Unassociated Document


                                                                                                                                         Exhibit

4.2

     

     

    A
M E N D E D  A N D  R E S T A T E D  P R O S P E C
T U S

     

    


     

    


     

    


     

    ENERGY
XXI SERVICES, LLC

     

    2008
FAIR MARKET VALUE STOCK PURCHASE PLAN

    _______________________

     

    COMMON
STOCK


     

    Par
Value $.001 Per Share

    _______________________

     

    This
Prospectus, as amended and restated, relates to shares of common stock, par
value $.001 per share (the “Common Stock”), of Energy XXI
(Bermuda) Limited, a Bermuda corporation (the “Company”), that may be
purchased by employees, directors and other service providers of Energy XXI
Services, LLC, a Delaware limited liability company and an indirect wholly-owned
subsidiary of the Company (the “Employer”), or any of its
affiliates, pursuant to the Energy XXI Services, LLC 2008 Fair Market Value
Stock Purchase Plan (the “Plan”).  For all
purposes of the Plan, this Prospectus constitutes the Plan
document.

    _______________________

     

    THESE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES

    AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS

    THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES

    COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS

    PROSPECTUS.  ANY
REPRESENTATION TO THE CONTRARY IS A

    CRIMINAL
OFFENSE.


     

    THIS
PROSPECTUS MAY NOT BE USED BY ANY PERSON IN CONNECTION WITH ANY

    RESALES
OF THE COMMON STOCK ACQUIRED UNDER THE PLAN.

    _______________________

     

    THIS
DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES

    THAT
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.

    _______________________

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The date
of this Prospectus is June 10, 2009.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    TABLE
OF CONTENTS

     

    Page

     

    
      
        	
                THE
      COMPANY

              	
                1

              
	
                DESCRIPTION
      OF THE 2008 FAIR MARKET VALUE STOCK PURCHASE PLAN

              	
                1

              
	
                General

              	
                1

              
	
                Administration
      of the Plan

              	
                1

              
	
                Persons
      Who May Participate in the Plan

              	
                2

              
	
                Securities
      to be Offered

              	
                2

              
	
                Other
      Provisions

              	
                2

              
	
                APPLICATION
      OF SECTION 16(b) OF THE EXCHANGE ACT

              	
                3

              
	
                OTHER
      RESTRICTIONS ON RESALE

              	
                3

              
	
                FEDERAL
      TAX CONSEQUENCES

              	
                3

              
	
                AVAILABLE
      INFORMATION

              	
                4

              
	
                INCORPORATION
      OF CERTAIN DOCUMENTS BY REFERENCE

              	
                5

              


      

    

     

    _______________________

     

     

    No
person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given or
made, such information or representations must not be relied upon as having been
authorized.  This Prospectus does not constitute an offer to sell or
the solicitation of an offer to buy in any jurisdiction in which or to any
person to whom it is unlawful to make such offer or
solicitation.  Neither the delivery of this Prospectus nor any sale
made hereunder will under any circumstances imply that information contained in
this Prospectus is correct at any time subsequent to the date of this
Prospectus.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    THE
COMPANY

     

    The Company is an independent oil and
natural gas exploration and production company whose growth strategy emphasizes
acquisitions, enhanced by a value-added organic drilling program. The Company
operates geographically focused producing reserves located in the U.S. Gulf of
Mexico waters and the Gulf Coast onshore, and it targets the acquisition of oil
and gas properties with which it can add value by increasing production and
ultimate recovery of reserves, whether through exploitation or exploration,
often using reprocessed seismic data to identify previously overlooked
opportunities.  The Company believes the mature legacy fields on which
its assets are located lend themselves well to its aggressive exploitation
strategy and expects to identify incremental exploration opportunities on the
properties. The Company intends to grow its reserve base and increase production
through strategic acquisitions of oil and natural gas properties, its drilling
program and the further optimization of production.  The Company
actively manages price risk and hedges a high percentage of its proved developed
producing reserves to enhance revenue certainty and predictability. The
Company’s disciplined risk management strategy provides substantial price
protection so that its cash flow is largely driven by production results rather
than commodity prices. This greater price certainty allows the Company to
efficiently allocate its capital resources and minimize its operating
cost. The Company’s
executive offices and operating headquarters are located at Canon’s Court, 22
Victoria Street, PO Box HM 1179, Hamilton HM EX, Bermuda, and its telephone
number at those offices is (441) 298-3262. 

     

    DESCRIPTION
OF THE 2008 FAIR MARKET VALUE STOCK PURCHASE PLAN

     

    General

     

    The Plan
is named the “Energy XXI Services, LLC 2008 Fair Market Value Stock Purchase
Plan” and was originally adopted by the board of directors of the Employer and
the Company effective as of July 1, 2008 (the “Effective
Date”).

     

    The
purpose of the Plan is to promote the interests of the Employer and the Company,
as well as employees, directors and other service providers by providing such
individuals with the opportunity to conveniently purchase Common
Stock.  The Plan allows eligible employees, directors, and other
service providers to purchase from the Company shares of Common Stock that have
been purchased by the Company on the open market or that have been newly issued
by the Company. In particular, individuals who have been granted restricted
stock units pursuant to the Company’s 2006 Long-Term Incentive Plan (the “LTIP”) that may be settled in
cash may use their cash settlement to purchase shares of Common Stock which will
be issued under the Plan.  See “— Securities To Be
Offered.”

     

    The Plan
is not intended to qualify under the provisions of Section 423 of the Internal
Revenue Code of 1986, as amended (the “Code”).  The Plan
is also not subject to the provisions of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”).

     

    Administration
of the Plan

     

    The board
of directors of the Company (the “Board”) has appointed a
Committee comprised of Board members (the “Committee”) to administer the
Plan pursuant to the Plan’s terms and all applicable state, federal, and other
rules or laws, except in the event the Board chooses to administer the
Plan.  Unless otherwise limited by the Plan or Rule 16b-3 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Committee
has broad discretion to administer the Plan, interpret its provisions, and adopt
policies for implementing the Plan.  This discretion includes the
power to determine the class of “Eligible Persons” for the
Plan, determine the terms under which Eligible Persons may purchase Common Stock
under the Plan, prescribe and interpret the terms and provisions of any
individual agreement between the Company and Eligible Persons which shall govern
the purchase of Common Stock (the terms of which may vary), and to execute all
other responsibilities permitted or required under the Plan.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    Persons
Who May Participate in the Plan

     

    An
Eligible Person shall be either: (a) a holder of a restricted stock unit granted
pursuant to the LTIP and settleable in cash, or (b) any employee, director or
consultant of the Employer or the Company or an affiliate thereof designated by
the Committee as an Eligible Person.

     

    An
Eligible Person will be eligible to purchase Common Stock solely pursuant to the
Plan terms, and will be subject to any limitations imposed by an appropriate
action of the Committee.

     

    Securities
to be Offered

     

    Shares Subject to the
Plan.  The maximum aggregate number of shares of Common Stock
that may be purchased pursuant to the Plan will not exceed 1,200,000
shares.  The Common Stock sold pursuant to the Plan may be newly
issued shares, shares held by the Company in treasury, shares which have been
acquired by the Company in the open market, or any combination of the
foregoing.  There are no fees, commissions or other charges applicable
to a purchase of Common Stock under the Plan.

     

    Purchase
of Common Stock

     

    With Respect to Restricted Stock
Units.   An Eligible Person who desires to purchase Common
Stock with cash received upon the settlement of restricted stock units granted
pursuant to the LTIP may do so by notifying the Company on or prior to the date
of vesting of the restricted stock units pursuant to reasonable procedures
established by the Company.

     

    The
Company shall use all or a portion of the cash payable to the Eligible Person
upon settlement of the restricted stock units (the “Purchase Consideration”) to
purchase Common Stock on behalf of the Eligible Person.  The Purchase
Consideration will equal the fair market value of the Common Stock on the
vesting date multiplied by the number of shares subject to the restricted stock
units the Eligible Person desires to use to purchase Common Stock, less any
applicable statutory income tax withholding and employment taxes relating to the
vesting and settlement of such restricted stock units.  The Company
will use the Purchase Consideration to acquire as many whole shares of Common
Stock as the Purchase Consideration will purchase at the fair market value of
the Common Stock on the vesting date.  No fraction of a share of
Common Stock may be purchased pursuant to the Plan, and any portion of the
Purchase Consideration that remains after the whole shares of Common Stock have
been acquired will be paid to the Eligible Person in cash.

     

    Other Cash
Purchases.  The Committee may also allow an Eligible Person to
purchase Common Stock upon the delivery of notice to the Company, pursuant to
reasonable procedures established by the Company, along with cash (including the
cash proceeds of restricted stock units) or such other consideration approved by
the Committee.  Any such purchase will be made at the fair market
value of the Common Stock on the date specified in such notice (which may be no
earlier than the date such notice is received by the Company), provided the
notice was timely received by the Company.  In the event the notice is
not timely received, the purchase will occur on the first business day following
the Company’s receipt of the notice.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    Other
Provisions

     

    Fair Market Value. The fair
market value of the Common Stock will be the value equal to the closing price of
a share of Common Stock on any national or foreign securities exchange or
over-the-counter market, if applicable, for the date of determination, or, if no
trade is reported for that date, the closing sales price quoted on such exchange
for the most recent trade prior to the determination date.  In the
event that shares of Common Stock are not listed or admitted to trading on any
exchange, over-the-counter market or any similar organization as of the
determination date, the fair market value shall be determined by the Committee
in good faith using fair application of a reasonable valuation methodology that
takes into account all available information material to the value of the
Company.

     

    Amendment and
Termination.  The Board may at any time and from time to time
amend, alter, suspend, discontinue or terminate the Plan or the Committee’s
authority under the Plan.


     

    APPLICATION
OF SECTION 16(b) OF THE EXCHANGE ACT

     

    Section
16(b) of the Exchange Act imposes liability on officers and directors of the
Company and beneficial owners of 10% or more of a class of equity securities of
the Company with respect to any profit realized on a purchase and sale, or sale
and purchase, of any equity security (including derivative securities such as
Options and SARs) of the Company within a period of less than six
months.  The liability is owed to the Company and may be enforced by
the Company and any Company stockholder suing derivatively for the Company’s
benefit.  The Plan is intended to comply with Rule 16b-3 under the
Exchange Act, which, together with Rule 16b-6, exempts certain transactions
under the Plan from the short-swing liability provisions of Section 16(b) of the
Exchange Act.  You
should consult with the Company or legal counsel before determining for yourself
whether a transaction you are considering is exempt from short-swing liability
or whether the Plan has in fact been administered in compliance with Rule
16b-3.

     

    OTHER
RESTRICTIONS ON RESALE

     

    Subject
to the limitations of Section 16(b) of the Exchange Act, shares of Common Stock
acquired by an officer or director of the Company pursuant to the Plan may be
sold by such officer or director only in accordance with the provisions of Rule
144 under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to
an effective registration statement under the Securities Act, or in transactions
that are exempt from registration under the Securities Act.  Under
Rule 144, an officer or director may sell Common Stock if the sale meets certain
conditions.  In general, under Rule 144 an officer or director may
sell within any three-month period a number of shares that does not exceed the
greater of 1% of the total number of outstanding shares of Common Stock or the
average weekly trading volume of the Common Stock reported during the four
calendar weeks immediately preceding the sale.  In addition to other
conditions, the shares of Common Stock must also be sold in unsolicited
“brokers’ transactions” within the meaning of Rule 144 and Section 4(4) of the
Securities Act, directly with a “market maker” within the meaning of Rule 144
and Section 3(a)(38) of the Exchange Act, or in “riskless principal
transactions” within the meaning of Rule 144, and in certain circumstances the
seller must file a notice of sale with the Securities and Exchange Commission
(the “SEC”).  You should consult with the Company
or legal counsel before determining for yourself whether a transaction you are
considering complies with the conditions specified in Rule 144 or otherwise
satisfies an exemption under the Securities Act.

     

    FEDERAL
TAX CONSEQUENCES

     

    The
following discussion is for general information only and is intended to
summarize briefly the U.S. federal tax consequences to Eligible Persons arising
from participation in the Plan.  This description is based on current
law, which is subject to change (possibly retroactively).  The tax
treatment of an Eligible Person in the Plan may vary depending on his particular
situation and may, therefore, be subject to special rules not discussed
below.  No attempt has been made to discuss any potential foreign,
state, or local tax consequences.  The description below concerning
the taxation of restricted stock units and the Company’s corresponding deduction
are provided as additional information to Eligible Persons, although those tax
implications are consequences of participation in the LTIP rather than the
Plan.  You should
consult with your tax advisor concerning the specific tax consequences of
participating in the Plan.

     

    
      
        
        

      

      
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    Settlement of Restricted Stock Units
under the LTIP. In general, an Eligible Person will recognize ordinary
compensation income as a result of the cash settlement of a restricted stock
unit in an amount equal to the cash received with respect to the restricted
stock unit, including amounts withheld by the Company to satisfy its tax
withholding obligations.  The Eligible Person may be subject to
withholding for federal, and generally for state and local, income taxes at the
time he or she recognizes income pursuant to the settlement of the restricted
stock unit.

     

    Subject
to the discussion below, the Company (or a subsidiary) will be entitled to a
deduction for federal income tax purposes that corresponds as to timing and
amount with the compensation income recognized by an Eligible Person under the
foregoing discussion.

     

    Tax Code Limitations on
Deductibility. In order for the amounts described above to be deductible
by the Company (or a subsidiary), such amounts must constitute reasonable
compensation for services rendered or to be rendered and must be ordinary and
necessary business expenses.  The ability of the Company (or a
subsidiary) to obtain a deduction for future payments under the LTIP could also
be limited by the golden parachute payment rules of Section 280G of the Code,
which prevent the deductibility of certain excess parachute payments made in
connection with a change in control of an employer-corporation.

     

    Finally,
the ability of the Company (or a subsidiary) to obtain a deduction for amounts
paid under the LTIP could be limited by Section 162(m) of the Code, which limits
the deductibility, for federal income tax purposes, of compensation paid to
certain executive officers of a publicly traded corporation to $1 million with
respect to any such officer during any taxable year of the
corporation.

     

    Purchase of Common
Stock.   Because the Plan merely provides a convenient
opportunity for Eligible Persons to purchase Common Stock at its fair market
value, the initial purchase of Common Stock should not create a taxable event
for the Eligible Person.  The Eligible Person will be subject to
either short-term or long-term capital gain/loss upon the later sale or
disposition of the Common Stock, depending upon the time period the Eligible
Person was the holder of the Common Stock.

     

    AVAILABLE
INFORMATION

     

    The
Company is subject to the information requirements of the Exchange Act and in
accordance therewith files reports, proxy statements, and other information with
the SEC, which can be inspected and copied at prescribed rates at the public
reference facilities maintained by the SEC at Room 1580, 100 F Street, N.E.,
Washington, D.C. 20549.  These reports, proxy statements and other
information may also be obtained without charge from the web site that the SEC
maintains at http://www.sec.gov.

     

    This
Prospectus constitutes a part of a Registration Statement on Form S-8 (together
with all amendments thereto, the “Registration Statement”) that
the Company has filed with the SEC under the Securities Act.  This
Prospectus does not contain all the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the SEC. For further information with respect to the Company and
the Common Stock, reference is made to the Registration Statement and to the
exhibits thereto. Statements contained herein concerning the provisions of
certain documents are not necessarily complete, and in each instance, reference
is made to the copy of the document filed as an exhibit to the Registration
Statement or otherwise filed with the SEC. Each such statement is qualified in
its entirety by that reference.

     

    
      
        
        

      

      
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    INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE

     

    Except to
the extent that information is deemed furnished and not filed pursuant to
securities laws and regulations, the following documents have been filed by the
Company with the SEC and are incorporated by reference into this Prospectus, and
will be deemed to be a part hereof:

     

    
      	
               
      

            	
              (a)

            	
              The
      Company’s latest Annual Report on Form 10-K filed with the SEC on
      September 11, 2008.

            


    

     

    
      	
               
      

            	
              (b)

            	
              The
      Company’s Quarterly Reports on Form 10-Q filed with the SEC on
      November 5, 2008, February 9, 2009 and May 7,
      2009.

            


    

     

    
      	
               
      

            	
              (c)

            	
              The
      Company’s Current Reports on Form 8-K filed with the SEC on
      October 20, 2008, November 5, 2008, November 12, 2008,
      December 15, 2008, March 2, 2009, March 17, 2009,
      March 31, 2009, and May 18,
2009.

            


    

     

    
      	
               
      

            	
              (d)

            	
              All
      other reports filed by the Company since September 11, 2008, with the
      SEC pursuant to Section 13(a) or 15(d) of the Exchange
  Act.

            


    

     

    
      	
               
      

            	
              (e)

            	
              The
      description of our common stock contained in our latest Annual Report on
      Form 10-K filed with the SEC on September 11,
    2008.

            


    

     

    Except to
the extent that information is deemed furnished and not filed pursuant to
securities laws and regulations, all documents filed by the Company pursuant to
Section 13(a) or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering made hereby will be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of the filing of such documents.  Any statement
contained herein or any document incorporated or deemed to be incorporated by
reference herein will be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document that also is or is deemed to be incorporated by
reference herein or in any Prospectus Supplement modifies or supersedes such
statement.  Any statement so modified or superseded will not be deemed
to constitute a part of this Prospectus, except as so modified or
superseded.

     

    The
Company will provide without charge to each person to whom a copy of this
Prospectus has been delivered, on the written or oral request of any person, a
copy of any or all of the documents referred to above that have been or may be
incorporated by reference into this Prospectus, other than exhibits to the
documents (unless the exhibits are specifically incorporated by reference into
the documents).  Written or telephone request for the copies should be
directed to Corporate Secretary, Energy XXI (Bermuda) Limited, Canon’s Court, 22
Victoria Street, PO Box HM 1179, Hamilton HM EX, Bermuda  (Telephone: (441)
298-3262).