Authorized Signatory          

 

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CAPITAL ONE, NATIONAL ASSOCIATION, as Lender
                  By:     /s/ Peter Shen     Name:  Peter Shen     Title:   
Vice President          

 

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NATIXIS, as Lender
                  By:     /s/ Donovan C. Broussard     Name:  Donovan C.
Broussard     Title:    Managing Director                     By:  /s/ Liana
Tchernysheva    
Name:  Liana Tchernysheva
   
Title:  Director
         

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ALLIED IRISH BANKS p.l.c., as Lender
                  By:     /s/ Mark Connelly     Name:  Mark Connelly    
Title:    Senior Vice President                     By:  /s/ Vaughn Buck    
Name:  Vaughn Buck
   
Title:     Director
         

 
 

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

 

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UBS LOAN FINANCE LLC, as Lender
                  By:     /s/ Irja R. Otsa     Name:  Irja R. Otsa     Title:   
Associate Director Banking Product, US                     By:  /s/ Michael
Cerniglia    
Name:  Michael Cerniglia
   
Title:    Director Banking Products Services, US
         

 
 
 

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ING CAPITAL LLC, as Lender
                  By:     /s/ Juli Bieser     Name:  Juli Bieser     Title:  
Director          

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REGIONS BANK, as Lender and as Swing Line Lender
                  By:     /s/ Kelly L. Elmore III     Name:  Kelly L. Elmore III
    Title:   Senior Vice President          

 

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ACKNOWLEDGED AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN:
         
ENERGY XXI GOM, LLC
                  By:   /s/ Rick Fox     Name:  Rick Fox     Title:    Chief
Financial Officer             ENERGY XXI TEXAS ONSHORE, LLC                 By:
 /s/ Rick Fox     Name:  Rick Fox     Title:    Chief Financial Officer        
    ENERGY XXI ONSHORE, LLC                   By:  /s/  Rick Fox     Name:  Rick
Fox     Title:    Chief Financial Officer          

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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 USA, INC.             By:     /s/ Rick Fox     Name:  Rick
Fox     Title:   Chief Financial Officer          

 

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