Unassociated Document


    Execution
      Copy

     

    


    $700,000,000

    AMENDED
      AND RESTATED FIRST LIEN CREDIT AGREEMENT,

    


    


    dated
      as
      of June 8, 2007,

    


    


    among

    


    


    ENERGY
      XXI GULF COAST, INC.,

    as
      the
      Borrower,

    


    


    VARIOUS
      FINANCIAL INSTITUTIONS AND OTHER PERSONS FROM TIME TO TIME

    PARTIES
      HERETO,

    as
      the
      Lenders,

    


    


    THE
      ROYAL
      BANK OF SCOTLAND plc,

    as
      the
      Administrative Agent,

    


    


    and

    


    


    RBS
      SECURITIES CORPORATION and

    BNP
      PARIBAS,

    as
      Joint
      Lead Arrangers and Joint Bookrunners,

    


    


    and

    


    BNP
      PARIBAS,

    as
      Syndication Agent,

    


    


    and

    


    


    GUARANTY
      BANK, FSB and

    BMO
      CAPITAL MARKETS FINANCING, INC.,

    as
      Co-Documentation Agents

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    



    TABLE
      OF CONTENTS

     

    
      	 	 	Page
	 	 	 
	
              ARTICLE
                1

            	
              DEFINITIONS
                AND ACCOUNTING TERMS

            	
              2

            
	
              SECTION
                1.1.

            	
              Defined
                Terms

            	
              2

            
	
              SECTION
                1.2.

            	
              Use
                of Defined Terms

            	
              31

            
	
              SECTION
                1.3.

            	
              Cross-References
                and Other Provisions Relating to Terms

            	
              31

            
	
              SECTION
                1.4.

            	
              Amendment
                of Defined Instruments

            	
              31

            
	
              SECTION
                1.5.

            	
              Accounting
                and Financial Determinations

            	
              32

            
	
              ARTICLE
                2

            	
              COMMITMENTS,
                BORROWING AND ISSUANCE PROCEDURES, NOTES AND LETTERS OF
                CREDIT

            	
              32

            
	
              SECTION
                2.1.

            	
              Commitments

            	
              32

            
	
              SECTION
                2.2.

            	
              Termination
                of Commitments and Reduction of the Commitment Amounts

            	
              33

            
	
              SECTION
                2.3.

            	
              Borrowing
                Procedure

            	
              34

            
	
              SECTION
                2.4.

            	
              Continuation
                and Conversion Elections

            	
              34

            
	
              SECTION
                2.5.

            	
              Funding

            	
              35

            
	
              SECTION
                2.6.

            	
              Issuance
                Procedures and Provisions

            	
              35

            
	
              SECTION
                2.7.

            	
              Register;
                Notes

            	
              39

            
	
              SECTION
                2.8.

            	
              Borrowing
                Base

            	
              40

            
	
              ARTICLE
                3

            	
              REPAYMENTS,
                PREPAYMENTS, INTEREST AND FEES

            	
              43

            
	
              SECTION
                3.1.

            	
              Repayments
                and Prepayments; Application

            	
              43

            
	
              SECTION
                3.2.

            	
              Interest
                Provisions

            	
              45

            
	
              SECTION
                3.3.

            	
              Fees

            	
              46

            
	
              ARTICLE
                4

            	
              CERTAIN
                LIBO RATE AND OTHER PROVISIONS

            	
              47

            
	
              SECTION
                4.1.

            	
              LIBO
                Rate Lending Unlawful

            	
              47

            
	
              SECTION
                4.2.

            	
              Deposits
                Unavailable

            	
              47

            
	
              SECTION
                4.3.

            	
              Increased
                LIBO Rate Loan Costs, etc

            	
              48

            
	
              SECTION
                4.4.

            	
              Funding
                Losses

            	
              48

            
	
              SECTION
                4.5.

            	
              Increased
                Capital Costs

            	
              49

            
	
              SECTION
                4.6.

            	
              Taxes

            	
              49

            
	
              SECTION
                4.7.

            	
              Payments,
                Computations; Proceeds of Collateral, etc

            	
              52

            
	
              SECTION
                4.8.

            	
              Sharing
                of Payments

            	
              53

            
	
              SECTION
                4.9.

            	
              Setoff

            	
              54

            
	
              ARTICLE
                5

            	
              CONDITIONS
                TO CREDIT EXTENSIONS

            	
              54

            
	
              SECTION
                5.1.

            	
              Initial
                Credit Extension

            	
              54

            
	
              SECTION
                5.2.

            	
              All
                Credit Extensions

            	
              60

            
	
              ARTICLE
                6

            	
              REPRESENTATIONS
                AND WARRANTIES

            	
              61

            
	
              SECTION
                6.1.

            	
              Organization,
                etc

            	
              61

            
	
              SECTION
                6.2.

            	
              Due
                Authorization, Non-Contravention, Defaults etc

            	
              61

            
	
              SECTION
                6.3.

            	
              Government
                Approval, Regulation, etc

            	
              62

            
	
              SECTION
                6.4.

            	
              Validity,
                etc

            	
              62

            
	
              SECTION
                6.5.

            	
              Financial
                Information

            	
              62

            


    

     

    
      
        
        

      

      
        -i-

        
          

        

      

      
        
        

      

    

    

      TABLE
        OF CONTENTS

      (continued)

    

    
      	 	 	Page
	 	 	 


    

    
      	
              SECTION
                6.6.

            	
              No
                Material Adverse Change

            	
              62

            
	
              SECTION
                6.7.

            	
              Litigation,
                Labor Controversies, etc

            	
              62

            
	
              SECTION
                6.8.

            	
              Subsidiaries

            	
              63

            
	
              SECTION
                6.9.

            	
              Ownership
                 of Properties, Etc

            	
              63

            
	
              SECTION
                6.10.

            	
              Taxes

            	
              64

            
	
              SECTION
                6.11.

            	
              ERISA;
                Pension and Welfare Plans

            	
              64

            
	
              SECTION
                6.12.

            	
              Environmental
                Warranties

            	
              64

            
	
              SECTION
                6.13.

            	
              Disclosure
                of Material Information; Accuracy of Information

            	
              65

            
	
              SECTION
                6.14.

            	
              Regulations
                T, U and X

            	
              66

            
	
              SECTION
                6.15.

            	
              Labor
                Matters

            	
              66

            
	
              SECTION
                6.16.

            	
              Compliance
                with Laws

            	
              66

            
	
              SECTION
                6.17.

            	
              Material
                Contracts

            	
              66

            
	
              SECTION
                6.18.

            	
              Solvency

            	
              66

            
	
              SECTION
                6.19.

            	
              Deposit
                Account and Cash Management Accounts

            	
              66

            
	
              SECTION
                6.20.

            	
              Insurance

            	
              66

            
	
              SECTION
                6.21.

            	
              Restrictions
                on Liens

            	
              67

            
	
              SECTION
                6.22.

            	
              Location
                of Business and Offices

            	
              67

            
	
              SECTION
                6.23.

            	
              Maintenance
                of Properties

            	
              67

            
	
              SECTION
                6.24.

            	
              Gas
                Imbalances

            	
              68

            
	
              SECTION
                6.25.

            	
              Marketing
                of Production

            	
              68

            
	
              SECTION
                6.26.

            	
              Perfected
                Liens and Security Interests

            	
              68

            
	
              ARTICLE
                7

            	
              COVENANTS

            	
              68

            
	
              SECTION
                7.1.

            	
              Affirmative
                Covenants

            	
              68

            
	
              SECTION
                7.2.

            	
              Negative
                Covenants

            	
              79

            
	
              ARTICLE
                8

            	
              EVENTS
                OF DEFAULT

            	
              91

            
	
              SECTION
                8.1.

            	
              Listing
                of Events of Default

            	
              92

            
	
              SECTION
                8.2.

            	
              Action
                if Bankruptcy

            	
              94

            
	
              SECTION
                8.3.

            	
              Action
                if Other Event of Default

            	
              94

            
	
              ARTICLE
                9

            	
              THE
                ADMINISTRATIVE AGENT, AGENTS AND ISSUER

            	
              94

            
	
              SECTION
                9.1.

            	
              Actions

            	
              94

            
	
              SECTION
                9.2.

            	
              Funding
                Reliance, etc

            	
              95

            
	
              SECTION
                9.3.

            	
              Exculpation

            	
              95

            
	
              SECTION
                9.4.

            	
              Successor

            	
              96

            
	
              SECTION
                9.5.

            	
              Credit
                Extensions by Agents and Issuers

            	
              96

            
	
              SECTION
                9.6.

            	
              Credit
                Decisions

            	
              96

            
	
              SECTION
                9.7.

            	
              Copies,
                etc

            	
              97

            
	
              SECTION
                9.8.

            	
              Reliance
                by Agents and Issuers

            	
              97

            
	
              SECTION
                9.9.

            	
              Defaults

            	
              97

            
	
              SECTION
                9.10.

            	
              Posting
                of Approved Electronic Communications

            	
              98

            
	
              SECTION
                9.11.

            	
              Proofs
                of Claim

            	
              99

            
	
              SECTION
                9.12.

            	
              Security
                Matters; Authority of Administrative Agent to Release
                Collateral

            	
              100

            
	
              SECTION
                9.13.

            	
              Agents
                and Arrangers

            	
              100

            


    

     

    
      
        
        

      

      
        -ii-

        
          

        

      

      
        
        

      

    

    

      TABLE
        OF CONTENTS

      (continued)

    

    
      	 	 	Page
	 	 	 


    

    
      	
              ARTICLE
                10

            	
              MISCELLANEOUS
                PROVISIONS

            	
              100

            
	
              SECTION
                10.1.

            	
              Waivers,
                Amendments, etc

            	
              101

            
	
              SECTION
                10.2.

            	
              Notices;
                Time

            	
              102

            
	
              SECTION
                10.3.

            	
              Payment
                of Costs and Expenses

            	
              102

            
	
              SECTION
                10.4.

            	
              Indemnification

            	
              103

            
	
              SECTION
                10.5.

            	
              Survival

            	
              104

            
	
              SECTION
                10.6.

            	
              Severability

            	
              104

            
	
              SECTION
                10.7.

            	
              Headings

            	
              105

            
	
              SECTION
                10.8.

            	
              Execution
                in Counterparts, Effectiveness, etc

            	
              105

            
	
              SECTION
                10.9.

            	
              Governing
                Law

            	
              105

            
	
              SECTION
                10.10.

            	
              Successors
                and Assigns

            	
              105

            
	
              SECTION
                10.11.

            	
              Sale
                and Transfer of Credit Extensions; Participations in Credit Extensions;
                Notes

            	
              105

            
	
              SECTION
                10.12.

            	
              Other
                Transactions

            	
              109

            
	
              SECTION
                10.13.

            	
              Forum
                Selection and Consent to Jurisdiction

            	
              109

            
	
              SECTION
                10.14.

            	
              Waiver
                of Jury Trial

            	
              109

            
	
              SECTION
                10.15.

            	
              Confidentiality

            	
              110

            
	
              SECTION
                10.16.

            	
              Counsel
                Representation

            	
              111

            
	
              SECTION
                10.17.

            	
              No
                Oral Agreements

            	
              111

            
	
              SECTION
                10.18.

            	
              Maximum
                Interest

            	
              111

            
	
              SECTION
                10.19.

            	
              Collateral
                Matters; Hedging Agreements

            	
              112

            
	
              SECTION
                10.20.

            	
              Amendment
                and Restatement

            	
              112

            
	
              SECTION
                10.21.

            	
              Assignment
                and Reallocation of Existing Loans, Etc

            	
              112

            
	
              SECTION
                10.22.

            	
              Patriot
                Act

            	
              113

            


    


    
      
        
        

      

      
        -iii-

        
          

        

      

      
        
        

      

    


    
      	
              SCHEDULE
                I

            	
              -

            	
              Disclosure
                Schedule

            
	
              SCHEDULE
                II

            	
              -

            	
              Percentages;
                LIBOR Office; Domestic Office

            
	
              SCHEDULE
                7.2.20

            	
              -

            	
              Required
                Hedging

            
	
              EXHIBIT
                A

            	
              -

            	
              Form
                of Note

            
	
              EXHIBIT
                B-1

            	
              -

            	
              Form
                of Borrowing Request

            
	
              EXHIBIT
                B-2

            	
              -

            	
              Form
                of Issuance Request

            
	
              EXHIBIT
                C

            	
              -

            	
              Form
                of Continuation/Conversion Notice

            
	
              EXHIBIT
                D

            	
              -

            	
              Form
                of Lender Assignment Agreement

            
	
              EXHIBIT
                E

            	
              -

            	
              Form
                of Compliance Certificate

            
	
              EXHIBIT
                F

            	
              -

            	
              Form
                of Guaranty

            
	
              EXHIBIT
                G-1

            	
              -

            	
              Form
                of Borrower and Subsidiary Pledge and Security Agreement and Irrevocable
                Proxy

            
	
              EXHIBIT
                G-2

            	
              -

            	
              Form
                of Intermediate Holdco Pledge Agreement and Irrevocable
                Proxy

            
	
              EXHIBIT
                H

            	
              -

            	
              Form
                of Amended and Restated Control Agreement

            
	
              EXHIBIT
                I-1

            	
              -

            	
              Form
                of Amendment to Mortgage of EXXI GOM (Texas)

            
	
              EXHIBIT
                I-2

            	
              -

            	
              Form
                of Amendment to Mortgage of EXXI GOM (Louisiana)

            
	
              EXHIBIT
                I-3

            	
              -

            	
              Form
                of Amendment to Mortgage of EXXI Texas LP (Texas)

            
	
              EXHIBIT
                I-4

            	
              -

            	
              Form
                of Amendment to Mortgage of Borrower

            
	
              EXHIBIT
                J

            	
              -

            	
              Form
                of Solvency Certificate

            


    


    
      
        
        

      

      
        -iv-

        
          

        

      

      
        
        

      

    



    AMENDED
      AND RESTATED FIRST LIEN CREDIT AGREEMENT

     

    THIS
      AMENDED AND RESTATED FIRST LIEN CREDIT AGREEMENT, dated as of June 8, 2007,
      is
      among ENERGY XXI GULF COAST, INC., a Delaware corporation (the “Borrower”),
      the
      various financial institutions and other Persons from time to time parties
      hereto (the “Lenders”),
      THE
      ROYAL BANK OF SCOTLAND plc (“RBS”),
      as
      administrative agent (in such capacity, the “Administrative
      Agent”)
      for
      the Lenders, RBS SECURITIES CORPORATION (“RBS
      Securities”)
      and
      BNP PARIBAS (“BNP
      Paribas”),
      as
      Joint Lead Arrangers and Joint Bookrunners, BNP PARIBAS, as syndication agent
      (in such capacity, the “Syndication
      Agent”)
      for
      the Lenders, and GUARANTY BANK, FSB and BMO CAPITAL MARKETS FINANCING, INC.
      f/k/a HARRIS NESBITT FINANCING, INC., as co-documentation agents (in such
      capacity, each a “Co-Documentation
      Agent”)
      for
      the Lenders, and the Issuers herein identified.

     

    W
      I T
      N E S S E T H:

     

    WHEREAS,
      the Borrower has entered into that certain First Lien Credit Agreement, dated
      as
      of April 4, 2006, by and among the Borrower, the various financial institutions
      and other Persons from time to time parties thereto, as lenders (the
“Existing
      Lenders”),
      The
      Royal Bank of Scotland, plc, as the Administrative Agent, RBS Securities
      Corporation, as a Joint Lead Arranger and a Joint Bookrunner, BNP Paribas,
      as
      the Syndication Agent, a Joint Lead Arranger and a Joint Bookrunner, Harris
      Nesbitt Financing, Inc., as the Documentation Agent, and the other persons
      parties thereto in the capacities therein specified, as amended by that certain
      First Amendment to First Lien Credit Agreement dated as of July 28, 2006, as
      further amended by that certain Second Amendment to First Lien Credit Agreement
      dated as of September 1, 2006, as further amended by that certain Consent and
      Third Amendment to First Lien Credit Agreement dated as of February 14, 2007,
      and as further amended by that certain Fourth Amendment to First Lien Credit
      Agreement dated as of March 7, 2007 (as so amended, and as amended,
      supplemented, amended and restated or otherwise modified prior to the date
      hereof, the “Existing
      First Lien Credit Agreement”);

     

    WHEREAS,
      the “Obligations” of the Borrower under the Existing First Lien Credit Agreement
      (the “Existing
      Obligations”)
      are
      secured by certain mortgage(s), guarantee(s), security agreement(s) and other
      similar documents heretofore executed and delivered by the Borrower and certain
      of its affiliates;

     

    WHEREAS,
      pursuant to a Purchase and Sale Agreement, dated as of April 24, 2007 (as
      amended, supplemented, amended and restated or otherwise modified from time
      to
      time as permitted hereunder, the “PSA”),
      among
      Energy XXI GOM, LLC, a Delaware limited liability company and Subsidiary of
      the
      Borrower (“EXXI
      GOM”),
      and
      Pogo Producing Company, Delaware corporation (the “Seller”),
      EXXI
      GOM intends to acquire (the “Acquisition”)
      from
      the Seller, the “Assets” as defined in the PSA, for aggregate consideration
      estimated to be approximately $419,500,000 plus fees and expenses (subject
      to
      certain adjustments as provided under the PSA);

     

    WHEREAS,
      the Borrower intends concurrently herewith to issue those certain 10% senior
      notes due 2013 dated as of the Closing Date in an aggregate principal amount
      of
      up to $850,000,000 (the “PP
      Notes”)
      pursuant to that certain Indenture dated as of the Closing Date (the
“Indenture”);

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        1

        
          

        

      

      
        
        

      

    


    WHEREAS,
      Intermediate Holdco and the Borrower expect to pay fees and expenses (the
“Transaction
      Costs”)
      in
      connection with the Acquisition and the issuance of the PP Notes (collectively,
      the “Transaction”);

     

    WHEREAS,
      in order to consummate the Acquisition and to pay Transaction Costs and to
      provide for the ongoing working capital needs and general corporate purposes
      of
      the Borrower and its Subsidiaries, the Borrower has requested that the Lenders
      provide (i) Loan Commitments (to include availability for Loans and Letters
      of
      Credit) pursuant to which Loans will be made from time to time prior to the
      Loan
      Commitment Termination Date; and (ii) Letter of Credit Commitments pursuant
      to
      which Letters of Credit will be issued from time to time prior to the Letter
      of
      Credit Commitment Termination Date, in each case on the terms and conditions
      set
      forth herein;

     

    WHEREAS,
      the Lenders and the Issuers are willing, on the terms and subject to the
      conditions hereinafter set forth, to extend the Commitments and make Loans
      to
      the Borrower and issue (or participate in) Letters of Credit; and

     

    WHEREAS,
      the parties hereto have agreed that it is in their respective best interests
      to
      enter into this Agreement to extend, renew and continue, but not to extinguish,
      terminate or novate, the Existing Loans and to amend, restate and supersede,
      but
      not to extinguish, terminate or cause to be novated the Indebtedness under,
      the
      Existing First Lien Credit Agreement;

     

    NOW,
      THEREFORE, the parties hereto agree to amend and restate the Existing First
      Lien
      Credit Agreement as follows:

     

    ARTICLE
      1

    DEFINITIONS
      AND ACCOUNTING TERMS

     

    SECTION
      1.1. Defined
      Terms.
      The
      following terms (whether or not underscored) when used in this Agreement,
      including its preamble
      and
recitals,
      shall,
      except where the context otherwise requires, have the following meanings (such
      meanings to be equally applicable to the singular and plural forms
      thereof):

     

    “Account
      Debtor”
means
      any Person who is or who may become obligated under, with respect to, or on
      account of, an account, chattel paper, or a general intangible or intangible,
      as
      applicable, in each case, as such term is defined under the UCC.

     

    “Acquisition”
is
      defined in the third
      recital.

     

    “Administrative
      Agent”
is
      defined in the preamble
      and
      includes each other Person appointed as the successor Administrative Agent
      pursuant to Section 9.4.

     

    “Affiliate”
of
      any
      Person means any other Person that, directly or indirectly, controls, is
      controlled by or is under common control with such Person. “Control” of a Person
      means the power, directly or indirectly,

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    (a)
      to
      vote 10% or more of the Capital Securities (on a fully diluted basis) of such
      Person having ordinary voting power for the election of directors, managing
      members or general partners (as applicable); or

     

    (b)
      to
      direct or cause the direction of the management and policies of such Person
      (whether by contract or otherwise).

     

    “Agent
      Indemnified Parties”
is
      defined in Section
      9.3.

     

    “Agents”
means
      each of the Administrative Agent, the Arrangers, the Syndication Agent and
      the
      Co-Documentation Agents and also includes any Person identified as a “Joint
      Bookrunner”.

     

    “Agreement”
means,
      on any date, this Amended and Restated First Lien Credit Agreement as originally
      in effect on the Effective Date and as thereafter from time to time amended,
      supplemented, amended and restated or otherwise modified from time to time
      and
      in effect on such date.

     

    “Alternate
      Base Rate”
means,
      on any date and with respect to all Base Rate Loans, a fluctuating rate of
      interest per annum (rounded upward, if necessary, to the next highest 1/16
      of
      1%) equal to the higher of

     

    (a)
      the
      Base Rate in effect on such day; and

     

    (b)
      the
      Federal Funds Rate in effect on such day plus 1⁄2 of 1%.

     

    Changes
      in the rate of interest on that portion of any Loans maintained as Base Rate
      Loans will take effect simultaneously with each change in the Alternate Base
      Rate. The Administrative Agent will give notice promptly to the Borrower and
      the
      Lenders of changes in the Alternate Base Rate; provided
      that,
      the failure to give such notice shall not affect the Alternate Base Rate in
      effect after such change.

     

    “Applicable
      Commitment Fee Margin”
means
      0.375%.

     

    “Applicable
      Law”
means
      with respect to any Person or matter, any United States or foreign, federal,
      state, regional, tribal or local statute, law, code, rule, treaty, convention,
      application, order, decree, consent decree, injunction, directive, determination
      or other requirement (whether or not having the force of law) relating to such
      Person or matter and, where applicable, any interpretation thereof by a
      Governmental Authority having jurisdiction with respect thereto or charged
      with
      the administration or interpretation thereof.

     

    “Applicable
      Margin”
means,
      for any day and with respect to all Loans maintained as LIBO Rate Loans or
      Base
      Rate Loans, the applicable percentage set forth below corresponding to the
      Borrowing Base Utilization Percentage: 

     

    
      	
              If
                the Borrowing

              Base
                Utilization

              Percentage
                is:

            	
              Then
                the Applicable Margin for LIBO Rate
                Loans is:

            	
              Then
                the Applicable Margin for Base Rate
                Loans is:

            
	
              Greater
                than or equal to 90%

            	
              2.25%

            	
              1.25%

            
	
              Greater
                than or equal to 75% but less than 90%

            	
              2.00%

            	
              1.00%

            
	
              Greater
                than or equal to 50% but less than 75%

            	
              1.75%

            	
              0.75%

            
	
              Less
                than 50%

            	
              1.50%

            	
              0.50%

            


    


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        3

        
          

        

      

      
        
        

      

    


    provided
      that the applicable percentages set forth in the foregoing table shall be
      decreased by 0.25% beginning with the period following the infusion by
      Intermediate Holdco of an aggregate amount of at least $50,000,000 in cash
      as an
      equity contribution to the Borrower after the Closing Date.

     

    If
      at any
      time the Borrower fails to deliver a Reserve Report pursuant to Section
      2.8.2
      or
2.8.3,
      then
      the “Applicable
      Margin”
means
      the rate per annum set forth on the grid when the Borrowing Base Utilization
      Percentage is at its highest level until such time as such Reserve Report has
      been delivered.

     

    “Approved
      Counterparties”
means
      any counterparty to the Hedging Agreement with the Borrower that (a) is a Lender
      or an Affiliate of a Lender or (B) has a credit rating of Baa1 or higher from
      Moody’s or BBB+ or higher from S&P.

     

    “Approved
      Engineer”
means
      Netherland, Sewell and Associates, Inc., Miller and Lents, Ltd., Ryder Scott
      Company, L.P., or any other independent petroleum engineer satisfactory to
      the
      Administrative Agent in its sole and absolute discretion.

     

    “Approved
      Fund”
means
      any Person (other than a natural Person) that (a) is engaged in making,
      purchasing, holding or otherwise investing in commercial loans and similar
      extensions of credit in the ordinary course of its business, and (b) is
      administered or managed by a Lender, an Affiliate of a Lender or a Person or
      an
      Affiliate of a Person that administers or manages a Lender.

     

    “Approved
      Southwest Speaks Assets Sale”
means
      the sale or Disposition of the Borrower’s interests in the Southwest Speaks
      field in Lavaca County, Texas provided that (a) 100% of the consideration
      received in respect of such sale or Disposition shall be in cash, (b) the
      consideration received in respect of such sale or Disposition shall be equal
      to
      or greater than the fair market value of such interests (as reasonably
      determined by the board of directors of the Borrower and, if requested by the
      Administrative Agent, the Borrower shall deliver a certificate of a Authorized
      Officer of the Borrower certifying to that effect), and (c) such sale or
      Disposition is completed within three (3) months of the Closing Date.


     

    “Arrangers”
means,
      collectively, RBS and BNP Paribas.

     

    “Assets”
is
      defined in the PSA.

     

    “Authorized
      Officer”
means,
      relative to any Obligor, those of its officers, general partners or managing
      members (as applicable) whose signatures and incumbency shall have been
      certified to the Administrative Agent, the Lenders and the Issuers pursuant
      to
Section
      5.1.1.

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        4

        
          

        

      

      
        
        

      

    


    “Base
      Amount”
is
      defined in Section
      3.3.3.

     

    “Base
      Rate”
means,
      at any time, the rate of interest then most recently established by the
      Administrative Agent in New York as its base rate for Dollars loaned in the
      United States. The Base Rate is not necessarily intended to be the lowest rate
      of interest determined by the Administrative Agent in connection with extensions
      of credit.

     

    “Base
      Rate Loan”
means
      a
      Loan bearing interest at a fluctuating rate determined by reference to the
      Alternate Base Rate.

     

    “BNP
      Paribas”
is
      defined in the preamble.

     

    “Borrower”
is
      defined in the preamble.

     

    “Borrower
      Pledge and Security Agreement”
means
      the Amended and Restated First Lien Pledge and Security Agreement and
      Irrevocable Proxy executed and delivered by an Authorized Officer of the
      Borrower, substantially in the form of Exhibit
      G-1
      hereto,
      as amended, supplemented, amended and restated or otherwise modified from time
      to time.

     

    “Borrowing”
means
      the Loans of the same Type and, in the case of LIBO Rate Loans having the same
      Interest Period made by all Lenders required to make such Loans on the same
      Business Day and pursuant to the same Borrowing Request in accordance with
      Section
      2.3.

     

    “Borrowing
      Base”
means
      at any time an amount equal to the amount determined in accordance with
Section
      2.8,
      as the
      same may be adjusted from time to time in accordance with the terms
      hereof.

     

    “Borrowing
      Base Deficiency”
is
      defined in Section
      3.1.1(c).

     

    “Borrowing
      Base Utilization Percentage”
means,
      as of any day, the fraction expressed as a percentage, the numerator of which
      is
      the sum of the Credit Exposures of the Lenders on such day, and the denominator
      of which is the Borrowing Base in effect on such day.

     

    “Borrowing
      Request”
means
      a
      Loan request and certificate duly executed by an Authorized Officer of the
      Borrower substantially in the form of Exhibit B-1
      hereto.

     

    “Business
      Day”
means
      (a) any day that is neither a Saturday or Sunday nor a legal holiday on
      which banks are authorized or required to be closed in New York, New York and
      (b) relative to the making, continuing, prepaying or repaying of any LIBO
      Rate Loans, any day that is a Business Day described in clause (a)
      above,
      and that is also a day on which dealings in Dollars are carried on in the London
      interbank eurodollar market.

     

    “Capital
      Expenditures”
means,
      for any period, the aggregate amount of (a) all expenditures of the
      Borrower and its Subsidiaries for fixed or capital assets made during such
      period that, in accordance with GAAP, would be classified as capital
      expenditures and (b) Capitalized Lease Liabilities incurred by the Borrower
      and its Subsidiaries during such period.

     


    
      
        Credit
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        5

        
          

        

      

      
        
        

      

    


    “Capital
      Securities”
means,
      with respect to any Person, all shares, interests, participations or other
      equivalents (however designated, whether voting or non-voting) of such Person’s
      capital (including all capital stock, partnership, membership or other equity
      interests in such Person), whether now outstanding or issued after the Effective
      Date and whether or not certificated.

     

    “Capitalized
      Lease Liabilities”
means,
      with respect to any Person, all monetary obligations of such Person and its
      Subsidiaries under any leasing or similar arrangement which have been (or,
      in
      accordance with GAAP, should be) classified as capitalized leases, and for
      purposes of each Loan Document the amount of such obligations shall be the
      capitalized amount thereof, determined in accordance with GAAP, and the stated
      maturity thereof shall be the date of the last payment of rent or any other
      amount due under such lease prior to the first date upon which such lease may
      be
      terminated by the lessee without payment of a premium or a penalty.

     

    “Cash
      Collateralize”
means,
      with respect to a Letter of Credit, the deposit of immediately available funds
      into a cash collateral account maintained with (or on behalf of) the
      Administrative Agent on terms satisfactory to the Administrative Agent in an
      amount equal to the Stated Amount of such Letter of Credit.

     

    “Cash
      Equivalent Investment”
means,
      at any time:

     

    (a)
      any
      direct obligation of (or unconditionally guaranteed by) the United States or
      a
      State thereof (or any agency or political subdivision thereof, to the extent
      such obligations are supported by the full faith and credit of the United States
      or a State thereof) maturing not more than one year after such
      time;

     

    (b)
      commercial paper maturing not more than 270 days from the date of issue, that
      is
      issued by (i) a corporation (other than an Affiliate of any Obligor) organized
      under the laws of any State of the United States or of the District of Columbia,
      and rated A-1 or higher by S&P or P-1 or higher by Moody’s or (ii) any
      Lender (or its holding company);

     

    (c)
      any
      certificate of deposit, time deposit or bankers acceptance, maturing not more
      than one year after its date of issuance, that is issued by (i) any bank
      organized under the laws of the United States (or any State thereof), and that
      has (A) a credit rating of A2 or higher from Moody’s or A or higher from
      S&P and (B) a combined capital and surplus greater than $500,000,000,
      or (ii) any Lender;

     

    (d)
      shares of money market mutual or similar funds which invest exclusively in
      assets satisfying the requirements of clauses
      (a)
      through
      (c)
      of this
      definition;

     

    (e)
      money
      market funds that (i) purport to comply generally with the criteria set forth
      in
      SEC Rule 2a-7 under the Investment Company Act of 1940, as amended, (ii) are
      rated AAA by S&P or Aaa by Moody’s or carrying an equivalent rating by a
      national recognized rating agency, and (iii) have portfolio assets of at least
      $5,000,000,000; or

     

    (f)
      any
      repurchase agreement having a term of 30 days or less entered into with any
      Lender or any commercial banking institution satisfying the criteria set forth
      in clause
      (c)(i)
      that

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    (i)
      is
      secured by a fully perfected security interest in any obligation of the type
      described in clause
      (a),
      and

     

    (ii)
      has
      a market value at the time such repurchase agreement is entered into of not
      less
      than 100% of the repurchase obligation of such commercial banking institution
      thereunder.

     

    “Castex”
means
      Castex Energy, Inc., a Texas corporation.

     

    “Castex
      Acquisition”
means
      the acquisition, pursuant to the Castex PSA, of certain oil and gas properties
      held by Castex and certain other interests in Oil and Gas Properties, including
      certain working interests held by related parties and certain other “Properties”
as defined in the Castex PSA. 

     

    “Castex
      Oil and Gas Properties”
means
      the Oil and Gas Properties acquired pursuant to the Castex
      Acquisition.

     

    “Castex
      PSA”
means
      that certain Purchase and Sale Agreement, dated as of June 6, 2006, by and
      between the Borrower, as buyer, and Castex Energy, Inc., Castex Energy 1995,
      L.P., Browning Oil Company, Inc., Flare Resources Inc., J&S Oil and Gas,
      LLC, Kitty Hawk Energy, L.L.C., and Rabbit Island, L.P., as sellers, as amended
      by that certain First Amendment to Purchase and Sale Agreement dated as of
      July
      5, 2006, as further amended by that certain Second Amendment to Purchase and
      Sale Agreement dated as of July 10, 2006, and as may be amended, supplemented,
      restated or otherwise modified from time to time in accordance with the Loan
      Documents.

     

    “Casualty
      Event”
means
      the damage, destruction or condemnation, as the case may be, of property of
      any
      Person or any of its Subsidiaries.

     

    “CERCLA”
means
      the Comprehensive Environmental Response, Compensation and Liability Act of
      1980, as amended.

     

    “CERCLIS”
means
      the Comprehensive Environmental Response Compensation Liability Information
      System List.

     

    “Change
      in Control”
      means:

     

    (a)
      the
      failure of the Parent at any time to directly or indirectly own beneficially
      and
      of record on a fully diluted basis 51% of the outstanding Capital Securities
      of
      Intermediate Holdco; 

     

    (b)
      the
      failure of Intermediate Holdco at any time to directly own beneficially and
      of
      record on a fully diluted basis 100% of the outstanding Capital Securities
      of
      the Borrower, such Capital Securities to be held free and clear of all Liens
      (other than Liens granted under a Loan Document);

     

    (c)
      the
      failure of the Borrower at any time to directly own beneficially and of record
      on a fully diluted basis 100% of the outstanding Capital Securities of EXXI
      GOM,
      such Capital Securities to be held free and clear of all Liens (other than
      Liens
      granted under a Loan Document);

     


    
      
        Credit
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        7

        
          

        

      

      
        
        

      

    


    (d)
      the
      occupation of a majority of the seats (other than vacant seats) on the board
      of
      directors of the Borrower by Persons who were neither (i) nominated by the
      board of directors or the stockholders of the Borrower nor (ii) appointed
      by directors a majority of whom was so nominated;

     

    (e)
      any
      Person or “group” (within the meaning of Section 13(d) or 14(d) of the
      Securities Exchange Act of 1934, as amended), shall have acquired ownership,
      directly or indirectly, beneficially or of record, of Capital Securities
      representing more than 50% of the aggregate ordinary voting power represented
      by
      the issued and outstanding Capital Securities of Parent; or

     

    (f)
      a
“Change of Control” as defined in the Indenture.

     

    “Closing
      Date”
means
      the date of the initial Credit Extension hereunder, but in no event shall such
      date be later than July 1, 2007.

     

    “Closing
      Date Certificate”
means
      the closing date certificate executed and delivered by an Authorized Officer
      of
      the Borrower in form and substance satisfactory to the Administrative
      Agent.

     

    “Closing
      Date Material Adverse Effect”
is
      defined in Section
      5.1.5.

     

    “Code”
means
      the Internal Revenue Code of 1986, and the regulations thereunder, in each
      case
      as amended, reformed or otherwise modified from time to time.

     

    “Co-Documentation
      Agent”
is
      defined in the preamble.

     

    “Collateral”
means
      any “Collateral” or “Mortgaged Property” as defined in any Security Document or
      any other collateral pledged or encumbered by any Obligor pursuant to the Loan
      Documents to secure all or part of the Obligations. 

     

    “Collections”
means
      all cash, checks, notes, instruments and other items of payment (including
      insurance proceeds, proceeds of cash sales, rental proceeds and tax refunds)
      of
      the Borrower and its Subsidiaries.

     

    “Commitment”
means,
      as the context may require, any Loan Commitment or Letter of Credit Commitment,
      as adjusted from time to time in accordance with this Agreement.

     

    “Commitment
      Amount”
means,
      as the context may require, the Loan Commitment Amount and the Letter of Credit
      Commitment Amount.

     

    “Commitment
      Termination Date”
means,
      as the context may require, the Letter of Credit Commitment Termination Date
      or
      the Loan Commitment Termination Date.

     

    “Commitment
      Termination Event”
      means

     


    
      
        Credit
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        8

        
          

        

      

      
        
        

      

    


    (a)
      the
      occurrence of any Event of Default with respect to the Borrower described in
      clauses
      (a)
      through
(d)
      of
Section
      8.1.9;
      or

     

    (b)
      the
      occurrence and continuance of any other Event of Default and either

     

    (i)
      the
      declaration of all or any portion of the Loans to be due and payable pursuant
      to
Section 8.3,
      or

     

    (ii)
      the
      giving of notice by the Administrative Agent, acting at the direction of the
      Required Lenders to the Borrower that the Commitments have been
      terminated.

     

    “Communications”
is
      defined in clause
      (a)
      of
Section 9.10.

     

    “Compliance
      Certificate”
means
      a
      certificate duly completed and executed by an Authorized Officer of the
      Borrower, substantially in the form of Exhibit E
      hereto,
      together with such changes thereto as the Administrative Agent may from time
      to
      time request for the purpose of monitoring the Borrower’s compliance with the
      financial covenants contained herein.

     

    “Contingent
      Liability”
means
      any agreement, undertaking or arrangement by which any Person guarantees,
      endorses or otherwise becomes or is contingently liable upon (by direct or
      indirect agreement, contingent or otherwise, to provide funds for payment,
      to
      supply funds to, or otherwise to invest in, a debtor, or otherwise to assure
      a
      creditor against loss) the Indebtedness of any other Person (other than by
      endorsements of instruments in the course of collection), or guarantees the
      payment of dividends or other distributions upon the Capital Securities of
      any
      other Person. The amount of any Person’s obligation under any Contingent
      Liability shall (subject to any limitation set forth therein) be deemed to
      be
      the outstanding principal amount of the debt, obligation or other liability
      guaranteed thereby.

     

    “Continuation/Conversion
      Notice”
means
      a
      notice of continuation or conversion and certificate duly executed by an
      Authorized Officer of the Borrower, substantially in the form of Exhibit C
      hereto.

     

    “Control
      Agreement”
means
      an agreement substantially in the form of Exhibit
      H
      or
      otherwise in form and substance reasonably satisfactory to the Administrative
      Agent which provides for the Administrative Agent to have “control” (as defined
      in Section 8-106 of the UCC, as such term relates to investment property (other
      than certificated securities or commodity contracts), or as used in Section
      9-106 of the UCC, as such term relates to commodity contracts, or as used in
      Section 9-104(a) of the UCC, as such term relates to deposit
      accounts).

     

    “Controlled
      Group”
means
      all members of a controlled group of corporations and all members of a
      controlled group of trades or businesses (whether or not incorporated) under
      common control that, together with the Borrower, are treated as a single
      employer under Section 414(b) or 414(c) of the Code or Section 4001 of
      ERISA.

     

    “Covered
      Properties”
is
      defined in Section
      7.1.1(m).

     


    
      
        Credit
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        9

        
          

        

      

      
        
        

      

    


    “Credit
      Exposure”
means,
      with respect to any Lender at any time, the sum of the outstanding principal
      amount of such Lender’s Loans and its Letter of Credit Outstandings at such
      time.

     

    “Credit
      Extension”
means,
      as the context may require,

     

    (a)
      the
      making of a Loan by a Lender (which shall not include the continuation or
      conversion of any Type of existing Loan); or

     

    (b)
      the
      issuance of any Letter of Credit, or the extension or renewal of any Stated
      Expiry Date of any existing Letter of Credit, by an Issuer.

     

    “Current
      Ratio”
means
      the ratio of

     

    (a) consolidated
      current assets of the Borrower and its Subsidiaries, but including any unused
      availability under the Borrowing Base and excluding therefrom any current
      non-cash asset (including in respect of Hedging Agreements) described in or
      calculated pursuant to the requirements of Statement of Financial Accounting
      Standards 133 and 143, each as amended (provided that, for the avoidance of
      doubt, the calculation of consolidated current assets shall include any current
      assets in respect of the termination of any Hedging Agreement) 

     

    to

     

    (b) consolidated
      current liabilities of the Borrower and its Subsidiaries but excluding therefrom
      any current non-cash liabilities (including in respect of Hedging Agreements)
      described in or calculated pursuant to the requirements of Statement of
      Financial Accounting Standards 133 and 143, each as amended (provided that,
      for
      the avoidance of doubt, the calculation of consolidated current liabilities
      shall include any current liabilities in respect of the termination of any
      Hedging Agreement).

     

    “Default”
means
      any Event of Default or any condition, occurrence or event which, after notice
      or lapse of time or both, would constitute an Event of Default.

     

    “Deposit
      Account”
means
      a
“deposit account” as that term is defined in Section 9-102(a) of the
      UCC.

     

    “Default
      Rate”
is
      defined in Section
      3.2.2.

     

    “Designated
      Amount”
is
      defined in Section
      3.3.3.

     

    “Disbursement”
is
      defined in Section
      2.6.2.

     

    “Disbursement
      Date”
is
      defined in Section
      2.6.2.

     

    “Disclosure
      Schedule”
means
      the Disclosure Schedule attached hereto as Schedule I,
      as it
      may be amended, supplemented, amended and restated or otherwise modified from
      time to time by the Borrower with the written consent of the Required
      Lenders.

     


    
      
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        10

        
          

        

      

      
        
        

      

    


    “Disposition”
(or
      similar words such as “Dispose”)
      means
      any sale, transfer, lease, contribution or other conveyance (including by way
      of
      merger) of, or the granting of options, warrants or other rights to, any of
      the
      Borrower’s or its Subsidiaries’ assets (including accounts receivable and
      Capital Securities of Subsidiaries) to any other Person (other than to another
      Obligor) in a single transaction or series of transactions.

     

    “Dollar”
and
      the
      sign “$”
mean
      lawful money of the United States.

     

    “Domestic
      Office”
means
      the office of a Lender designated as its “Domestic Office” on Schedule
      II
      hereto
      or in a Lender Assignment Agreement, or such other office within the United
      States as may be designated from time to time by notice from such Lender to
      the
      Administrative Agent and the Borrower.

     

    “EBITDA”
means,
      for any applicable period and with the respect to the Borrower and its
      consolidated Subsidiaries, the sum of (a) Net Income, plus (b) to the extent
      deducted in determining Net Income, the sum of (i) amounts attributable to
      amortization, depletion and depreciation of assets, (ii) income tax
      expense, (iii) Interest Expense for such period, and (iv) reasonable
      transaction fees and expenses incurred in connection with negotiation, execution
      and delivery of this Agreement, the Loan Documents and the PP Debt Documents
      and
      in connection with the closing of the Acquisition, the Marlin Acquisition
and
      the
      Castex Acquisition
      as well
      as the repayment of the Indebtedness under the Second Lien Loan Documents;
      provided,
      however,
      that
      (A) for the Fiscal Quarter ending September 30, 2006, EBITDA for such Fiscal
      Quarter shall be deemed to be equal to $79,883,043, (B) for the Fiscal Quarter
      ending December 31, 2006, EBITDA for such Fiscal Quarter shall be deemed to
      be
      equal to $87,490,216, and (C) for the Fiscal Quarter ending March 31, 2007,
      EBITDA for such Fiscal Quarter shall be deemed to be equal to $71,661,308;
      provided,
      further,
      that
      any calculation of EBITDA hereunder for any applicable period shall be made
      using an EBITDA for such applicable period calculated on a pro forma basis
      (inclusive of any acquisitions and/or divestitures, if any, of assets or equity
      interests made during such applicable period as if such acquisitions or
      divestitures had been made at the beginning of such applicable
      period).

     

    “Effective
      Date”
means
      the date this Agreement becomes effective pursuant to Section 10.8.

     

    “Eligible
      Assignee”
means
      (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund;
      or (d) any other Person (other than a natural Person, the Borrower, any
      Affiliate of the Borrower or any other Person taking direction from, or working
      in concert with, the Borrower or any of the Borrower’s Affiliates).

     

    “Environmental
      Laws”
means
      all applicable foreign, federal, state, provincial or local statutes, laws,
      ordinances, codes, rules, regulations and guidelines (including consent decrees
      and administrative orders) relating to public health and safety and protection
      of the environment.

     

    “ERISA”
means
      the Employee Retirement Income Security Act of 1974, as amended, and any
      successor statute thereto of similar import, together with the regulations
      thereunder, in each case as in effect from time to time. References to sections
      of ERISA also refer to any successor sections thereto.

     


    
      
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        11

        
          

        

      

      
        
        

      

    


    “ERISA
      Affiliate”
means
      all members of a controlled group of corporations and all members of a
      controlled group of trades or businesses (whether or not incorporated) under
      common control that, together with the Borrower, are treated as a single
      employer under section 414 (b) or 414 (c) of the Code or section 4001(b)(1)
      of ERISA. 

     

    “Event
      of Default”
is
      defined in Section
      8.1.

     

    “Exemption
      Certificate”
is
      defined in clause
      (e)
      of
Section
      4.6.

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    “Existing
      First Lien Credit Agreement”
is
      defined in the first
      recital.

     

    “Existing
      Lenders”
is
      defined in the first
      recital.

     

    “Existing
      Loans”
is
      defined in the Section
      2.1.1(c).

     

    “Existing
      Obligations”
is
      defined in the second
      recital.

     

    “EXXI
      GOM”
is
      defined in the third
      recital.

     

    “EXXI
      Texas GP”
means
      Energy XXI Texas GP, LLC, a Delaware limited liability company, formerly known
      as Marlin Texas GP, L.L.C., and its permitted assigns and
      successors.

     

    “EXXI
      Texas LP”
means
      Energy XXI Texas, LP, a Delaware limited partnership, formerly known as Marlin
      Texas, L.P., and its permitted assigns and successors.

     

    “Federal
      Funds Rate”
means,
      for any day, a fluctuating interest rate per annum equal for each day during
      such day to

     

    (a)
      the
      weighted average of the rates on overnight federal funds transactions with
      members of the Federal Reserve System arranged by federal funds brokers, as
      published for such day (or, if such day is not a Business Day, for the next
      preceding Business Day) by the Federal Reserve Bank of New York;
      or

     

    (b)
      if
      such rate is not so published for any day which is a Business Day, the average
      of the quotations for such day on such transactions received by the
      Administrative Agent from three federal funds brokers of recognized standing
      selected by it.

     

    “Fee
      Letter”
means
      the Fee Letter, dated June 8, 2007, by and among RBS, RBS Securities, BNP
      Paribas and the Borrower.

     

    “Filing
      Statements”
is
      defined in Section
      5.1.13.

     

    “Fiscal
      Quarter”
means
      any period of three consecutive calendar months ending on the last day of March,
      June, September or December.

     


    
      
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        12

        
          

        

      

      
        
        

      

    


    “Fiscal
      Year”
means
      any period of twelve consecutive calendar months ending on June 30; references
      to a Fiscal Year with a number corresponding to any calendar year (e.g.,
      the
“2006 Fiscal Year”) refer to the Fiscal Year ending on June 30 of such calendar
      year.

     

    “F.R.S.
      Board”
means
      the Board of Governors of the Federal Reserve System or any successor
      thereto.

     

    “G&A
      Expenses”
means,
      with respect to any Person, the general and administrative expenses of such
      Person not attributable to any particular Property, including without
      limitation, salaries, directors’ and officers’ insurance, office rent and
      operating expenses, overhead and outside contractors, but excluding expenses
      that are properly capitalized under GAAP.

     

    “GAAP”
is
      defined in Section
      1.5.

     

    “Good
      Title”
means,
      with respect to any Property, a good and valid title to such Property that
      is
      free from reasonable doubt, is superior to any other titles and claims with
      respect to such Property, and could not be reasonably expected to expose the
      party who holds such title to the hazards of litigation with respect to the
      validity and priority of such title.

     

    “Governmental
      Authority”
means
      the government of the United States or Bermuda, any other nation, or any
      political subdivision thereof, whether state, provincial or local, and any
      agency, authority, instrumentality, regulatory body, court, central bank or
      other Person exercising executive, legislative, judicial, taxing, regulatory
      or
      administrative powers or functions of or pertaining to government.

     

    “Granting
      Lender”
is
      defined in clause
      (g)
      of
Section
      10.11.

     

    “Guarantor”
means,
      collectively, Intermediate Holdco, each Subsidiary Guarantor and each other
      Person that executes and delivers a Guaranty.

     

    “Guaranty”
means,
      as applicable, the Intermediate Holdco Guaranty, the Subsidiary Guaranties
      and
      any other document delivered by a Subsidiary of the Borrower whereby such
      Subsidiary becomes liable for the Obligations as a guarantor.

     

    “Hazardous
      Material”
      means

     

    (a)
      any
“hazardous substance”, as defined by CERCLA;

     

    (b)
      any
“hazardous waste”, as defined by the Resource Conservation and Recovery Act, as
      amended; or

     

    (c)
      any
      pollutant or contaminant or hazardous, dangerous or toxic chemical, material
      or
      substance (including any petroleum product) within the meaning of any other
      applicable foreign, federal, state, provincial or local law, regulation,
      ordinance or requirement (including consent decrees and administrative orders)
      relating to or imposing liability or standards of conduct concerning any
      hazardous, toxic or dangerous waste, substance or material, all as
      amended.

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        13

        
          

        

      

      
        
        

      

    


    “Hedging
      Agreements”
means
      (a) any agreement providing for options, swaps, floors, caps, collars,
      forward sales or forward purchases involving interest rates, commodities or
      commodity prices, equities, currencies, bonds, or indexes based on any of the
      foregoing, (b) any option, futures or forward contract traded on an
      exchange, and (c) any other hedging contract, derivative agreement or other
      similar agreement or arrangement.

     

    “Hedging
      Obligations”
means,
      with respect to any Person, all liabilities of such Person under Hedging
      Agreements.

     

    “herein”,
      “hereof”,
      “hereto”,
      “hereunder”
and
      similar terms contained in any Loan Document refer to such Loan Document as
      a
      whole and not to any particular Section, paragraph or provision of such Loan
      Document.

     

    “Highest
      Lawful Rate”
is
      defined in Section
      10.18.

     

    “Hydrocarbon
      Interests”
means
      all rights, titles, interests and estates now or hereafter acquired in and
      to
      oil and gas leases, oil, gas and mineral leases, or other liquid or gaseous
      hydrocarbon leases, mineral fee interests, overriding royalty and royalty
      interests, net profit interests and production payment interests, including
      any
      reserved or residual interests of whatever nature.

     

    “Hydrocarbons”
means
      oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate,
      distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined
      or separated therefrom.

     

    “IFRS”
means
      the “International Financial Reporting Standards” adopted and promulgated by the
      International Accounting Standards Board , as amended.

     

    “Impermissible
      Qualification”
means
      any qualification, exception, explanatory paragraph or paragraph of emphasis
      to
      the opinion or certification of any independent public accountant as to any
      financial statement 

     

    (a)
      that
      is of a “going concern” or similar nature;

     

    (b)
      that
      relates to the limited scope of examination of matters relevant to such
      financial statement; or

     

    (c)
      that
      relates to the treatment or classification of any item in such financial
      statement and which, as a condition to its removal, would require an adjustment
      to such item the effect of which would be to cause the Borrower to be in
      Default.

     

    “including”
and
      “include”
means
      including without limiting the generality of any description preceding such
      term, and, for purposes of each Loan Document, the parties hereto agree that
      the
      rule of ejusdem generis shall not be applicable to limit a general statement,
      that is followed by or referable to an enumeration of specific matters, to
      matters similar to the matters specifically mentioned.

     

    “Indebtedness”
of
      any
      Person means:

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        14

        
          

        

      

      
        
        

      

    


    (a)
      all
      obligations of such Person for borrowed money or advances and all obligations
      of
      such Person evidenced by bonds, debentures, notes or similar instruments or
      upon
      which interest payments are customarily made;

     

    (b)
      all
      obligations, contingent or otherwise, relative to the face amount of all letters
      of credit, whether or not drawn, banker’s acceptances, performance, surety or
      appeal bonds (or similar obligations) issued for the account of such
      Person;

     

    (c)
      all
      Capitalized Lease Liabilities of such Person;

     

    (d)
      all
      reimbursement, payment or other obligations or liabilities of such Person
      created or arising under any conditional sale or title retention agreement
      with
      respect to property used or acquired by such Person;

     

    (e)
      all
      other items that, in accordance with GAAP, would be included as liabilities
      on
      the balance sheet of such Person as of the date at which Indebtedness is to
      be
      determined;

     

    (f)
      net
      Hedging Obligations of such Person;

     

    (g)
      whether or not so included as liabilities in accordance with GAAP, all
      obligations of such Person to pay the deferred purchase price of property or
      services (including all reimbursement, payment or other obligations or
      liabilities of such Person created or arising under any conditional sale or
      title retention agreement with respect to property used or acquired by such
      Person) (excluding trade accounts payable in the ordinary course of business
      that are not overdue for a period of more than 90 days or, if overdue for more
      than 90 days, as to which a dispute exists and adequate reserves in conformity
      with GAAP have been established on the books of such Person), and indebtedness
      secured by (or for which the holder of such indebtedness has an existing right,
      contingent or otherwise, to be secured by) a Lien on property owned or being
      acquired by such Person (including indebtedness arising under conditional sales
      or other title retention agreements), whether or not such indebtedness shall
      have been assumed by such Person or is limited in recourse;

     

    (h)
      obligations arising under Synthetic Leases;

     

    (i)
      all
      Contingent Liabilities of such Person; and

     

    (j)
      all
      obligations referred to in clauses
      (a)
      through
(i)
      of this
      definition of another Person secured by (or for which the holder of such
      Indebtedness has an existing right, contingent or otherwise, to be secured
      by) a
      Lien upon property owned by such Person.

     

    The
      Indebtedness of any Person shall include the Indebtedness of any other Person
      (including any partnership in which such Person is a general partner) to the
      extent such Person is liable therefor as a result of such Person’s ownership
      interest in or other relationship with such Person, except to the extent the
      terms of such Indebtedness provide that such Person is not liable
      therefor.

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        15

        
          

        

      

      
        
        

      

    


    “Indemnified
      Liabilities”
is
      defined in Section
      10.4.

     

    “Indemnified
      Parties”
is
      defined in Section
      10.4.

     

    “Indenture”
is
      defined in the fourth
      recital.

     

    “Initial
      Reserve Report”
means
      (a) the reserve report concerning Assets, prepared by Ryder Scott Company,
      L.P.,
      issued on or after December 31, 2006 and dated as of December 31, 2006 and
      (b)
      internal reserve report concerning the Oil and Gas Properties of the Borrower
      (other than the Assets), prepared by the Borrower dated as of April 1,
      2007.

     

    “Interest
      Coverage Ratio”
means,
      as of the last day of any Fiscal Quarter, the ratio of:

     

    (a)
      EBITDA computed for the period consisting of such Fiscal Quarter and each of
      the
      three immediately preceding Fiscal Quarters

     

    to

     

    (b)
      Interest Expense computed for the period consisting of such Fiscal Quarter
      and
      each of the three immediately preceding Fiscal Quarters;

     

    provided,
      however,
      that
for
      purposes of calculating “Interest Coverage Ratio”,
      (i) (A)
      for the Fiscal Quarter ending September 30, 2006, EBITDA for such Fiscal Quarter
      shall be deemed to be equal to $79,883,043, (B) for the Fiscal Quarter ending
      December 31, 2006, EBITDA for such Fiscal Quarter shall be deemed to be equal
      to
      $87,490,216, and (C) for the Fiscal Quarter ending March 31, 2007, EBITDA for
      such Fiscal Quarter shall be deemed to be equal to $71,661,308; and (ii) any
      calculation of EBITDA hereunder for any applicable period shall be made using
      an
      EBITDA for such applicable period calculated on a pro forma basis (inclusive
      of
      any acquisitions and/or divestitures, if any, of assets or equity interests
      made
      during such applicable period as if such acquisitions or divestitures had been
      made at the beginning of such applicable period).

     

    “Interest
      Expense”
means,
      for any applicable period, the aggregate cash interest expense (both accrued
      and
      paid and net of interest income paid during such period to the Borrower and
      its
      Subsidiaries) of the Borrower and its Subsidiaries for such applicable period,
      including the portion of any payments made in respect of Capitalized Lease
      Liabilities allocable to interest expense,
      but
      excluding one-time write-offs of unamortized upfront fees associated with this
      Agreement and the other Loan Documents, the Existing Credit Agreement and the
      “Loan Documents” thereunder, the Second Lien Loan Documents and the PP Debt
      Documents.

     

    “Interest
      Period”
means,
      relative to any LIBO Rate Loan, the period beginning on (and including) the
      date
      on which such LIBO Rate Loan is made or continued as, or converted into, a
      LIBO
      Rate Loan pursuant to Section 2.3
      or
2.4
      and
      shall end on (but exclude) the day that numerically corresponds to such date
      one, three or six months thereafter (or, if such month has no numerically
      corresponding day, on the last Business Day of such month), in either case
      as
      the Borrower may select in its relevant notice pursuant to Section 2.3
      or
2.4;
      provided,
      that,

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        16

        
          

        

      

      
        
        

      

    


    (a)
      the
      Borrower shall not be permitted to select Interest Periods to be in effect
      at
      any one time that have expiration dates occurring on more than six different
      dates; and

     

    (b)
      no
      Interest Period for any Loan may end later than the Stated Maturity
      Date.

     

    “Intermediate
      Holdco”
means
      Energy XXI USA, Inc., a Delaware corporation.

     

    “Intermediate
      Holdco Guaranty”
means
      the Amended and Restated Limited Recourse Guaranty executed and delivered by
      an
      Authorized Officer of Intermediate Holdco, substantially in the form of
Exhibit
      F
      hereto,
      as amended, supplemented, amended and restated or otherwise modified from time
      to time.

     

    “Intermediate
      Holdco Pledge Agreement”
means
      the Amended and Restated First Lien Pledge Agreement and Irrevocable Proxy
      executed and delivered by an Authorized Officer of Intermediate Holdco,
      substantially in the form of Exhibit
      G-2
      hereto,
      as amended, supplemented, amended and restated or otherwise modified from time
      to time.

     

    “Investment”
means,
      relative to any Person,

     

    (a)
      any
      loan, advance or extension of credit made by such Person to any other Person,
      including the purchase by such Person of any bonds, notes, debentures or other
      debt securities of any other Person;

     

    (b)
      Contingent Liabilities in favor of any other Person; and

     

    (c)
      any
      Capital Securities held by such Person in any other Person.

     

    The
      amount of any Investment shall be the original principal or capital amount
      thereof less all returns of principal or capital thereon and shall, if made
      by
      the transfer or exchange of property other than cash, be deemed to have been
      made in an original principal or capital amount equal to the fair market value
      of such property at the time of such Investment.

     

    “ISP
      Rules”
is
      defined in Section
      10.9.

     

    “Issuance
      Request”
means
      a
      Letter of Credit request and certificate duly executed by an Authorized Officer
      of the Borrower substantially in the form of Exhibit
      B-2
      hereto.

     

    “Issuer”
means,
      as applicable, RBS or BNP Paribas in its capacity as an issuer of the Letters
      of
      Credit pursuant to the terms of this Agreement. At the request of the
      Administrative Agent and with the Borrower’s consent (not to be unreasonably
      withheld), another Lender may issue one or more Letters of Credit
      hereunder.

     

    “Lender
      Assignment Agreement”
means
      an assignment agreement substantially in the form of Exhibit D
      hereto.

     

    “Lenders”
is
      defined in the preamble.

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        17

        
          

        

      

      
        
        

      

    


    “Lender’s
      Environmental Liability”
means
      any and all losses, liabilities, obligations, penalties, claims, litigation,
      demands, defenses, costs, judgments, suits, proceedings, damages, (including
      consequential damages), disbursements or expenses of any kind or nature
      whatsoever (including reasonable attorneys’ fees at trial and appellate levels
      and experts’ fees and disbursements and expenses incurred in investigating,
      defending against or prosecuting any litigation, claim or proceeding) that
      may
      at any time be imposed upon, incurred by or asserted or awarded against any
      Agent, any Lender or any Issuer or any of such Person’s Affiliates,
      shareholders, directors, officers, employees, and agents in connection with
      or
      arising from:

     

    (a)
      any
      Hazardous Material on, in, under or affecting all or any portion of any property
      of the Borrower or any of its Subsidiaries or the groundwater thereunder to
      the
      extent caused by Releases from the Borrower’s or any of its Subsidiaries’ or any
      of their respective predecessors’ properties or any surrounding areas
      thereof;

     

    (b)
      any
      misrepresentation, inaccuracy or breach of any warranty, contained or referred
      to in Section
      6.12;

     

    (c)
      any
      violation or claim of violation by the Borrower or any of its Subsidiaries
      of
      any Environmental Laws; or

     

    (d)
      the
      imposition of any Lien for damages caused by, or the recovery of any costs
      with
      respect to, the cleanup, release or threatened release of Hazardous Material
      by
      the Borrower or any of its Subsidiaries, or in connection with any property
      owned or formerly owned by the Borrower or any of its Subsidiaries.

     

    “Letter
      of Credit”
is
      defined in Section
      2.1.2.

     

    “Letter
      of Credit Commitment”
means
      an Issuer’s obligation to issue Letters of Credit pursuant to Section
      2.1.2
      and any
      Lender’s obligation to participate in Letters of Credit pursuant to Section
      2.6.

     

    “Letter
      of Credit Commitment Amount”
means,
      on any date, a maximum amount of $40,000,000, as such amount may be permanently
      reduced from time to time pursuant to Section
      2.2.

     

    “Letter
      of Credit Commitment Termination Date”
means
      the date that is five Business Days prior to the Loan Commitment Termination
      Date.

     

    “Letter
      of Credit Outstandings”
means,
      on any date, an amount equal to the sum of (a) the then aggregate amount that
      is
      undrawn and available under all issued and outstanding Letters of Credit, and
      (b) the then aggregate amount of all unpaid and outstanding Reimbursement
      Obligations. The Letter of Credit Outstandings of any Lender at any time shall
      be its Percentage of the Letter of Credit Outstandings at such
      time.

     

    “LIBO
      Rate”
means,
      relative to any Interest Period for LIBO Rate Loans, the rate per annum (rounded
      upwards, if necessary, to the nearest 1/16 of 1%) determined by the
      Administrative Agent at approximately 11:00 a.m. (London time) on the date
      that is two Business Days prior to the beginning of the relevant Interest Period
      by reference to the British Bankers’ Association Interest Settlement Rates for
      deposits in Dollars (as set forth by the Bloomberg Information Service or any
      successor thereto or any other service selected by the Administrative Agent
      that
      has been nominated by the British Bankers’ Association as an authorized
      information vendor for the purpose of displaying such rates) for a period most
      closely approximating such Interest Period (and in an amount approximately
      equal
      to the amount of the relevant LIBO Rate Loans); provided
      that, to
      the extent that an interest rate is not ascertainable pursuant to the foregoing
      provisions of this definition, the “LIBO Rate” shall be the interest rate per
      annum determined by the Administrative Agent to be the average of the rates
      per
      annum at which deposits in Dollars (in an amount approximately equal to the
      amount of the relevant LIBO Rate Loans) are offered for such relevant Interest
      Period to major banks in the London interbank market in London, England by
      the
      Administrative Agent at approximately 11:00 a.m. (London time) on the date
      that is two Business Days prior to the beginning of such Interest
      Period.

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        18

        
          

        

      

      
        
        

      

    


    “LIBO
      Rate Loan”
means
      a
      Loan bearing interest, at all times during an Interest Period applicable to
      such
      Loan, at a rate of interest determined by reference to the LIBO Rate (Reserve
      Adjusted).

     

    “LIBO
      Rate (Reserve Adjusted)”
means,
      relative to any Loan to be made, continued or maintained as, or converted into,
      a LIBO Rate Loan for any Interest Period, a rate per annum (rounded upwards,
      if
      necessary, to the nearest 1/16 of 1%) determined pursuant to the following
      formula:

     

    
      	
              LIBO
                Rate

            	
              =

            	
              LIBO
                Rate

            
	
              (Reserve
                Adjusted)

            	 	
              1.00
                - LIBOR Reserve Percentage

            


    

     

    The
      LIBO
      Rate (Reserve Adjusted) for any Interest Period for LIBO Rate Loans will be
      determined by the Administrative Agent on the basis of the LIBOR Reserve
      Percentage in effect two Business Days before the first day of such Interest
      Period.

     

    “LIBOR
      Office”
means
      the office of a Lender designated as its “LIBOR Office” on Schedule
      II
      hereto
      or in a Lender Assignment Agreement, or such other office designated from time
      to time by notice from such Lender to the Borrower and the Administrative Agent,
      whether or not outside the United States, which shall be making or maintaining
      the LIBO Rate Loans of such Lender.

     

    “LIBOR
      Reserve Percentage”
means,
      relative to any Interest Period for LIBO Rate Loans, the reserve percentage
      (expressed as a decimal) equal to the maximum aggregate reserve requirements
      (including all basic, emergency, supplemental, marginal and other reserves
      and
      taking into account any transitional adjustments or other scheduled changes
      in
      reserve requirements) specified under regulations issued from time to time
      by
      the F.R.S. Board and then applicable to assets or liabilities consisting of
      or
      including “Eurocurrency Liabilities”, as currently defined in Regulation D
      of the F.R.S. Board, having a term approximately equal or comparable to such
      Interest Period.

     

    “Lien”
means
      any security interest, mortgage, pledge, hypothecation, assignment, deposit
      arrangement, encumbrance, lien (statutory or otherwise), privilege, charge
      against or security interest in property, or other priority or preferential
      arrangement of any kind or nature whatsoever, including any conditional sale
      or
      title retention arrangement, any Capitalized Lease Liability and any assignment,
      deposit arrangement or financing lease intended as security.

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        19

        
          

        

      

      
        
        

      

    


    “Loan
      Commitment”
means,
      relative to any Lender, such Lender’s obligation (if any) to make and/or hold
      Loans pursuant to Section
      2.1.1.

     

    “Loan
      Commitment Amount”
means,
      on any date, $700,000,000, as such amount may be reduced from time to time
      pursuant to Section
      2.2.

     

    “Loan
      Commitment Termination Date”
means
      the earliest of

     

    (a)
      the
      Stated Maturity Date;

     

    (b)
      the
      date on which the Loan Commitment Amount is terminated in full or reduced to
      zero pursuant to the terms of this Agreement; and

     

    (c)
      the
      date on which any Commitment Termination Event occurs.

     

    Upon
      the
      occurrence of any event described above, the Loan Commitments shall terminate
      automatically and without any further action.

     

    “Loan
      Documents”
means,
      collectively, this Agreement, the Notes, the Letters of Credit, each Hedging
      Agreement between the Borrower and any then current Lender or Affiliate of
      a
      then current Lender, the Fee Letter, each Security Document, each Guaranty,
      each
      Borrowing Request, each Issuance Request, and each other agreement, certificate,
      document or instrument delivered in connection with any Loan Document, whether
      or not specifically mentioned herein or therein.

     

    “Loans”
is
      defined in Section
      2.1.1.

     

    “Marlin
      Acquisition”
means
      the Borrower’s acquisition of the “Assets” (as defined in the Marlin PSA)
      pursuant to the Marlin PSA.

     

    “Marlin
      PSA”
means
      in that certain Purchase and Sale Agreement, dated as of February 21, 2006
      among
      the Borrower and Marlin Energy, L.L.C., Delaware limited liability company,
      as
      amended, supplemented, restated or otherwise modified from time to
      time.

     

    “Material
      Adverse Effect”
means,
      in light of all circumstances prevailing at the time, a material adverse effect
      on (a) the business, assets, condition (financial or otherwise), operations,
      performance, properties or prospects of the Borrower or the Borrower and its
      Subsidiaries taken as a whole, (b) the rights and remedies of any Secured Party
      under any Loan Document, (c) the ability of any Obligor to perform its
      Obligations under any Loan Document, (d) the legality, validity or
      enforceability of this Agreement or any other Loan Document or (e) the validity,
      perfection or priority of Liens with respect to any material portion of the
      Collateral in favor of the Administrative Agent for the benefit of the Secured
      Parties.

     

    “Moody’s”
means
      Moody’s Investors Service, Inc.

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        20

        
          

        

      

      
        
        

      

    


    “Mortgage”
means
      each mortgage, deed of hypothecation, debenture, pledge, deed of trust or
      agreement executed and delivered by any Obligor in favor of the Administrative
      Agent for itself and as agent for the benefit of the Secured Parties pursuant
      to
      the requirements of this Agreement in form and substance reasonably satisfactory
      to the Administrative Agent, as applicable, under which a Lien is granted on
      the
      real property and fixtures described therein, in each case as amended,
      supplemented, amended and restated or otherwise modified from time to
      time.

     

    “Mortgaged
      Properties”
is
      defined in Section
      7.1.1(m).

     

    “Mortgage
      Supplements”
is
      defined in Section
      5.1.16.

     

    “Net
      Income”
means,
      for any period, the aggregate of all amounts that would be included as net
      income (or loss) on the consolidated financial statements of the Borrower and
      its Subsidiaries for such period, but shall exclude effects on net income
      attributable to any current non-cash income or expense (including in respect
      of
      Hedging Agreements) described in or calculated pursuant to the requirements
      of
      Statement of Financial Accounting Standards 133 and 143, in each case as amended
      (provided that, for the avoidance of doubt, the calculation of Net Income shall
      include any income or expense in respect of the termination of any Hedging
      Agreement).

     

    “No
      Less Favorable Terms and Conditions”
means,
      with respect to any refinancing of any Indebtedness permitted hereunder, terms
      and conditions that are, taken as a whole, no less favorable to the Lenders
      and
      evidenced by documentation that shall not (a) increase the principal amount
      of
      or interest rate on such outstanding Indebtedness, (b) reduce either the tenor
      or the average life of such Indebtedness, (c) change the respective primary
      obligor(s) on the refinancing Indebtedness, (d) change the security, if any,
      for
      the refinancing Indebtedness (except to the extent that only a subset of
      existing security is granted to holders of such refinancing Indebtedness) or
      (e) afford the holders of such refinancing Indebtedness other covenants,
      defaults, rights or remedies, taken as a whole, more burdensome to the
      obligor(s) than those contained in such Indebtedness (and in the case of PP
      Debt, none of the provisions contained in the refinancing Indebtedness shall
      be
      materially more favorable taken as a whole to the Noteholders than the
      corresponding provision in the Indenture as in effect at the time of such
      refinancing).

     

    “Non-Excluded
      Taxes”
means
      any Taxes other than net income and franchise Taxes imposed with respect to
      any
      Secured Party by any Governmental Authority under the laws of which such Secured
      Party is organized or in which it maintains its applicable lending
      office.

     

    “Non-U.S.
      Lender”
means
      any Lender that is not a “United States person”, as defined under Section
      7701(a)(30) of the Code.

     

    “Note”
means
      a
      promissory note of the Borrower payable to any Lender, in the form of
Exhibit A
      hereto
      (as such promissory note may be amended, endorsed or otherwise modified from
      time to time), evidencing the aggregate Indebtedness of the Borrower to such
      Lender resulting from outstanding Loans, and also means all other promissory
      notes accepted from time to time in substitution or replacement therefor or
      renewal thereof.

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        21

        
          

        

      

      
        
        

      

    


    “Noteholders”
shall
      have the meaning given such term in the Indenture.

     

    “Obligations”
means
      all obligations (monetary or otherwise, whether absolute or contingent, matured
      or unmatured) of the Borrower and each other Obligor arising under or in
      connection with a Loan Document, including Reimbursement Obligations and the
      principal of and premium, if any, and interest (including interest accruing
      (or
      which would have accrued) during the pendency of any proceeding of the type
      described in Section
      8.1.9,
      whether
      or not allowed in such proceeding) on the Loans and such
      obligations.

     

    “Obligor”
means,
      as the context may require, the Borrower and each other Person (other than
      a
      Secured Party) obligated under any Loan Document.

     

    “Offshore
      Oil and Gas Properties”
means
      all Oil and Gas Properties of the Obligors located in the waters of the Gulf
      of
      Mexico including, but not limited to, those within the territorial waters of
      the
      United States of America and the States of Alabama, Florida, Louisiana,
      Mississippi, and Texas.

     

    “Oil
      and Gas Properties”
means
      (a) Hydrocarbon Interests; (b) the Properties now or hereafter pooled or
      unitized with Hydrocarbon Interests; (c) all presently existing or future
      unitization, pooling agreements and declarations of pooled units and the units
      created thereby (including without limitation all units created under orders,
      regulations and rules of any Governmental Authority) that may affect all or
      any
      portion of the Hydrocarbon Interests; (d) all operating agreements,
      contracts and other agreements, including production sharing contracts and
      agreements, that relate to any of the Hydrocarbon Interests or the production,
      sale, purchase, exchange or processing of Hydrocarbons from or attributable
      to
      such Hydrocarbon Interests; (e) all Hydrocarbons in and under and that may
      be
      produced and saved or attributable to the Hydrocarbon Interests, including
      all
      oil in tanks, and all rents, issues, profits, proceeds, products, revenues
      and
      other incomes from or attributable to the Hydrocarbon Interests; (f) all
      tenements, hereditaments, appurtenances and Properties in any manner
      appertaining, belonging, affixed or incidental to the Hydrocarbon Interests
      and
      (g) all Properties, rights, titles, interests and estates described or referred
      to above, including any and all Property, real or personal, now owned or
      hereinafter acquired and situated upon, used, held for use or useful in
      connection with the operating, working or development of any of such Hydrocarbon
      Interests or Property (excluding drilling rigs, automotive equipment, rental
      equipment or other personal Property that may be on such premises for the
      purpose of drilling a well or for other similar temporary uses) and including
      any and all oil wells, gas wells, injection wells or other wells, buildings,
      structures, fuel separators, liquid extraction plants, plant compressors, pumps,
      pumping units, field gathering systems, tanks and tank batteries, fixtures,
      valves, fittings, machinery and parts, engines, boilers, meters, apparatus,
      equipment, appliances, tools, implements, cables, wires, towers, casing, tubing
      and rods, surface leases, rights-of-way, easements and servitudes, together
      with
      all additions, substitutions, replacements, accessions and attachments to any
      and all of the foregoing.

     

    “Onshore
      Oil and Gas Properties”
means
      all Oil and Gas Properties of the Obligors (other than Offshore Oil and Gas
      Properties), including without limitation, Oil and Gas Properties acquired
      pursuant to the Castex Acquisition and all Oil and Gas Properties of the
      Borrower and its Subsidiaries in respect of (a) the Southwest Speaks field
      in
      Lavaca County, Texas, (b) the Plum Point Mineral Leases (as defined in the
      Mortgage delivered by EXXI Texas LP) and Plum Point Surface Lease (as defined
      in
      the Mortgage delivered by EXXI Texas LP) and (c) the Bateman Lake field in
      St.
      Mary’s Parish, Louisiana.

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        22

        
          

        

      

      
        
        

      

    


    “Organic
      Document”
means,
      relative to any Obligor, as applicable, its certificate or articles of
      incorporation, articles and memorandum of association, by-laws, certificate
      of
      partnership, partnership agreement, certificate of formation, limited liability
      agreement, operating agreement and similar or comparable agreement or
      certificate, and all shareholder agreements, voting trusts and similar
      arrangements applicable to any of such Obligor’s Capital
      Securities.

     

    “Other
      Taxes”
means
      any and all stamp, documentary or similar Taxes, or any other excise or property
      Taxes or similar levies that arise on account of any payment made or required
      to
      be made under any Loan Document or from the execution, delivery, registration,
      recording or enforcement of, or otherwise with respect to, any Loan
      Document.

     

    “Parent”
means
      Energy XXI (Bermuda) Limited, a corporation organized under the laws of
      Bermuda.

     

    “Participant”
is
      defined in clause
      (d)
      of
Section
      10.11.

     

    “Patriot
      Act”
means
      the USA PATRIOT ACT (Title III of Pub. L. 107-56 (signed into law October 26,
      2001)), as amended and supplemented from time to time.

     

    “PBGC”
means
      the Pension Benefit Guaranty Corporation and any Person succeeding to any or
      all
      of its functions under ERISA.

     

    “Pension
      Plan”
means
      a
“pension plan”, as such term is defined in Section 3(2) of ERISA, that is
      subject to Title IV of ERISA (other than a multiemployer plan as defined in
      Section 4001(a)(3) of ERISA), and to which the Borrower or any corporation,
      trade or business that is, along with the Borrower, a member of a Controlled
      Group, may have liability, including any liability by reason of having been
      a
      substantial employer within the meaning of Section 4063 of ERISA at any
      time during the preceding five years, or by reason of being deemed to be a
      contributing sponsor under Section 4069 of ERISA.

     

    “Percentage”
means,
      relative to any Lender, the percentage set forth opposite its name on
Schedule II
      hereto
      under the “Percentage” column or set forth in a Lender Assignment Agreement
      under the “Percentage” column, as such percentage may be adjusted from time to
      time pursuant to Lender Assignment Agreements executed by such Lender and its
      Assignee Lender and delivered pursuant to Section 10.11.
      A
      Lender shall not have any Loan Commitment or Letter of Credit Commitment if
      its
      Percentage is zero.

     

    “Permitted
      Acquisition”
means
      an acquisition (whether pursuant to an acquisition of Capital Securities, assets
      or otherwise) by the Borrower or any Subsidiary from any Person of a business
      in
      which all of the following conditions are satisfied:

     

    (a)
      the
      Borrower shall have submitted to the Administrative Agent at least 30 days
      prior
      to the consummation of such acquisition, (i) a business description of the
      business or assets being acquired, (ii) either (A) with respect to the
      acquisition of a Person whose primary business or assets involve the exploration
      or production of Hydrocarbons, reserve reports in form and substance
      satisfactory to the Administrative Agent together with lease operating
      statements and other financial information regarding such Person, all as
      reasonably requested by the Administrative Agent or (B) with respect to any
      other acquisition, the audited (or subject to a limited audit satisfactory
      to
      the Administrative Agent) financial statements of the business or assets being
      acquired (or such other financial information as reasonably acceptable to the
      Administrative Agent), and (iii) an executive overview outlining the rationale
      for such acquisition and a summary of the terms of the acquisition, all in
      reasonable detail;

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        23

        
          

        

      

      
        
        

      

    


    (b)
      the
      assets, Capital Securities or business being acquired, will be located,
      incorporated and/or doing business in the United States (or located in the
      offshore area in the Gulf of Mexico over which the United States of America
      and
      the Minerals Management Service of the United States Department of the Interior
      assert jurisdiction and to which the laws of the States of Texas or Louisiana
      are applicable);

     

    (c)
      Borrower shall have delivered a certificate certifying that before and after
      giving effect to such acquisition, the representations and warranties set forth
      in each Loan Document shall, in each case, be true and correct in all material
      respects with the same effect as if then made (unless stated to relate solely
      to
      an earlier date, in which case such representations and warranties shall be
      true
      and correct in all material respects as of such earlier date) and no Default
      or
      Borrowing Base Deficiency has occurred and is continuing or would result
      therefrom;

     

    (d)
      the
      Borrower shall have delivered to the Administrative Agent a Compliance
      Certificate for the period of four full Fiscal Quarters immediately preceding
      such acquisition (prepared in good faith and in a manner and using such
      methodology that is consistent with the most recent financial statements
      delivered pursuant to Section
      7.1.1)
      giving
pro forma
      effect
      to the consummation of such acquisition as if such Permitted Acquisition had
      occurred on the first day of the period of four Fiscal Quarters ending on the
      last day of the most recently ended Fiscal Quarter for which a Compliance
      Certificate has been delivered pursuant to clause
      (c)
      of
Section
      7.1.1
      and
      evidencing compliance with the covenants set forth in Section
      7.2.4,
      such
pro forma
      adjustments being reasonably satisfactory to the Administrative Agent;
      and

     

    (e)
      such
      acquisition is acceptable to the Administrative Agent, acting
      reasonably.

     

    “Person”
means
      any natural person, corporation, limited liability company, partnership, limited
      partnership, joint venture, association, trust or unincorporated organization,
      Governmental Authority or any other legal entity, whether acting in an
      individual, fiduciary or other capacity.

     

    “Platform”
is
      defined in clause
      (b)
      of
Section
      9.10.

     

    “Pogo
      Oil and Gas Properties”
means
      the Oil and Gas Properties acquired pursuant to the Acquisition.

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        24

        
          

        

      

      
        
        

      

    


    “PP
      Debt”
means
      the Indebtedness under the Indenture, PP Notes and the other PP Debt
      Documents.

     

    “PP
      Debt Documents”
means
      the Indenture, the PP Notes, and the other agreement, certificate, document
      or
      instrument delivered in connection with any of the foregoing.

     

    “PP
      Debt Trustee”
means
      the “Trustee” under the Indenture.

     

    “PP
      Notes”
is
      described in the fourth
      recital
      and
      shall have the meaning given the term “Notes” as defined in the Indenture.


     

    “Primary
      Syndication”
means
      the period commencing on or prior to the Closing Date and ending on the earlier
      of (a) the date that is 90 days following the Closing Date and (b) the
      date that the Administrative Agent has declared the primary syndication of
      the
      Commitments and Credit Extensions to have ended.

     

    “Proceeds
      Account”
is
      defined in Section
      7.1.10.

     

    “Property”
means
      any interest in any kind of property or asset, whether real, personal or mixed,
      or tangible or intangible, including, without limitation, cash, securities,
      accounts and contract rights.

     

    “Proposed
      Borrowing Base”
is
      defined in Section
      2.8.2.

     

    “Proved
      Developed Nonproducing Reserves”
means
      Proved Reserves which are categorized as both “Developed” and “Nonproducing” in
      the Reserve Definitions.

     

    “Proved
      Developed Producing Reserves”
means
      Proved Reserves which are categorized as both “Developed” and “Producing” in the
      Reserve Definitions.

     

    “Proved
      Reserves”
means
      “Proved Reserves” as defined in the Definitions for Oil and Gas Reserves (the
“Reserve
      Definitions”)
      promulgated by the Society of Petroleum Engineers (or any generally recognized
      successor) as in effect at the time in question.

     

    “Proved
      Undeveloped Reserves”
means
      Proved Reserves which are categorized as “Undeveloped” in the Reserve
      Definitions.

     

    “PSA”
is
      defined in the third
      recital.

     

    “PV9”
means
      the net present value, discounted at 9% per annum, of the future net revenues
      expected to accrue to the Borrower’s and its Subsidiaries’ collective interests
      in Proved Reserves expected to be produced from Oil and Gas Properties during
      the remaining expected economic lives of such reserves. Each calculation of
      such
      expected future net revenues shall be made in accordance with the then existing
      standards of the Society of Petroleum Engineers, provided that in any event
      (a)
      appropriate deductions shall be made for severance and ad valorem taxes, and
      for
      operating, gathering, transportation and marketing costs required for the
      production and sale of such reserves, (b) appropriate adjustments shall be
      made
      for hedging operations and deferred premiums, provided that Hedging Agreements
      with non-investment grade counterparties shall not be taken into account to
      the
      extent that such Hedging Agreements improve the position of or otherwise benefit
      the Borrower or any of its Subsidiaries, (c) the pricing assumptions used in
      determining PV9 for any particular reserves shall be based upon the following
      price decks: (i) for natural gas, $5.50/mmbtu and (ii) for crude oil,
      $42.00/Bbl, and (d) the cash-flows derived from the pricing assumptions set
      forth in clauses (b) and (c) above shall be further adjusted to account for
      the
      historical basis differentials for each month during the preceding 12-month
      period calculated by comparing realized crude oil and natural gas prices to
      Cushing, Oklahoma and Henry Hub NYMEX prices for each month during such
      period.

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        25

        
          

        

      

      
        
        

      

    


    “Quarterly
      Payment Date”
means
      the last Business Day of each March, June, September and December.

     

    “RBS”
is
      defined in the preamble.

     

    “RBS
      Securities”
is
      defined in the preamble.

     

    “Register”
is
      defined in clause
      (a)
      of
Section
      2.7.

     

    “Reimbursement
      Obligation”
is
      defined in Section
      2.6.3.

     

    “Release”
means
      a
“release”, as such term is defined in CERCLA or any release, threatened release,
      spill, emission, leaking, pumping, pouring, emitting, emptying, escape,
      injection, deposit, disposal, discharge, dispersal, dumping, leaching or
      migration of Hazardous Material in the indoor or outdoor environment, including
      the movement of Hazardous Material through or in the air, soil, surface water,
      ground water or property.

     

    “Replacement
      Lender”
is
      defined in Section
      4.6(g).

     

    “Replacement
      Notice”
is
      defined in Section
      4.6(g).

     

    “Required
      Lenders”
means,
      at any time, Lenders holding not less than 67% of the Total Exposure
      Amount.

     

    “Required
      Percentages”
is
      defined in Section
      7.1.11.

     

    “Reserve
      Report”
means
      the Initial Reserve Report and each other report setting forth, as of each
      December 31st
      or June
      30th
      (or such
      other date as required pursuant to Section
      2.8
      and the
      other provisions of this Agreement), the oil and gas reserves attributable
      to
      the Oil and Gas Properties of the Borrower and its Subsidiaries that the
      Borrower wishes to include in the Borrowing Base, together with a projection
      of
      the rate of production and future net income, severance and ad valorem taxes,
      operating expenses and capital expenditures with respect thereto as of such
      date, consistent with SEC reporting requirement at the time, provided that
      each
      such report hereafter delivered must (a) separately report on the Proved
      Developed Producing Reserves, Proved Developed Nonproducing Reserves and Proved
      Undeveloped Reserves of the Borrower and its Subsidiaries, (b) take into account
      the Borrower’s actual experiences with leasehold operating expenses and other
      costs in determining projected leasehold operating expenses and other costs,
      (c)
      identify and take into account any “overproduced” or “under-produced” status
      under gas balancing arrangements, and (d) contain information and analysis
      comparable in scope to that contained in the Initial Reserve Report except
      that
      there shall be no requirement to include any information regarding probable
      and
      possible reserves, any field descriptions, or other information other than
      the
      numerical output from the proved reserve calculations and summary information
      to
      the reasonable satisfaction of the Administrative Agent.

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        26

        
          

        

      

      
        
        

      

    


    “Resource
      Conservation and Recovery Act”
means
      the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq.,
      as
      amended.

     

    “Restricted
      Payment”
means
      (a) the declaration or payment of any dividend (other than dividends
      payable solely in Capital Securities of the Borrower or any Subsidiary) on,
      or
      the making of any payment or distribution on account of, or setting apart assets
      for a sinking or other analogous fund for the purchase, redemption, defeasance,
      retirement or other acquisition of, any class of Capital Securities of
      Intermediate Holdco, the Borrower or any Subsidiary or any warrants, options
      or
      other right or obligation to purchase or acquire any such Capital Securities,
      whether now or hereafter outstanding, or (b) the making of any other
      distribution in respect of such Capital Securities, in each case either directly
      or indirectly, whether in cash, property or obligations of Intermediate Holdco,
      the Borrower or any Subsidiary or otherwise.

     

    “S&P”
means
      Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies,
      Inc.

     

    “SEC”
means
      the Securities and Exchange Commission.

     

    “Second
      Lien Administrative Agent”
means
      the administrative agent for the Second Lien Credit Agreement.

     

    “Second
      Lien Credit Agreement”
means
      the Amended and Restated Second Lien Credit Agreement, dated as of July 28,
      2006, among the Borrower, the various financial institutions and other Persons
      from time to time party thereto as lenders, the Second Lien Administrative
      Agent
      and the other Persons party thereto as agents, as amended, supplemented, amended
      and restated, refinanced or otherwise modified from time to time in accordance
      with Section
      7.2.11.

     

    “Second
      Lien Loan Documents”
means
      the “Loan Documents” as defined in the Second Lien Credit Agreement (or such
      corresponding term in the event the Second Lien Credit Agreement is refinanced
      in accordance with the terms hereof).

     

    “Secured
      Parties”
means,
      collectively, the Lenders, the Issuers, the Administrative Agent, the other
      Agents, each counterparty to a Hedging Agreement that is currently Lender or
      an
      Affiliate thereof and (in each case) each of their respective successors,
      transferees and assigns.

     

    “Security
      Agreement”
means
      the Intermediate Holdco Pledge Agreement, the Borrower Pledge and Security
      Agreement and each Subsidiary Pledge and Security Agreement, substantially
      in
      the form of Exhibit G-1
      or
G-2
      hereto,
      together with any other pledge or security agreements delivered pursuant to
      the
      terms of this Agreement, in each case as amended, supplemented, amended and
      restated or otherwise modified from time to time.

     

    “Security
      Documents”
means
      each Mortgage and Mortgage Supplement, each Security Agreement, each Guaranty,
      each Control Agreement delivered pursuant to the terms of the Loan Documents,
      and all other security agreements, deeds of trust, mortgages, chattel mortgages,
      pledges, guaranties, control agreements, financing statements, continuation
      statements, extension agreements and other agreements or instruments,
      supplements, amendments or other modifications to any of the foregoing now,
      heretofore, or hereafter delivered by any Obligor to the Administrative Agent
      in
      connection with this Agreement or any transaction contemplated hereby to secure
      or guarantee the payment of any part of the Obligations or the performance
      of
      any Obligor’s other duties and obligations under the Loan
      Documents.

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        27

        
          

        

      

      
        
        

      

    


    “Seller”
is
      defined in the third
      recital.

     

    “Solvent”
means,
      with respect to any Person and its Subsidiaries on a particular date, that
      on
      such date (a) the fair value of the property of such Person and its Subsidiaries
      on a consolidated basis is greater than the total amount of liabilities,
      including contingent liabilities, of such Person and its Subsidiaries on a
      consolidated basis, (b) the present fair salable value of the assets of such
      Person and its Subsidiaries on a consolidated basis is not less than the amount
      that will be required to pay the probable liability of such Person and its
      Subsidiaries on a consolidated basis on its debts as they become absolute and
      matured, (c) such Person does not intend to, and does not believe that it or
      its
      Subsidiaries will, incur debts or liabilities beyond the ability of such Person
      and its Subsidiaries to pay as such debts and liabilities mature, (d) the
      realizable value of such Person’s assets are equal to or greater than the
      aggregate of its liabilities and stated capital of all classes of Capital
      Securities and (e) such Person and its Subsidiaries on a consolidated basis
      is
      not engaged in a business or a transaction, and such Person and its Subsidiaries
      on a consolidated basis is not about to engage in a business or a transaction,
      for which the property of such Person and its Subsidiaries on a consolidated
      basis would constitute unreasonably small capital. The amount of Contingent
      Liabilities at any time shall be computed as the amount that, in light of all
      the facts and circumstances existing at such time, can reasonably be expected
      to
      become an actual or matured liability.

     

    “SPC”
is
      defined in clause
      (g)
      of
Section
      10.11.

     

    “Stated
      Amount”
means,
      on any date and with respect to a particular Letter of Credit, the total amount
      then available to be drawn under such Letter of Credit.

     

    “Stated
      Expiry Date”
is
      defined in Section
      2.6.

     

    “Stated
      Maturity Date”
means
      June 8, 2011.

     

    “Subsidiary”
means,
      with respect to any Person, any other Person of which more than 50% of the
      outstanding Voting Securities of such other Person (irrespective of whether
      at
      the time Capital Securities of any other class or classes of such other Person
      shall or might have voting power upon the occurrence of any contingency) is
      at
      the time directly or indirectly owned or controlled by such Person, by such
      Person and one or more other Subsidiaries of such Person, or by one or more
      other Subsidiaries of such Person. Unless the context otherwise specifically
      requires, the term “Subsidiary” shall be a reference to a Subsidiary of the
      Borrower.

     

    “Subsidiary
      Guarantor”
means
      each Subsidiary that has executed and delivered to the Administrative Agent
      a
      Subsidiary Guaranty (including by means of a delivery of a supplement
      thereto).

     


    
      
        Credit
          Agreement (First Lien)

        
        

      

      
        28

        
          

        

      

      
        
        

      

    


    “Subsidiary
      Guaranty”
means
      any guaranty executed and delivered by an Authorized Officer of each Subsidiary
      pursuant to the terms of this Agreement, substantially in the form of
Exhibit F
      hereto
      or otherwise in form and substance reasonable to the Administrative Agent,
      as
      amended, supplemented, amended and restated or otherwise modified from time
      to
      time.

     

    “Subsidiary
      Pledge and Security Agreement”
means
      the Amended and Restated First Lien Pledge and Security Agreement and
      Irrevocable Proxy executed and delivered by each Subsidiary Guarantor,
      substantially in the form of Exhibit G-1
      hereto,
      together with any other pledge or security agreements delivered pursuant to
      the
      terms of this Agreement, in each case as amended, supplemented, amended and
      restated or otherwise modified from time to time.

     

    “Syndication
      Agent”
is
      defined in the preamble.

     

    “Synthetic
      Lease”
means,
      as applied to any Person, any lease (including leases that may be terminated by
      the lessee at any time) of any property (whether real, personal or mixed) (a)
      that is not a capital lease in accordance with GAAP and (b) in respect of which
      the lessee retains or obtains ownership of the property so leased for federal
      income tax purposes, other than any such lease under which that Person is the
      lessor.

     

    “Taxes”
means
      all taxes, duties, levies, imposts, charges, assessments, fees, deductions
      or
      withholdings, now or hereafter imposed, levied, collected, withheld or assessed
      by any Governmental Authority, and all interest, penalties or similar
      liabilities with respect thereto.

     

    “Tax
      Related Person”
means
      any Person (including a beneficial owner of an interest in a pass-through
      entity) whose income is realized through or determined by reference to the
      Administrative Agent, a Lender or Participant or any Tax Related Person of
      any
      of the foregoing.

     

    “TEC”
means
      The Exploitation Company, a Texas limited liability partnership.

     

    “Termination
      Date”
means
      the date that all Obligations have been paid in full in cash, all Letters of
      Credit have been terminated or expired (or been Cash Collateralized), all
      Hedging Agreements have been terminated and all Commitments shall have
      terminated.

     

    “Terrorism
      Laws”
means
      any of the following (a) Executive Order 13224 issued by the President of the
      United States, (b) the Terrorism Sanctions Regulations (Title 31 Part 595 of
      the
      U.S. Code of Federal Regulations), (c) the Terrorism List Governments Sanctions
      Regulations (Title 31 Part 596 of the U.S. Code of Federal Regulations), (d)
      the
      Foreign Terrorist Organizations Sanctions Regulations (Title 31 Part 597 of
      the
      U.S. Code of Federal Regulations), (e) the Uniting and Strengthening America
      by
      Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA
      PATRIOT ACT) Act of 2001 (as it may be subsequently codified), (f) all other
      present and future legal requirements of any Governmental Authority addressing,
      relating to, or attempting to eliminate, terrorist acts and acts of war and
      (g)
      any regulations promulgated pursuant thereto or pursuant to any legal
      requirements of any Governmental Authority governing terrorist acts or acts
      of
      war.

     

    “Total
      Debt”
means,
      on any date and without duplication, the outstanding principal amount of all
      Indebtedness of the Borrower and its Subsidiaries of the type referred to in
      clause
      (a)
      (which,
      in the case of the Loans or PP Debt, shall be deemed to equal the actual daily
      amount of the Loans or PP Notes, as the case may be, outstanding for such date),
      clause
      (b)
      (which,
      in the case of Letter of Credit Outstandings shall be deemed to equal the actual
      daily amount of Letter of Credit Outstandings for such date), clause
      (c),
      clause
      (f)
      (but
      excluding any current non-cash asset or liability (including in respect of
      Hedging Agreements) described in or calculated pursuant to the requirements
      of
      Statement of Financial Accounting Standards 133 and 143, in each case as amended
      (provided that, for the avoidance of doubt, the calculation of Total Debt shall
      include any current assets or liabilities in respect of the termination of
      any
      Hedging Agreement)), and clause
      (g),
      in each
      case of the definition of “Indebtedness” (exclusive of intercompany Indebtedness
      between the Borrower and its Subsidiaries but including the Indebtedness in
      respect of principal hereunder and under the PP Notes) and any Contingent
      Liability in respect of any of the foregoing. 

     


    
      
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    “Total
      Exposure Amount”
means,
      on any date of determination (and without duplication), the outstanding
      principal amount of all Loans, the aggregate amount of all Letter of Credit
      Outstandings and unpaid Reimbursement Obligations and the unfunded amount of
      the
      Commitments.

     

    “Total
      Leverage Ratio”
means,
      as of the last day of any Fiscal Quarter, the ratio of

     

    (a)
      Total
      Debt outstanding on the last day of such Fiscal Quarter

     

    to

     

    (b)
      EBITDA computed for the period consisting of such Fiscal Quarter and each of
      the
      three immediately preceding Fiscal Quarters; 

     

    provided,
      however,
      that
for
      purposes of calculating “Total Leverage Ratio”,
      (i) (A)
      for the Fiscal Quarter ending September 30, 2006, EBITDA for such Fiscal Quarter
      shall be deemed to be equal to $79,883,043, (B) for the Fiscal Quarter ending
      December 31, 2006, EBITDA for such Fiscal Quarter shall be deemed to be equal
      to
      $87,490,216, and (C) for the Fiscal Quarter ending March 31, 2007, EBITDA for
      such Fiscal Quarter shall be deemed to be equal to $71,661,308; and (ii) any
      calculation of EBITDA hereunder for any applicable period shall be made using
      an
      EBITDA for such applicable period calculated on a pro forma basis (inclusive
      of
      any acquisitions and/or divestitures, if any, of assets or equity interests
      made
      during such applicable period as if such acquisitions or divestitures had been
      made at the beginning of such applicable period).

     

    “Transaction”
is
      defined in the fifth
      recital;
      provided that for purposes of Article
      VI
      and
Section
      10.4,
      the
      term “Transaction”
shall
      include a reference to the Castex Acquisition and the Marlin
      Acquisition.

     

    “Transaction
      Costs”
is
      defined in the fifth
      recital.

     

    “Transaction
      Documents”
means,
      collectively, the PP Debt Documents, the PSA, the Castex PSA, the Marlin PSA
      and
      the documents and agreements executed and delivered in connection with the
      PSA,
      the Castex PSA or the Marlin PSA, in each case as amended, supplemented, amended
      and restated or otherwise modified from time to time in accordance with
Section 7.2.11.

     


    
      
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    “Type”
means,
      relative to any Loan, the portion thereof, if any, being maintained as a Base
      Rate Loan or a LIBO Rate Loan.

     

    “UCC”
means
      the Uniform Commercial Code as in effect from time to time in the State of
      New
      York; provided
      that,
      if, with respect to any Filing Statement or by reason of any provisions of
      law,
      the perfection or the effect of perfection or non-perfection or priority of
      the
      security interests granted to the Administrative Agent pursuant to the
      applicable Loan Document is governed by the Uniform Commercial Code as in effect
      in a jurisdiction of the United States other than New York, then “UCC” means the
      Uniform Commercial Code as in effect from time to time in such other
      jurisdiction for purposes of the provisions of each Loan Document and any Filing
      Statement relating to such perfection or effect of perfection or non-perfection
      or priority.

     

    “United
      States”
or
      “U.S.”
means
      the United States of America, its fifty states and the District of
      Columbia.

     

    “U.S.
      Subsidiary”
means
      any Subsidiary that is incorporated or organized under the laws of the United
      States, a state thereof or the District of Columbia.

     

    “Voting
      Securities”
means,
      with respect to any Person, Capital Securities of any class or kind ordinarily
      having the power to vote for the election of directors, managers or other voting
      members of the governing body of such Person.

     

    “Welfare
      Plan”
means
      a
“welfare plan”, as such term is defined in Section 3(1) of
      ERISA.

     

    “wholly
      owned Subsidiary”
means
      any Subsidiary all of the outstanding Capital Securities of which (other than
      any director’s qualifying shares or investments by foreign nationals mandated by
      Applicable Law) is owned directly or indirectly by the Borrower.

     

    SECTION
      1.2. Use
      of
      Defined Terms.
      Unless
      otherwise defined or the context otherwise requires, terms for which meanings
      are provided in this Agreement shall have such meanings when used in each other
      Loan Document and the Disclosure Schedule.

     

    SECTION
      1.3. Cross-References
      and Other Provisions Relating to Terms.
      Unless
      otherwise specified, (a) references in a Loan Document to any Article or Section
      are references to such Article or Section of such Loan Document, and references
      in any Article, Section or definition to any clause are references to such
      clause of such Article, Section or definition; (b) all references herein to
      Articles, Sections, Exhibits and Schedules shall be construed to refer to
      Articles and Sections of, and Exhibits and Schedules to, this Agreement; (c)
      the
      definitions of terms herein shall apply equally to the singular and plural
      forms
      of the terms defined; (d) whenever the context may require, any pronoun shall
      include the corresponding masculine, feminine and neuter forms; and (e) any
      reference herein to any Person shall be construed to include such Person’s
      successors and assigns, provided such successors and assigns are permitted
      by
      the Loan Documents.

     

    SECTION
      1.4. Amendment
      of Defined Instruments.
      Unless
      the context otherwise requires or unless otherwise provided herein the terms
      defined in this Agreement that refer to a particular agreement, instrument
      or
      document also refer to and include all renewals, extensions, modifications,
      amendments and restatements of such agreement, instrument or document in
      accordance with the Loan Documents, provided that nothing contained in this
      section shall be construed to authorize any such renewal, extension,
      modification, amendment or restatement.

     

     


    
      
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    SECTION
      1.5. Accounting
      and Financial Determinations.

     

    (a)
      Unless otherwise specified, all accounting terms used in each Loan Document
      shall be interpreted, and all accounting determinations and computations
      thereunder (including under Section 7.2.4
      and the
      definitions used in such calculations) shall be made, in accordance with those
      generally accepted accounting principles in effect in the United States
      (“GAAP”)
      applied on a basis consistent with those used in the preparation of the
      financial statements referred to in clause (a)(i)
      of
Section 5.1.8.
      Unless
      otherwise expressly provided, all financial covenants and defined financial
      terms shall be computed on a consolidated basis for the Borrower and its
      Subsidiaries, in each case without duplication.

     

    (b)
      As of
      any date of determination, for purposes of determining the Current Ratio,
      Interest Coverage Ratio or Total Leverage Ratio (and any financial calculations
      required to be made or included within such ratios, or required for purposes
      of
      preparing any Compliance Certificate to be delivered pursuant to the definition
      of “Permitted Acquisition”), the calculation of such ratios and other financial
      calculations shall include or exclude, as the case may be, the effect of any
      assets or businesses that have been acquired or Disposed of by the Borrower
      or
      any of its Subsidiaries pursuant to the terms hereof (including through mergers
      or consolidations) as of such date of determination, as determined by the
      Borrower on a pro forma
      basis in
      accordance with GAAP, which determination may include one-time adjustments
      or
      reductions in costs, if any, directly attributable to any such permitted
      Disposition or Permitted Acquisition, as the case may be, in each case (i)
      calculated in accordance with Regulation S-X of the Securities Act of 1933,
      as
      amended from time to time, and any successor statute, for the period of four
      Fiscal Quarters ended on or immediately prior to the date of determination
      of
      any such ratios (without giving effect to any cost-savings or adjustments
      relating to synergies resulting from a Permitted Acquisition except as the
      Arrangers shall otherwise agree) and (ii) giving effect to any such Permitted
      Acquisition or permitted Disposition as if it had occurred on the first day
      of
      such four Fiscal Quarter period.

     

    ARTICLE
      2

    COMMITMENTS,
      BORROWING AND ISSUANCE

    PROCEDURES,
      NOTES AND LETTERS OF CREDIT

     

    SECTION
      2.1. Commitments.
      On the
      terms and subject to the conditions of this Agreement, the Lenders and the
      Issuers severally agree to make Credit Extensions as set forth
      below.

     

    SECTION
      2.1.1. Loan
      Commitment
      (1) From
      time to time on any Business Day occurring on or after the Effective Date but
      prior to the Loan Commitment Termination Date, each Lender severally agrees
      that
      it will make loans (relative to such Lender, its “Loans”)
      to the
      Borrower in an aggregate amount equal to such Lender’s Percentage of the
      aggregate amount of each Borrowing of the Loans requested by the Borrower to
      be
      made on such day.

     


    
      
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    (b)
      On
      the terms and subject to the conditions hereof, the Borrower may from time
      to
      time borrow, prepay and reborrow Loans. No Lender shall be permitted or required
      to make any Loan if, after giving effect thereto, (i) such Lender’s Credit
      Exposure would exceed such Lender’s Percentage of the lesser of (A) the then
      existing Loan Commitment Amount and (B) the Borrowing Base then in effect or
      (ii) the aggregate Credit Exposures of all Lenders would exceed the lesser
      of
      (A) the then existing Loan Commitment Amount and (B) the Borrowing Base then
      in
      effect.

     

    (c)
      Notwithstanding the foregoing, the parties hereto hereby acknowledge and agree
      that (i) as of the Closing Date, the “Lenders” under the Existing First Lien
      Credit Agreement had outstanding to the Borrower under the Existing First Lien
      Credit Agreement, “Loans” in the principal amount of $244,875,000.00 (the
“Existing
      Loans”),
      (ii)
      such Existing Loans are hereby deemed extended, continued and advanced as Loans
      hereunder and held by the Lenders hereunder based on their respective
      Percentages, and (iii) from and after the Closing Date, such Existing Loans
      shall be subject to and governed by the terms and conditions hereof as
      Loans.

     

    SECTION
      2.1.2. Letter
      of Credit Commitment.
      From
      time to time on any Business Day occurring from the Effective Date until the
      Letter of Credit Commitment Termination Date, the Issuer agrees that it
      will

     

    (a)
      issue
      one or more standby letters of credit (relative to such Issuer, its
“Letter
      of Credit”)
      for
      the account of the Borrower (which can be issued in the name of a Subsidiary)
      in
      the Stated Amount requested by the Borrower on such day; or

     

    (b)
      extend the Stated Expiry Date of an existing standby Letter of Credit previously
      issued hereunder.

     

    No
      Issuer
      shall be permitted or required to issue any Letter of Credit if, after giving
      effect thereto, (i) the aggregate amount of all Letter of Credit
      Outstandings would exceed the Letter of Credit Commitment Amount or (ii) the
      aggregate amount Credit Exposures of all Lenders would exceed the lesser of
      (A)
      the existing Loan Commitment Amount or (B) the Borrowing Base then in effect.
      The parties acknowledge and agree that the outstanding letter(s) of credit
      issued pursuant to the Existing First Lien Credit Agreement (which outstanding
      letter(s) of credit are in an aggregate face amount of $5,000,000) shall be
      deemed to be Letter(s) of Credit issued hereunder and subject to the terms
      hereof, but otherwise having the same issuer(s), face amount, maturity date
      and
      general terms as previously specified in such outstanding letter(s) of
      credit.

     

    SECTION
      2.2. Termination
      of Commitments and Reduction of the Commitment Amounts.
      Unless
      previously terminated, the Loan Commitments shall terminate on the Loan
      Commitment Termination Date and the Letter of Credit Commitment shall terminate
      on the Letter of Credit Commitment Termination Date. If at any time the
      Borrowing Base is terminated or reduced to zero, then the Commitments shall
      terminate on the effective date of such termination or reduction. The Borrower
      may, from time to time on any Business Day occurring after the Effective Date,
      voluntarily reduce the amount of any Commitment Amount on the Business Day
      so
      specified by the Borrower; provided
      that,
      (a) all such reductions shall require at least one Business Day’s prior notice
      to the Administrative Agent and be permanent, (b) any reduction of any
      Commitment Amount shall be in a minimum amount of $1,000,000 and in an integral
      multiple of $1,000,000 unless such reduction is in the full amount of the
      remaining available Commitment Amount, and (c) the Borrower shall not terminate
      or reduce (i) the Loan Commitment Amount if, after giving effect thereto and
      to
      any concurrent prepayments hereunder, the aggregate Credit Exposures of all
      Lenders would exceed the Loan Commitment Amount or (ii) the Letter of Credit
      Commitment if, after giving effect thereto, the aggregate amount of all Letter
      of Credit Outstandings would exceed the Letter of Credit Commitment. Any
      optional or mandatory reduction of the Loan Commitment Amount pursuant to the
      terms of this Agreement that reduces the Loan Commitment Amount below the Letter
      of Credit Commitment Amount shall result in an automatic and corresponding
      reduction of the Letter of Credit Commitment Amount (as directed by the Borrower
      in a notice to the Administrative Agent delivered together with the notice
      of
      such voluntary reduction in the Loan Commitment Amount) to an aggregate amount
      not in excess of the Loan Commitment Amount, as so reduced.

     

     


    
      
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    SECTION
      2.3. Borrowing
      Procedure.
      In the
      case of Loans, by delivering a Borrowing Request to the Administrative Agent
      on
      or before noon, New York time, on a Business Day, the Borrower may from time
      to
      time irrevocably request, on the same Business Day’s notice in the case of Base
      Rate Loans, or three Business Days’ notice in the case of LIBO Rate Loans, and
      in either case not more than five Business Days’ notice, that a Borrowing be
      made, (a) in the case of LIBO Rate Loans, in an aggregate minimum amount of
      $1,000,000 and an integral multiple of $1,000,000, (b) in the case of Base
      Rate
      Loans, in an aggregate minimum amount of $1,000,000 and an integral multiple
      of
      $1,000,000 or, in either case, in the unused amount of the Loan Commitment;
      provided,
      that no
      LIBO Rate Loans may be advanced when any Default or Borrowing Base Deficiency
      has occurred and is continuing. Each such irrevocable request may be made by
      telephone confirmed promptly by hand delivery or facsimile to the Administrative
      Agent of the applicable Borrowing Request. On the terms and subject to the
      conditions of this Agreement, each Borrowing shall be comprised of the Type
      of
      Loans, and shall be made on the Business Day, specified in such Borrowing
      Request. On or before 11:00 a.m., New York time, on such Business Day (or
      3:00p.m., New York time, in the case of a Base Rate Loan requested on the same
      Business Day), each Lender that has a Loan Commitment to make the Loans being
      requested shall deposit with the Administrative Agent same day funds in an
      amount equal to such Lender’s Percentage of the requested Borrowing. Such
      deposit will be made to an account which the Administrative Agent shall specify
      from time to time by notice to the Lenders. To the extent funds are received
      from the Lenders, the Administrative Agent shall make such funds available
      to
      the Borrower by wire transfer to the accounts the Borrower shall have specified
      in its Borrowing Request. No Lender’s obligation to make any Loan shall be
      affected by any other Lender’s failure to make any Loan.

     

    SECTION
      2.4. Continuation
      and Conversion Elections.
      By
      delivering a Continuation/Conversion Notice to the Administrative Agent on
      or
      before noon, New York time, on a Business Day, the Borrower may from time to
      time irrevocably elect, on not less than one Business Day’s notice in the case
      of Base Rate Loans, or three Business Days’ notice in the case of LIBO Rate
      Loans, and in either case not more than five Business Days’ notice, that all, or
      any portion in an aggregate minimum amount of $1,000,000 and an integral
      multiple of $1,000,000 be, in the case of Base Rate Loans, converted into LIBO
      Rate Loans, or in the case of LIBO Rate Loans, converted into Base Rate Loans
      or
      continued as LIBO Rate Loans (in the absence of delivery of a
      Continuation/Conversion Notice with respect to any LIBO Rate Loan at least
      three
      Business Days (but not more than five Business Days) before the last day of
      the
      then current Interest Period with respect thereto, such LIBO Rate Loan shall,
      on
      such last day, automatically convert to a Base Rate Loan); provided
      that,
      (a) each such conversion or continuation shall be pro rated among the
      applicable outstanding Loans of all Lenders that have made such Loans, and
      (b) no portion of the outstanding principal amount of any Loans may be
      continued as, or be converted into, LIBO Rate Loans when any Default or
      Borrowing Base Deficiency has occurred and is continuing. Each such irrevocable
      request may be made by telephone confirmed promptly by hand delivery or
      facsimile to the Administrative Agent of the applicable Continuation/Conversion
      Notice. The conversion of a Base Rate Loan into a LIBO Rate Loan or a LIBO
      Rate
      Loan into a Base Rate Loan shall not effect a novation of the Loan so
      converted.


    
      
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    SECTION
      2.5. Funding.
      Each
      Lender may, if it so elects, fulfill its obligation to make, continue or convert
      LIBO Rate Loans hereunder by causing one of its foreign branches or Affiliates
      (or an international banking facility created by such Lender) to make or
      maintain such LIBO Rate Loan; provided
      that,
      such LIBO Rate Loan shall nonetheless be deemed to have been made and to be
      held
      by such Lender, and the obligation of the Borrower to repay such LIBO Rate
      Loan
      shall nevertheless be to such Lender for the account of such foreign branch,
      Affiliate or international banking facility. In addition, the Borrower hereby
      consents and agrees that, for purposes of any determination to be made for
      purposes of Sections
      4.1,
      4.2,
      4.3
      or
4.4,
      it
      shall be conclusively assumed that each Lender elected to fund all LIBO Rate
      Loans by purchasing Dollar deposits in its LIBOR Office’s interbank eurodollar
      market.

     

    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 be for a period greater than one year or shall cause a Letter
      of
      Credit to expire on a date that is later than the Letter of Credit Commitment
      Termination Date. 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. Each Issuer will make
      available to the beneficiary thereof the original of the Letter of Credit that
      it issues.

     

    SECTION
      2.6.1. Other
      Lenders Participation.
      Upon
      the issuance of each Letter of Credit, and without further action, each Lender
      (other than the Issuer) shall be deemed to have irrevocably purchased, to the
      extent of its Percentage, a participation interest in such Letter of Credit
      (including the Contingent Liability and any Reimbursement Obligation with
      respect thereto). Unless such Reimbursement Obligation has been satisfied
      through the making of a Loan pursuant to Sections
      2.6.2
      and
2.6.3
      below,
      such Lender shall, to the extent of its Percentage, be responsible for
      reimbursing the Issuer for Reimbursement Obligations that have not otherwise
      been reimbursed by the Borrower in accordance with Section
      2.6.3
      within
      one Business Day of receiving notice from the Issuer for Reimbursement
      Obligations that have not been reimbursed by the Borrower in accordance with
      Section
      2.6.3
      (with
      the terms of this Section surviving the termination of this Agreement). In
      addition, such Lender shall, to the extent of its Percentage, be entitled to
      receive a ratable portion of the Letter of Credit fees payable pursuant to
      Section
      3.3.4
      with
      respect to each Letter of Credit and of interest payable pursuant to
Section
      3.2
      with
      respect to any Reimbursement Obligation. To the extent that any Lender has
      reimbursed any Issuer for a Disbursement, such Lender shall be entitled to
      receive its ratable portion of any amounts subsequently received (from the
      Borrower or otherwise) in respect of such Disbursement.

     


    
      
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    SECTION
      2.6.2. Disbursements.
      An
      Issuer will notify the Borrower and the Administrative Agent promptly of the
      presentment for payment of any Letter of Credit issued by such Issuer, together
      with notice of the date (the “Disbursement
      Date”)
      such
      payment shall be made (each such payment, a “Disbursement”).
      Subject to the terms and provisions of such Letter of Credit and this Agreement,
      the applicable Issuer shall make such payment to the beneficiary (or its
      designee) of such Letter of Credit. Prior to 1:00 p.m., New York time, on
      the Disbursement Date if the Borrower shall have received such notice of such
      Disbursement on or prior to 10:00 a.m., New York time, or, if the Borrower
      shall
      have received such notice of Disbursement after 10:00 a.m., New York time,
      on
      the Disbursement Date then not later than 1:00 p.m., New York time, on the
      first
      Business Day following the Disbursement Date, the Borrower will reimburse the
      Administrative Agent for the account of the applicable Issuer, for all amounts
      that such Issuer has disbursed under such Letter of Credit, together with
      interest thereon at a rate per annum equal to the rate per annum then in effect
      for Base Rate Loans (with the then Applicable Margin for Loans accruing on
      such
      amount) pursuant to Section
      3.2
      for the
      period from the Disbursement Date through the date of such reimbursement;
provided
      that the
      Borrower may, subject to the conditions to set forth herein, request in
      accordance with Section
      2.3
      that
      such payment be financed with a Base Rate Loan in an equivalent amount and,
      to
      the extent so financed, the Borrower’s obligation to make such payment shall be
      discharged and replaced by the resulting Borrowing. Without limiting in any
      way
      the foregoing and notwithstanding anything to the contrary contained herein
      or
      in any separate application for any Letter of Credit, the Borrower hereby
      acknowledges and agrees that it shall be obligated to reimburse the applicable
      Issuer upon each Disbursement of a Letter of Credit, and it shall be deemed
      to
      be the obligor for purposes of each such Letter of Credit issued hereunder
      (whether the account party on such Letter of Credit is the Borrower or a
      Subsidiary).

     

    SECTION
      2.6.3. Reimbursement.
      The
      obligation (a “Reimbursement
      Obligation”)
      of the
      Borrower under Section
      2.6.2
      to
      reimburse an Issuer with respect to each Disbursement (including interest
      thereon), and, upon the failure of the Borrower to reimburse an Issuer, each
      Lender’s obligation under Section
      2.6.1,
      to
      reimburse an Issuer, shall be absolute and unconditional under any and all
      circumstances and irrespective of any setoff, counterclaim or defense to payment
      which the Borrower or such Lender, as the case may be, may have or have had
      against such Issuer or any Lender, including any defense based upon the failure
      of any Disbursement to conform to the terms of the applicable Letter of Credit
      (if, in such Issuer’s good faith opinion, such Disbursement is determined to be
      appropriate) or any non-application or misapplication by the beneficiary of
      the
      proceeds of such Letter of Credit; provided
      that,
      after paying in full its Reimbursement Obligation hereunder, nothing herein
      shall adversely affect the right of the Borrower or such Lender, as the case
      may
      be, to commence any proceeding against an Issuer for any wrongful Disbursement
      made by such Issuer under a Letter of Credit as a result of acts or omissions
      constituting gross negligence or willful misconduct (as determined by a court
      of
      competent jurisdiction in a final and non-appealable judgment) on the part
      of
      such Issuer. 

     


    
      
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    SECTION
      2.6.4. Deemed
      Disbursements.
      Upon
      the occurrence and during the continuation of any Default under Section
      8.1.9
      or upon
      notification by the Administrative Agent (acting at the direction of the
      Required Lenders) to the Borrower of its obligations under this Section,
      following the occurrence and during the continuation of any other Event of
      Default,

     

    (a)
      the
      aggregate Stated Amount of all Letters of Credit shall, without demand upon
      or
      notice to the Borrower or any other Person, be deemed to have been paid or
      disbursed by the Issuers of such Letters of Credit (notwithstanding that such
      amount may not in fact have been paid or disbursed); and

     

    (b)
      the
      Borrower shall be immediately obligated to reimburse the Issuers for the amount
      deemed to have been so paid or disbursed by such Issuers.

     

    Amounts
      payable by the Borrower pursuant to this Section shall be deposited in
      immediately available funds in an account with the Administrative Agent, in
      the
      name of the Administrative Agent and for the benefit of the Secured Parties,
      and
      held as collateral security for the Obligations. The Borrower hereby grants
      to
      the Administrative Agent, for the benefit of the Issuer and the Lenders, an
      exclusive first priority and continuing perfected security interest in and
      Lien
      on such account and all cash, checks, drafts, certificates and instruments,
      if
      any, from time to time deposited or held in such account, all deposits or wire
      transfers made thereto, any and all investments purchased with funds deposited
      in such account, all interest, dividends, cash, instruments, financial assets
      and other Property from time to time received, receivable or otherwise payable
      in respect of, or in exchange for, any or all of the foregoing, and all
      proceeds, products, accessions, rents, profits, income and benefits therefrom,
      and any substitutions and replacements therefor. The Borrower’s obligation to
      deposit amounts pursuant to this Section
      2.6.4
      shall be
      absolute and unconditional, without regard to whether any beneficiary of any
      such Letter of Credit has attempted to draw down all or a portion of such amount
      under the terms of a Letter of Credit, and, to the fullest extent permitted
      by
      applicable law, shall not be subject to any defense or be affected by a right
      of
      set-off, counterclaim or recoupment that the Borrower or any of its Subsidiaries
      may now or hereafter have against any such beneficiary, the Issuer, the
      Administrative Agent, the Lenders or any other Person for any reason whatsoever.
      Such deposit shall be held as collateral securing the payment and performance
      of
      the Obligations. The Administrative Agent shall have exclusive dominion and
      control, including the exclusive right of withdrawal, over such account.
      Interest, if any, on such deposit shall accumulate in such account. Moneys
      in
      such account shall be applied by the Administrative Agent to reimburse the
      Issuer for Disbursements for that it has not been reimbursed and, to the extent
      not so applied, shall be held for the satisfaction of the Reimbursement
      Obligations of the Borrower at such time or, if the maturity of the Loans has
      been accelerated, be applied to satisfy other Obligations of the Borrower and
      the Guarantors under this Agreement or the other Loan Documents. When all
      Defaults giving rise to the deemed disbursements under this Section have been
      cured or waived the Administrative Agent shall return to the Borrower all
      amounts then on deposit with the Administrative Agent pursuant to this Section
      that have not been applied to the satisfaction of the Reimbursement Obligations
      or the Obligations.

     


    
      
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    SECTION
      2.6.5. Nature
      of Reimbursement Obligations.
      The
      Borrower, each other Obligor and, to the extent set forth in Section
      2.6.1,
      each
      Lender shall assume all risks of the acts, omissions or misuse of any Letter
      of
      Credit by the beneficiary thereof. No Issuer (except to the extent of its own
      gross negligence or willful misconduct (as determined by a court of competent
      jurisdiction in a final and non-appealable judgment) shall be responsible
      for:

     

    (a)
      the
      form, validity, sufficiency, accuracy, genuineness or legal effect of any Letter
      of Credit or any document submitted by any party in connection with the
      application for and issuance of a Letter of Credit, even if it should in fact
      prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent
      or forged;

     

    (b)
      the
      form, validity, sufficiency, accuracy, genuineness or legal effect of any
      instrument transferring or assigning or purporting to transfer or assign a
      Letter of Credit or the rights or benefits thereunder or the proceeds thereof
      in
      whole or in part, which may prove to be invalid or ineffective for any
      reason;

     

    (c)
      failure of the beneficiary to comply fully with conditions required in order
      to
      demand payment under a Letter of Credit;

     

    (d)
      errors, omissions, interruptions or delays in transmission or delivery of any
      messages, by mail, cable, telegraph, telex or otherwise; or

     

    (e)
      any
      loss or delay in the transmission or otherwise of any document or draft required
      in order to make a Disbursement under a Letter of Credit.

     

    None
      of
      the foregoing shall affect, impair or prevent the vesting of any of the rights
      or powers granted to any Issuer or any Lender hereunder. In furtherance and
      not
      in limitation or derogation of any of the foregoing, any action taken or omitted
      to be taken by an Issuer in good faith (and not constituting gross negligence
      or
      willful misconduct as determined by a court of competent jurisdiction in a
      final
      and non-appealable judgment) shall be binding upon each Obligor and each such
      Lender, and shall not put such Issuer under any resulting liability to any
      Obligor or any
      Lender, as the case may be. NOTWITHSTANDING
      ANYTHING HEREIN TO THE CONTRARY, AND SPECIFICALLY WITH REFERENCE TO THE
      PROVISIONS OF SECTIONS 2.6.3 AND 2.6.5, IT IS THE INTENTION OF THE PARTIES
      HERETO THAT EACH ISSUER BE REIMBURSED OR INDEMNIFIED IN THE CASE OF, AND NOT
      BE
      LIABLE FOR, ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE OR WILLFUL
      MISCONDUCT), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY,
      ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL.

     

    SECTION
      2.6.6. Replacement
      of the Issuer.
      An
      Issuer may be replaced at any time by written agreement among the Borrower,
      the
      Administrative Agent, the replaced Issuer and the successor Issuer. The
      Administrative Agent shall notify the Lenders of any such replacement of the
      Issuer. At the time any such replacement shall become effective, the Borrower
      shall pay all unpaid fees accrued for the account of the replaced Issuer
      pursuant to Section
      3.3.
      From
      and after the effective date of any such replacement, (a) the successor Issuer
      shall have all the rights and obligations of the Issuer under this Agreement
      with respect to Letters of Credit to be issued thereafter and (a) references
      herein to the term “Issuer” shall be deemed to refer to such successor or to any
      previous Issuer, or to such successor and all previous Issuers, as the context
      shall require. After the replacement of the Issuer hereunder, the replaced
      Issuer shall remain a party hereto and shall continue to have all the rights
      and
      obligations of the Issuer under this Agreement with respect to Letters of Credit
      issued by it prior to such replacement, but shall not be required to issue
      additional Letters of Credit.

     


    
      
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    SECTION
      2.6.7. Cash
      Collateral.
      The
      Borrower shall Cash Collateralize all Letter of Credit Outstandings to the
      extent required by the terms of this Agreement, including without limitation,
      Sections
      2.8.7,
      3.1.1,
      4.7,
      7.1.4,
      7.2.10,
      8.2
      and
8.3.
      The
      Borrower hereby grants to the Administrative Agent, for the benefit of the
      Issuers and the Lenders, a security interest in all cash and deposit account
      balances provided in connection with such Cash Collateralization and all
      proceeds of the foregoing. Such cash and deposit account balances shall be
      maintained in blocked, non-interest bearing deposit accounts at Royal Bank
      of
      Scotland plc. Upon the drawing of any Letter of Credit for which funds are
      on
      deposit as Cash Collateral, such funds shall be applied, to the extent permitted
      under Applicable Law, to reimburse the appropriate Issuer. 

     

    SECTION
      2.7. Register;
      Notes.
      The
      Register shall be maintained on the following terms.

     

    (a)
      The
      Borrower hereby designates the Administrative Agent to serve as the Borrower’s
      agent, solely for the purpose of this clause, to maintain a register (the
“Register”)
      on
      which the Administrative Agent will record each Lender’s Commitments, the Loans
      made by each Lender and each repayment in respect of the principal amount of
      the
      Loans, annexed to which the Administrative Agent shall retain a copy of each
      Lender Assignment Agreement delivered to the Administrative Agent pursuant
      to
Section
      10.11.
      Failure
      to make any recordation, or any error in such recordation, shall not affect
      any
      Obligor’s Obligations. The entries in the Register shall be conclusive, in the
      absence of manifest error, and the Borrower, the Administrative Agent and the
      Lenders shall treat each Person in whose name a Loan is registered as the owner
      thereof for the purposes of all Loan Documents, notwithstanding notice or any
      provision herein to the contrary. Any assignment or transfer of a Commitment
      or
      the Loans made pursuant hereto shall be registered in the Register only upon
      delivery to the Administrative Agent of a Lender Assignment Agreement that
      has
      been executed by the requisite parties pursuant to Section
      10.11.
      No
      assignment or transfer of a Lender’s Commitment or Loans shall be effective
      unless such assignment or transfer shall have been recorded in the Register
      by
      the Administrative Agent as provided in this Section.

     

    (b)
      The
      Borrower agrees that, upon the request of any Lender, the Borrower will execute
      and deliver to such Lender a Note evidencing the Loans made by, and payable
      to
      the order of, such Lender in a maximum principal amount equal to such Lender’s
      Percentage of the applicable Commitment Amount. The Borrower hereby irrevocably
      authorizes each Lender to make (or cause to be made) appropriate notations
      on
      the grid attached to such Lender’s Note (or on any continuation of such grid),
      which notations, if made, shall evidence, inter alia,
      the
      date of, the outstanding principal amount of, and the interest rate and Interest
      Period applicable to the Loans evidenced thereby. Such notations shall, to
      the
      extent not inconsistent with notations made by the Administrative Agent in
      the
      Register, be conclusive and binding on each Obligor absent manifest error;
      provided
      that,
      the failure of any Lender to make any such notations shall not limit or
      otherwise affect any Obligations of any Obligor.

     

     


    
      
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    SECTION
      2.8. Borrowing
      Base.

     

    SECTION
      2.8.1. Initial
      Borrowing Base.
      As of
      the Closing Date, the parties hereto agree that the Borrowing Base shall be
      equal to $450,000,000 until such time as the Borrowing Base is redetermined in
      accordance with this Agreement; provided,
      however,
      that to
      the extent that the aggregate principal amount of PP Notes outstanding on the
      Closing Date exceeds $700,000,000, then the amount specified in this Section
      for
      the Borrowing Base shall be reduced by $0.50 for each $1.00 of such
      excess.

     

    SECTION
      2.8.2. Annual
      Scheduled Determinations of the Borrowing Base.
      Promptly after June 30 of each calendar year, commencing June 30, 2007, and
      in
      any event prior to August 15 (in the case of the 2007 calendar year) or
      September 30 (in the case of each calendar year thereafter), the Borrower shall
      furnish to the Administrative Agent and the Lenders a Reserve Report in form
      and
      substance satisfactory to the Administrative Agent, prepared by an Approved
      Engineer, which Reserve Report shall be dated as of June 30 of such calendar
      year and shall set forth the proven and producing oil and gas reserves
      attributable to the Oil and Gas Properties owned directly by the Borrower and
      its Subsidiaries that the Borrower wishes to include in the Borrowing Base
      and a
      projection of the rate of production and future net income, taxes, operating
      expenses and capital expenditures with respect thereto as of such date, based
      on
      pricing assumptions consistent with SEC reporting requirements at the time,
      together with additional data concerning pricing, hedging, quantities and
      purchasers of production, and other information and engineering and geological
      data as the Administrative Agent or any Lender may reasonably request. Within
      fifteen (15) days after receipt of all such Reserve Report (or, for purposes
      of
      the Reserve Report required to be delivered by no later than August 15, 2007
      pursuant to this Section, eight (8) days after receipt of such Reserve Report)
      and information, the Administrative Agent shall make an initial determination
      of
      the new Borrowing Base (the “Proposed
      Borrowing Base”),
      and
      upon such initial determination shall promptly notify the Lenders in writing
      of
      its initial determination of the Proposed Borrowing Base. Such initial
      determination made by the Administrative Agent shall be so made by the
      Administrative Agent in the exercise of its sole discretion in accordance with
      the Administrative Agent’s customary practices and standards for oil and gas
      lending as they exist at the particular time. In no event shall the Proposed
      Borrowing Base exceed the aggregate Loan Commitments of the Lenders. The
      Required Lenders shall approve or reject the Administrative Agent’s initial
      determination of the Proposed Borrowing Base by written notice to the
      Administrative Agent within fifteen (15) days (or, for purposes of the Reserve
      Report required to be delivered by no later than August 15, 2007 pursuant to
      this Section, within eight (8) days) of the Administrative Agent’s notification
      of its initial determination; provided,
      however
      that
      failure by any Lender to confirm in writing, the Administrative Agent’s
      determination of the Proposed Borrowing Base shall be and shall be deemed,
      an
      approval of the Proposed Borrowing Base. If the Required Lenders fail to approve
      any such determination of the Proposed Borrowing Base made by the Administrative
      Agent hereunder in such fifteen (15) or eight (8) day period, as the case may
      be, then the Administrative Agent shall poll the Lenders to ascertain the
      highest Proposed Borrowing Base then acceptable to the Required Lenders for
      purposes of this Section
      2.8.2
      and,
      subject to the last sentence of this Section
      2.8.2,
      such
      amounts shall become the new Borrowing Base effective on the date specified
      in
      this Section
      2.8.
      Upon
      agreement by the Administrative Agent and the Required Lenders of the new
      Borrowing Base, the Administrative Agent shall, by written notice to the
      Borrower and the Lenders, designate the new Borrowing Base available to the
      Borrower. Such designation shall be effective as of the Business Day specified
      in such written notice (or, if no effective date is specified in such written
      notice, the next Business Day following delivery of such written notice) and
      such new Borrowing Base shall remain in effect until the next determination
      or
      redetermination of the Borrowing Base in accordance with this Agreement.
      Anything herein contained to the contrary notwithstanding, any determination
      or
      redetermination of the Borrowing Base resulting in any increase of the Borrowing
      Base in effect immediately prior to such determination or redetermination shall
      require the approval of all the Lenders in their sole discretion in accordance
      with their respective customary practices and standards for oil and gas lending
      as they exist at the particular time.

     


    
      
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    SECTION
      2.8.3. Semi-Annual
      Scheduled Determination of the Borrowing Base.
      In
      addition, promptly after December 31 of each calendar year, commencing December
      31, 2007, and in any event prior to March 31 of each calendar year (commencing
      March 31, 2008), the Borrower will make available for review by the
      Administrative Agent a Reserve Report in form and substance satisfactory to
      the
      Administrative Agent, prepared by the Borrower’s petroleum engineers, which
      report shall be dated as of December 31 of such calendar year and shall set
      forth the proven and producing oil and gas reserves attributable to the Oil
      and
      Gas Properties owned directly by the Borrower and its Subsidiaries that the
      Borrower wishes to include in the Borrowing Base and a projection of the rate
      of
      production and future net income, taxes, operating expenses and capital
      expenditures with respect thereto as of such date, based on pricing assumptions
      consistent with SEC reporting requirements at the time, together with additional
      data concerning pricing, hedging, quantities and purchasers of production,
      and
      other information and engineering and geological data as the Administrative
      Agent or any Lender may reasonably request. Within fifteen (15) days after
      receipt of all such Reserve Report and information, the Administrative Agent
      shall make an initial determination of a Proposed Borrowing Base, and upon
      such
      initial determination shall promptly notify the Lenders in writing of initial
      determination of the Proposed Borrowing Base. Such initial determination shall
      be made in the same manner and be subject to the same approvals as prescribed
      above with respect to the annual review, and likewise the Administrative Agent
      shall communicate the results of such initial determination to the Lenders.
      The
      Required Lenders shall approve such determination of the Proposed Borrowing
      Base
      by written notice to the Administrative Agent within fifteen (15) days of the
      giving of notice of such determination by the Administrative Agent to such
      Lenders; provided,
      however
      that
      failure by any Lender to confirm in writing the Administrative Agent’s
      determination of the Proposed Borrowing Base shall be, and shall be deemed,
      an
      approval of the Proposed Borrowing Base. If the Required Lenders fail to approve
      any such determination of the Proposed Borrowing Base made by the Administrative
      Agent hereunder in such fifteen (15) day period, then the Administrative Agent
      shall poll the Lenders to ascertain the highest Proposed Borrowing Base then
      acceptable to the Required Lenders for purposes of this Section
      2.8.3
      and,
      subject to the last sentence of this Section
      2.8.3,
      such
      amounts shall become the new Borrowing Base, effective on the date specified
      in
      this Section
      2.8.
      Upon
      agreement by the Administrative Agent and the Required Lenders of the amount
      of
      credit to be made available to the Borrower hereunder, the Administrative Agent
      shall, by written notice to the Borrower and the Lenders, designate the new
      Borrowing Base available to the Borrower. Such designation shall be effective
      as
      of the Business Day specified in such written notice (or, if no effective date
      is specified in such written notice, the next Business Day following delivery
      of
      such written notice) and such new Borrowing Base shall remain in effect until
      the next determination or redetermination of the Borrowing Base in accordance
      with this Agreement. Anything herein contained to the contrary notwithstanding,
      any determination or redetermination of the Borrowing Base resulting in any
      increase of the Borrowing Base in effect immediately prior to such determination
      or redetermination shall require the approval of all the Lenders in their sole
      discretion in accordance with their respective customary practices and standards
      for oil and gas lending as they exist at the particular time.

     


    
      
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    SECTION
      2.8.4. Discretionary
      Determination of the Borrowing Base by the Lenders.
      In
      addition to the foregoing scheduled annual and semi-annual determinations of
      the
      Borrowing Base, the Required Lenders shall have the right to redetermine the
      Borrowing Base at their sole discretion at any time and from time to time but
      not more often than two (2) times every calendar year. If the Required Lenders
      shall elect to make a discretionary redetermination of the Borrowing Base
      pursuant to the provisions of this Section 2.8.4,
      the
      Borrower shall within thirty (30) days of receipt of a request therefor from
      the
      Administrative Agent, deliver to the Administrative Agent a Reserve Report
      in
      form and substance satisfactory to the Administrative Agent, prepared by the
      Borrower’s petroleum engineers containing information similar to the Reserve
      Reports delivered pursuant to Section
      2.8.3,
      together with such updated engineering, production, operating and other data
      as
      the Administrative Agent, the Issuer or any Lender may reasonably request.
      The
      Administrative Agent shall have fifteen (15) days following receipt of such
      requested information to make an initial redetermination of the Borrowing Base,
      and the Administrative Agent and the Required Lenders shall approve and
      designate the new Borrowing Base in accordance with the procedures and standards
      described in Section
      2.8.2.

     

    SECTION
      2.8.5. Discretionary
      Determination of the Borrowing Base by the Borrower.
      In
      addition to the foregoing determinations of the Borrowing Base, the Borrower
      may
      request a redetermination of the Borrowing Base at any time and from time to
      time but not more often than two (2) times every calendar year, by delivering
      a
      written request to the Administrative Agent, together with (a) an engineering
      fee in the aggregate amount of $2,500 for the account of the Administrative
      Agent in immediately available funds, and (b) a Reserve Report in form and
      substance satisfactory to the Administrative Agent, prepared by the Borrower’s
      petroleum engineers containing information similar to the Reserve Reports
      delivered pursuant to Section
      2.8.3,
      together with such other updated engineering, production, operating and other
      data as the Administrative Agent, the Issuer or any Lender may reasonably
      request. Each such discretionary redetermination of the Borrowing Base shall
      be
      made in the same manner and in accordance with the procedures and standards
      set
      forth above by adjusting the Borrowing Base then in effect. The Administrative
      Agent shall have fifteen (15) days following receipt of such requested
      information to make an initial redetermination of the Borrowing Base, and the
      Administrative Agent and the Required Lenders shall approve and designate the
      new Borrowing Base in accordance with the procedures and standards described
      in
Section
      2.8.2.

     

    SECTION
      2.8.6. Other
      Redeterminations of Borrowing Base.
      Notwithstanding anything to the contrary contained herein, (a) upon the
      Borrower’s incurrence after the Closing Date of additional Indebtedness under
      the PP Debt Documents such that, after giving effect to such incurrence, the
      aggregate principal amount of the outstanding PP Notes exceeds $750,000,000
      (provided that nothing in this Section shall be construed to authorize any
      such
      increase except in accordance with this Agreement), then the Borrowing Base
      shall automatically and without further action on the part of the Lenders be
      reduced by $0.50 for each $1.00 of such additional Indebtedness so incurred;
      and
      (b) the Borrowing Base will also be redetermined or adjusted in accordance
      with
      the provisions of Section
      7.1.13
      and
Section
      7.2.10(e).
      Anything herein contained to the contrary notwithstanding, any determination
      or
      redetermination of the Borrowing Base resulting in any increase of the Borrowing
      Base in effect immediately prior to such determination or redetermination shall
      require the approval of all the Lenders in their sole discretion in accordance
      with their respective customary practices and standards for oil and gas lending
      as they exist at the particular time.

     


    
      
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    SECTION
      2.8.7. Mandatory
      Action When Loans and Letter of Credit Outstandings Exceed the Borrowing
      Base.
      In the
      event the sum of the aggregate unpaid principal amount of the Loans plus
      the
      aggregate amount of the Letter of Credit Outstandings of all Lenders shall,
      upon
      any determination or redetermination of the Borrowing Base, be in excess of
      the
      Borrowing Base at such time, upon notice thereof by the Administrative Agent
      to
      the Borrower, the Borrower shall immediately make mandatory prepayments of
      principal on account of the Notes together with accrued interest thereon,
      deposit Cash Collateral to secure the Obligations, or both, in the amounts
      and
      on the dates set forth in Section
      3.1.

     

    SECTION
      2.8.8. General
      Provision With Respect to the Borrowing Base.
      Notwithstanding anything herein the contrary, in the event that the Borrower
      does not furnish all required Reserve Reports or other information in a timely
      manner, the Agent and the Required Lenders may nonetheless designate the
      Borrowing Base from time to time thereafter until the Administrative Agent
      and
      the Lenders receive all such Reserve Reports and information, whereupon the
      Administrative Agent and the Required Lenders or all Lenders, as applicable,
      shall designate a new Borrowing Base in accordance with the general procedures
      outlined in Section
      2.8.2.

     

    ARTICLE
      3

    REPAYMENTS,
      PREPAYMENTS, INTEREST AND FEES

     

    SECTION
      3.1. Repayments
      and Prepayments; Application.
      The
      Borrower agrees that the Loans shall be repaid and prepaid pursuant to the
      following terms.

     

    SECTION
      3.1.1. Repayments
      and Prepayments.
      The
      Borrower shall repay in full the unpaid principal amount of each Loan upon
      the
      applicable Stated Maturity Date therefor. Prior thereto, payments and
      prepayments of the Loans shall or may be made as set forth below.

     

    (a)
      From
      time to time on any Business Day, the Borrower may make a voluntary prepayment,
      in whole or in part, of the outstanding principal amount of any Loans;
provided
      that,
      (i) all such voluntary prepayments shall require, in the case of Base Rate
      Loans at least the same Business Day’s prior notice (such notice to be delivered
      before noon on such day), and in the case of LIBO Rate Loans at least three
      Business Days’ prior notice (such notice to be delivered before noon on such
      day), and in either case not more than five Business Days’ prior irrevocable
      notice to the Administrative Agent (which notice may be telephonic so long
      as
      such notice is confirmed in writing within 24 hours thereafter and such notice
      to be delivered before noon on such day); and (ii) all such voluntary partial
      prepayments shall be, in the case of LIBO Rate Loans, in an aggregate minimum
      amount of $1,000,000 and an integral multiple of $1,000,000 and, in the case
      of
      Base Rate Loans, in an aggregate minimum amount of $1,000,000 and an integral
      multiple of $1,000,000 (unless such prepayment is for the entire amount of
      all
      outstanding LIBO Rate Loans or Base Rate Loans, as the case may be). Each notice
      of prepayment sent pursuant to this clause shall specify the prepayment date,
      the principal amount of each Borrowing (or portion thereof) to be prepaid and
      the scheduled installment or installments of principal to which such prepayment
      is to be applied. Each such notice shall be irrevocable and shall commit the
      Borrower to prepay such Borrowing by the amount stated therein on the date
      stated therein; provided
      that a
      notice of prepayment may state that such notice is conditioned upon the
      effectiveness of other credit facilities, in which case such notice may be
      revoked by the Borrower (by notice to the Administrative Agent on or prior
      to
      the specified effective date) if such condition is not satisfied. All
      prepayments under this clause (other than prepayments of Loans that are Base
      Rate Loans that are not made in connection with the termination or permanent
      reduction of the Loan Commitment) shall be accompanied by accrued and unpaid
      interest on the principal amount to be prepaid to but excluding the date of
      payment.

     


    
      
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    (b)
      On
      each date when, after giving effect to any termination or reduction of the
      Commitments pursuant to Section
      2.2,
      the sum
      of (i) the aggregate outstanding principal amount of all Loans and
      (ii) the aggregate amount of all Letter of Credit Outstandings exceeds the
      Loan Commitment Amount (as it may be reduced from time to time pursuant to
      this
      Agreement), the Borrower shall make a mandatory prepayment of Loans and, if
      necessary, Cash Collateralize all Letter of Credit Outstandings, in an aggregate
      amount equal to such excess.

     

    (c)
      If at
      any time the sum of (i) the aggregate outstanding principal amount of all
      Loans and (ii) the aggregate amount of all Letter of Credit Outstandings
      exceeds the redetermined or adjusted Borrowing Base (a “Borrowing
      Base Deficiency”),
      then
      the Borrower shall (A) prepay the Borrowings in an aggregate principal amount
      equal to such excess, and (B) if any excess remains after prepaying all of
      the
      Borrowings as a result of a Letter of Credit Outstanding, Cash Collateralize
      such Letter of Credit Outstanding, in an aggregate amount equal to such excess.
      The Borrower shall be obligated to make such prepayment and/or deposit of cash
      collateral within forty-five (45) days following its receipt of the written
      designation of the Borrowing Base in accordance with Section
      2.8
      or the
      date the adjustment occurs (or earlier, if otherwise required pursuant to
Section
      7.2.10(e));
      provided that all payments required to be made pursuant to this clause
      (c)
      must be
      made on or prior to the Termination Date.

     

    (d)
      Upon
      any adjustments to the Borrowing Base pursuant to Sections
      7.1.13
      and
7.2.10,
      if the
      sum of (A) the aggregate outstanding principal amount of all Loans and
      (B) the aggregate amount of all Letter of Credit Outstandings exceeds the
      redetermined or adjusted Borrowing Base, then the Borrower shall (i) prepay
      the
      Borrowings in an aggregate principal amount equal to such excess, and (ii)
      if
      any excess remains after prepaying all of the Borrowings as a result of a Letter
      of Credit Outstanding, Cash Collateralize such Letter of Credit Outstandings,
      in
      an aggregate amount equal to such excess. The Borrower shall be obligated to
      make such prepayment and/or deposit of cash collateral on the date it or any
      Subsidiary receives cash proceeds as a result of any sale or Disposition under
      Section
      7.2.10;
      provided that all payments required to be made pursuant to this clause
      (d)
      must be
      made on or prior to the Termination Date.

     


    
      
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    (e)
      Immediately upon any acceleration of the Stated Maturity Date of any Loans
      pursuant to Section 8.2
      or
Section 8.3,
      the
      Borrower shall repay all the Loans, unless, pursuant to Section 8.3,
      only a
      portion of all the Loans is so accelerated (in which case the portion so
      accelerated shall be so repaid).

     

    Each
      prepayment of any Loans made pursuant to this Section shall be without premium
      or penalty, except as may be required by Section
      4.4,
      and
      shall be accompanied by all interest then accrued and unpaid on the principal
      so
      prepaid.

     

    SECTION
      3.1.2. Application.
      Each
      prepayment or repayment of the principal of the Loans shall be applied, to
      the
      extent of such prepayment or repayment, first,
      to the
      principal amount thereof being maintained as Base Rate Loans, and second,
      subject
      to the terms of Section 4.4,
      to the
      principal amount thereof being maintained as LIBO Rate Loans, in each case
      in a
      manner that minimizes the amount of any payments required to be made by the
      Borrower pursuant to Section
      4.4.

     

    SECTION
      3.2. Interest
      Provisions.
      Interest on the outstanding principal amount of the Loans shall accrue and
      be
      payable in accordance with the terms set forth below.

     

    SECTION
      3.2.1. Rates.
      Subject
      to Section
      2.3.2,
      pursuant to an appropriately delivered Borrowing Request or
      Continuation/Conversion Notice, the Borrower may elect that the Loans comprising
      a Borrowing accrue interest at a rate per annum:

     

    (a)
      on
      that portion maintained from time to time as a Base Rate Loan, equal to the
      sum
      of the Alternate Base Rate, from time to time in effect plus the Applicable
      Margin; and

     

    (b)
      on
      that portion maintained as a LIBO Rate Loan, during each Interest Period
      applicable thereto, equal to the sum of the LIBO Rate (Reserve Adjusted) for
      such Interest Period plus the Applicable Margin.

     

    All
      LIBO
      Rate Loans shall bear interest from and including the first day of the
      applicable Interest Period to (but not including) the last day of such Interest
      Period at the interest rate determined as applicable to such LIBO Rate
      Loan.

     

    SECTION
      3.2.2. Post-Default
      Rates.
      After
      the date any Event of Default has occurred and for so long as such Event of
      Default is continuing, the Borrower shall pay, but only to the extent permitted
      by law, interest (after as well as before judgment) on all outstanding
      Obligations at a rate per annum equal to the following (the “Default
      Rate”)
      (a) in the case of principal on any Loan, subject to applicable law, the
      rate of interest that otherwise would be applicable to such Loan plus
      2% per
      annum; and (b) in the case of overdue interest, fees, and other monetary
      Obligations, the Base Rate from time to time in effect, plus the Applicable
      Margin for Loans accruing interest at the Base Rate, plus
      a margin
      of 2% per annum.

     


    
      
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    SECTION
      3.2.3. Payment
      Dates.
      Interest accrued on each Loan shall be payable, without
      duplication:

     

    (a)
      on
      the Stated Maturity Date therefor;

     

    (b)
      on
      the date of any payment or prepayment, in whole or in part, of principal
      outstanding on such Loan on the principal amount so paid or
      prepaid;

     

    (c)
      with
      respect to Base Rate Loans, on each Quarterly Payment Date occurring after
      the
      Effective Date;

     

    (d)
      with
      respect to LIBO Rate Loans, on the last day of each applicable Interest Period
      (and, if such Interest Period shall exceed three months, on the date occurring
      on each three-month interval occurring after the first day of such Interest
      Period);

     

    (e)
      with
      respect to any Base Rate Loans converted into LIBO Rate Loans on a day when
      interest would not otherwise have been payable pursuant to clause
      (c),
      on the
      date of such conversion; and

     

    (f)
      on
      that portion of any Loans the Stated Maturity Date of which is accelerated
      pursuant to Section
      8.2
      or
Section
      8.3,
      immediately upon such acceleration.

     

    Interest
      accrued on Loans or other monetary Obligations after the date such amount is
      due
      and payable (whether on the Stated Maturity Date, upon acceleration or
      otherwise) shall be payable upon demand.

     

    SECTION
      3.3. Fees.
      The
      Borrower agrees to pay the fees set forth below. All such fees shall be
      non-refundable.

     

    SECTION
      3.3.1. Commitment
      Fee.
      The
      Borrower agrees to pay to the Administrative Agent for the account of each
      Lender, for the period (including any portion thereof when any of its
      Commitments are suspended by reason of the Borrower’s inability to satisfy any
      condition of Article V)
      commencing on the Effective Date and continuing through the Loan Commitment
      Termination Date, a commitment fee in an amount equal to the Applicable
      Commitment Fee Margin, in each case on such Lender’s Percentage of the sum of
      the average daily unused portion of the Borrowing Base. All commitment fees
      payable pursuant to this Section shall be calculated on a year comprised of
      360 days and payable by the Borrower in arrears on the Effective Date and
      thereafter on each Quarterly Payment Date, commencing with the first Quarterly
      Payment Date following the Effective Date, and on the Loan Commitment
      Termination Date.

     

    SECTION
      3.3.2. Arrangers’
      and Administrative Agent’s Fees.
      The
      Borrower agrees to pay to the Arrangers and the Administrative Agent, for their
      respective accounts, the fees in the amounts and on the dates set forth in
      the
      Fee Letter.

     


    
      
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    SECTION
      3.3.3. Additional
      Upfront Fees.
      In the
      event that, as a result of a redetermination of the Borrowing Base, the
      Borrowing Base is increased to an amount that is higher than the amount of
      the
      Borrowing Base for the Closing Date specified in Section
      2.8.1
      (the
“Base
      Amount”;
      and
      such higher amount herein the “Designated
      Amount”),
      the
      Borrower agrees to pay to the Administrative Agent, for the account of each
      Lender, an upfront fee in an amount equal to 25 basis points on such Lender’s
      Percentage of the difference between the Designated Amount and the Base Amount;
      provided,
      however, that solely for purposes of calculating the upfront fee pursuant to
      this Section
      3.3.3,
      upon
      payment of such upfront fee and for purposes of future upfront fees pursuant
      to
      this Section
      3.3.3,
      the
      Base Amount shall be increased to be equal to the last Designated Amount for
      which an upfront fee has been paid hereunder.

     

    SECTION
      3.3.4. Letter
      of Credit Fee.
      The
      Borrower agrees to pay to the Administrative Agent, for the pro rata
      account
      of the applicable Issuer and each Lender, a Letter of Credit fee in a per annum
      amount equal to the then effective Applicable Margin for Loans maintained as
      LIBO Rate Loans, multiplied by the Stated Amount of each such Letter of Credit,
      such fees being payable quarterly in arrears on each Quarterly Payment Date
      following the date of issuance of each Letter of Credit and on the Loan
      Commitment Termination Date.

     

    SECTION
      3.3.5. Letter
      of Credit Issuance Fee.
      The
      Borrower agrees to pay to each Issuer for its own account an issuance fee for
      each Letter of Credit issued by such Issuer equal to 0.125% per annum of the
      Stated Amount of such Letter of Credit. Such fee shall be payable by the
      Borrower on the date of issuance (and renewal or extension, as applicable)
      of
      such Letter of Credit. The Borrower also agrees to pay such Issuer’s standard
      fees with respect to the issuance, amendment, renewal or extension of any Letter
      of Credit or processing of drawings thereunder, which fees shall be payable
      to
      such Issuer within ten (10) days after demand.

     

    ARTICLE
      4

     

    CERTAIN
      LIBO RATE AND OTHER PROVISIONS

     

    SECTION
      4.1. LIBO
      Rate Lending Unlawful.
      If any
      Lender shall determine (which determination shall, upon notice thereof to the
      Borrower and the Administrative Agent, be conclusive and binding on the
      Borrower) that the introduction of or any change in or in the interpretation
      of
      any law makes it unlawful, or any Governmental Authority asserts that it is
      unlawful, for such Lender to make or continue any Loan as, or to convert any
      Loan into, a LIBO Rate Loan, the obligations of such Lender to make, continue
      or
      convert any such LIBO Rate Loan shall, upon such determination, forthwith be
      suspended until such Lender shall notify the Administrative Agent that the
      circumstances causing such suspension no longer exist, and all outstanding
      LIBO
      Rate Loans payable to such Lender shall automatically convert into Base Rate
      Loans at the end of the then current Interest Periods with respect thereto
      or
      sooner, if required by such law or assertion.

     

    SECTION
      4.2. Deposits
      Unavailable.
      If the
      Administrative Agent shall have determined that (a) Dollar deposits in the
      relevant amount and for the relevant Interest Period are not available to it
      in
      its relevant market; or (b) by reason of circumstances affecting its
      relevant market, adequate means do not exist for ascertaining the interest
      rate
      applicable hereunder to LIBO Rate Loans; then, upon notice from the
      Administrative Agent to the Borrower and the Lenders, the obligations of all
      Lenders under Section
      2.3
      and
Section
      2.4
      to make
      or continue any Loans as, or to convert any Loans into, LIBO Rate Loans shall
      forthwith be suspended until the Administrative Agent shall notify the Borrower
      and the Lenders that the circumstances causing such suspension no longer
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    SECTION
      4.3. Increased
      LIBO Rate Loan Costs, etc.
      The
      Borrower agrees to reimburse each Lender and Issuer for any increase in the
      cost
      to such Lender or Issuer of, or any reduction in the amount of any sum
      receivable by such Secured Party in respect of, such Secured Party’s Commitments
      and the making of Credit Extensions hereunder (including the making, continuing
      or maintaining (or of its obligation to make or continue) any Loans as, or
      of
      converting (or of its obligation to convert) any Loans into, LIBO Rate Loans)
      that arise in connection with any change in, or the introduction, adoption,
      effectiveness, interpretation, reinterpretation or phase in after the Closing
      Date of, any law or regulation, directive, guideline, decision or request
      (whether or not having the force of law) of any Governmental Authority;
      provided, however, that any such changes with respect to increased capital
      costs
      and Taxes shall be subject to and governed by the terms of Sections
      4.5
      and
4.6,
      respectively. Each affected Secured Party shall promptly notify the
      Administrative Agent and the Borrower in writing of the occurrence of any such
      event, stating the reasons therefor and the additional amount required fully
      to
      compensate such Secured Party for such increased cost or reduced amount. Such
      additional amounts shall be payable by the Borrower directly to such Secured
      Party within five days of its receipt of such notice, and such notice shall,
      in
      the absence of manifest error, be conclusive and binding on the
      Borrower.

     

    SECTION
      4.4. Funding
      Losses.
      In the
      event any Lender shall incur any loss or expense (including any loss or expense
      incurred by reason of the liquidation or reemployment of deposits or other
      funds
      acquired by such Lender to make or continue any portion of the principal amount
      of any Loan as, or to convert any portion of the principal amount of any Loan
      into, a LIBO Rate Loan) as a result of

     

    (a)
      any
      conversion or repayment or prepayment of the principal amount of any LIBO Rate
      Loan on a date other than the scheduled last day of the Interest Period
      applicable thereto, whether pursuant to Article
      III
      or
      otherwise;

     

    (b)
      any
      Loans not being made as LIBO Rate Loans in accordance with the Borrowing Request
      therefor;

     

    (c)
      any
      Loans not being continued as, or converted into, LIBO Rate Loans in accordance
      with the Continuation/Conversion Notice therefor; or

     

    (d)
      any
      LIBO Rate Loans not being prepaid in accordance with any notice delivered
      pursuant to clause
      (a)
      of
Section
      3.1.1
      (as a
      result of a revocation of such notice or as a result of such payment not being
      made);

     

    then,
      upon the written notice of such Lender to the Borrower (with a copy to the
      Administrative Agent), the Borrower shall, within five (5) days of its receipt
      thereof, pay directly to such Lender such amount as will (in the reasonable
      determination of such Lender) reimburse such Lender for such loss or expense.
      Such written notice shall, in the absence of manifest error, be conclusive
      and
      binding on the Borrower.

     

     


    
      
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    SECTION
      4.5. Increased
      Capital Costs.
      If any
      change in, or the introduction, adoption, effectiveness, interpretation,
      reinterpretation or phase in of, any law or regulation, directive, guideline,
      decision or request (whether or not having the force of law) of any Governmental
      Authority affects or would affect the amount of capital required or expected
      to
      be maintained by any Secured Party or any Person controlling such Secured Party,
      and such Secured Party determines (in good faith but in its sole and absolute
      discretion) that the rate of return on its or such controlling Person’s capital
      as a consequence of the Commitments or the Credit Extensions made, or the
      Letters of Credit participated in, by such Secured Party is reduced to a level
      below that which such Secured Party or such controlling Person could have
      achieved but for the occurrence of any such circumstance, then upon notice
      from
      time to time by such Secured Party to the Borrower, the Borrower shall within
      five days following receipt of such notice pay directly to such Secured Party
      additional amounts sufficient to compensate such Secured Party or such
      controlling Person for such reduction in rate of return. A statement of such
      Secured Party as to any such additional amount or amounts shall, in the absence
      of manifest error, be conclusive and binding on the Borrower. In determining
      such amount, such Secured Party may use any method of averaging and attribution
      that it (in its sole and absolute discretion) shall deem
      applicable.

     

    SECTION
      4.6. Taxes.
      The
      Borrower covenants and agrees as follows with respect to Taxes.

     

    (a)
      Any
      and all payments by the Borrower and each other Obligor under each Loan Document
      shall be made without setoff, counterclaim or other defense, and free and clear
      of, and without deduction or withholding for or on account of, any Taxes. In
      the
      event that any Taxes are imposed and required to be deducted or withheld from
      any payment required to be made to or on behalf of any Secured Party under
      any
      Loan Document, then:

     

    (i)
      subject to clause
      (f),
      if such
      Taxes are Non-Excluded Taxes, the Borrower and each Obligor shall increase
      the
      amount of such payment so that each Secured Party receives an amount sufficient
      to put it and its Tax Related Persons in the same after-Tax position they would
      have been in, after withholding and deduction and payment of all Taxes
      (including income Taxes) had no such deduction or withholding been made;
      and

     

    (ii)
      the
      Borrower or the Administrative Agent (as applicable) shall withhold the full
      amount of such Taxes from such payment (as increased pursuant to clause
      (a)(i))
      and
      shall pay such amount to the Governmental Authority imposing such Taxes in
      accordance with applicable law.

     

    (b)
      In
      addition, the Borrower shall pay all Other Taxes imposed to the relevant
      Governmental Authority imposing such Other Taxes in accordance with applicable
      law.

     

    (c)
      As
      promptly as practicable after the payment of any Taxes that the Borrower is
      required to pay on account of any payment made or required to be made under
      any
      Loan Document, and in any event within 45 days of any such payment being due,
      the Borrower shall furnish to the Administrative Agent an official receipt
      (or a
      certified copy thereof), or other proof of payment satisfactory to the
      Administrative Agent, acting reasonably, evidencing the payment of such Taxes
      or
      Other Taxes. The Administrative Agent shall make copies thereof available to
      any
      Lender upon request therefor.

     


    
      
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    (d)
      Subject to clause
      (f),
      the
      Borrower shall indemnify each Secured Party for any Non-Excluded Taxes and
      Other
      Taxes levied, imposed or assessed on (and whether or not paid directly by)
      such
      Secured Party whether or not such Non-Excluded Taxes or Other Taxes are
      correctly or legally asserted by the relevant Governmental Authority. In
      addition, the Borrower shall indemnify each Secured Party for any Taxes that
      may
      become payable by such Secured Party or its Tax Related Persons as a result
      of
      indemnification payments (net of any reduction in Taxes resulting from the
      losses being indemnified) or as a result of any failure of the Borrower to
      pay
      any Taxes when due to the appropriate Governmental Authority or to deliver
      to
      the Administrative Agent, pursuant to clause
      (c),
      documentation evidencing the payment of Taxes or Other Taxes. With respect
      to
      indemnification for Non-Excluded Taxes and Other Taxes actually paid by any
      Secured Party or the indemnification provided in the immediately preceding
      sentence, such indemnification shall be made within 30 days after the date
      such
      Secured Party makes written demand therefor. The Borrower and each other Obligor
      acknowledges that any payment made to any Secured Party or to any Governmental
      Authority in respect of the indemnification obligations of the Borrower or
      other
      Obligor provided in this clause shall constitute a payment in respect of which
      the provisions of clause
      (a)
      and this
      clause shall apply.

     

    (e)
      Each
      Non-U.S. Lender making Loans to the Borrower, on or prior to the date on which
      such Non-U.S. Lender becomes a Lender hereunder (and from time to time
      thereafter upon the request of the Borrower or the Administrative Agent, but
      only for so long as such non-U.S. Lender is legally entitled to do so), shall
      deliver to the Borrower and the Administrative Agent either (i) two duly
      completed copies of either (x) Internal Revenue Service Form W-8BEN or W-8IMY
      claiming eligibility of the Non-U.S. Lender for benefits of an income tax treaty
      to which the United States is a party or (y) Internal Revenue Service Form
      W-8ECI, or in either case an applicable successor form; (ii) in the case of
      a
      Non-U.S. Lender that is not legally entitled to deliver either form listed
      in
clause
      (e)(i),
      (x) a
      certificate to the effect that such Non-U.S. Lender is not (A) a “bank” within
      the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder”
of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or
      (C) a
      controlled foreign corporation receiving interest from a related person within
      the meaning of Section 881(c)(3)(C) of the Code (referred to as an “Exemption
      Certificate”)
      and
      (y) two duly completed copies of Internal Revenue Service Form W-8BEN or W-8IMY
      or applicable successor form, or (iii) in the case of a Lender that is not
      a
      Non-U.S. Lender, two duly completed copies of Internal Revenue Service form
      W-9
      or applicable successor form. Each Lender, Eligible Assignee or Participant,
      as
      the case may be, agrees to promptly notify the Borrower and the Administrative
      Agent of any change in circumstances that would modify or render invalid any
      claimed exemption or reduction. In addition, each Lender, Eligible Assignee
      or
      Participant, as the case may be, shall timely deliver to the Borrower and the
      Administrative Agent two further copies of such Form W-8BEN, W-8IMY, W-8ECI
      or
      W-9 or successor forms on or before the date that any previously executed form
      expires or becomes obsolete, or after the occurrence of any event requiring
      a
      change in the most recent form delivered by such Person to the
      Borrower.

     


    
      
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    (f)
      The
      Borrower shall not be obligated to pay any additional amounts to any Lender
      pursuant to clause
      (a)(i),
      or to
      indemnify any Lender pursuant to clause
      (d),
      in
      respect of United States federal withholding taxes to the extent imposed as
      a
      result of (i) the failure of such Lender to deliver to the Borrower the
      form or forms and/or an Exemption Certificate, as applicable to such Lender,
      pursuant to clause
      (e),
      (ii)
      such form or forms and/or Exemption Certificate not establishing a complete
      exemption from U.S. federal withholding tax or the information or certifications
      made therein by the Lender being untrue or inaccurate on the date delivered
      in
      any material respect, or (iii) the Lender designating a successor lending office
      at which it maintains its Loans that has the effect of causing such Lender
      to
      become obligated for tax payments in excess of those in effect immediately
      prior
      to such designation; provided
      that,
      the Borrower shall be obligated to pay additional amounts to any such Lender
      pursuant to clause
      (a)(i),
      and to
      indemnify any such Lender pursuant to clause
      (d),
      in
      respect of United States federal withholding taxes if (i) any such failure
      to
      deliver a form or forms or an Exemption Certificate or the failure of such
      form
      or forms or Exemption Certificate to establish a complete exemption from U.S.
      federal withholding tax or inaccuracy or untruth contained therein resulted
      from
      a change in any applicable statute, treaty, regulation or other applicable
      law
      or any interpretation of any of the foregoing occurring after the Closing Date,
      which change rendered such Lender no longer legally entitled to deliver such
      form or forms or Exemption Certificate or otherwise ineligible for a complete
      exemption from U.S. federal withholding tax, or rendered the information or
      certifications made in such form or forms or Exemption Certificate untrue or
      inaccurate in a material respect, (ii) the redesignation of the Lender’s
      lending office was made at the request of the Borrower or (iii) the obligation
      to pay any additional amounts to any such Lender pursuant to clause
      (a)(i)
      or to
      indemnify any such Lender pursuant to clause
      (d)
      is with
      respect to an Assignee Lender that becomes an Assignee Lender as a result of
      an
      assignment made at the request of the Borrower.

     

    (g)
      If
      any Lender (an “Affected
      Lender”)
      makes
      a demand upon the Borrower for amounts pursuant to this Section
      4.6
      (and the
      payment of such amounts are, and are likely to continue to be, materially more
      onerous in the reasonable judgment of the Borrower than with respect to the
      other Lenders), the Borrower may, within 30 days of receipt by the Borrower
      of
      such demand, give notice (a “Replacement
      Notice”)
      in
      writing to the Administrative Agent and such Affected Lender of its intention
      to
      cause such Affected Lender to sell all of its Loans, Commitments and/or Notes
      to
      an Eligible Assignee (a “Replacement
      Lender”)
      designated in such Replacement Notice; provided,
      however,
      that no
      Replacement Notice may be given by the Borrower and no Lender may be replaced
      pursuant to this clause
      (g)
      if (i)
      such replacement conflicts with any applicable law or regulation, (ii) any
      Event
      of Default shall have occurred and be continuing at the time of such replacement
      or (iii) prior to any such replacement, such Affected Lender shall have taken
      any necessary action under Section
      4.6
      (if
      applicable) so as to eliminate the continued need for payment of amounts owing
      pursuant to Section
      4.6
      or shall
      have waived its right to payment of the specific amounts that give rise or
      would
      give rise to such Replacement Notice (it being understood for sake of clarity
      that the Affected Lender shall be under no obligation to waive such rights
      to
      payment and that such Affected Lender, if it is replaced in accordance with
      this
clause
      (g),
      shall
      be entitled to be reimbursed for all breakage losses in connection with such
      replacement). If the Administrative Agent shall, in the exercise of its
      reasonable discretion and within 30 days of its receipt of such Replacement
      Notice, notify the Borrower and such Affected Lender in writing that the
      Replacement Lender is satisfactory to the Administrative Agent (such consent
      not
      being required where the Replacement Lender is already a Lender or an Affiliate
      of a Lender), then such Affected Lender shall, subject to the payment of any
      amounts due pursuant to Section
      4.4,
      assign,
      in accordance with Section
      10.11,
      all of
      its Commitments, Loans, Notes (if any), and other rights and obligations under
      this Agreement and all other Loan Documents (including Reimbursement
      Obligations, if applicable) designated in the replacement notice to such
      Replacement Lender; provided,
      however,
      that
      (A) such assignment shall be without recourse, representation or warranty and
      shall be on terms and conditions reasonably satisfactory to such Affected Lender
      and such Replacement Lender, (B) the purchase price paid by such Replacement
      Lender shall be in the amount of such Affected Lender’s Loans designated in the
      Replacement Notice, and/or its Percentage of outstanding Reimbursement
      Obligations, as applicable, together with all accrued and unpaid interest and
      fees in respect thereof, plus all other amounts (including the amounts demanded
      and unreimbursed under Section
      4.6)
      and
      including any call premiums, owing to such Affected Lender hereunder and (C)
      the
      Borrower shall pay to the Affected Lender and the Administrative Agent all
      reasonable out-of-pocket expenses incurred by the Affected Lender and the
      Administrative Agent in connection with such assignment and assumption
      (including the processing fees described in Section
      10.11).
      Upon
      the effective date of an assignment described above, the Replacement Lender
      shall become a “Lender” for all purposes under the Loan Documents. Each Lender
      hereby grants to the Administrative Agent an irrevocable power of attorney
      (which power is coupled with an interest) to execute and deliver, on behalf
      of
      such Lender as assignor, any assignment agreement necessary to effectuate any
      assignment of such Lender’s interests hereunder in the circumstances
      contemplated by this Section.


    
      
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    SECTION
      4.7. Payments,
      Computations; Proceeds of Collateral, etc.
      (2)
      Unless otherwise expressly provided in a Loan Document, all payments by the
      Borrower pursuant to each Loan Document shall be made by the Borrower to the
      Administrative Agent for the pro rata
      account
      of the Secured Parties entitled to receive such payment. All payments shall
      be
      made without setoff, deduction or counterclaim not later than 11:00 a.m. on
      the date due in same day or immediately available funds to such account as
      the
      Administrative Agent shall specify from time to time by notice to the Borrower.
      Funds received after that time shall be deemed to have been received by the
      Administrative Agent on the next succeeding Business Day. The Administrative
      Agent shall promptly remit in same day funds to each Secured Party its share,
      if
      any, of such payments received by the Administrative Agent for the account
      of
      such Secured Party. All interest (including interest on LIBO Rate Loans) and
      fees (including all fees in respect of Letters of Credit) shall be computed
      on
      the basis of the actual number of days (including the first day but excluding
      the last day) occurring during the period for which such interest or fee is
      payable over a year comprised of 360 days (or, in the case of interest on a
      Base Rate Loan (calculated at other than the Federal Funds Rate), 365 days
      or, if appropriate, 366 days). Payments due on other than a Business Day
      shall (except as otherwise required by clause
      (b)
      of the
      proviso in the definition of “Interest Period”) be made on the next succeeding
      Business Day and such extension of time shall be included in computing interest
      and fees in connection with that payment.

     


    
      
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    (b)
      After
      the occurrence and during the continuance of an Event of Default, the
      Administrative Agent may, and upon direction from the Required Lenders, shall,
      apply all amounts received under the Loan Documents (including from the proceeds
      of collateral securing the Obligations) or under applicable law upon receipt
      thereof to the Obligations as follows: (i) first, to the payment of all
      Obligations in respect of fees, expense reimbursements, indemnities and other
      amounts owing to the Administrative Agent, in its capacity as the Administrative
      Agent (including the fees and expenses of counsel to the Administrative Agent),
      (ii) second, after payment in full in cash of the amounts specified in
clause (b)(i),
      to the
      ratable payment of all interest (including interest accruing (or which would
      accrue) after the commencement of a proceeding in bankruptcy, insolvency or
      similar law, whether or not permitted as a claim under such law) and fees owing
      under the Loan Documents, and all costs and expenses owing to the Secured
      Parties pursuant to the terms of the Loan Documents, until paid in full in
      cash,
      (iii) third, after payment in full in cash of the amounts specified in
clauses (b)(i)
      and
(b)(ii),
      to the
      ratable payment of the principal amount of the Loans then outstanding, the
      aggregate Reimbursement Obligations then owing, the Cash Collateralization
      for
      contingent liabilities under Letter of Credit Outstandings and the net credit
      exposure owing to Secured Parties under Hedging Agreements, (iv) fourth, after
      payment in full in cash of the amounts specified in clauses
      (b)(i)
      through
(b)(iii),
      to the
      ratable payment of all other Obligations owing to the Secured Parties, and
      (v)
      fifth, after payment in full in cash of the amounts specified in clauses (b)(i)
      through
(b)(iv),
      and
      following the Termination Date, to each applicable Obligor or any other Person
      lawfully entitled to receive such surplus. For purposes of clause
      (b)(iii),
      the
“net credit exposure” at any time of any Secured Party with respect to a Hedging
      Agreement to which such Secured Party is a party shall be determined at such
      time in accordance with the customary methods of calculating net credit exposure
      under similar arrangements by the counterparty to such arrangements, taking
      into
      account potential interest rate (or, if applicable, currency) movements and
      the
      respective termination provisions and notional principal amount and term of
      such
      Hedging Agreement.

     

    SECTION
      4.8. Sharing
      of Payments.
      If any
      Secured Party shall obtain any payment or other recovery (whether voluntary,
      involuntary, by application of setoff or otherwise) on account of any Credit
      Extension or Reimbursement Obligation (other than pursuant to the terms of
      Sections
      4.3,
      4.4,
      4.5
      or
4.6)
      in
      excess of its pro rata share of payments obtained by all Secured Parties, such
      Secured Party shall purchase from the other Secured Parties such participations
      in Credit Extensions made by them as shall be necessary to cause such purchasing
      Secured Party to share the excess payment or other recovery ratably (to the
      extent such other Secured Parties were entitled to receive a portion of such
      payment or recovery) with each of them; provided
      that, if
      all or any portion of the excess payment or other recovery is thereafter
      recovered from such purchasing Secured Party, the purchase shall be rescinded
      and each Secured Party that has sold a participation to the purchasing Secured
      Party shall repay to the purchasing Secured Party the purchase price to the
      ratable extent of such recovery together with an amount equal to such selling
      Secured Party’s ratable share (according to the proportion of (a) the amount of
      such selling Secured Party’s required repayment to the purchasing Secured Party
      to (b) total amount so recovered from the purchasing Secured Party) of any
      interest or other amount paid or payable by the purchasing Secured Party in
      respect of the total amount so recovered. The Borrower agrees that any Secured
      Party purchasing a participation from another Secured Party pursuant to this
      Section may, to the fullest extent permitted by law, exercise all its rights
      of
      payment (including pursuant to Section
      4.9)
      with
      respect to such participation as fully as if such Secured Party were the direct
      creditor of the Borrower in the amount of such participation. If under any
      applicable bankruptcy, insolvency or other similar law any Secured Party
      receives a secured claim in lieu of a setoff to which this Section applies,
      such
      Secured Party shall, to the extent practicable, exercise its rights in respect
      of such secured claim in a manner consistent with the rights of the Secured
      Parties entitled under this Section to share in the benefits of any recovery
      on
      such secured claim.


    
      
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    SECTION
      4.9. Setoff.
      Each
      Secured Party shall, upon the occurrence and during the continuance of any
      Default described in clauses
      (b)
      through
(d)
      of
Section
      8.1.9
      or, with
      the consent of the Required Lenders, upon the occurrence and during the
      continuance of any other Event of Default, have the right to appropriate and
      apply to the payment of the Obligations owing to it (whether or not then due),
      and (as security for such Obligations) the Borrower hereby grants to each
      Secured Party a continuing security interest in, any and all balances, credits,
      deposits, accounts or moneys of the Borrower then or thereafter maintained
      with
      such Secured Party; provided
      that,
      any such appropriation and application shall be subject to the provisions of
      Section
      4.8.
      Each
      Secured Party agrees promptly to notify the Borrower and the Administrative
      Agent after any such appropriation and application made by such Secured Party;
      provided
      that,
      the failure to give such notice shall not affect the validity of such setoff
      and
      application. The rights of each Secured Party under this Section are in addition
      to other rights and remedies (including other rights of setoff under applicable
      law or otherwise) which such Secured Party may have.

     

    ARTICLE
      5

    CONDITIONS
      TO CREDIT EXTENSIONS

     

    SECTION
      5.1. Initial
      Credit Extension.
      The
      obligations of the Lenders and, if applicable, any Issuer to make the initial
      Credit Extension (including as constituted by the continuation of the Existing
      Loans as Loans hereunder) shall be subject to the prior or concurrent
      satisfaction of each of the conditions precedent set forth in this Article
      V.

     

    SECTION
      5.1.1. Credit
      Agreement.
      The
      Administrative Agent (or its counsel) shall have received from each party hereto
      (or intended to become a party hereto) either (a) a counterpart of this
      Agreement signed on behalf of such party or (b) written evidence
      satisfactory to the Administrative Agent (which may include facsimile
      transmission of a signed signature page of this Agreement) that such party
      has
      signed a counterpart of this Agreement.

     

    SECTION
      5.1.2. Secretaries’
      Certificates, etc.
      The
      Administrative Agent shall have received from each Obligor, as applicable,
      (a) a copy of a good standing certificate, dated a date reasonably close to
      the Closing Date, for such Obligor from the jurisdiction in which such Obligor
      is organized and each other jurisdiction in which such Obligor is qualified
      to
      do business and (b) a certificate, dated as of the Closing Date, duly
      executed and delivered by such Obligor’s Secretary or Assistant Secretary,
      managing member or general partner, as applicable, as to

     

    (i)
      resolutions of such Obligor’s Board of Directors (or other managing body, in the
      case of an Obligor that is not a corporation) then in full force and effect
      authorizing, to the extent relevant, all aspects of the Transaction applicable
      to such Obligor and the execution, delivery and performance of each Loan
      Document to be executed by such Obligor and the transactions contemplated hereby
      and thereby;

     


    
      
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    (ii)
      the
      incumbency and signatures of those of its officers, managers, managing member
      or
      general partner (or officers or managers of its managing member or general
      partner), as applicable, authorized to act with respect to each Loan Document
      to
      be executed by such Obligor; and

     

    (iii)
      the
      Organic Documents of such Obligor and the full force and validity
      thereof;

     

    upon
      which certificates each Secured Party may conclusively rely until it shall
      have
      received a further certificate of the Secretary, Assistant Secretary, managing
      member or general partner (or Secretary or Assistant Secretary of the managing
      member or general partner), as applicable, of any such Obligor canceling or
      amending the prior certificate of such Obligor.

     

    SECTION
      5.1.3. Closing
      Date Certificate.
      The
      Administrative Agent shall have received the Closing Date Certificate, dated
      as
      of the Closing Date and duly executed and delivered by an Authorized Officer
      of
      Intermediate Holdco and the Borrower, in which certificate such Obligors shall
      agree and acknowledge that the statements made therein shall be deemed to be
      true and correct representations and warranties of Intermediate Holdco and
      the
      Borrower as of such date, and, at the time each such certificate is delivered,
      such statements shall in fact be true and correct. All documents and agreements
      (including Transaction Documents) required to be appended to the Closing Date
      Certificate shall be in form and substance satisfactory to the Administrative
      Agent, shall have been executed and delivered by the requisite parties, and
      shall be in full force and effect.

     

    SECTION
      5.1.4. Consents,
      Licenses, Permits and Approvals.
      The
      Administrative Agent shall have received (a) a certificate of an Authorized
      Officer of each Obligor dated as of the Closing Date either (i) attaching copies
      of all consents, licenses and approvals required in connection with the
      execution, delivery and performance by such Obligor and the validity against
      such Obligor of the Loan Documents to which it is a party, and such consents,
      licenses and approvals shall be in full force and effect, or (ii) stating that
      no such consents, licenses or approvals are so required (except as have already
      been obtained by the appropriate Obligor), and (b) with respect to EXXI GOM
      only, a report from a consultant acceptable to the Administrative Agent with
      respect to the offshore Pogo Oil and Gas Properties confirming that (i) EXXI
      GOM
      has complied in all material respects with all Applicable Law and regulatory
      requirements (including, without limitation, all Applicable Law relating to
      the
      operation of the offshore Pogo Oil and Gas Properties acquired in connection
      with the Acquisition) and (ii) EXXI GOM has received all necessary permits,
      licenses and approvals to operate such Pogo Oil and Gas Properties as expected
      to be operated after giving effect to the Transaction, and all such permits,
      licenses and approvals are then in full force and effect.

     

    SECTION
      5.1.5. Consummation
      of Transaction; Copies of Transaction Documents.
      (3)
      Each of the Arrangers shall have received evidence satisfactory to them that
      all
      actions necessary to consummate the Transaction shall have been taken in
      accordance with all applicable law and in accordance with the terms of each
      applicable Transaction Document, without amendment or waiver of any material
      provision thereof from the forms of the Transaction Documents provided to and
      reviewed by the Arrangers (except as consented to by the Administrative Agent
      which consent shall not be unreasonably withheld or delayed) and that each
      of
      the Acquisition and the incurrence of the PP Debt (which shall result in the
      Borrower’s raising at least $700,000,000 but not more than $850,000,000 on a
      gross basis pursuant to the issuance of the PP Notes) has occurred or will
      occur
      concurrently with the closing and effectiveness of this Agreement. In addition
      to, and not in limitation of, the foregoing, each of the Arrangers shall be
      reasonably satisfied with (i) the final structure of the Transaction,
      including the Acquisition and the incurrence of PP Debt, (ii) the sources
      and uses of the proceeds used to effect the Transaction, (iii) the terms
      and conditions of the documents relating to the consummation of the Transaction
      and (iv) the organizational and legal structure and the terms and
      conditions of the capitalization of the Parent and each of its Subsidiaries
      after giving effect to the Transaction. There shall not
      have
      occurred any event, change or condition since December 31, 2006, and there
      is
      not existing any pending or threatened litigation, investigation or proceeding,
      that, individually or in the aggregate, has had, or could reasonably be expected
      to have, any material adverse effect on the business, operations or financial
      condition of the Parent or the Borrower and their respective Subsidiaries on
      a
      combined basis, after giving pro forma
      effect
      to the Transaction (a “Closing
      Date Material Adverse Effect”).

     


    
      
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    (b)
      The
      Administrative Agent shall have received (i) copies of all Transaction Documents
      relating to the PP Debt and the Acquisition, certified by an Authorized Officer
      of the Borrower as true, correct and complete in all material respects and
      (ii)
      evidence satisfactory to it that the Borrower is permitted under the Indenture
      to incur Credit Extensions hereunder in an amount of the initial Borrowing
      Base
      specified in Section
      2.8.1,
      which
      such evidence shall include reasonably detailed calculations
      therefor.

     

    SECTION
      5.1.6. Payment
      of Outstanding Indebtedness, etc.
      All
      Indebtedness identified in Item
      5.1.6
      of the
      Disclosure Schedule, together with all interest, all prepayment premiums and
      other amounts payable with respect thereto, shall have been paid in full and
      the
      commitments in respect of such Indebtedness shall have been terminated, and
      all
      Liens securing payment of any such Indebtedness, interest, prepayment premiums
      or other amounts shall have been terminated and released and the Administrative
      Agent shall have received all Uniform Commercial Code Form UCC-3 termination
      statements or other instruments as may be suitable or appropriate in connection
      therewith.

     

    SECTION
      5.1.7. Delivery
      of Notes.
      The
      Administrative Agent shall have received, for the account of each Lender that
      has requested a Note, a Note payable to the order of such Lender duly executed
      and delivered by an Authorized Officer of the Borrower.

     

    SECTION
      5.1.8. Financial
      Information.
      The
      Administrative Agent shall have received:

     

    (a)
      historic pro forma
      monthly
      lease operating statements with respect to the Assets and a summary of sources
      and uses of funds (including the Credit Extensions and proceeds of PP Notes)
      as
      of the Closing Date, which lease operating statements and summary shall be
      in
      form and substance reasonably acceptable to the Administrative
      Agent;

     


    
      
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    (b)
      a
pro forma
      consolidated balance sheet of the Borrower as of the Closing Date prepared
      after
      giving effect to the Transaction as if the Transaction had occurred as of such
      date, which balance sheet shall not be materially inconsistent with the
      information previously provided to the Administrative
      Agent
      and
      shall be in form and substance reasonably acceptable to the Administrative
      Agent; and

     

    (c)
      the
      annual financial and operational projections for the Borrower, by month, for
      the
      twelve month period immediately following the Closing Date prepared in good
      faith based on available information and estimates determined to be reasonable
      at the time such projections were prepared.

     

    SECTION
      5.1.9. Initial
      Reserve Report.
      The
      Lenders shall have received the Initial Reserve Report.

     

    SECTION
      5.1.10. Repayment
      of Indebtedness under Second Lien Loan Documents.
      Evidence satisfactory to the Administrative Agent that the net proceeds of
      the
      PP Debt has been applied to the repayment of all “Obligations” under the Second
      Lien Credit Agreement (with permanent reductions of the corresponding
      commitments under the Second Lien Credit Agreement) such that all “Obligations”
under the Second Lien Credit Agreement are repaid in full and discharged (with
      permanent reductions of all corresponding commitments), together with evidence
      satisfactory to the Administrative Agent of the termination or release of all
      security interests and Liens granted to granted under the Second Lien Loan
      Documents and such other terminations and releases as reasonably requested
      by
      the Administrative Agent

     

    SECTION
      5.1.11. Solvency,
      etc.
      The
      Administrative Agent shall have received a solvency certificate duly executed
      and delivered by the chief financial or accounting Authorized Officer of each
      Obligor, dated as of the Closing Date, substantially in the form of Exhibit
      J
      or
      otherwise in form and substance satisfactory to the Administrative
      Agent.

     

    SECTION
      5.1.12. Guarantees.
      The
      Administrative Agent shall have received, with counterparts for each Lender,
      each Guaranty, dated as of the Closing Date, duly executed and delivered by
      an
      Authorized Officer of Intermediate Holdco and each Subsidiary, as
      applicable.

     

    SECTION
      5.1.13. Security
      Agreements.
      The
      Administrative Agent shall have received, with counterparts for each Lender,
      executed counterparts of the Security Agreement, each dated as of the Closing
      Date, duly executed and delivered by the Borrower, Intermediate Holdco and
      each
      Subsidiary of the Borrower, together with:

     

    (a)
      certificates (in the case of Capital Securities that are certificated securities
      (as defined in the UCC)) evidencing all of the issued and outstanding Capital
      Securities owned by each Obligor in its U.S. Subsidiaries directly owned by
      such
      Obligor, which certificates in each case shall be accompanied by undated
      instruments of transfer duly executed in blank, or, if any Capital Securities
      are uncertificated securities (as defined in the UCC), confirmation and evidence
      satisfactory to the Administrative Agent that the security interest therein
      has
      been transferred to and perfected by the Administrative Agent for the benefit
      of
      the Secured Parties in accordance with Articles 8 and 9 of the UCC and all
      laws
      otherwise applicable to the perfection of the pledge of such Capital
      Securities;

     


    
      
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    (b)
      Uniform Commercial Code Form UCC-1 financing statements and Uniform Commercial
      Code Form UCC-3 amendment or continuation statements (“Filing
      Statements”),
      as
      appropriate, suitable in form for naming Intermediate Holdco, the Borrower,
      and
      each Subsidiary Guarantor as a debtor and the Administrative Agent as the
      secured party, or other similar instruments or documents to be filed under
      the
      UCC of all jurisdictions as may be necessary or, in the opinion of the
      Administrative Agent, desirable to perfect the security interests of the
      Administrative Agent pursuant to such Security Agreement; and

     

    (c)
      Uniform Commercial Code Form UCC-3 termination statements, if any, necessary
      to
      release all Liens and other rights of any Person in any collateral described
      in
      any Security Agreement previously granted by any Person, and (ii) securing
      any
      of the Indebtedness under the Second Lien Loan Documents, together with such
      other Uniform Commercial Code UCC-3 termination statements as the Administrative
      Agent may reasonably request from such Obligors.

     

    SECTION
      5.1.14. UCC
      Searches.
      The
      Administrative Agent shall have received certified copies of UCC Requests for
      Information or Copies (Form UCC-11), or a similar search report certified by
      a
      party acceptable to the Administrative Agent, dated a date reasonably near
      to
      the Closing Date, listing all effective financing statements that name any
      Obligor (under its present name and any previous names) as the debtor, together
      with copies of such financing statements (none of which shall, except with
      respect to Liens permitted by Section
      7.2.3.),
      evidence a Lien on any collateral described in any Loan Document).

     

    SECTION
      5.1.15. Insurance.
      The
      Administrative Agent shall have received (a) a certificate, reasonably
      satisfactory to the Administrative Agent, from the Borrower’s and its
      Subsidiaries’ insurance broker(s), dated as of (or a date reasonably near) the
      Closing Date relating to each insurance policy required to be maintained
      pursuant to Section
      7.1.4,
      identifying types of insurance and the insurance limits of each such insurance
      policy and naming the Administrative Agent as loss payee, and each of the
      Secured Parties as an additional insured, as appropriate, to the extent required
      under Section
      7.1.4
      and
      stating that such insurance is in full force and effect and that all premiums
      due have been paid, together with evidence in form and substance satisfactory
      to
      the Administrative Agent that the Assets are covered under the Borrower’s
      existing insurance policies (with the same coverages and deductions); and (b)
      a
      summary of casualty, property and other insurance policies currently in effect
      and maintained by the Borrower’s Subsidiaries provided by an insurance broker
      and stating that such insurance is in full force and effect and that all
      premiums due have been paid, in form and substance satisfactory to the
      Administrative Agent.

     

    SECTION
      5.1.16. Mortgage
      Supplements.
      The
      Administrative Agent shall have received counterparts of received amendments
      and/or supplements to the Mortgages with respect to the Pogo Oil and Gas
      Properties dated as of the Closing Date (the “Mortgage
      Supplements”),
      substantially in the form of Exhibit
      I-1,
      I-2,
      I-3
      or
I-4
      or
      otherwise in form and substance reasonably satisfactory to the Administrative
      Agent, duly executed and delivered by the applicable Obligors in a sufficient
      number of counterparts for the due recording in each applicable recording office
      (including each office specified in any title opinions described in Section
      5.1.18),
      granting to the Administrative Agent (or a trustee appointed by the
      Administrative Agent) for the benefit of the Secured Parties first and prior
      Liens on the Pogo Oil and Gas Properties such that as of the Closing Date,
      the
      Mortgaged Properties to constitute at
      least
      eighty-five percent (85%) of the total value of the Proved Reserves
      of the
      Borrower and its Subsidiaries and at least eighty-five
      percent (85%) of
      the
      total value of the Proved Developed Producing Reserves of the Borrower and
      its
      Subsidiaries, as well as such other agreements, documents and other writings
      as
      may be reasonably requested by the Administrative Agent, including, without
      limitation, UCC-1 financing statements, authorizing resolutions, tax affidavits
      and applicable department of revenue documentation, together with

     


    
      
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    (a)
      evidence of the completion (or satisfactory arrangements for the completion)
      of
      all recordings and filings of such Mortgage Supplements as may be necessary
      or,
      in the reasonable opinion of the Administrative Agent, desirable to create
      a
      valid, perfected first priority Lien against the properties purported to be
      covered thereby; and

     

    (b)
      such
      other approvals, opinions, or documents as the Administrative Agent may
      reasonably request in form and substance reasonably satisfactory to the
      Administrative Agent.

     

    SECTION
      5.1.17. Opinions
      of Counsel.
      The
      Administrative Agent shall have received opinions, dated the Closing Date and
      addressed to the Administrative Agent and all Lenders, from

     

    (a)
      Looper, Reed & McGraw, New York and Texas counsel to the Obligors in form
      and substance, and from counsel, satisfactory to the Administrative Agent;
      and

     

    (b)
      Gieger, Laborde and Laperouse, L.L.C., local Louisiana counsel to the Obligors
      in form and substance, and from counsel, satisfactory to the Administrative
      Agent.

     

    SECTION
      5.1.18. Title.
      The
      Arrangers shall have received title information and opinions in form and
      substance reasonably satisfactory to the Administrative Agent with respect
      to
      the Mortgaged Properties that comprise at least eighty-five percent (85%) of
      the
      total value of the Proved Developed Producing Reserves of the Pogo Oil and
      Gas
      Properties.

     

    SECTION
      5.1.19. Environmental
      Matters.
      The
      Administrative Agent shall have received, to the extent requested, favorable
      environmental site assessments, reports and evaluations and regulatory
      compliance reviews satisfactory to the Administrative Agent covering that
      portion of the Covered Properties reasonably determined to be appropriate by
      the
      Administrative Agent.

     

    SECTION
      5.1.20. Minimum
      Liquidity.
      The
      Administrative Agent shall have received evidence satisfactory to it that
      immediately after giving effect to the consummation of the Transaction, (a)
      the
      sum of (i) the Borrower’s unused availability under this Agreement plus
      (ii) the aggregate amount of all cash or Cash Equivalent Investments of the
      Borrower, minus (b) all scheduled or anticipated costs, expenses, capital
      expenditures and financial obligations or liabilities of the Borrower for the
      thirty day period immediately following the Closing Date, determined by the
      Borrower in good faith, shall equal or exceed $75,000,000.

     


    
      
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    SECTION
      5.1.21. Closing
      Fees, Expenses, etc.
      The
      Administrative Agent shall have received for its own account, or for the account
      of each Lender, as the case may be, all fees, costs and expenses due and payable
      pursuant to Sections 3.3
      and, if
      then invoiced, 10.3.

     

    SECTION
      5.1.22. Patriot
      Act Disclosures.
      The
      Administrative Agent and each Lender shall have received all Patriot Act
      disclosures requested by them prior to execution of this Agreement.

     

    SECTION
      5.1.23. Other
      Legal Matters.
      All
      legal matters and other due diligence in connection with this Agreement and
      the
      Loan Documents, the consummation of the Transaction, and the assets and
      properties of the Parent, the Borrower or their respective Subsidiaries shall
      be
      approved by the Administrative Agent and its legal counsel, and there shall
      have
      been furnished to the Administrative Agent by the Parent or the Borrower, at
      the
      Borrower’s expense, such agreements and other documents, information and records
      with respect to the Parent, the Borrower or their respective Subsidiaries in
      form, substance, scope and methodology satisfactory to the Administrative Agent
      in its sole discretion, as the Administrative Agent may reasonably have
      requested for that purpose.

     

    For
      purposes of determining compliance with the conditions specified in this
Section
      5.1,
      each
      Lender or Issuer that has signed this Agreement shall be deemed to have
      consented to, approved or accepted or to be satisfied with, each document or
      other matter required thereunder to be consented to or approved by or acceptable
      or satisfactory to a Lender or the Issuers unless the Administrative Agent
      shall
      have received notice from such Lender or Issuer prior to the proposed Closing
      Date specifying its objection thereto.

     

    SECTION
      5.2. All
      Credit Extensions.
      The
      obligation of each Lender and each Issuer to make any Credit Extension shall
      be
      subject to the satisfaction of each of the conditions precedent set forth
      below.

     

    SECTION
      5.2.1. Compliance
      with Warranties, No Default, etc.
      Both
      before and after giving effect to any Credit Extension the following statements
      shall be true and correct:

     

    (a)
      the
      representations and warranties set forth in each Loan Document shall, in each
      case, be true and correct with the same effect as if then made (unless stated
      to
      relate solely to an earlier date, in which case such representations and
      warranties shall be true and correct in all material respects as of such earlier
      date);

     

    (b)
      no
      Material Adverse Effect has occurred since December 31, 2006;

     

    (c)
      no
      Default shall have then occurred and be continuing; and

     

    (d)
      as of
      the date of such Credit Extension, the Borrower is permitted under the Indenture
      to incur such Credit Extension.

     


    
      
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    SECTION
      5.2.2. Credit
      Extension Request, etc.
      Subject
      to Section
      2.3.2,
      the
      Administrative Agent shall have received a Borrowing Request if Loans are being
      requested, or an Issuance Request if a Letter of Credit is being requested
      or
      extended. Each of the delivery of a Borrowing Request or Issuance Request and
      the acceptance by the Borrower of the proceeds of such Credit Extension shall
      constitute a representation and warranty by the Borrower that on the date of
      such Credit Extension (both immediately before and after giving effect to such
      Credit Extension and the application of the proceeds thereof) the statements
      made in Section
      5.2.1
      are true
      and correct.

     

    SECTION
      5.2.3. Satisfactory
      Legal Form.
      All
      documents executed or submitted pursuant hereto by or on behalf of any Obligor
      shall be reasonably satisfactory in form and substance to the Administrative
      Agent.

     

    ARTICLE
      6

    REPRESENTATIONS
      AND WARRANTIES

     

    In
      order
      to induce the Secured Parties to enter into this Agreement and to make Credit
      Extensions hereunder, the Borrower represents and warrants to each Secured
      Party
      as set forth in this Article.

     

    SECTION
      6.1. Organization,
      etc.
      Each
      Obligor is validly organized and existing and in good standing under the laws
      of
      the state or jurisdiction of its incorporation or organization, is duly
      qualified to do business and is in good standing as a foreign entity in each
      jurisdiction where the nature of its business requires such qualification,
      except for such jurisdictions where the failure to so qualify could not
      reasonably be expected to have a Material Adverse Effect, and has full power
      and
      authority and holds all requisite governmental licenses, permits and other
      approvals to enter into and perform its Obligations under each Loan Document
      to
      which it is a party, to own and hold under lease its property and to conduct
      its
      business substantially as currently conducted by it, except for those licenses,
      permits or other approvals, the absence of which could not reasonably be
      expected to have a Material Adverse Effect.

     

    SECTION
      6.2. Due
      Authorization, Non-Contravention, Defaults etc.
      The
      execution, delivery and performance by each Obligor of each Loan Document
      executed or to be executed by it, each Obligor’s participation in the
      consummation of all aspects of the Transaction, and the execution, delivery
      and
      performance by the Borrower or (if applicable) any Obligor of the agreements
      executed and delivered by it in connection with the Transaction are in each
      case
      within such Person’s powers, have been duly authorized by all necessary action,
      and do not

     

    (a)
      contravene any (i) Obligor’s Organic Documents, (ii) court decree or
      order binding on or affecting any Obligor or (iii) law or governmental
      regulation binding on or affecting any Obligor; or

     

    (b)
      result in (i) or require the creation or imposition of, any Lien on any
      Obligor’s properties (except as permitted by this Agreement), (ii) a
      default under any material contractual restriction binding on or affecting
      any
      Obligor or (iii) any noncompliance, suspension, impairment, forfeiture or
      nonrenewal of any material license, permit or other governmental
      approval.

     


    
      
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    No
      Obligor is in default under any agreement, instrument or undertaking to which
      it
      is a party or by which it or any of its property is bound that could reasonably
      be expected to have a Material Adverse Effect. No Obligor is a party to any
      agreement or instrument or subject to any other obligation or any charter or
      corporate restriction or any provision of any applicable law, rule or regulation
      that, individually or in the aggregate, could reasonably be expected to have
      a
      Material Adverse Effect.

     

    SECTION
      6.3. Government
      Approval, Regulation, etc.
      No
      authorization or approval or other action by, and no notice to or filing with,
      any Governmental Authority or other Person (other than those that have been,
      or
      on the Effective Date will be, duly obtained or made and that are, or on the
      Effective Date will be, in full force and effect) is required for the
      consummation of the Transaction or the due execution, delivery or performance
      by
      any Obligor of any Loan Document to which it is a party, or for the due
      execution, delivery and/or performance of Transaction Documents, in each case
      by
      the parties thereto or the consummation of the Transaction. Neither the Borrower
      nor any of its Subsidiaries is an “investment company” within the meaning of the
      Investment Company Act of 1940, as amended.

     

    SECTION
      6.4. Validity,
      etc.
      Each
      Loan Document and each Transaction Document to which any Obligor is a party
      constitutes the legal, valid and binding obligations of such Obligor,
      enforceable against such Obligor in accordance with their respective terms
      (except, in any case, as such enforceability may be limited by applicable
      bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally and by principles of equity).

     

    SECTION
      6.5. Financial
      Information.
      The
      financial statements furnished to the Administrative Agent and each Lender
      pursuant to Section
      5.1.8
      present
      fairly the revenues, direct operating expenses, and pro forma consolidated
      financial condition of the Persons covered thereby as at the dates thereof
      and
      the results of their operations for the periods then ended. All balance sheets,
      all statements of income and of cash flow and all other financial information
      of
      each of the Borrower and its Subsidiaries furnished pursuant to Section
      7.1.1
      have
      been and will for periods following the Effective Date be prepared in accordance
      with IFRS reconciled with GAAP consistently applied, and do or will present
      fairly the consolidated financial condition of the Persons covered thereby
      as at
      the dates thereof and the results of their operations for the periods then
      ended.

     

    SECTION
      6.6. No
      Material Adverse Change.
      There
      has been no material adverse change in the business, condition (financial or
      otherwise), operations, performance, or properties or prospects of the Parent
      and its Subsidiaries taken as a whole since December 31, 2005, on a combined
      basis after giving pro forma
      effect
      to the Transaction.

     

    SECTION
      6.7. Litigation,
      Labor Controversies, etc.
      There
      is no pending or, to the knowledge of the Borrower or any of its Subsidiaries,
      threatened litigation, action, proceeding, investigation or labor
      controversy

     

    (a)
      except as disclosed in Item 6.7
      of the
      Disclosure Schedule, affecting the Borrower, any of its Subsidiaries or any
      other Obligor, or any of their respective properties, businesses, assets or
      revenues, which could reasonably be expected to have a Material Adverse Effect,
      and no adverse development has occurred in any labor controversy, litigation,
      arbitration or governmental investigation or proceeding disclosed in
Item
      6.7;
      or

     


    
      
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    (b)
      which
      purports to affect the legality, validity or enforceability of any Loan
      Document, the Transaction Documents or the Transaction.

     

    SECTION
      6.8. Subsidiaries.
      The
      Borrower has no Subsidiaries, except those Subsidiaries that are identified
      in
Item
      6.8
      of the
      Disclosure Schedule, or that are permitted to have been organized or acquired
      in
      accordance with Sections
      7.2.5 or
      7.2.9.

     

    SECTION
      6.9. Ownership
      of Properties, Etc.
      (4)
      Each of the Borrower and its Subsidiaries has Good Title to the Oil and Gas
      Properties evaluated in the most recently delivered Reserve Report and good
      title to all its personal Properties, in each case, free and clear of all Liens
      except Liens permitted by Section
      7.2.3.
      After
      giving full effect to the such permitted Liens, the Borrower or such Subsidiary
      specified as the owner owns the net interests in production attributable to
      the
      Hydrocarbon Interests as reflected in the most recently delivered Reserve
      Report, and the ownership of such Properties shall not in any material respect
      obligate the Borrower or such Subsidiary to bear the costs and expenses relating
      to the maintenance, development and operations of each such Property in an
      amount in excess of the working interest of each Property set forth in the
      most
      recently delivered Reserve Report that is not offset by a corresponding
      proportionate increase in the Borrower’s or such Subsidiary’s net revenue
      interest in such Property.

     

    (b)
      All
      material leases and agreements necessary for the conduct of the business of
      the
      Borrower and its Subsidiaries are valid and subsisting, in full force and
      effect, and there exists no default or event or circumstance which with the
      giving of notice or the passage of time or both would give rise to a default
      under any such lease or leases, that could reasonably be expected to have a
      Material Adverse Effect.

     

    (c)
      The
      rights and Properties presently owned, leased or licensed by the Borrower and
      its Subsidiaries including, without limitation, all easements and rights of
      way,
      include all rights and Properties necessary to permit the Borrower and its
      Subsidiaries to conduct their business in all material respects in the same
      manner as its business has been conducted prior to the date hereof.

     

    (d)
      All
      of the Properties of the Borrower and its Subsidiaries that are reasonably
      necessary for the operation of their businesses are in good working condition
      and are maintained in accordance with prudent business standards with the
      exception of certain Properties that were damaged by hurricanes and are the
      subject of repair which Borrower is diligently pursuing (provided that such
      damaged Properties could not, individually or in the aggregate, reasonably
      be
      expected to result in a Material Adverse Effect).

     

    (e)
      The
      Borrower and each of its Subsidiary owns, or is licensed to use, all trademarks,
      tradenames, copyrights, patents and other intellectual Property material to
      its
      business, and the use thereof by the Borrower and such Subsidiary does not
      infringe upon the rights of any other Person, except for any such infringements
      that, individually or in the aggregate, could not reasonably be expected to
      result in a Material Adverse Effect. The Borrower and its Subsidiaries either
      own or have valid licenses or other rights to use all databases, geological
      data, geophysical data, engineering data, seismic data, maps, interpretations
      and other technical information used in their businesses as presently conducted,
      subject to the limitations contained in the agreements governing the use of
      the
      same, which limitations are customary for companies engaged in the business
      of
      the exploration and production of Hydrocarbons, with such exceptions as could
      not reasonably be expected to have a Material Adverse Effect.

     

     


    
      
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    SECTION
      6.10. Taxes.
      The
      Borrower and each of its Subsidiaries has filed all tax returns and reports
      required by law to have been filed by it and has paid all Taxes thereby shown
      to
      be due and owing, (except any such Taxes that are being diligently contested
      in
      good faith by appropriate proceedings and for which adequate reserves in
      accordance with GAAP shall have been set aside on its books) and has paid all
      Taxes shown to be due on any assessment received to the extent that such Taxes
      have become due and payable, except where the failure to file any such returns
      or reports or to pay any such Taxes would not give rise to a Material Adverse
      Effect.

     

    SECTION
      6.11. ERISA;
      Pension and Welfare Plans.
      The
      Borrower, its Subsidiaries and each ERISA Affiliate have complied in all
      material respects with ERISA and, where applicable, the Code regarding each
      Pension or Welfare Plan. During the twelve-consecutive-month period prior to
      the
      Effective Date and prior to the date of any Credit Extension hereunder, no
      steps
      have been taken to terminate any Pension Plan, and no contribution failure
      has
      occurred with respect to any Pension Plan sufficient to give rise to a Lien
      under Section 302(f) of ERISA. No condition exists or event or transaction
      has
      occurred with respect to any Pension Plan that might result in the incurrence
      by
      the Borrower or any member of the Controlled Group of any material liability,
      fine or penalty. Except as disclosed in Item
      6.11
      of the
      Disclosure Schedule, neither the Borrower nor any member of the Controlled
      Group
      has any contingent liability with respect to any post-retirement benefit under
      a
      Welfare Plan, other than liability for continuation coverage described in Part
      6
      of Title I of ERISA.

     

    SECTION
      6.12. Environmental
      Warranties.
      Except
      as set forth in Item
      6.12
      of the
      Disclosure Schedule:

     

    (a)
      all
      facilities and property owned, operated or leased by the Borrower or any of
      its
      Subsidiaries are owned, operated or leased by the Borrower and its Subsidiaries
      have been, and continue to be, in material compliance with all Environmental
      Laws;

     

    (b)
      there
      have been no past, and there are no pending or, to the Borrower’s knowledge,
      threatened (i) claims, complaints, notices or governmental requests for
      information received by the Borrower or any of its Subsidiaries with respect
      to
      any alleged material violation of any Environmental Law, or (ii) written
      complaints, notices or inquiries to the Borrower or any of its Subsidiaries
      regarding material potential liability of the Borrower or any of its
      Subsidiaries under any Environmental Law;

     

    (c)
      there
      have been no Releases of Hazardous Materials at, on or under any property now
      or
      previously owned, operated, or leased by the Borrower or any of its Subsidiaries
      that have, or could reasonably be expected to have, a Material Adverse
      Effect;

     


    
      
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    (d)
      the
      Borrower and its Subsidiaries have been issued and are in material compliance
      with all permits, certificates, approvals, licenses, registrations and other
      authorizations relating to environmental matters;

     

    (e)
      no
      property currently, or to the knowledge of the Borrower previously, owned,
      operated or leased by the Borrower or any of its Subsidiaries is listed, or
      proposed for listing in the Federal Register or similar governmental publication
      (with respect to owned property only), on the National Priorities List pursuant
      to CERCLA, on the CERCLIS or on any similar foreign, federal, state or
      provincial list of sites requiring investigation or clean-up under Environmental
      Laws;

     

    (f)
      there
      are no underground storage tanks, active or abandoned, including petroleum
      storage tanks, on or under any property now or previously owned, operated or
      leased by the Borrower or any of its Subsidiaries that, singly or in the
      aggregate, have, or could reasonably be expected to have, a Material Adverse
      Effect;

     

    (g)
      to
      the knowledge of the Borrower, neither the Borrower nor any of its Subsidiaries
      has directly transported or directly arranged for the transportation of any
      Hazardous Material to any location that is listed or proposed for listing on
      the
      National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar
      federal, provincial or state list or that is the subject of federal, state,
      provincial or local enforcement actions or other investigations that could
      reasonably be expected to result in material claims against the Borrower or
      such
      Subsidiary for any remedial work, damage to natural resources or personal
      injury, including claims under CERCLA or Environmental Laws;

     

    (h)
      there
      are no polychlorinated biphenyls or friable asbestos present at any property
      now
      or previously owned or leased by the Borrower or any of its Subsidiaries that
      could reasonably be expected to result in any liability, claims, or costs
      having, individually or in the aggregate, a Material Adverse Effect;
      and

     

    (i)
      no
      conditions exist at, on or under any property now or previously owned or leased
      by the Borrower or any of its Subsidiaries that, with the passage of time or
      the
      giving of notice or both, could reasonably be expected to result in any material
      liability, claims, or costs under any Environmental Law.

     

    SECTION
      6.13. Disclosure
      of Material Information; Accuracy of Information.
      Each
      Obligor has disclosed to the Administrative Agent and the Lenders all
      agreements, instruments and corporate or other restrictions to which it or
      any
      of its Subsidiaries is subject, and all other matters known to it, that,
      individually or in the aggregate, could reasonably be expected to result in
      a
      Material Adverse Effect. None of the factual information heretofore or
      contemporaneously furnished in writing to any Secured Party by or on behalf
      of
      any Obligor in connection with any Loan Document or any transaction contemplated
      hereby (including the Transaction) contains any untrue statement of a material
      fact, or omits to state any material fact necessary to make any information
      not
      misleading, and no other factual information hereafter furnished in connection
      with any Loan Document by or on behalf of any Obligor to any Secured Party
      will
      contain any untrue statement of a material fact or will omit to state any
      material fact necessary to make any information not misleading on the date
      as of
      which such information is dated or certified.


    
      
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    SECTION
      6.14. Regulations
      T, U and X.
      No
      Obligor is engaged in the business of extending credit for the purpose of buying
      or carrying margin stock, and no proceeds of any Credit Extensions will be
      used
      to purchase or carry margin stock or otherwise for a purpose that violates,
      or
      would be inconsistent with, F.R.S. Board Regulations T, U or X. Terms for which
      meanings are provided in F.R.S. Board Regulations T, U or X or any regulations
      substituted therefor, as from time to time in effect, are used in this Section
      with such meanings.

     

    SECTION
      6.15. Labor
      Matters.
      Except
      as set forth on Item
      6.15
      of the
      Disclosure Schedule, as of the date hereof no Obligor is subject to any labor
      or
      collective bargaining agreement. Except as set forth on Item
      6.15
      of the
      Disclosure Schedule, there are no existing or threatened strikes, lockouts
      or
      other labor disputes involving any Obligor that singly or in the aggregate
      could
      reasonably be expected to have a Material Adverse Effect. Hours worked by and
      payments made to employees of each Obligor are not in violation of the Fair
      Labor Standards Act or any other applicable law, rule or regulation dealing
      with
      such matters where such violation could reasonably be expected to have a
      Material Adverse Effect.

     

    SECTION
      6.16. Compliance
      with Laws.
      Each
      Obligor is in compliance in all material respects with the requirements of
      all
      Applicable Law and all orders, writs, injunctions and decrees applicable to
      it
      or to its properties (except for Environmental Laws that are the subject of
      Section 6.12),
      and
      possesses all licenses, permits, franchises, exemptions, approvals and other
      governmental authorizations necessary for the ownership of its Property
      (including its Oil and Gas Properties) and the conduct and operation of its
      business (including, without limitation, the operation of the Properties
      acquired pursuant to the Acquisition, the Castex Acquisition and the Marlin
      Acquisition), except in such instances in which the failure to comply therewith,
      either individually or in the aggregate, would not reasonably be expected to
      have a Material Adverse Effect.

     

    SECTION
      6.17. Material
      Contracts.
      Each of
      the Borrower’s and its Subsidiaries’ material contracts (a) are in full force
      and effect and are binding upon and enforceable against each Obligor that is
      a
      party thereto and, to the best knowledge of the Borrower and its Subsidiaries,
      all other parties thereto in accordance with its terms, and (b) is not in
      default due to the action of such Obligor.

     

    SECTION
      6.18. Solvency.
      The
      Borrower and the Guarantors, taken as a whole, on a consolidated basis, both
      before and after giving effect to any Credit Extensions, are
      Solvent.

     

    SECTION
      6.19. Deposit
      Account and Cash Management Accounts.
      Set
      forth on Item
      6.19(a)
      of the
      Disclosure Schedule is a complete and accurate list of all Deposit Accounts
      of
      the Borrower and each Subsidiary and set forth on Item
      6.19(b)
      of the
      Disclosure Schedule is a complete and accurate list of all Securities Accounts
      (as defined in the UCC) of the Borrower and each Subsidiary, if any as updated
      in accordance with Section
      7.1.9.

     

    SECTION
      6.20. Insurance.
      The
      Borrower and each of its Subsidiaries keeps its property adequately insured
      and
      maintains (a) insurance to such extent and against such risks, including fire,
      as is customary with companies of similar size and in the same or similar
      businesses, (b) workmen’s compensation insurance in the amount required by
      applicable law, (c) public liability insurance, which shall include product
      liability insurance, in the amount customary with companies of similar size
      and
      in the same or similar business against claims for personal injury or death
      on
      properties owned, occupied or controlled by it, and (d) such other insurance
      as
      may be required by law.


    
      
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    SECTION
      6.21. Restrictions
      on Liens.
      Neither
      the Borrower nor any of its Subsidiaries is a party to any material agreement
      or
      arrangement or subject to any order, judgment, writ or decree, that either
      restricts or purports to restrict its ability to grant Liens to the
      Administrative Agent and the Lenders on or in respect of their Properties to
      secure the Obligations and the Loan Documents.

     

    SECTION
      6.22. Location
      of Business and Offices.
      The
      Borrower’s jurisdiction of organization is Delaware; the name of the Borrower as
      listed in the public records of its jurisdiction of organization is Energy
      XXI
      Gulf Coast, Inc.; and the organizational identification number of the Borrower
      in its jurisdiction of organization is 4106697 (or, in each case, as set forth
      in a notice delivered to the Administrative Agent pursuant to Section
      10.2).
      The
      Borrower’s principal place of business and chief executive offices are located
      at the address specified in Section 10.2 (or as set forth in a notice delivered
      pursuant to Section
      10.2).
      The
      jurisdiction of organization, name as listed in the public records of its
      jurisdiction of organization, organizational identification number in its
      jurisdiction of organization, and the location of its principal place of
      business and chief executive office of Intermediate Holdco and each Subsidiary
      of the Borrower is stated on Item
      6.22
      of the
      Disclosure Schedule (or as set forth in a notice delivered pursuant to
Section
      10.2).

     

    SECTION
      6.23. Maintenance
      of Properties.
      Except
      for such acts or failures to act as could not be reasonably expected to have
      a
      Material Adverse Effect, the Oil and Gas Properties (and Properties unitized
      therewith) of the Borrower and its Subsidiaries have been maintained, operated
      and developed in a good and workmanlike manner and in conformity with all
      Applicable Law and in conformity with the provisions of all leases, subleases
      or
      other contracts comprising a part of the Hydrocarbon Interests and other
      contracts and agreements forming a part of the Oil and Gas Properties of the
      Borrower and its Subsidiaries. Specifically in connection with the foregoing,
      except for those as could not be reasonably expected to have a Material Adverse
      Effect, (a) no Oil and Gas Property of the Borrower or any Subsidiary is subject
      to having allowable production reduced below the full and regular allowable
      (including the maximum permissible tolerance) because of any overproduction
      (whether or not the same was permissible at the time) and (b) none of the wells
      comprising a part of the Oil and Gas Properties (or Properties unitized
      therewith) of the Borrower or any Subsidiary is deviated from the vertical
      more
      than the maximum permitted by Applicable Law, and such wells are, in fact,
      bottomed under and are producing from, and the well bores are wholly within,
      the
      Oil and Gas Properties (or in the case of wells located on Properties unitized
      therewith, such unitized Properties) of the Borrower or such Subsidiary. All
      pipelines, wells, gas processing plants, platforms and other material
      improvements, fixtures and equipment owned in whole or in part by the Borrower
      or any of its Subsidiaries that are necessary to conduct normal operations
      are
      being maintained in a state adequate to conduct normal operations, and with
      respect to such of the foregoing that are operated by the Borrower or any of
      its
      Subsidiaries, in a manner consistent with the Borrower’s or its Subsidiaries’
past practices (other than those the failure of which to maintain in accordance
      with this Section
      6.24
      could
      not reasonably be expected to have a Material Adverse Effect).


    
      
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    SECTION
      6.24. Gas
      Imbalances.
      Except
      as set forth on Item
      6.24
      of the
      Disclosure Schedule or on the most recent certificate of the Borrower delivered
      in connection with a Reserve Report, on a net basis there are no gas imbalances,
      take or pay or other prepayments that would require the Borrower or any of
      its
      Subsidiaries to deliver Hydrocarbons produced from the Oil and Gas Properties
      at
      some future time without then or thereafter receiving full payment therefor
      exceeding 1.5 bcf of gas (on an mcf equivalent basis) in the
      aggregate.

     

    SECTION
      6.25. Marketing
      of Production.
      Except
      for contracts listed and in effect on the date hereof on Item
      6.25
      of the
      Disclosure Schedule, and thereafter either disclosed in writing to the
      Administrative Agent or included in the most recently delivered Reserve Report
      (with respect to all of which contracts the Borrower represents that it or
      its
      Subsidiaries are receiving a price for all production sold thereunder that
      is
      computed substantially in accordance with the terms of the relevant contract
      and
      are not having deliveries curtailed substantially below the subject Property’s
      delivery capacity), no material agreements exist that are not cancelable on
      60
      days notice or less without penalty or detriment for the sale of production
      from
      the Borrower’s or its Subsidiaries’ Hydrocarbons (including, without limitation,
      calls on or other rights to purchase, production, whether or not the same are
      currently being exercised) that (a) pertain to the sale of production at a
      fixed
      price and (b) have a maturity or expiry date of longer than six (6) months
      from
      the date hereof.

     

    SECTION
      6.26. Perfected
      Liens and Security Interests.
      The
      Obligations are and shall be at all times secured by valid, perfected first
      priority Liens (subject to Liens permitted pursuant to Section
      7.2.3)
      in
      favor of the Administrative Agent, covering and encumbering all collateral
      granted or purported to be granted by the Security Documents, to the extent
      perfection has or will occur, by the recording of a Mortgage or other Security
      Document or amendment or supplement or modification thereto, the filing of
      a UCC
      financing statement, or by possession or control. 

     

    ARTICLE
      7

    COVENANTS

     

    SECTION
      7.1. Affirmative
      Covenants.
      The
      Borrower agrees with each Lender, each Issuer and the Administrative Agent
      that
      until the Termination Date has occurred, the Borrower will, and will cause
      its
      Subsidiaries to, perform or cause to be performed the obligations set forth
      below.

     

    SECTION
      7.1.1. Financial
      Information, Reports, Notices, etc.
      The
      Borrower will furnish the Administrative Agent and each Lender, copies of the
      following financial statements, reports, notices and information:

     

    (a)
      as
      soon as available and in any event within 60 days after the end of each of
      the first three Fiscal Quarters of each Fiscal Year, an unaudited consolidated
      balance sheet of the Borrower and its Subsidiaries as of the end of such Fiscal
      Quarter and consolidated statements of income and cash flow of the Borrower
      and
      its Subsidiaries for such Fiscal Quarter and for the period commencing at the
      end of the previous Fiscal Year and ending with the end of such Fiscal Quarter,
      and including (in each case), in comparative form the figures for the
      corresponding Fiscal Quarter in, and year to date portion of, the immediately
      preceding Fiscal Year (provided that such comparative figures will not be
      required until the Fiscal Quarter ending on June 30, 2007), in each case,
      certified as complete and correct by the chief financial or accounting
      Authorized Officer of the Borrower (subject to normal year-end audit
      adjustments);

     


    
      
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    (b)
      as
      soon as available and in any event within 120 days after the end of each
      Fiscal Year, a copy of the consolidated balance sheet of the Borrower and its
      Subsidiaries, and the related consolidated statements of income and cash flow
      of
      the Borrower and its Subsidiaries for such Fiscal Year, setting forth in
      comparative form the figures for the immediately preceding Fiscal Year, audited
      (without any Impermissible Qualification) by independent public accountants
      acceptable to the Administrative Agent, that shall include a calculation of
      the
      financial covenants set forth in Section
      7.2.4
      and
      stating that, in performing the examination necessary to deliver the audited
      financial statements of the Borrower, no knowledge was obtained of any Event
      of
      Default;

     

    (c)
      concurrently with the delivery of the financial information pursuant to
clauses (a)
      and
(b),
      a
      Compliance Certificate, executed by the chief financial or accounting Authorized
      Officer of the Borrower, (i) showing compliance with the financial covenants
      set
      forth in Section
      7.2.4
      and
      stating that no Default has occurred and is continuing (or, if a Default has
      occurred, specifying the details of such Default and the action that the
      Borrower or an Obligor has taken or proposes to take with respect thereto),
      and
      (ii) stating that no Subsidiary has been formed or acquired since the delivery
      of the last Compliance Certificate (or, if a Subsidiary has been formed or
      acquired since the delivery of the last Compliance Certificate, a statement
      that
      such Subsidiary has complied with Section
      7.1.8);

     

    (d)
      as
      soon as possible and in any event within five days after the Borrower or any
      other Obligor obtains knowledge of the occurrence of a Default, a statement
      of
      an Authorized Officer of the Borrower setting forth details of such Default
      and
      the action that the Borrower or such Obligor has taken and proposes to take
      with
      respect thereto;

     

    (e)
      as
      soon as possible and in any event within five days after the Borrower or any
      other Obligor obtains knowledge of (i) the occurrence of any material
      adverse development with respect to any litigation, action, proceeding or labor
      controversy described in Item
      6.7
      of the
      Disclosure Schedule, (ii) the commencement of any litigation, action,
      proceeding or labor controversy of the type and materiality described in
Section
      6.7
      or (iii)
      the filing or commencement of, or the threat in writing of, any action, suit,
      proceeding, investigation or arbitration by or before any arbitrator or
      Governmental Authority (including under Environmental Laws or with respect
      to
      ERISA matters) against or affecting the Borrower or any Affiliate thereof not
      previously disclosed in writing to the Lenders, notice thereof and, to the
      extent the Administrative Agent requests, copies of all documentation relating
      thereto;

     


    
      
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    (f)
      promptly after the sending or filing thereof, copies of all reports, notices,
      prospectuses and registration statements that any Obligor files with the SEC,
      or
      any national securities exchange;

     

    (g)
      promptly upon becoming aware of (i) the institution of any steps by any
      Person to terminate any Pension Plan, (ii) the failure to make a required
      contribution to any Pension Plan if such failure is sufficient to give rise
      to a
      Lien under Section 302(f) of ERISA, (iii) the taking of any action
      with respect to a Pension Plan that could result in the requirement that any
      Obligor furnish a bond or other security to the PBGC or such Pension Plan,
      or
      (iv) the occurrence of any event with respect to any Pension Plan that
      could result in the incurrence by any Obligor of any liability, fine or penalty,
      notice thereof and copies of all documentation relating thereto;

     

    (h)
      promptly upon receipt thereof, copies of all “management letters” or reports
      submitted to the Borrower or any other Obligor by the independent public
      accountants referred to in clause
      (b)
      in
      connection with each audit made by such accountants or any other interim or
      special audit conducted by them;

     

    (i)
      promptly following the mailing or receipt of any material notice or report
      delivered under the terms of the Indenture, copies of such notice or
      report;

     

    (j)
      promptly (i) if the Borrower obtains knowledge that the Borrower or any Person
      that owns, directly or indirectly, any Capital Securities of the Borrower,
      or
      any other holder at any time of any direct or indirect equitable, legal or
      beneficial interest therein is the subject of any of the Terrorism Laws, the
      Borrower will notify the Administrative Agent and (ii) upon the request of
      any
      Lender, the Borrower will provide any information such Lender believes is
      reasonably necessary to be delivered to comply with the Patriot
      Act;

     

    (k)
      concurrently with any delivery of financial statements under clause
      (b)
      above,
      or within five days following any change to any existing insurance policy that
      could reasonably be expected to have an adverse effect on the Lender Parties,
      a
      certificate of insurance coverage from each insurer with respect to the
      insurance required by Section
      7.1.4,
      in form
      and substance satisfactory to the Administrative Agent, and, if requested by
      the
      Administrative Agent or any Lender, all copies of the applicable
      policies;

     

    (l)
      concurrently with the delivery of any Reserve Report to the Administrative
      Agent
      pursuant to Section
      2.8,
      a list
      of Persons who purchase (or did purchase in the last six months) at least 50%
      of
      the Hydrocarbons from the Borrower or any of its Subsidiaries;

     

    (m)
      concurrently with the delivery of any Reserve Report, the Borrower shall provide
      to the Administrative Agent and each Lender, a certificate from the president
      or
      chief financial officer of Borrower certifying that, to the best of his
      knowledge and in all material respects: (i) the information contained in
      such Reserve Report and any other information delivered in connection therewith
      is true and correct, (ii) the Borrower and its Subsidiaries own Good Title
      to the Oil and Gas Properties evaluated in such Reserve Report (in this Section
      called the “Covered
      Properties”)
      and
      are free of all Liens except for Liens permitted by Section
      7.2.3,
      (iii) except as set forth on an exhibit to the certificate, on a net basis
      there are no gas imbalances, take or pay or other prepayments with respect
      to
      its Oil and Gas Properties evaluated in such Engineering Report (other than
      those permitted by the Security Documents) that would require Borrower or such
      Subsidiary to deliver hydrocarbons produced from such Oil and Gas Properties
      at
      some future time without then or thereafter receiving full payment therefor,
      (iv) none of the Covered Properties has been sold since the date of the
      last Borrowing Base determination except as set forth on an exhibit to the
      certificate, which certificate shall list all of such properties sold and in
      such detail as reasonably required by the Administrative Agent, (v) set
      forth on a schedule attached to the certificate is the present discounted value
      of all Covered Properties that are part of the Oil and Gas Properties that
      are
      encumbered by the Mortgages (the “Mortgaged
      Properties”),
      (vi) Oil and Gas Properties that comprise at
      least
      eighty-five percent (85%) of the total value of the Proved Reserves
      that are
      included within the Covered Properties are part of the Mortgaged Properties,
      and
      (vii) Oil and Gas Properties that comprise at least eighty-five percent
      (85%) of the total value of the Proved Developed Producing Reserves that are
      included within the Covered Properties are part of the Mortgaged
      Properties;

     


    
      
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    (n)
      in
      the event the Borrower or any Subsidiary intends to sell or otherwise Dispose
      of
      at least $5,000,000 worth of any Oil or Gas Properties or any Capital Securities
      in any Subsidiary in accordance with this Agreement, prior written notice of
      such Disposition, the price thereof and the anticipated date of
      closing;

     

    (o)
      prompt written notice, and in any event within five Business Days, of the
      occurrence of any Casualty Event or the commencement of any action or proceeding
      that could reasonably be expected to result in a Casualty Event;

     

    (p)
      prompt written notice (and in any event within thirty (30) days prior thereto)
      of any change (i) in the Borrower or any Guarantor’s corporate name or in
      the ownership of its Properties, (ii) in the location of the Borrower or
      any Guarantor’s chief executive office or principal place of business,
      (iii) in the Borrower or any Guarantor’s identity or corporate structure or
      in the jurisdiction in which such Person is incorporated or formed, (iv) in
      the
      Borrower or any Guarantor’s jurisdiction of organization or such Person’s
      organizational identification number in such jurisdiction of organization,
      and
      (v) in the Borrower or any Guarantor’s federal taxpayer identification
      number;

     

    (q)
      with
      the delivery of quarterly financial statements under Section
      7.1.1(a)
      and in
      any event, no later than 60 days after the end of each fiscal quarter, (i)
      a
      report setting forth, for each calendar month during the then current fiscal
      year to date on a production date basis, the volume of production and sales
      attributable to production (and the prices at which such sales were made and
      the
      revenues derived from such sales) for each such calendar month from the Oil
      and
      Gas Properties, and setting forth the related ad valorem, severance and
      production taxes and lease operating expenses attributable thereto and incurred
      for each such calendar month, including, without limitation, transportation,
      gathering and marketing costs, and all categories of applicable expenses (at
      a
      level of detail reasonably acceptable to the Administrative Agent) charged
      to
      the Borrower or its Subsidiaries under the relevant operating agreements, and
      (ii) a report, in form and substance reasonably acceptable to the Administrative
      Agent and regarding the ongoing drilling programs of the Borrower and it
      Subsidiaries, which report will specify (A) the wells drilled by the Borrower
      and its Subsidiaries during such recently ended fiscal quarter, (B) the status
      of such wells as producing, shut-in, waiting-on-connection or otherwise, and
      the
      categorization of such wells as Proved Developed Producing Reserves, Proved
      Developed Nonproducing Reserves, Proved Undeveloped Reserves or unproved
      reserves as of the most recent reserve report delivered pursuant to the most
      recently completed borrowing base redetermination, (C) the total number of
      successful wells for such fiscal quarter on a gross and net basis and (D) the
      Capital Expenditures incurred in connection with such wells during such fiscal
      quarter;

     


    
      
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    (r)
      promptly, but in any event within five (5) Business Days after the execution
      thereof, copies of any amendment, modification or supplement to the certificate
      or articles of incorporation, by-laws, any preferred stock designation or any
      other organic document of the Borrower or any Subsidiary;

     

    (s)
      (i)
      concurrently with any delivery of financial statements under Section
      7.1.1(a),
      a
      certificate of an Authorized Officer of the Borrower, in form and substance
      satisfactory to the Administrative Agent, setting forth as of the last Business
      Day of such Fiscal Year, a true and complete list of all Hedging Agreements
      of
      the Borrower and each Subsidiary, the material terms thereof (including the
      type, term, effective date, termination date and notional amounts or volumes),
      the net mark-to-market value therefor, any new credit support agreements
      relating thereto not listed on Schedule 7.2.20,
      or not
      previously provided to the Administrative Agent, any margin required or supplied
      under any credit support document, and the counterparty to each such agreement
      and (ii) within five days after any execution of any new Hedging Agreements
      or
      any assignment, termination or unwinding of any existing Hedging Agreements,
      notice thereof to the Administrative Agent, which notice shall be in form and
      substance and with details reasonably acceptable to the Administrative
      Agent.

     

    (t)
      such
      other financial and other information as any Lender or Issuer through the
      Administrative Agent may from time to time reasonably request (including
      information and reports in such detail as the Administrative Agent may request
      with respect to the terms of and information provided pursuant to the Compliance
      Certificate, and including to the extent requested by the Administrative Agent,
      reasonably detailed calculations confirming that the Borrower is in compliance
      with Section 4.09 of the Indenture).

     

    SECTION
      7.1.2. Maintenance
      of Existence; Compliance with Contracts, Laws, etc.
      The
      Borrower will, and will cause each of its Subsidiaries to, preserve and maintain
      its and their respective legal existence (except as otherwise permitted by
      Section
      7.2.9),
      perform in all material respects their obligations under material agreements
      to
      which the Borrower or a Subsidiary is a party, and comply in all material
      respects with all Applicable Law, including the payment (before the same become
      delinquent), of all Taxes, imposed upon the Borrower or its Subsidiaries or
      upon
      their property except to the extent being diligently contested in good faith
      by
      appropriate proceedings and for which adequate reserves in accordance with
      GAAP
      have been set aside on the books of the Borrower or its Subsidiaries, as
      applicable. The Borrower shall take all reasonable and necessary actions to
      ensure that no portion of the Loans will be used, disbursed or distributed
      for
      any purpose, or to any Person, directly or indirectly, in violation of any
      of
      the Terrorism Laws and shall take all reasonable and necessary action to comply
      in all material respects with all Terrorism Laws with respect
      thereto.

     


    
      
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      SECTION
        7.1.3. Operation
        and Maintenance of Properties.
        The
        Borrower will, and will cause each of its Subsidiaries to,

       

      (a)
        maintain, preserve, protect and keep its and their respective properties
        in good
        repair, working order and condition (ordinary wear and tear excepted), and
        make
        necessary repairs, renewals and replacements so that the business carried
        on by
        the Borrower and its Subsidiaries may be properly conducted at all times,
        unless
        the Borrower or such Subsidiary determines in good faith that the continued
        maintenance of such property is no longer economically desirable, necessary
        or
        useful to the business of the Borrower or any of its Subsidiaries or the
        Disposition of such property is otherwise permitted by Sections 7.2.9
        or
7.2.10;

       

      (b)
        operate its Oil and Gas Properties and other material Properties or cause
        such
        Oil and Gas Properties and other material Properties to be operated in a
        careful
        and efficient manner in accordance with the practices of the industry and
        in
        compliance with all applicable contracts and agreements and in compliance
        with
        all Applicable Law, including, without limitation, applicable proration
        requirements and Environmental Laws, and all Applicable Law, rules and
        regulations of every other Governmental Authority from time to time constituted
        to regulate the development and operation of its Oil and Gas Properties and
        the
        production and sale of Hydrocarbons and other minerals therefrom, except,
        in
        each case, where the failure to comply could not reasonably be expected to
        have
        a Material Adverse Effect;

       

      (c)
        promptly pay and discharge, or make reasonable and customary efforts to cause
        to
        be paid and discharged, all delay rentals, royalties, expenses and indebtedness
        accruing under the leases or other agreements affecting or pertaining to
        its Oil
        and Gas Properties and will do all other things necessary to keep unimpaired
        their rights with respect thereto and prevent any forfeiture thereof or default
        thereunder;

       

      (d)
        promptly perform or make reasonable and customary efforts to cause to be
        performed, in accordance with industry standards, the obligations required
        by
        each and all of the assignments, deeds, leases, sub-leases, contracts and
        agreements affecting its interests in its Oil and Gas Properties and other
        material Properties; and

       

      (e)
        to
        the extent the Borrower is not the operator of any Property, the Borrower
        shall
        use reasonable efforts to cause the operator to comply with this Section
        7.1.3.

       

      SECTION
        7.1.4. Insurance;
        Casualty Events.
        The
        Borrower will, and will cause each of its Subsidiaries to maintain:

       

      (a)
        insurance on its property (including with respect to the Pogo Oil and Gas
        Assets) with financially sound and reputable insurance companies against
        loss
        and damage in at least the amounts (and with only those deductibles) customarily
        maintained, and against such risks as are typically insured against in the
        same
        general area, by Persons of comparable size engaged in the same or similar
        business as the Borrower and its Subsidiaries; and

       


      
        
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      (b)
        all
        worker’s compensation, employer’s liability insurance or similar insurance as
        may be required under the laws of any state or jurisdiction in which it may
        be
        engaged in business,

       

      in
        each
        case to the reasonable satisfaction of the Administrative Agent; provided
        that
        the Borrower will maintain, and will cause each of its Subsidiaries to maintain,
        coverage for named windstorms with respect to their respective properties
        (excluding the Pogo Oil and Gas Properties for the period described in clause
        (x) below but including the Pogo Oil and Gas Properties for the period described
        in clause (y) below) (x) from the Closing Date until June 30, 2007, with
        limits
        of not less than $72,500,000 per occurrence and in the annual aggregate and
        with
        deductibles that are reasonably acceptable to the Administrative Agent and
        (y)
        thereafter, with limits of not less than $100,000,000 per occurrence and
        in the
        annual aggregate and with deductibles that are reasonably acceptable to the
        Administrative Agent. 

       

      Without
        limiting the foregoing, all insurance policies required pursuant to this
        Section
        shall (i) (A) name the Administrative Agent on behalf of the Secured
        Parties as loss payee (in the case of property insurance) or name the
        Administrative Agent and other Secured Parties as additional insured (in
        the
        case of liability insurance), as applicable, and (B) provide that no
        cancellation or modification of the policies will be made without thirty
        days’
prior written notice to the Administrative Agent and (ii) be in addition to
        any requirements to maintain specific types of insurance contained in the
        other
        Loan Documents.

       

      If
        no
        Borrowing Base Deficiency exists and no Event of Default has occurred and
        is
        continuing, (a) the Borrower and the Administrative Agent will cause all
        proceeds of insurance in connection with a Casualty Event to be deposited
        into a
        Deposit Account or Securities Account maintained at the Administrative Agent
        or
        as to which a Control Agreement has been executed in favor of the Administrative
        Agent granting “control” to the Administrative Agent under the UCC and (b) the
        Borrower may use such insurance proceeds to, at its option, repair or rebuild
        the affected property or pay or prepay any outstanding Loans or other
        Obligations or for any other lawful purpose not otherwise restricted by the
        Loan
        Documents. If a Borrowing Base Deficiency exists, such insurance proceeds
        shall
        be used to cure such Borrowing Base Deficiency by prepaying the Loans and/or
        Cash Collateralizing the Letters of Credit to the extent of the deficiency.
        After the occurrence and during the continuance of an Event of Default, the
        Administrative Agent may, and upon direction from the Required Lenders, shall,
        apply all insurance proceeds upon receipt thereof to the Obligations in
        accordance with Section
        4.7.

       

      SECTION
        7.1.5. Books
        and Records.
        The
        Borrower will, and will cause each of its Subsidiaries to, keep books and
        records in accordance with IFRS reconciled to GAAP that accurately reflect
        all
        of its business affairs and transactions and permit each Secured Party or
        any of
        their respective representatives, at reasonable times and intervals upon
        reasonable notice to the Borrower, to visit each such Obligor’s offices, to
        discuss each such Obligor’s financial matters with its officers and employees,
        and its independent public accountants (and the Borrower hereby authorizes
        such
        independent public accountant to discuss each such Obligor’s financial matters
        with each Secured Party or their representatives whether or not any
        representative of any Obligor is present) and to examine (and photocopy extracts
        from) any of its books and records; provided
        that
        unless an Event of Default has occurred and is continuing, the Borrower shall
        not be required to make its independent public accountants available for
        discussions with any Secured Party other than the Administrative
        Agent.
        The
        Borrower shall pay any fees of such independent public accountant incurred
        in
        connection with any Secured Party’s exercise of its rights pursuant to this
        Section.

       


      
        
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      SECTION
        7.1.6. Environmental
        Law Covenant.
        The
        Borrower will, and will cause each of its Subsidiaries to,

       

      (a)
        use
        and operate all of its and their facilities and properties in material
        compliance with all Environmental Laws, keep all necessary permits, approvals,
        certificates, licenses and other authorizations relating to environmental
        matters in effect and remain in material compliance therewith, and handle
        all
        Hazardous Materials in material compliance with all applicable Environmental
        Laws; and

       

      (b)
        promptly notify the Administrative Agent and provide copies upon receipt
        of all
        material written claims, complaints, notices or inquiries relating to the
        condition of its owned, operated and leased facilities and properties in
        respect
        of, or as to compliance with, Environmental Laws, and shall promptly resolve
        any
        non-compliance with Environmental Laws and keep its owned property free of
        any
        Lien imposed by any Environmental Law.

       

      SECTION
        7.1.7. Use
        of
        Proceeds.
        The
        Borrower has and will apply the proceeds of the Credit Extensions as
        follows:

       

      (a)
        with
        respect to Loans advanced by the Lenders on April 4, 2006, to consummate
        the
        Marlin Acquisition and to pay transaction costs and expenses related thereto
        and
        repay the Indebtedness incurred on or prior to such date;

       

      (b)
        in
        the case of Loans, for working capital and general corporate purposes of
        the
        Borrower and the Subsidiary Guarantors, including Permitted Acquisitions
        by such
        Persons;

       

      (c)
        for
        issuing Letters of Credit for the account of the Borrower and its Subsidiaries;
        and

       

      (d)
        to
        help consummate the Castex Acquisition (as defined in the Existing First
        Lien
        Credit Agreement) and to pay transaction expenses related thereto and, on
        and
        after the Closing Date, to help consummate the Transaction, to pay Transaction
        Costs and to repay Indebtedness under the Second Lien Loan
        Documents.

       

      SECTION
        7.1.8. Future
        Guarantors, Security, etc.
        The
        Borrower will, and will cause each of its Subsidiaries to, execute any
        documents, Filing Statements, agreements and instruments, and take all further
        action (including filing Mortgages and Mortgage Supplements) that may be
        required under applicable law, or that the Administrative Agent may reasonably
        request, in order to effectuate the transactions contemplated by the Loan
        Documents and in order to grant, preserve, protect and perfect the validity
        and
        first priority (subject to Liens permitted by Section
        7.2.3)
        of the
        Liens created or intended to be created by the Loan Documents. The Borrower
        will
        cause any subsequently acquired or organized Subsidiary to execute, within
        10
        Business Days of its acquisition or organization, a supplement (in form and
        substance satisfactory to the Administrative Agent) to the Subsidiary Guaranty
        and each other applicable Loan Document in favor of the Secured Parties.
        In
        addition, from time to time, the Borrower will, at its cost and expense,
        promptly secure the Obligations by pledging or creating, or causing to be
        pledged or created, perfected Liens with respect to such of its assets and
        properties as the Administrative Agent or the Required Lenders shall designate,
        it being agreed that it is the intent of the parties that the Obligations
        shall
        be secured by, among other things, substantially all the assets of the Borrower
        and its U.S. Subsidiaries (including real and personal property acquired
        subsequent to the Effective Date). Such Liens will be created under the Loan
        Documents in form and substance satisfactory to the Administrative Agent,
        and
        the Borrower shall deliver or cause to be delivered to the Administrative
        Agent
        all such instruments and documents (including legal opinions, title insurance
        policies and lien searches) as the Administrative Agent shall reasonably
        request
        to evidence compliance with this Section. Without limiting the foregoing,
        the
        Borrower for itself and on behalf of its Subsidiaries agrees that the
        Administrative Agent is hereby authorized to file, at such times as the
        Administrative Agent deems necessary or desirable, Filing Statements naming
        the
        Borrower or any of its Subsidiaries as debtor and describing the collateral
        as
“all personal property” or “all assets” of such debtor whether now or hereafter
        acquired, or words of like import.

       


      
        
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      SECTION
        7.1.9. Cash
        Management.
        The
        Borrower will keep all of its operating accounts, Deposit Accounts and other
        bank accounts separate from, and will not co-mingle any of its cash or money
        with, those of other Persons (including its Subsidiaries). The Borrower will,
        and will cause each Subsidiary Guarantor to: (a) ensure that such Person’s
        Account Debtors forward payment of all amounts owed by them to such Person
        to
        one of the Deposit Accounts of such Person set forth on Item
        6.19(a)
        of the
        Disclosure Schedule, and (b) deposit, or cause to be deposited, promptly,
        and in
        any event no later than the second Business Day after the date of receipt
        thereof, all of such Person’s Collections in one of the Deposit Accounts of such
        Person set forth on Item
        6.19(a)
        of the
        Disclosure Schedule. Within 60 days of the Closing Date (as such date may
        be
        extended with the consent of the Administrative Agent), the Borrower will
        deliver or cause to be delivered to the Administrative Agent fully executed
        Control Agreements with respect to each Deposit Account and Securities Account
        of the Borrower set forth on Item
        6.19(a)
        and
Item
        6.19(b)
        of the
        Disclosure Schedule. At all times thereafter, the Borrower will use commercially
        reasonable efforts to ensure, prior to any termination or expiration of the
        Control Agreement relating to the Deposit Accounts initially set forth on
        Item
        6.19(a)
        of the
        Disclosure Schedule, that such Deposit Accounts are replaced with Deposit
        Accounts subject to a Control Agreement. So long as no Default has occurred
        and
        is continuing (except with respect to the Deposit Accounts initially set
        forth
        in Item
        6.19(a)
        of the
        Disclosure Schedule, which Deposit Accounts may be replaced at any time,
        subject
        to the proviso to this sentence), the Borrower may amend Item
        6.19(a)
        and
Item
        6.19(b)
        of the
        Disclosure Schedule to add or replace one or more of the Deposit Accounts;
        provided,
        however,
        that
        (i) the prospective depository institution at which such Deposit Account
        will be
        held shall be reasonably satisfactory to the Administrative Agent and (ii)
        in
        the event such Deposit Account will replace or be in addition to a Deposit
        Account set forth on Item
        6.19(a)
        of the
        Disclosure Schedule hereto, prior to the time of the opening of such Deposit
        Account, the Borrower or relevant Subsidiary and such prospective depository
        institution shall use commercially reasonable efforts to have executed and
        delivered to the Administrative Agent a Control Agreement in respect of such
        Deposit Account. The Borrower shall close or cause to be closed any of such
        Deposit Accounts (and establish replacement Deposit Accounts in accordance
        with
        the foregoing sentence) promptly and in any event within 30 days of notice
        from
        the Administrative Agent that the creditworthiness of any depository institution
        holding such Deposit Account is no longer acceptable in the Administrative
        Agent’s reasonable judgment, or as promptly as practicable and in any event
        within 60 days of notice from the Administrative Agent that the operating
        performance, funds transfer, or availability procedures or performance of
        the
        depository institution holding such Deposit Account is no longer acceptable
        in
        the Administrative Agent’s reasonable judgment.

       


      
        
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      SECTION
        7.1.10. Proceeds
        Account.
        The
        Mortgages contain an assignment to the Administrative Agent by the Borrower
        and
        its Subsidiaries, as applicable, of all Production and Production Proceeds
        (in
        each case as defined in the Mortgages). Notwithstanding such assignment,
        the
        Borrower or such Subsidiary, as applicable, may, until the Administrative
        Agent
        shall give notice to the contrary, as provided in Section 3.1
        of the
        Mortgages, receive such Production and Production Proceeds. Thereafter, all
        Production and Production Proceeds shall be paid directly into an account
        of the
        Borrower maintained with the Administrative Agent (the “Proceeds
        Account”).
        The
        Borrower hereby grants to the Administrative Agent for the benefit of the
        Secured Parties, subject to the prior assignment in favor of the Administrative
        Agent of such Production and Production Proceeds, a security interest in
        the
        Proceeds Account and all proceeds thereof.

       

      SECTION
        7.1.11. Maintenance
        of Liens on Properties.
        The
        Borrower shall cause the Mortgaged Properties to constitute at
        least
        eighty-five percent (85%) of the total value of the Proved Reserves
        of the
        Borrower and its Subsidiaries and at least eighty-five
        percent (85%) of
        the
        total value of the Proved Developed Producing Reserves of the Borrower and
        its
        Subsidiaries (in this Section called the “Required
        Percentages”).
        Within thirty (30) days following each determination or redetermination of
        the
        Borrowing Base, the Borrower will execute and deliver documentation in form
        and
        substance satisfactory to the Administrative Agent, granting to the
        Administrative Agent first perfected Liens on Oil and Gas properties that
        are
        not then part of the Mortgaged Properties, sufficient to cause the Mortgaged
        Properties to include the Required Percentages. In addition, the Borrower
        will
        furnish to the Administrative Agent title due diligence in form and substance
        satisfactory to the Administrative Agent and will furnish all other documents
        and information relating to such properties as the Administrative Agent may
        reasonably request.

       

      SECTION
        7.1.12. Hedging
        Agreements.
        Within
        fourteen days after the Closing Date, the Borrower shall have entered into
        hedging positions covering sufficient volumes in 2009 or 2010, or both, in
        order
        to generate a PV9 of at least $22,500,000. The Hedging Agreements entered
        into
        in connection with the foregoing hedging positions shall be with one or more
        Approved Counterparties (in the case of Hedging Agreements that are puts
        that
        are not executed in conjunction with any other Hedging Agreements) or Lenders
        (in the case of any other Hedging Agreements). The Borrower shall maintain
        the
        Hedging Agreements required pursuant to this Section
        7.1.12
        and
        shall not assign, terminate or unwind any such Hedging Agreements or sell
        any
        Hedging Agreements if the effect of such action (when taken together with
        any
        other Hedging Agreements executed contemporaneously with the taking of such
        action) would have the effect of canceling its positions under such Hedging
        Agreements required hereby unless such actions (a) are undertaken (i) with
        prior
        written notice to and approval from (which approval shall not be unreasonably
        withheld or delayed) the Administrative Agent and (ii) for the purpose of
        repositioning volumes for later or earlier months or for the purpose of
        eliminating production obligations in anticipation of temporary production
        shutdowns due to storms or other force majeure events, and (b) are in compliance
        with the restrictions set forth in Section
        7.2.20.
        As of
        the date of any determination or redetermination of the Borrowing Base, the
        Borrower shall maintain hedging positions that are acceptable to the
        Administrative Agent, acting reasonably. 

       


      
        
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      SECTION
        7.1.13. Title
        Information.
        (a)
        On or
        before the delivery to the Administrative Agent and the Lenders of each Reserve
        Report required by Section
        2.8,
        the
        Borrower will deliver title information in form and substance acceptable
        to the
        Administrative Agent covering enough of the Oil and Gas Properties evaluated
        by
        such Reserve Report that were not included in the immediately preceding Reserve
        Report, so that the Administrative Agent shall be reasonably satisfied with
        the
        status of title to the Oil and Gas Properties evaluated by such Reserve
        Report.
        If
        the
        Borrower has provided title information for additional Properties under the
        preceding sentence, the Borrower shall, within 90 days of notice from the
        Administrative Agent that title defects or exceptions exist with respect
        to such
        additional Properties, either (i) cure any such title defects or exceptions
        (including defects or exceptions as to priority) that are not permitted by
        Section
        7.2.3
        raised
        by such information, (ii) substitute acceptable Mortgaged Properties with
        no
        title defects or exceptions except for Liens permitted by Section
        7.2.3
        having
        an equivalent value or (iii) deliver title information in form and substance
        acceptable to the Administrative Agent so that the Administrative Agent shall
        be
        reasonably satisfied with the status of title to the Oil and Gas Properties
        evaluated by such Reserve Report. If
        the
        Borrower is unable to cure any title defect requested by the Administrative
        Agent or the Lenders to be cured within the 90-day period or the Borrower
        does
        not comply with the requirements to provide acceptable title information
        to the
        Oil and Gas Properties evaluated in the most recent Reserve Report or the
        Borrower fails to take the actions required pursuant to clause
        (b)
        below,
        such default shall not be a Default, but instead the Administrative Agent
        and/or
        the Required Lenders shall have the right to exercise the following remedy
        in
        their sole discretion from time to time, and any failure to so exercise this
        remedy at any time shall not be a waiver as to future exercise of the remedy
        by
        the Administrative Agent or the Lenders. To the extent that the Administrative
        Agent or the Required Lenders are not satisfied with title to any Mortgaged
        Property after the 90-day period has elapsed, the Administrative Agent may
        send
        a notice to the Borrower and the Lenders that the then outstanding Borrowing
        Base shall be reduced by amounts as determined by the Required Lenders to
        cause
        the Borrower to be in compliance with the requirement to provide acceptable
        title information to the Oil and Gas Properties. This new Borrowing Base
        shall
        become effective immediately after receipt of such notice.

       

      (b) Within
        ninety (90) days after the Closing Date or such later time as may be acceptable
        to the Administrative Agent in its sole discretion, the Borrower shall provide
        evidence to the Administrative Agent, in the form of copies of recorded
        documents and other evidence as reasonably acceptable to the Administrative
        Agent, confirming that the chain of title to the leasehold interests of the
        Borrower’s Subsidiaries in the Assets as on record in all applicable counties
        and parishes has been made consistent with the chain of title to such Assets
        as
        on record with the Minerals Management Service of the United States Department
        of the Interior.

       


      
        
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      SECTION
        7.1.14. Right
        of Inspection.
        The
        Borrower will permit, and will cause each of its Subsidiaries to permit,
        any
        officer, employee or agent of the Administrative Agent or of any Secured
        Party
        to visit and inspect any of the assets of any such Obligor, examine each
        such
        Obligor’s books of record and accounts, take copies and extracts thereof and
        therefrom, and discuss the affairs, finances and accounts of each such Obligor
        with each such Obligor’s officers, accountants and auditors, all upon prior
        written notice to the Borrower at such reasonable times during the Borrower’s or
        such Obligor’s normal business hours (and in a manner so as, to the extent
        practicable, not to interfere with the normal business operations of the
        Borrower or such Obligor) and as often as the Administrative Agent or any
        Lender
        may reasonably request; provided
        that
        unless an Event of Default has occurred and is continuing, the Borrower shall
        not be required to make its independent public accountants available for
        discussions with any Secured Party other than the Administrative Agent.
        Notwithstanding the foregoing, as long as no Event of Default has occurred
        and
        is continuing, the Borrower will not be required to bear the expense of more
        than one (1) inspection by the Administrative Agent (on behalf of the Secured
        Parties) during any calendar year; provided
        that if
        an Event of Default has occurred and is continuing, the Administrative Agent
        shall be entitled to conduct more frequent inspections at the expense of
        the
        Borrower.

       

      SECTION
        7.1.15. Further
        Assurances.
        The
        Borrower at its expense will, and will cause each Subsidiary to, promptly
        execute and deliver to the Administrative Agent all such other documents,
        agreements and instruments reasonably requested by the Administrative Agent
        to
        comply with, cure any defects or accomplish the conditions precedent, covenants
        and agreements of the Borrower or any Subsidiary, as the case may be, in
        the
        Loan Documents, including the Notes, if requested, or to further evidence
        and
        more fully describe the collateral intended as security for the Indebtedness,
        or
        to correct any omissions in this Agreement or the Security Instruments, or
        to
        state more fully the obligations secured therein, or to perfect, protect
        or
        preserve any Liens created pursuant to this Agreement or any of the Security
        Instruments or the priority thereof, or to make any recordings, file any
        notices
        or obtain any consents, all as may be reasonably necessary or appropriate,
        in
        the sole discretion of the Administrative Agent, in connection therewith.
        The
        Borrower hereby authorizes the Administrative Agent to file one or more
        financing or continuation statements, and amendments thereto, relative to
        all or
        any part of any Mortgaged Property or any part thereof or any other collateral
        without the signature of the Borrower or any other Guarantor where permitted
        by
        law. A carbon, photographic or other reproduction of the Security Instruments
        or
        any financing statement covering the Mortgaged Property or any part thereof
        or
        any other collateral shall be sufficient as a financing statement where
        permitted by law. The Borrower shall notify the Administrative Agent of any
        name
        change of any of the Borrower’s Subsidiaries in accordance with the Borrower
        Pledge and Security Agreement.

       

      SECTION
        7.1.16. Minimum
        Availability Under Borrowing Base.
        During
        the period from the Closing Date to the date that the Borrower shall have
        achieved compliance with the windstorm insurance requirements described in
        clause (y) of Section
        7.1.4,
        the
        Borrower will not permit the aggregate Credit Exposures of all Lenders to
        exceed
        an amount equal to (a) the Borrowing Base then in effect minus
        (b)
        $100,000,000. 

       

      SECTION
        7.2. Negative
        Covenants.
        The
        Borrower covenants and agrees with each Lender, each Issuer and the
        Administrative Agent that until the Termination Date has occurred, the Borrower
        will, and will cause its Subsidiaries to, perform or cause to be performed
        the
        obligations set forth below.

       


      
        
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      SECTION
        7.2.1. Business
        Activities; International Operations.
        The
        Borrower will not, and will not permit any of its Subsidiaries to engage
        in any
        business activity except those business activities engaged in on the date
        of
        this Agreement and activities reasonably incidental thereto. From and after
        the
        date hereof, the Borrower and its Subsidiaries will not acquire or make any
        other expenditure (whether such expenditure is capital, operating or otherwise)
        in or related to, any Oil and Gas Properties or businesses not located within
        the geographical boundaries of the United States or the offshore area in
        the
        Gulf of Mexico over which the United States of America asserts jurisdiction
        and
        to which the laws of the States of Texas or Louisiana are applicable or
        otherwise purchase, make, incur, assume or permit to exist any Investment
        in any
        Person not organized under the laws of the United States or one of the States
        thereof.

       

      SECTION
        7.2.2. Indebtedness.
        The
        Borrower will not, and will not permit any of its Subsidiaries to, create,
        incur, assume or permit to exist any Indebtedness, except:

       

      (a)
        (i)
        the Obligations and (ii) Hedging Obligations incurred pursuant to this
        Agreement;

       

      (b)
        [Reserved];

       

      (c)
        Indebtedness existing as of the Effective Date that is identified in
Item 7.2.2(c)
        of the
        Disclosure Schedule, and refinancing of such Indebtedness on No Less Favorable
        Terms and Conditions in a principal amount not in excess of that which is
        outstanding on the Effective Date (as such amount has been reduced following
        the
        Effective Date);

       

      (d)
        unsecured Indebtedness (i) incurred in the ordinary course of business of
        the Borrower and its Subsidiaries (including open accounts extended by suppliers
        on normal trade terms in connection with purchases of goods and services
        (including insurance premium payables in the ordinary course) that are not
        overdue for a period of more than 90 days or, if overdue for more than 90
        days,
        as to which a dispute exists and adequate reserves in conformity with GAAP
        have
        been established on the books of the Borrower or such Subsidiary) and
        (ii) in respect of performance, surety or appeal bonds provided in the
        ordinary course of business, but excluding (in each case), Indebtedness incurred
        through the borrowing of money or Contingent Liabilities in respect
        thereof;

       

      (e)
        Indebtedness (i) evidencing the deferred purchase price of newly acquired
        property or incurred to finance the acquisition of equipment of the Borrower
        and
        its Subsidiaries (pursuant to purchase money mortgages or otherwise, whether
        owed to the seller or a third party) used in the ordinary course of business
        of
        the Borrower and its Subsidiaries (provided
        that,
        such Indebtedness is incurred within 60 days of the acquisition of such
        property) and (ii) in respect of Capitalized Lease Liabilities;
provided
        that,
        the aggregate amount of all Indebtedness outstanding pursuant to this clause
        shall not at any time exceed $10,000,000;

       


      
        
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      (f)
        Indebtedness of any Subsidiary owing to the Borrower or any other
        Subsidiary;

       

      (g)
        Indebtedness incurred pursuant to the PP Debt Documents, and Contingent
        Liabilities of the Subsidiary Guarantors in respect of the PP Debt; and,
        the
        refinancing of all such Indebtedness so long as such refinancing is on No
        Less
        Favorable Terms and Conditions, provided,
        however,
        that
        such Indebtedness (i) is unsecured and does not exceed an aggregate outstanding
        principal amount of U.S.$850,000,000, (ii) does not have a maturity date
        that is prior to the later to occur of (A) the date that is six (6) months
        after
        the Stated Maturity Date or (B) the date that is the originally scheduled
        “Stated Maturity” (as defined in the Indenture) with respect to the payment of
        principal on the PP Notes, (iii) has a coupon or interest rate not in excess
        of
        ten and one-half percent (10.5%), (iv) contains covenants not materially
        more
        onerous to Borrower and its Subsidiaries than those contained in the Loan
        Documents, and (v) contains other terms and conditions (including amount,
        interest, amortization, covenants and events of default) as are satisfactory
        to
        the Administrative Agent;

       

      (h)
        Indebtedness incurred by the Borrower and its Subsidiaries associated with
        bonds
        or surety obligations required by Applicable Law in connection with the
        operation of the Oil and Gas Properties;

       

      (i)
        Indebtedness of a Person existing at the time such Person became a Subsidiary
        of
        the Borrower, but only if such Indebtedness was not created or incurred in
        contemplation of such Person becoming a Subsidiary;

       

      (j)
        other
        unsecured Indebtedness of the Borrower and its Subsidiaries in an aggregate
        amount at any time outstanding not to exceed $2,500,000;

       

      provided,
        that no
        Indebtedness otherwise permitted by clauses (c), (e), (g), or (j) shall be
        incurred, assumed, created, refinanced or otherwise incurred if a Default
        or
        Borrowing Base Deficiency has occurred and is then continuing or would result
        therefrom.

       

      SECTION
        7.2.3. Liens.
        The
        Borrower will not, and will not permit any of its Subsidiaries to, create,
        incur, assume or permit to exist any Lien upon any of its property (including
        Capital Securities of any Person), revenues or assets, whether now owned
        or
        hereafter acquired, except:

       

      (a)
        Liens
        securing payment of the Obligations;

       

      (b)
        [Reserved];

       

      (c)
        Liens
        existing as of the Effective Date and disclosed in Item
        7.2.3(c)
        of the
        Disclosure Schedule securing Indebtedness described in clause
        (c)
        of
Section
        7.2.2,
        and
        refinancings of such Indebtedness; provided
        that, no
        such Lien shall encumber any additional property and the amount of Indebtedness
        secured by such Lien is not increased from that existing on the Effective
        Date
        (as such Indebtedness may have been permanently reduced subsequent to the
        Effective Date);

       


      
        
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      (d)
        Liens
        securing Indebtedness of the type permitted under clause
        (e)
        of
Section
        7.2.2;
        provided
        that,
        (i) such Lien is granted within 60 days after such Indebtedness is incurred,
        (ii) the Indebtedness secured thereby does not exceed 80% of the lesser of
        the
        cost or the fair market value of the applicable property, improvements or
        equipment at the time of such acquisition (or construction) and (iii) such
        Lien
        secures only the assets that are the subject of the Indebtedness referred
        to in
        such clause;

       

      (e)
        Liens
        securing Indebtedness permitted by clause
        (i)
        of
Section
        7.2.2;
        provided
        that,
        such Liens existed prior to such Person becoming a Subsidiary, were not created
        in anticipation thereof and attach only to specific tangible assets of such
        Person (and not assets of such Person generally);

       

      (f)
        Liens
        in favor of carriers, warehousemen, mechanics, contractors, laborers, suppliers,
        operators, non-operators, materialmen and landlords granted in the ordinary
        course of business for amounts not overdue or being diligently contested
        in good
        faith by appropriate proceedings and for which adequate reserves in accordance
        with GAAP shall have been set aside on its books;

       

      (g)
        Liens
        incurred or deposits made in the ordinary course of business in connection
        with
        worker’s compensation, unemployment insurance or other forms of governmental
        insurance or benefits, or to secure performance of tenders, statutory
        obligations, bids, leases or other similar obligations (other than for borrowed
        money) entered into in the ordinary course of business or to secure obligations
        on surety and appeal bonds or performance bonds;

       

      (h)
        judgment Liens in existence for less than 45 days after the entry thereof
        or with respect to which execution has been stayed or the payment of which
        is
        covered in full (subject to a customary deductible) by insurance maintained
        with
        responsible insurance companies and which do not otherwise result in an Event
        of
        Default under Section
        8.1.6;

       

      (i)
        easements, rights-of-way, zoning restrictions, minor defects or irregularities
        in title and other similar encumbrances not interfering in any material respect
        with the value or use of the property to which such Lien is
        attached;

       

      (j)
        Liens
        for Taxes not at the time delinquent or thereafter payable without penalty
        or
        being diligently contested in good faith by appropriate proceedings and for
        which adequate reserves in accordance with GAAP shall have been set aside
        on its
        books;

       

      (k)
        [Reserved];

       

      (l)
        any
        zoning or similar law or right reserved or vested in any governmental office
        or
        agency to control or regulate the use of, or any reservation in the grant
        from
        the crown in respect of, any real property;

       

      (m)
        Liens
        arising solely by virtue of any statutory or common law provision relating
        to
        banker’s liens, rights of set-off or similar rights and remedies as to deposit
        accounts or other funds maintained with a creditor depository
        institution;

       


      
        
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      (n)
        easements, restrictions, servitudes, permits, conditions, covenants, exceptions
        or reservations in any Property of the Borrower or any of its Subsidiaries
        for
        the purpose of roads, pipelines, transmission lines, transportation lines,
        distribution lines for the removal of gas, oil, coal or other minerals or
        timber, and other like purposes, or for the joint or common use of real estate,
        rights of way, facilities and equipment, that do not secure any monetary
        obligations and which in the aggregate do not materially impair the use of
        such
        Property for the purposes of which such Property is held by the Borrower
        or any
        of its Subsidiaries or materially impair the value of such Property subject
        thereto;

       

      (o)
        royalties, overriding royalties, reversionary interests, production payments
        and
        similar burdens granted by the Borrower with respect to its Oil and Gas
        Properties to the extent such burdens do not reduce the Borrower’s net interests
        in production in its Oil and Gas Properties below the interests reflected
        in
        each Reserve Report or the interests warranted under this Agreement or the
        Mortgage and do not operate to deprive the Borrower of any material rights
        in
        respect of its assets or properties (except for rights customarily granted
        with
        respect to such interests);

       

      (p)
        Liens
        on any leased real property granted to landlords under any leases;

       

      (q)
        Liens
        permitted under the Loan Documents to the extent permitted thereby;
        and

       

      (r)
        Liens
        on Letters of Credit issued hereunder pledged to secure obligations under
        Hedging Agreements permitted by Section
        7.2.20.

       

      SECTION
        7.2.4. Financial
        Condition and Operations.
        The
        Borrower will not permit any of the events set forth below to
        occur.

       

      (a)
        The
        Borrower will not permit the Total Leverage Ratio (i) as of the last day
        of the
        Fiscal Quarter ending June 30, 2007 to be greater than 3.75 to 1.00 and (ii)
        as
        of the last day of any Fiscal Quarter thereafter to be greater than 3.50
        to
        1.00.

       

      (b)
        The
        Borrower will not permit the Interest Coverage Ratio as of the last day of
        any
        Fiscal Quarter to be less than 3.00 to 1.00.

       

      (c)
        The
        Borrower will not permit the Current Ratio as of the last day of any Fiscal
        Quarter to be less than 1.00 to 1.00.

       

      For
        avoidance of doubt and notwithstanding that the financial statements delivered
        pursuant to Sections
        7.1.1(a)
        and
(b)
        may be
        delivered in accordance with IFRS reconciled to GAAP, the accounting
        determinations and computations under this Section
        7.2.4
        shall be
        made in accordance with GAAP consistently applied.

       

      SECTION
        7.2.5. Investments.
        The
        Borrower will not, and will not permit any of its Subsidiaries to, purchase,
        make, incur, assume or permit to exist any Investment in any other Person,
        except:

       


      
        
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      (a)
        Investments existing on the Effective Date and identified in Item
        7.2.5(a)
        of the
        Disclosure Schedule;

       

      (b)
        Cash
        Equivalent Investments;

       

      (c)
        Investments received in connection with the bankruptcy or reorganization
        of, or
        settlement of delinquent accounts and disputes with, customers and suppliers,
        in
        each case in the ordinary course of business;

       

      (d)
        Investments consisting of any deferred portion of the sales price received
        by
        the Borrower or any Subsidiary in connection with any Disposition permitted
        under Section 7.2.10;

       

      (e)
        Investments by way of contributions to capital or purchases of Capital
        Securities (i) by the Borrower in any Subsidiaries or by any Subsidiary in
        other Subsidiaries, or (ii) by any Subsidiary in the Borrower;

       

      (f)
        Investments constituting (i) accounts receivable arising, (ii) trade
        debt granted, or (iii) deposits made in connection with the purchase price
        of goods or services, in each case in the ordinary course of
        business;

       

      (g)
        Investments by way of the acquisition of Capital Securities constituting
        Permitted Acquisitions permitted under clause
        (d)
        of
Section
        7.2.9;
        provided
        that,
        such Investments shall result in the acquisition of a wholly owned
        Subsidiary;

       

      (h)
        intercompany loans, advances or guaranties among the Borrower and its
        Subsidiaries, all to the extent permitted by clause
        (f)
        of
Section
        7.2.2
        and
clause
        (e)
        of this
Section
        7.2.5;

       

      (i)
        Capital Expenditures reasonably incurred in the ordinary course of
        business;

       

      (j)
        loans
        or advances to employees, officers or directors in the ordinary course of
        business of the Borrower or any of its Subsidiaries, in each case only as
        permitted by Applicable Law, including Section 402 of the Sarbanes Oxley
        Act of
        2002, but in any event not to exceed $100,000 in the aggregate at any time;
        

       

      (k)
        Investments in U.S. Persons (other than Obligors or any Person owning,
        controlling or managing, directly or indirectly an Obligor) that are not
        Subsidiaries in an aggregate amount not to exceed $1,000,000 at any time
        outstanding; and

       

      (l)
        other
        Investments in an amount not to exceed $1,000,000 over the term of this
        Agreement;

       

      provided
        that,

       

      (m)
        any
        Investment that when made complies with the requirements of the definition
        of
        the term “Cash Equivalent Investment” may continue to be held notwithstanding
        that such Investment if made thereafter would not comply with such requirements;
        and

       


      
        
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      (n)
        no
        Investment otherwise permitted by clauses
        (g),
        (h),
        (j),
        (k)
        or
(l)
        shall be
        permitted to be made if any Default or Borrowing Base Deficiency has occurred
        and is continuing or would result therefrom.

       

      SECTION
        7.2.6. Restricted
        Payments; etc.
        The
        Borrower will not, and will not permit any of its Subsidiaries to, declare
        or
        make a Restricted Payment, or make any deposit for any Restricted Payment,
        except:

       

      (a)
        Restricted Payments made by Subsidiaries to the Borrower or wholly owned
        Subsidiaries;

       

      (b)
        so
        long as no Default or Borrowing Base Deficiency has occurred and is continuing,
        or shall be caused thereby, Restricted
        Payments made by the Borrower or its Subsidiaries to Intermediate Holdco
        for the
        Borrower’s share of income taxes calculated as if the Borrower were filing for
        taxes independently of Intermediate Holdco (provided that prior to making
        such
        Restricted Payment, Borrower shall provide the Administrative Agent with
        a
        calculation of such attributable taxes in detail and form reasonably acceptable
        to the Administrative Agent); and

       

      (c)
        so
        long as no Default or Borrowing Base Deficiency has occurred and is continuing,
        or shall be caused thereby, the Borrower may make Restricted Payments (including
        to Intermediate Holdco so that Intermediate Holdco may make payments, including
        Restricted Payments, to Parent) pursuant to and in accordance with stock
        option
        plans or other benefit plans for management or employees of the Borrower
        and its
        Subsidiaries as established in good faith by the Borrower’s board of directors
        and to otherwise pay for G&A Expenses and other costs and expenses of
        similar nature of Intermediate Holdco and Parent; provided,
        that
        such
        Restricted Payments shall not exceed $2,000,000 in any Fiscal Year.

       

      SECTION
        7.2.7. Change
        in Management.
        The
        Borrower shall not permit any Change of Management. For purposes of this
        Section
        7.2.7,
        “Change
        of Management”
shall
        mean that any of John Daniel Schiller, Jr., Steven Albert Weyel and David
        West
        Griffin cease to be the Chief Executive Officer, the President or the Chief
        Financial Officer, respectively, of the Parent (except as a result of the
        death
        or disability of such Person) and a successor reasonably acceptable to the
        Administrative Agent and the Required Lenders is not appointed within one
        hundred eighty (180) days thereafter. 

       

      SECTION
        7.2.8. Issuance
        of Capital Securities.
        The
        Borrower will not, and will not permit any of its Subsidiaries to, issue
        any
        Capital Securities (whether for value or otherwise) to any Person other than
        (in
        the case of Subsidiaries), to the Borrower or another wholly owned Subsidiary
        or
        (in the case of the Borrower), to Intermediate Holdco (so long as such Capital
        Securities are not mandatorily redeemable prior to one year and one day after
        the Stated Maturity Date for Term Loans).

       


      
        
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      SECTION
        7.2.9. Consolidation,
        Merger; Permitted Acquisitions, etc.
        The
        Borrower will not, and will not permit any of its Subsidiaries to, liquidate
        or
        dissolve, consolidate with, or merge or amalgamate into or with, any other
        Person, or purchase or otherwise acquire all or substantially all of the
        assets
        of any Person (or any division thereof), except:

       

      (a)
        any
        Subsidiary may liquidate or dissolve voluntarily into, and may merge or
        amalgamate with and into, the Borrower or any other Subsidiary; (provided
        that, in
        any merger involving the Borrower, the Borrower is the surviving Person and
        a
        Subsidiary Guarantor may only merge with and into another Subsidiary
        Guarantor);

       

      (b)
        the
        assets or Capital Securities of any Subsidiary may be purchased or otherwise
        acquired by the Borrower or any other Subsidiary (provided
        that,
        the assets or Capital Securities of any Subsidiary Guarantor may only be
        purchased or otherwise acquired by the Borrower or another Subsidiary
        Guarantor); provided,
        further,
        that in
        no event shall any Subsidiary consolidate with or merge with and into any
        other
        Subsidiary unless after giving effect thereto, the Administrative Agent shall
        have a perfected pledge of, and security interest in and to, at least the
        same
        percentage of the issued and outstanding interests of Capital Securities
        (on a
        fully diluted basis) and other assets of the surviving Person as the
        Administrative Agent had immediately prior to such merger or consolidation
        in
        form and substance satisfactory to the Administrative Agent and its counsel,
        pursuant to such documentation and opinions as shall be necessary in the
        opinion
        of the Administrative Agent to create, perfect or maintain the collateral
        position of the Secured Parties therein;

       

      (c)
        Investments made in accordance with Section
        7.2.5;
        and

       

      (d)
        the
        Borrower or any of its Subsidiaries may purchase all or substantially all
        of the
        assets of any Person (or any division thereof), or acquire such Person by
        merger
        or otherwise, in each case, if:

       

      (i)
        no
        Default or Borrowing Base Deficiency has occurred and is continuing or would
        occur after giving effect thereto;

       

      (ii)
        such
        purchase or acquisition constitutes a Permitted Acquisition; and

       

      (iii)
        the
        amount paid or payable in connection with such transaction (together with
        all
        previous Permitted Acquisitions) does not exceed $40,000,000 in any Fiscal
        Year.

       

      SECTION
        7.2.10. Permitted
        Dispositions.
        The
        Borrower will not, and will not permit any of its Subsidiaries to, Dispose
        of
        any of the Borrower’s or such Subsidiaries’ assets (including accounts
        receivable and Capital Securities of Subsidiaries) to any Person in one
        transaction or series of transactions unless such Disposition is:

       

      (a)
        inventory or obsolete, damaged, worn out or surplus property Disposed of
        in the
        ordinary course of its business, or the discounted sale of defaulted or
        delinquent trade receivables written off and reserved in the ordinary course
        of
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      (b)
        the
        sale of Hydrocarbons in the ordinary course of business;

       

      (c)
        farmouts of undeveloped acreage and assignments in connection with such
        farmouts;

       

      (d)
        Investment made in accordance with Section
        7.2.5
        and
        Restricted Payments made in accordance with Section
        7.2.6;

       

      (e)
        the
        sale or other Disposition (including Casualty Events) of any Oil and Gas
        Property or any interest therein or any Subsidiary (other than EXXI GOM)
        of the
        Borrower owning Oil and Gas Properties (including any interest in the Southwest
        Speaks field in Lavaca County, Texas); provided that (i) 100% of the
        consideration received in respect of such sale or other Disposition shall
        be
        cash, (ii) the consideration received in respect of such sale or other
        Disposition shall be equal to or greater than the fair market value of the
        interests that are the subject of such sale or other Disposition (as reasonably
        determined by the board of directors of the Borrower and, if requested by
        the
        Administrative Agent, the Borrower shall deliver a certificate of a Authorized
        Officer of the Borrower certifying to that effect), (iii) upon a sale or
        other
        Disposition of Oil and Gas Property or any such Subsidiary owning Oil and
        Gas
        Properties that involves Oil and Gas Properties included in the most recently
        delivered Reserve Report (the “Subject
        Disposition”),
        if
        the consideration received for the Subject Disposition together with the
        consideration for all other sales and Dispositions of Oil and Gas Properties
        or
        any such Subsidiary owning Oil and Gas Properties that are included in the
        most
        recently delivered Reserve Report during any period between two successive
        determinations or redeterminations of the Borrowing Base exceeds $5,000,000
        individually or in the aggregate, then, except in the case of the Approved
        Southwest Speaks Asset Sale, the Borrowing Base shall be reduced, effective
        immediately upon such Subject Disposition, by an amount equal to the value,
        if
        any, assigned to the relevant Oil and Gas Properties in the most recently
        delivered Reserve Report that were sold or otherwise Disposed in connection
        with
        such Subject Disposition, (iv) if any such sale or other Disposition is of
        any
        such Subsidiary owning Oil and Gas Properties, such sale or other Disposition
        shall include all the Capital Securities of such Subsidiary, and (v)
        notwithstanding Section
        3.1.1(c),
        if a
        Borrowing Base Deficiency exists at the time of such sale or Disposition
        or
        would result from the reduction of the Borrowing Base pursuant to this
clause
        (e),
        then
        the proceeds of such sale or other Disposition shall be applied immediately
        to
        cure such Borrowing Base Deficiency first by prepaying the Revolving Loans
        and
        second by Cash Collateralizing all outstanding Letters of Credit to the extent
        of such Borrowing Base Deficiency; and

       

      (f)
        sales
        and other Dispositions of Properties not regulated by Section
        7.2.10(a)
        to
(e)
        having a
        fair market value not to exceed $2,500,000 during any 12-month
        period.

       

      SECTION
        7.2.11. Modification
        of Certain Agreements.
        The
        Borrower will not, and will not permit any of its Subsidiaries to, consent
        to
        any amendment, supplement, waiver or other modification of, or enter into
        any
        forbearance from exercising any rights with respect to the terms or provisions
        contained in:

       


      
        
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      (a)
        any
        of the Transaction Documents (other than the PP Debt Documents), other than
        non-material amendments, supplements, waivers or other modifications that
        individually or in the aggregate would not be materially adverse to the Secured
        Parties;

       

      (b)
        the
        Organic Documents of the Borrower or any of its Subsidiaries, if the result
        would have an adverse effect on the rights or remedies of any Secured Party;
        and

       

      (c)
        any
        of the PP Debt Documents that results or causes or has the effect of doing
        any
        of the following: (i) increasing the then outstanding aggregate principal
        amount
        of the PP Notes to an amount exceeding $850,000,000, (ii) contravening the
        provisions of this Agreement, (iii) increasing the interest, premium or the
        yield on the PP Notes beyond the interest, yield or premium currently specified
        in the PP Debt Documents as of the Closing Date, (iv) providing for dates
        for
        payment of principal, interest, premium (if any), yield or fees which are
        earlier than such dates under the Indenture as in effect on the date hereof,
        (v)
        providing for any covenant, event of default or remedy which is more restrictive
        on any Obligor than that set forth in the Indenture as in effect on the date
        hereof, (vi) providing for redemption, prepayment or defeasance provisions
        that
        are more burdensome on any Obligor than those set forth in the Indenture
        as in
        effect on the date hereof, (vii) providing for collateral securing Indebtedness
        thereunder, or (viii) increasing the obligations of any Obligor or conferring
        any additional rights on any holder of PP Debt which could reasonably be
        expected to be adverse to the Secured Parties.

       

      SECTION
        7.2.12. Transactions
        with Affiliates.
        The
        Borrower will not, and will not permit any of its Subsidiaries to, enter
        into or
        cause or permit to exist any arrangement, transaction or contract (including
        for
        the purchase, lease or exchange of property or the rendering of services)
        with
        any of its other Affiliates, unless such arrangement, transaction or contract
        (i) is on fair and reasonable terms no less favorable to the Borrower or
        such Subsidiary than it could obtain in an arm’s-length transaction with a
        Person that is not an Affiliate and (ii) is of the kind that would be
        entered into by a prudent Person in the position of the Borrower or such
        Subsidiary with a Person that is not one of its Affiliates other
        than:

       

      (a)
        transactions among the Obligors otherwise permitted hereunder;

       

      (b)
        reasonable fees and compensation (including employee benefits) paid to, an
        indemnity provided for the benefit of, officers, directors, board members,
        employees or consultants of the Borrower or any Subsidiary as determined
        in good
        faith by the Borrower’s board of directors; and

       

      (c)
        payment by the Borrower to Affiliates for the Borrower’s share of reasonable and
        customary G&A Expenses incurred by such Affiliates in the ordinary course of
        business and provided such G&E Expenses are supported by appropriate
        invoices and, to the extent that the Borrower is not the only subsidiary
        of
        Intermediate Holdco, incurred pursuant to an expense sharing arrangement
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      (d)
        reimbursement by the Borrower of reasonable and customary costs actually
        incurred by TEC on the Borrower’s behalf and provided such costs are supported
        by appropriate invoices; and

       

      (e)
        the
        payment of Restricted Payments as provided under Section
        7.2.6.

       

      SECTION
        7.2.13. Restrictive
        Agreements, etc.
        The
        Borrower will not, and will not permit any of its Subsidiaries to, enter
        into
        any agreement prohibiting

       

      (a)
        the
        creation or assumption of any Lien upon its properties, revenues or assets,
        whether now owned or hereafter acquired;

       

      (b)
        the
        ability of any Obligor to amend or otherwise modify any Loan Document;
        or

       

      (c)
        the
        ability of any Subsidiary to make any payments, directly or indirectly, to
        the
        Borrower, including by way of dividends, advances, repayments of loans,
        reimbursements of management and other intercompany charges, expenses and
        accruals or other returns on investments.

       

      The
        foregoing prohibitions shall not apply to restrictions contained (i) in any
        Loan Document, (ii) in the case of clause
        (a),
        any
        agreement governing any Indebtedness permitted by clause
        (e)
        of
Section
        7.2.2
        as to
        the assets financed with the proceeds of such Indebtedness, or (iii) in the
        case
        of clauses (a)
        and
        (b),
        in the
        PP Debt Documents.

       

      SECTION
        7.2.14. Sale
        and Leaseback.
        The
        Borrower will not, and will not permit any of its Subsidiaries to, directly
        or
        indirectly enter into any agreement or arrangement providing for the sale
        or
        transfer by it of any property (now owned or hereafter acquired) to a Person
        and
        the subsequent lease or rental of such property or other similar property
        from
        such Person.

       

      SECTION
        7.2.15. No
        Prepayment of PP Debt.
        The
        Borrower will not, and will not permit any of its Subsidiaries to, prior
        to the
        date that is six months after the Stated Maturity Date:

       

      (a)
        make
        any payment or prepayment of or otherwise redeem or defease the principal
        of, or
        premium or interest on, the PP Debt other than: (i) with respect to interest,
        (A) on the stated, scheduled dates for payment of interest set forth in the
        Indenture or (B) upon any refinancing of the PP Debt permitted hereunder
        or (ii)
        with respect to principal, (A) on the date of the “Stated Maturity” (as defined
        in the Indenture) with respect to the payment of principal on the PP Notes,
        (B) on each scheduled date for payment of principal or as required in
        connection with a mandatory prepayment, redemption or defeasance of the PP
        Notes
        under the Indenture, provided that (x) no Default or Event of Default or
        Borrowing Base Deficiency has occurred and is continuing or arise as a result
        thereof and (y) the Borrower has paid any Obligations required to be made
        hereunder pursuant to the terms of this Agreement, (C) with the written consent
        of the Required Lenders, or (D) upon any refinancing of the PP Debt permitted
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      (b)
        redeem, retire, purchase, defease or otherwise acquire the PP Debt (except
        as
        set forth in clause (a));
        or

       

      (c)
        make
        any deposit (including the payment of amounts into a sinking fund or other
        similar fund) for any of the foregoing purposes other than, in each case,
        in
        connection with a refinancing of the PP Debt on No Less Favorable Terms and
        Conditions.

       

      SECTION
        7.2.16. Pension
        Plans.
        The
        Borrower will not, and will not permit any of its Subsidiaries to make any
        contribution in respect of any Pension Plan in any Fiscal Year in excess
        of the
        maximum amount recommended to be contributed by the Borrower and its
        Subsidiaries as determined by a valuation provided to the Borrower by a
        nationally recognized agency providing such valuations for purposes of complying
        with ERISA, the Code and Internal Revenue Service rules and
        regulations.

       

      SECTION
        7.2.17. Limitation
        on Leases.
        Neither
        the Borrower nor any of its Subsidiaries will create, incur, assume or suffer
        to
        exist any obligation for the payment of rent or hire of Property of any kind
        whatsoever (real or personal but excluding Capital Leases and leases of
        Hydrocarbon Interests and short term operating leases having a term of not
        more
        than six months incurred in the ordinary course of business), under leases
        or
        lease agreements that would cause the aggregate amount of all payments made
        by
        the Borrower and its Subsidiaries pursuant to all such leases or lease
        agreements, including, without limitation, any residual payments at the end
        of
        any lease, to exceed $2,000,000 in any period of twelve consecutive calendar
        months during the life of such leases. 

       

      SECTION
        7.2.18. Subsidiaries.
        The
        Borrower will not, and will not permit any Subsidiary to, create or acquire
        any
        additional Subsidiary unless the Borrower gives written notice to the
        Administrative Agent of such creation or acquisition and complies with
Section
        7.1.8.
        The
        Borrower shall not, and shall not permit any of its Subsidiaries to, sell,
        assign or otherwise dispose of any Capital Securities in any of its Subsidiary
        except in compliance with Section
        7.2.10(e).

       

      SECTION
        7.2.19. Gas
        Imbalances, Take or Pay or Other Prepayments.
        The
        Borrower will not allow gas imbalances, take-or-pay or other prepayments
        with
        respect to the Oil and Gas Properties of the Borrower or any of its Subsidiary
        that would require the Borrower or such Subsidiary to deliver Hydrocarbons
        at
        some future time without then or thereafter receiving full payment therefor
        to
        exceed 1.5 bcf of gas (on an mcf equivalent basis) in the
        aggregate.

       


      
        
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      SECTION
        7.2.20. Restrictions
        on Hedging Agreements.
        The
        Borrower will not enter into any Hedging Agreements with any Person other
        than
        (a) commodity Hedging Agreements with one or more Approved Counterparties
        (in
        the case of Hedging Agreements that are puts or calls that are not executed
        in
        conjunction with any other Hedging Agreements) or Lenders (in the case of
        any
        other Hedging Agreements); (b) Hedging Agreements in respect of interest
        rates
        with an Approved Counterparty; and (c) Hedging Agreements required under
        Section
        7.1.12;
        provided that all Hedging Agreements permitted hereunder are in accordance
        with
        this Section
        7.2.20
        and have
        a fixed price or floor prices acceptable to the Administrative Agent and
        aggregate notional volumes acceptable to the Administrative Agent. With respect
        to any commodity Hedging Agreements permitted hereunder, (i) as at any date
        (A)
        volumes corresponding to swaps or collars (for the absence of doubt, volumes
        related to puts that are not executed in conjunction with any other Hedging
        Agreements are excluded) covering Offshore Oil and Gas Properties of the
        Obligors shall not exceed the percentages set forth in Schedule
        7.2.20
        for
        crude oil and natural gas, as the case may be, during the then twelve calendar
        months period following such date and 80% thereafter, in each case in respect
        of
        the reasonably estimated projected crude oil and natural gas production from
        the
        Borrower’s Proved Developed Producing Reserves in respect of such Offshore Oil
        and Gas Properties (provided that as of November 15th
        of each
        calendar year, the Borrower may enter into swaps or collars covering Offshore
        Oil and Gas Properties of the Obligors not to exceed 80% of the reasonably
        estimated projected crude oil and natural gas production from the Borrower’s
        Proved Developed Producing Reserves for the delivery period from December
        1 of
        such calendar year through June 1 of the following calendar year), and (B)
        volumes corresponding to swaps or collars (for the absence of doubt, volumes
        related to puts that are not executed in conjunction with any other Hedging
        Agreements are excluded) covering Onshore Oil and Gas Properties of the Obligors
        shall not exceed 90% for crude oil and natural gas, as the case may be, during
        the then twelve calendar months period following such date and 80% thereafter,
        in each case in respect of the reasonably estimated projected crude oil and
        natural gas production from the Borrower’s Proved Developed Producing Reserves
        in respect of such Onshore Oil and Gas Properties; and (ii) as at any date
        volumes for all commodity Hedging Agreements (including swaps, collars and
        puts), shall not be less than 50% on a rolling two year period basis of the
        reasonably estimated projected BTU equivalent of crude oil and natural gas
        production from its Proved Developed Producing Reserves as determined by
        reference to the then current Reserve Reports delivered pursuant to the terms
        of
        this Agreement. As at any date (x) volumes corresponding to basis swaps covering
        Offshore Oil and Gas Properties shall not exceed 80% in respect of the
        reasonably estimated projected BTU equivalent of crude oil and natural gas
        production from the Borrower’s Proved Developed Producing Reserves and (y)
        volumes corresponding to basis swaps covering Onshore Oil and Gas Properties
        of
        the Obligors shall not exceed 90% for crude oil and natural gas, as the case
        may
        be, during the then twelve calendar months period following such date and
        80%
        thereafter, in each case in respect of the reasonably estimated projected
        crude
        oil and natural gas production from the Borrower’s Proved Developed Producing
        Reserves in respect of such Onshore Oil and Gas Properties. The Borrower
        will
        not purchase any calls other than (1) calls corresponding to an existing
        permitted collar already executed or being executed in conjunction with such
        purchased call or (2) with the consent of the Administrative Agent, calls
        for
        the purpose of mitigating physical delivery risk, provided that the unamortized
        premium of all outstanding calls shall not exceed $6,000,000 at any time.
        In no
        event shall the Borrower post collateral (whether cash or by letters of credit
        or otherwise) or margin in respect of its Hedging Agreements in an aggregate
        amount in excess of $10,000,000 to secure its obligations under its Hedging
        Agreements or to cover market exposures with respect thereto. Notwithstanding
        anything herein to the contrary, the Borrower will not enter into any Hedging
        Agreements other than in the ordinary course of business for the purpose
        of
        protecting against fluctuations in interest rates and commodity prices and
        basis
        risk and not for purposes of speculation. The Borrower will not permit any
        Subsidiary to enter into any Hedging Agreement without the consent of the
        Administrative Agent.

       

      ARTICLE
        8

      EVENTS
        OF
        DEFAULT

       

      SECTION
        8.1. Listing
        of Events of Default.
        Each of
        the following events or occurrences described in this Article shall constitute
        an “Event
        of Default”.

       


      
        
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      SECTION
        8.1.1. Non-Payment
        of Obligations.
        The
        Borrower shall default in the payment or prepayment when due of

       

      (a)
        any
        principal of any Loan or any Reimbursement Obligation; or

       

      (b)
        any
        interest, any fee described in Article
        III
        or any
        other monetary Obligation, and such default shall continue unremedied for
        a
        period of three Business Days after such amount was due.

       

      SECTION
        8.1.2. Breach
        of Warranty.
        Any
        representation or warranty of any Obligor made or deemed to be made in any
        Loan
        Document (including any certificates delivered pursuant to Article V)
        is or
        shall be incorrect when made or deemed to have been made in any material
        respect.

       

      SECTION
        8.1.3. Non-Performance
        of Certain Covenants and Obligations.
        The
        Borrower shall default in the due performance or observance of any of its
        obligations under Section
        7.1.1,
        Section
        7.1.7
        or
Section
        7.2,
        or any
        Guarantor shall default under any payment or guarantee obligation under a
        Guaranty.

       

      SECTION
        8.1.4. Non-Performance
        of Other Covenants and Obligations.
        Any
        Obligor shall default in the due performance and observance of any other
        agreement contained in any Loan Document executed by it, and such default
        shall
        continue unremedied for a period of 30 days after the earlier of (a) the
        date of such default or the date on that any Obligor has knowledge of such
        Default, whichever is earlier, or (b) notice thereof given to the Borrower
        by
        the Administrative Agent or any Lender.

       

      SECTION
        8.1.5. Default
        on Other Indebtedness.
        (a) A
        default shall occur in the payment of any amount when due (subject to any
        applicable grace period), whether by acceleration or otherwise, of any principal
        or stated amount of, or interest or fees on, any Indebtedness (other than
        Indebtedness described in Section 8.1.1)
        of the
        Borrower or any of its Subsidiaries or any other Obligor having a principal
        or
        stated amount, individually or in the aggregate, in excess of $2,500,000,
        or a
        default shall occur in the performance or observance of any obligation or
        condition with respect to such Indebtedness if the effect of such default
        is to
        accelerate the maturity of any such Indebtedness or such default shall continue
        unremedied for any applicable period of time sufficient to permit the holder
        or
        holders of such Indebtedness, or any trustee or agent for such holders, to
        cause
        or declare such Indebtedness to become due and payable or to require such
        Indebtedness to be prepaid, redeemed, purchased or defeased, or require an
        offer
        to purchase or defease such Indebtedness to be made, prior to its expressed
        maturity; or (b) an “Event of Default” shall have occurred and be continuing
        under the Indenture.

       

      SECTION
        8.1.6. Judgments.
        Any
        judgment or order for the payment of money individually or in the aggregate
        in
        excess of $2,500,000 (exclusive of any amounts fully covered by insurance
        (less
        any applicable deductible) and as to which the insurer has not acknowledged
        to
        its responsibility to cover such judgment or order) shall be rendered against
        the Borrower or any of its Subsidiaries or any other Obligor and such judgment
        shall not have been vacated or discharged or stayed or bonded pending appeal
        within 30 days after the entry thereof or enforcement proceedings shall
        have been commenced by any creditor upon such judgment or order.

       


      
        
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      SECTION
        8.1.7. Pension
        Plans.
        Any of
        the following events shall occur with respect to any Pension Plan:

       

      (a)
        the
        institution of any steps by the Borrower, any member of its Controlled Group
        or
        any other Person to terminate a Pension Plan if, as a result of such
        termination, the Borrower or any such member could be required to make a
        contribution to such Pension Plan, or could reasonably expect to incur a
        liability or obligation to such Pension Plan, in excess of $2,500,000;
        or

       

      (b)
        a
        contribution failure occurs with respect to any Pension Plan sufficient to
        give
        rise to a Lien under section 302(f) of ERISA.

       

      SECTION
        8.1.8. Change
        in Control.
        Any
        Change in Control shall occur.

       

      SECTION
        8.1.9. Bankruptcy,
        Insolvency, etc.
        The
        Borrower, any of its Subsidiaries or any other Obligor shall

       

      (a)
        become insolvent or generally fail to pay, or admit in writing its inability
        or
        unwillingness generally to pay, debts as they become due;

       

      (b)
        apply
        for, consent to, or acquiesce in the appointment of a trustee, receiver,
        sequestrator or other custodian for any substantial part of the property
        of any
        thereof, or make a general assignment for the benefit of creditors;

       

      (c)
        in
        the absence of such application, consent or acquiescence in or permit or
        suffer
        to exist the appointment of a trustee, receiver, receiver manager, sequestrator
        or other custodian for a substantial part of the property of any thereof,
        and
        such trustee, receiver, receiver manager, sequestrator or other custodian
        shall
        not be discharged within 60 days; provided
        that,
        the Borrower, each Subsidiary and each other Obligor hereby expressly authorizes
        each Secured Party to appear in any court conducting any relevant proceeding
        during such 60-day period to preserve, protect and defend their rights under
        the
        Loan Documents;

       

      (d)
        permit or suffer to exist the commencement of any bankruptcy, reorganization,
        debt arrangement or other case or proceeding under any bankruptcy or insolvency
        law or any dissolution, winding up or liquidation proceeding, in respect
        thereof, and, if any such case or proceeding is not commenced by the Borrower,
        any Subsidiary or any Obligor, such case or proceeding shall be consented
        to or
        acquiesced in by the Borrower, such Subsidiary or such Obligor, as the case
        may
        be, or shall result in the entry of an order for relief or shall remain for
        60 days undismissed; provided
        that,
        the Borrower, each Subsidiary and each Obligor hereby expressly authorizes
        each
        Secured Party to appear in any court conducting any such case or proceeding
        during such 60-day period to preserve, protect and defend their rights under
        the
        Loan Documents; or

       


      
        
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      (e)
        take
        any action authorizing, or in furtherance of, any of the foregoing.

       

      SECTION
        8.1.10. Impairment
        of Security, etc.
        Any Loan
        Document shall (except in accordance with its terms), in whole or in part,
        terminate, cease to be effective or cease to be the legally valid, binding
        and
        enforceable obligation of any Obligor party thereto; any Lien shall (except
        in
        accordance with the terms of any Loan Document), in whole or in part, terminate,
        cease to be effective or cease to be the legally valid, binding and enforceable
        obligation of any Obligor subject thereto in respect of any material portion
        of
        the Collateral; any Obligor or any other party shall contest in any manner
        such
        effectiveness, validity, binding nature or enforceability; or, except as
        permitted under any Loan Document, any Lien securing any Obligation shall,
        in
        whole or in part, cease to be a perfected first priority Lien with respect
        to
        any portion of the Collateral.

       

      SECTION
        8.2. Action
        if Bankruptcy.
        If any
        Event of Default described in clauses
        (a)
        through
(d)
        of
Section
        8.1.9
        with
        respect to the Borrower shall occur, the Commitments (if not theretofore
        terminated) shall automatically terminate and the outstanding principal amount
        of all outstanding Loans and all other Obligations (including Reimbursement
        Obligations) shall automatically be and become immediately due and payable,
        without notice or demand to any Person and each Obligor shall automatically
        and
        immediately be obligated to Cash Collateralize all Letter of Credit
        Outstandings.

       

      SECTION
        8.3. Action
        if Other Event of Default.
        If any
        Event of Default (other than any Event of Default described in clauses
        (a)
        through
(d)
        of
Section
        8.1.9
        with
        respect to the Borrower) shall occur for any reason, whether voluntary or
        involuntary, and be continuing, the Administrative Agent, upon the direction
        of
        the Required Lenders, shall by notice to the Borrower declare all or any
        portion
        of the outstanding principal amount of the Loans and other Obligations
        (including Reimbursement Obligations) to be due and payable and/or the
        Commitments (if not theretofore terminated) to be terminated, whereupon the
        full
        unpaid amount of such Loans and other Obligations that shall be so declared
        due
        and payable shall be and become immediately due and payable, without further
        notice, demand or presentment, and/or, as the case may be, the Commitments
        shall
        terminate and the Borrower shall automatically and immediately be obligated
        to
        Cash Collateralize all Letter of Credit Outstandings.

       

      ARTICLE
        9

      THE
        ADMINISTRATIVE AGENT, AGENTS AND ISSUER

       

      SECTION
        9.1. Actions.
        Each
        Lender and Issuer hereby appoints RBS as its Administrative Agent under and
        for
        purposes of each Loan Document. Each Lender authorizes the Administrative
        Agent
        to act on behalf of such Lender under each Loan Document and to appoint other
        agents or sub-agents to assist in its actions under the Loan Documents and,
        in
        the absence of other written instructions from the Required Lenders received
        from time to time by the Administrative Agent (with respect to which the
        Administrative Agent agrees that it will comply, except as otherwise provided
        in
        this Section or as otherwise advised by counsel in order to avoid contravention
        of applicable law), to exercise such powers hereunder and thereunder as are
        specifically delegated to or required of the Administrative Agent by the
        terms
        hereof and thereof, together with such powers as may be incidental thereto
        (including the release of Liens on assets Disposed of in accordance with
        the
        terms of the Loan Documents). Each Lender hereby indemnifies (which indemnity
        shall survive any termination of this Agreement) the Administrative Agent,
        pro rata
        according to such Lender’s proportionate Total Exposure Amount, from and against
        any and all liabilities, obligations, losses, damages, claims, costs or expenses
        of any kind or nature whatsoever which may at any time be imposed on, incurred
        by, or asserted against, the Administrative Agent in any way relating to
        or
        arising out of any Loan Document, (including reasonable attorneys’ fees), and as
        to which the Administrative Agent, is not reimbursed by the Borrower;
provided
        that, no
        Lender shall be liable for the payment of any portion of such liabilities,
        obligations, losses, damages, claims, costs or expenses that are determined
        by a
        court of competent jurisdiction in a final proceeding to have resulted from
        the
        Administrative Agent’s gross negligence or willful misconduct. The
        Administrative Agent shall not be required to take any action under any Loan
        Document, or to prosecute or defend any suit in respect of any Loan Document,
        unless it is indemnified hereunder to its satisfaction. If any indemnity
        in
        favor of the Administrative Agent shall be or become, in the Administrative
        Agent’s determination, inadequate, the Administrative Agent may call for
        additional indemnification from the Lenders and cease to do the acts indemnified
        against hereunder until such additional indemnity is given.

       

       


      
        
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      SECTION
        9.2. Funding
        Reliance, etc.
        Unless
        the Administrative Agent shall have been notified in writing by any Lender
        by
        3:00 p.m. on the Business Day prior to a Borrowing that such Lender will
        not
        make available the amount that would constitute its Percentage of such Borrowing
        on the date specified therefor, the Administrative Agent may assume that
        such
        Lender has made such amount available to the Administrative Agent and, in
        reliance upon such assumption, make available to the Borrower a corresponding
        amount. If and to the extent that such Lender shall not have made such amount
        available to the Administrative Agent, such Lender and the Borrower severally
        agree to repay the Administrative Agent forthwith on demand such corresponding
        amount together with interest thereon, for each day from the date the
        Administrative Agent made such amount available to the Borrower to the date
        such
        amount is repaid to the Administrative Agent, at the interest rate applicable
        at
        the time to Loans comprising such Borrowing (in the case of the Borrower)
        and
        (in the case of a Lender), at the Federal Funds Rate (for the first two Business
        Days after which such amount has not been repaid), and thereafter at the
        interest rate applicable to Loans comprising such Borrowing.

       

      SECTION
        9.3. Exculpation.
        Neither
        the Administrative Agent nor any other Agent nor any of their respective
        directors, officers, employees or agents (each, an “Agent
        Indemnified Party”)
        shall
        be liable to any Secured Party for any action taken or omitted to be taken
        by it
        under any Loan Document, or in connection therewith, except for its own willful
        misconduct or gross negligence (as determined by a court of competent
        jurisdiction in a final and non-appealable judgment), nor responsible for
        any
        recitals or warranties herein or therein, nor for the effectiveness,
        enforceability, validity or due execution of any Loan Document, nor for the
        creation, perfection or priority of any Liens purported to be created by
        any of
        the Loan Documents, or the validity, genuineness, enforceability, existence,
        value or sufficiency of any collateral security, nor to make any inquiry
        respecting the performance by any Obligor of its Obligations. Any such inquiry
        that may be made by the Administrative Agent or any other Agent shall not
        obligate any of them to make any further inquiry or to take any action. Any
        Agent shall be entitled to rely upon advice of counsel concerning legal matters
        and upon any notice, consent, certificate, statement or writing that it believes
        to be genuine and to have been presented by a proper Person. NOTWITHSTANDING
        ANYTHING HEREIN TO THE CONTRARY, AND SPECIFICALLY WITH REFERENCE TO THE
        PROVISIONS OF SECTIONS 9.1, 9.3, 9.5 AND 9.10, IT IS THE INTENTION OF THE
        PARTIES HERETO THAT EACH AGENT INDEMNIFIED PARTY BE REIMBURSED OR INDEMNIFIED
        IN
        THE CASE OF, AND NOT BE LIABLE FOR, ITS OWN NEGLIGENCE (OTHER THAN GROSS
        NEGLIGENCE OR WILLFUL MISCONDUCT), REGARDLESS OF WHETHER SUCH NEGLIGENCE
        IS SOLE
        OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR
        TECHNICAL.

       

       


      
        
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      SECTION
        9.4. Successor.
        The
        Administrative Agent may resign as such at any time upon at least 30 days’ prior
        notice to the Borrower and all Lenders. If the Administrative Agent at any
        time
        shall resign, the Required Lenders may appoint another Lender as a successor
        Administrative Agent that shall thereupon become the Administrative Agent
        hereunder. If no successor Administrative Agent shall have been so appointed
        by
        the Required Lenders, and shall have accepted such appointment, within 30
        days
        after the retiring Administrative Agent’s giving notice of resignation, then the
        retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
        Administrative Agent, which shall be one of the Lenders or a commercial banking
        institution organized under the laws of the United States (or any State thereof)
        or a United States branch or agency of a commercial banking institution,
        and
        having a combined capital and surplus of at least $250,000,000; provided
        that,
        if, such retiring Administrative Agent is unable to find a commercial banking
        institution that is willing to accept such appointment and that meets the
        qualifications set forth in above, the retiring Administrative Agent’s
        resignation shall nevertheless thereupon become effective and the Lenders
        shall
        assume and perform all of the duties of the Administrative Agent hereunder
        until
        such time, if any, as the Required Lenders appoint a successor as provided
        for
        above. Upon the acceptance of any appointment as Administrative Agent hereunder
        by a successor Administrative Agent, such successor Administrative Agent
        shall
        be entitled to receive from the retiring Administrative Agent such documents
        of
        transfer and assignment as such successor Administrative Agent may reasonably
        request, and shall thereupon succeed to and become vested with all rights,
        powers, privileges and duties of the retiring Administrative Agent, and the
        retiring Administrative Agent shall be discharged from its duties and
        obligations under the Loan Documents. After any retiring Administrative Agent’s
        resignation hereunder as the Administrative Agent, the provisions of this
        Article shall inure to its benefit as to any actions taken or omitted to
        be
        taken by it while it was the Administrative Agent under the Loan Documents,
        and
Section
        10.3
        and
Section
        10.4
        shall
        continue to inure to its benefit.

       

      SECTION
        9.5. Credit
        Extensions by Agents and Issuers.
        Each
        Agent and Issuer shall have the same rights and powers with respect to (a)
        the
        Credit Extensions made by it or any of its Affiliates, and (b) the Notes
        held by
        it or any of its Affiliates as any other Lender and may exercise the same
        as if
        it were not an Agent. Any Agent or Issuer and their Affiliates may accept
        deposits from, lend money to, and generally engage in any kind of business
        with
        the Borrower or any Subsidiary or Affiliate of the Borrower as if such Agent
        were not an Agent hereunder. 

       

      SECTION
        9.6. Credit
        Decisions.
        Each
        Lender acknowledges that it has, independently of the Agents, Issuers and
        each
        other Lender, and based on such Lender’s review of the financial information of
        the Borrower, the Loan Documents (the terms and provisions of which being
        satisfactory to such Lender) and such other documents, information and
        investigations as such Lender has deemed appropriate, made its own credit
        decision to extend its Commitments. Each Lender also acknowledges that it
        will,
        independently of the Agents, Issuers and each other Lender, and based on
        such
        other documents, information and investigations as it shall deem appropriate
        at
        any time, continue to make its own credit decisions as to exercising or not
        exercising from time to time any rights and privileges available to it under
        the
        Loan Documents. In this regard, each Lender acknowledges that Mayer, Brown,
        Rowe
& Maw LLP is acting in this transaction as special counsel to the
        Administrative Agent only, except to the extent otherwise expressly stated
        in
        any legal opinion or any Loan Document. Each other party hereto will consult
        with its own legal counsel to the extent that it deems necessary in connection
        with the Loan Documents and the matters contemplated therein.

       

       


      
        
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      SECTION
        9.7. Copies,
        etc.
        The
        Administrative Agent shall give prompt notice to each Lender of each notice
        or
        request required or permitted to be given to the Administrative Agent by
        the
        Borrower pursuant to the terms of the Loan Documents (unless concurrently
        delivered to the Lenders by the Borrower). The Administrative Agent will
        distribute to each Lender each document or instrument received (other than
        Borrowing Requests, Issuance Requests and other notices delivered pursuant
        to
Articles
        II
        and
III)
        for its
        account and copies of all other communications received by the Administrative
        Agent from the Borrower for distribution to the Lenders by the Administrative
        Agent in accordance with the terms of the Loan Documents.

       

      SECTION
        9.8. Reliance
        by Agents and Issuers.
        Each
        Agent and Issuer shall be entitled to rely upon any certification, notice
        or
        other communication (including any thereof by telephone, telecopy, telegram
        or
        cable) believed by it to be genuine and correct and to have been signed or
        sent
        by or on behalf of the proper Person, and upon advice and statements of legal
        counsel, independent accountants and other experts selected by such Agent
        or
        Issuer. As to any matters not expressly provided for by the Loan Documents,
        each
        Agent and Issuer shall in all cases be fully protected in acting, or in
        refraining from acting, thereunder in accordance with instructions given
        by the
        Required Lenders or all of the Lenders as is required in such circumstance,
        and
        such instructions of such Lenders and any action taken or failure to act
        pursuant thereto shall be binding on all Secured Parties. For purposes of
        applying amounts in accordance with this Section, the Administrative Agent
        shall
        be entitled to rely upon any Secured Party that has entered into a Hedging
        Agreement with any Obligor for a determination (which such Secured Party
        agrees
        to provide or cause to be provided upon request of the Administrative Agent)
        of
        the outstanding Obligations owed to such Secured Party under any Hedging
        Agreement. Unless it has actual knowledge evidenced by way of written notice
        from any such Secured Party and the Borrower to the contrary, the Administrative
        Agent, in acting in such capacity under the Loan Documents, shall be entitled
        to
        assume that no Hedging Agreements or Obligations in respect thereof are in
        existence or outstanding between any Secured Party and any Obligor.

       

      SECTION
        9.9. Defaults.
        No
        Agent or Issuer shall be deemed to have knowledge or notice of the occurrence
        of
        a Default or Borrowing Base Deficiency unless it has received a written notice
        from a Secured Party or the Borrower specifying such Default and stating
        that
        such notice is a “Notice of Default”. In the event that the Administrative Agent
        receives such a notice of the occurrence of a Default, the Administrative
        Agent
        shall give prompt notice thereof to the Lenders. The Administrative Agent
        shall
        (subject to Section
        10.1)
        take
        such action with respect to such Default as shall be directed by the Required
        Lenders; provided
        that,
        unless and until the Administrative Agent shall have received such directions,
        the Administrative Agent may (but shall not be obligated to) take such action,
        or refrain from taking such action, with respect to such Default or Borrowing
        Base Deficiency as it shall deem advisable in the best interest of the Secured
        Parties except to the extent that this Agreement expressly requires that
        such
        action be taken, or not be taken, only with the consent or upon the
        authorization of the Required Lenders or all Lenders.

       

       


      
        
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      SECTION
        9.10. Posting
        of Approved Electronic Communications.
        (5) In
        addition to providing the Administrative Agent with all originals or copies
        of
        all Communications (as defined below) in the manner specified by Section
        10.2,
        the Borrower hereby also agrees, unless directed otherwise by the Administrative
        Agent or unless the electronic mail address referred to below has not been
        provided by the Administrative Agent to the Borrower, that it will, or will
        cause its Subsidiaries to, provide to the Administrative Agent all information,
        documents and other materials that it is obligated to furnish to the
        Administrative Agent pursuant to the Loan Documents or to the Lenders under
        Section
        7.1.1,
        including all notices, requests, financial statements, financial and other
        reports, certificates and other information materials (all such communications
        being referred to herein collectively as “Communications”),
        by
        transmitting the Communications in an electronic/soft medium that is properly
        identified in a format acceptable to the Administrative Agent to an electronic
        mail address as directed by the Administrative Agent.

       

      (b)
        The
        Borrower further agrees that the Administrative Agent may make the
        Communications available to the Lenders by posting the Communications on
        Intralinks
        or a
        substantially similar electronic transmission system (the “Platform”).

       

      (c)
        THE
        PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. THE INDEMNIFIED PARTIES DO NOT
        WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS OR THE ADEQUACY
        OF
        THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN
        THE
        COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY,
        INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
        NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE
        DEFECTS IS MADE BY THE INDEMNIFIED PARTIES IN CONNECTION WITH THE COMMUNICATIONS
        OR THE PLATFORM. IN NO EVENT SHALL THE INDEMNIFIED PARTIES HAVE ANY LIABILITY
        TO
        ANY OBLIGOR, ANY LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, WHETHER
        OR
        NOT BASED ON STRICT LIABILITY AND INCLUDING DIRECT OR INDIRECT, SPECIAL,
        INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT,
        CONTRACT OR OTHERWISE) ARISING OUT OF ANY OBLIGOR’S OR THE ADMINISTRATIVE
        AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE
        EXTENT THE LIABILITY OF ANY INDEMNIFIED PARTY IS FOUND IN A FINAL RULING
        BY A
        COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH INDEMNIFIED
        PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

       

      (d)
        The
        Administrative Agent agrees that the receipt of the Communications by the
        Administrative Agent at its e-mail address set forth above shall constitute
        effective delivery of the Communications to the Administrative Agent for
        purposes of the Loan Documents. Each Lender agrees that receipt of notice
        to it
        (as provided in the next sentence) specifying that the Communications have
        been
        posted to the Platform shall constitute effective delivery of the Communications
        to such Lender for purposes of the Loan Documents. Each Lender agrees to
        notify
        the Administrative Agent in writing (including by electronic communication)
        from
        time to time of such Lender’s e-mail address to which the foregoing notice may
        be sent by electronic transmission and that the foregoing notice may be sent
        to
        such e-mail address.

       


      
        
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      (e)
        Nothing herein shall prejudice the right of the Administrative Agent or any
        Lender to give any notice or other communication pursuant to any Loan Document
        in any other manner specified in such Loan Document.

       

      SECTION
        9.11. Proofs
        of Claim.
        The
        Secured Parties and the Borrower hereby agree that after the occurrence of
        an
        Event of Default pursuant to Section
        8.1.9,
        in case
        of the pendency of any receivership, insolvency, liquidation, bankruptcy,
        reorganization, arrangement, adjustment, composition or other judicial
        proceeding relative to any of the Obligors, the Administrative Agent
        (irrespective of whether the principal of any Loan shall then be due and
        payable
        as herein expressed or by declaration or otherwise and irrespective of whether
        Administrative Agent shall have made any demand on any of the Obligors) shall
        be
        entitled and empowered, by intervention in such proceeding or
        otherwise:

       

      (a)
        to
        file and prove a claim for the whole amount of principal and interest owing
        and
        unpaid in respect of the Loans and any other Obligations that are owing and
        unpaid and to file such other papers or documents as may be necessary or
        advisable in order to have the claims of the Administrative Agent and other
        Agents and other Secured Parties (including any claim for the reasonable
        compensation, expenses, disbursements and advances of the Lenders, the
        Administrative Agent and other agents and their agents and counsel and all
        other
        amounts due the Administrative Agent and other Agents and Secured Parties)
        allowed in such judicial proceeding; and

       

      (b)
        to
        collect and receive any moneys or other property payable or deliverable on
        any
        such claims and to distribute the same;

       

      and
        any
        custodian, receiver, assignee, trustee, liquidator, sequestrator or other
        similar official in any such judicial proceeding is hereby authorized by
        each
        Secured Party to make such payments to the Administrative Agent and, in the
        event that the Administrative Agent shall consent to the making of such payments
        directly to the Secured Parties, to pay to the Administrative Agent any amount
        due for the reasonable compensation, expenses, disbursements and advances
        of
        Administrative Agent and its agents and counsel, and any other amounts due
        Administrative Agent and other agents hereunder. Nothing herein contained
        shall
        be deemed to authorize Administrative Agent to authorize or consent to or
        accept
        or adopt on behalf of any Secured Party any plan of reorganization, arrangement,
        adjustment or composition affecting the Obligations or the rights of any
        Secured
        Party or to authorize Administrative Agent to vote in respect of the claim
        of
        any Secured Party in any such proceeding. Further, nothing contained in this
        Section shall affect or preclude the ability of any Secured Party to (i)
        file
        and prove such a claim in the event that the Administrative Agent has not
        acted
        within ten days prior to any applicable bar date and (ii) require an amendment
        of the proof of claim to accurately reflect such Secured Party’s outstanding
        Obligations.

       

       


      
        
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      SECTION
        9.12. Security
        Matters; Authority of Administrative Agent to Release Collateral.
        (a)
        Each Lender and Issuer and other Secured Party (by their acceptance of the
        benefits of any Collateral)
        acknowledges and agrees that the Administrative Agent has entered into the
        Security Documents on behalf of itself and the Secured Parties, and the Secured
        Parties hereby agree to be bound by the terms of such Security Documents,
        acknowledge receipt of copies of such Security Documents and consent to the
        rights, powers, remedies, indemnities and exculpations given to the
        Administrative Agent thereunder. All rights, powers and remedies available
        to
        the Administrative Agent and the Secured Parties with respect to the Collateral,
        or otherwise pursuant to the Security Documents, shall be subject to the
        provisions of such Security Documents. In the event of any conflict or
        inconsistency between the terms and provisions of this Agreement and the
        terms
        and provisions of such Security Documents, the terms and provisions of such
        Security Documents shall govern and control except that this Agreement shall
        govern and control the rights, powers, duties, immunities and indemnities
        of the
        Administrative Agent.

       

      (b)
        Each
        Lender and Issuer and other Secured Party (by their acceptance of the benefits
        of any Collateral) hereby authorizes the Administrative Agent to release
        any
        collateral that is permitted to be sold or released pursuant to the terms
        of the
        Loan Documents. Each Lender and Issuer hereby authorizes the Administrative
        Agent to execute and deliver to the Borrower, at the Borrower’s sole cost and
        expense, any and all releases of Liens, termination statements, assignments
        or
        other documents reasonably requested by the Borrower in connection with any
        sale
        or other Disposition of Property to the extent such sale or other Disposition
        is
        permitted by the terms of this Agreement or is otherwise authorized by the
        terms
        of the Loan Documents. Each Lender hereby consents to the Administrative
        Agent’s
        entering into, and hereby authorizes the Administrative Agent to enter into,
        that certain Termination of Amended and Restated Intercreditor Agreement,
        dated
        as of even date herewith, by and among the Administrative Agent, as First
        Lien
        Agent thereunder, BNP Paribas, as Second Lien Agent thereunder, and the other
        parties thereto as therein specified, for the purpose of terminating the
        “Intercreditor Agreement” as defined in the Existing First Lien Credit
        Agreement.

       

      SECTION
        9.13. Agents
        and Arrangers.
        Except
        as otherwise set forth herein, the Syndication Agent, the Co-Documentation
        Agents, the Arrangers and the Persons identified as “Joint Bookrunners” shall
        not have any right, power, obligation, liability, responsibility or duty
        under
        this Agreement (or any other Loan Document) other than those applicable to
        all
        Lenders as such. Without limiting the foregoing, none of the Agents shall
        have
        or be deemed to have any fiduciary relationship with any other Lender or
        any
        Obligor. Each Lender acknowledges that it has not relied, and will not rely,
        on
        the Agents in deciding to enter into this Agreement and each other Loan Document
        to which it is a party or in taking or not taking action hereunder or
        thereunder.

       

      ARTICLE
        10

      MISCELLANEOUS
        PROVISIONS

       

      SECTION
        10.1. Waivers,
        Amendments, etc.
        The
        provisions of each Loan Document (other than Hedging Agreements, Letters
        of
        Credit or the Fee Letter, which shall be modified only in accordance with
        their
        respective terms) may from time to time be amended, modified or waived, if
        such
        amendment, modification or waiver is in writing and consented to by the Borrower
        and the Required Lenders; provided,
        that no
        other such amendment, modification or waiver shall:

       


      
        
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      (a)
        modify clause
        (b)
        of
Section
        4.7,
        Section
        4.8
        (as it
        relates to sharing of payments) or this Section, in each case, without the
        consent of all Lenders;

       

      (b)
        increase the aggregate amount of any Credit Extensions required to be made
        by a
        Lender pursuant to its Commitments, extend the final Commitment Termination
        Date
        of Credit Extensions made (or participated in) by a Lender or extend the
        final
        Stated Maturity Date for any Lender’s Loan, in each case without the consent of
        such Lender (it being agreed, however, that any vote to rescind any acceleration
        made pursuant to Section
        8.2
        and
Section
        8.3
        of
        amounts owing with respect to the Loans and other Obligations shall only
        require
        the vote of the Required Lenders);

       

      (c)
        reduce the principal amount of or reduce the rate of interest on any Lender’s
        Loan, reduce any fees described in Article
        III
        payable
        to any Lender or extend the date on which principal, interest or fees are
        payable in respect of such Lender’s Loans, in each case without the consent of
        such Lender (provided
        that,
        the vote of Required Lenders shall be sufficient to waive the payment, or
        reduce
        the increased portion, of interest accruing under Section
        3.2.2);

       

      (d)
        reduce the percentage set forth in the definition of “Required Lenders” or
        modify any requirement hereunder that any particular action be taken by all
        Lenders without the consent of all Lenders;

       

      (e)
        increase the Stated Amount of any Letter of Credit unless consented to by
        the
        Issuer of such Letter of Credit;

       

      (f)
        except as otherwise expressly provided in a Loan Document, release (i) either
        Borrower from its Obligations under the Loan Documents or any Guarantor from
        its
        obligations under a Guaranty or (ii) all or substantially all of the
        collateral under the Loan Documents, in each case without the consent of
        all
        Lenders; or

       

      (g)
        affect adversely the interests, rights or obligations of the Administrative
        Agent (in its capacity as the Administrative Agent) or any Issuer (in its
        capacity as Issuer) unless consented to by the Administrative Agent or such
        Issuer, as the case may be.

       

      No
        failure or delay on the part of any Secured Party in exercising any power
        or
        right under any Loan Document shall operate as a waiver thereof, nor shall
        any
        single or partial exercise of any such power or right preclude any other
        or
        further exercise thereof or the exercise of any other power or right. No
        notice
        to or demand on any Obligor in any case shall entitle it to any notice or
        demand
        in similar or other circumstances. No waiver or approval by any Secured Party
        under any Loan Document shall, except as may be otherwise stated in such
        waiver
        or approval, be applicable to subsequent transactions. No waiver or approval
        hereunder shall require any similar or dissimilar waiver or approval thereafter
        to be granted hereunder.

       

       


      
        
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      SECTION
        10.2. Notices;
        Time.
        All
        notices and other communications provided under each Loan Document shall
        be in
        writing or by facsimile and addressed, delivered or transmitted, if to the
        Borrower, the Administrative Agent, a Lender or an Issuer, to the applicable
        Person at its address or facsimile number set forth on Schedule II hereto
        or set
        forth in the Lender Assignment Agreement, or at such other address or facsimile
        number as may be designated by such party in a notice to the other parties.
        Any
        notice, if mailed and properly addressed with postage prepaid or if properly
        addressed and sent by pre-paid courier service, shall be deemed given when
        received; any notice, if transmitted by facsimile, shall be deemed given
        when
        the confirmation of transmission thereof is received by the transmitter.
        Electronic mail and Internet and intranet websites may be used only to
        distribute routine communications by the Administrative Agent to the Lender,
        such as financial statements and other information as provided in Section 7.1.1
        and for
        the distribution and execution of Loan Documents for execution by the parties
        thereto, and may not be used for any other purpose. The parties hereto agree
        that delivery of an executed counterpart of a signature page to this Agreement
        and each other Loan Document by facsimile (or electronic transmission) shall
        be
        effective as delivery of an original executed counterpart of this Agreement
        or
        such other Loan Document. Unless otherwise indicated, all references to the
        time
        of a day in a Loan Document shall refer to New York time.

       

      SECTION
        10.3. Payment
        of Costs and Expenses.
        The
        Borrower agrees to pay on demand all expenses of the Arrangers (including
        the
        reasonable fees and out-of-pocket expenses of Mayer, Brown, Rowe & Maw LLP,
        counsel to the Administrative Agent, and of local counsel, if any, who may
        be
        retained by or on behalf of the Administrative Agent and including, without
        limitation, the reasonable fees, charges and disbursements of counsel and
        other
        outside consultants for the Administrative Agent, the reasonable travel,
        photocopy, mailing, courier, telephone and other similar expenses, including
        all
Intralinks
        expenses, and the cost of environmental audits and surveys and appraisals)
        in
        connection with:

       

      (a)
        the
        negotiation, preparation, execution and delivery of each Loan Document,
        including schedules and exhibits, and any amendments, waivers, consents,
        supplements or other modifications to any Loan Document as may from time
        to time
        hereafter be required, whether or not the transactions contemplated hereby
        are
        consummated; and

       

      (b)
        the
        filing or recording of any Loan Document (including the Filing Statements)
        and
        all amendments, supplements, amendment and restatements and other modifications
        to any thereof, searches made following the Effective Date in jurisdictions
        where Filing Statements (or other documents evidencing Liens in favor of
        the
        Secured Parties) have been recorded and any and all other documents or
        instruments of further assurance required to be filed or recorded by the
        terms
        of any Loan Document; and

       

      (c)
        the
        preparation and review of the form of any document or instrument relevant
        to any
        Loan Document.

       


      
        
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      The
        Borrower further agrees to pay, and to save each Secured Party harmless from
        all
        liability for, any stamp or other taxes that may be payable in connection
        with
        the execution or delivery of each Loan Document, the Credit Extensions or
        the
        issuance of the Notes. The Borrower also agrees to reimburse the Secured
        Parties
        upon demand for all reasonable out-of-pocket expenses (including reasonable
        attorneys’ fees and legal expenses of counsel and settlement costs) incurred in
        connection with (x) the negotiation of any restructuring or “work-out” with
        the Borrower, whether or not consummated, of any Obligations and (y) the
        enforcement of any Obligations.

       

      SECTION
        10.4. Indemnification.
        In
        consideration of the execution and delivery of this Agreement by each Secured
        Party, the Borrower hereby indemnifies, exonerates and holds each Secured
        Party
        and each of their respective officers, directors, employees and agents
        (collectively, the “Indemnified
        Parties”)
        free
        and harmless from and against any and all actions, causes of action, suits,
        losses, costs, liabilities and damages, and expenses incurred in connection
        therewith (irrespective of whether any such Indemnified Party is a party
        to the
        action for which indemnification hereunder is sought), including reasonable
        attorneys’ fees and disbursements, whether incurred in connection with actions
        between or among the parties hereto or the parties hereto and third parties
        (collectively, the “Indemnified
        Liabilities”),
        incurred by the Indemnified Parties or any of them as a result of, or arising
        out of, or relating to

       

      (a)
        any
        transaction financed or to be financed in whole or in part, directly or
        indirectly, with the proceeds of any Credit Extension, including all Indemnified
        Liabilities arising in connection with the Transaction;

       

      (b)
        the
        entering into and performance of any Loan Document by any of the Indemnified
        Parties (including any action brought by or on behalf of the Borrower as
        the
        result of any determination by the Required Lenders pursuant to Article V
        not to
        fund any Credit Extension, provided
        that,
        any such action is resolved in favor of such Indemnified Party);

       

      (c)
        the
        Loan Documents, the Credit Extensions and the extension of the Commitments,
        the
        failure of any Obligor to comply with the terms of the Loan Documents or
        Applicable Law, the inaccuracy of any representation or warranty of any Obligor
        set forth in the Loan Documents or in a certificate, instrument or document
        delivered in connection therewith, and the use by any Obligor of the proceeds
        of
        any Credit Extension;

       

      (d)
        any
        investigation, litigation or proceeding related to any acquisition or proposed
        acquisition by any Obligor or any Subsidiary thereof of all or any portion
        of
        the Capital Securities or assets of any Person, whether or not an Indemnified
        Party is party thereto;

       

      (e)
        any
        investigation, litigation or proceeding related to any environmental cleanup,
        audit, compliance or other matter relating to the protection of the environment
        or the Release by any Obligor or any Subsidiary thereof of any Hazardous
        Material;

       


      
        
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      (f)
        the
        presence on or under, or the escape, seepage, leakage, spillage, discharge,
        emission, discharging or releases from, any real property owned or operated
        by
        any Obligor or any Subsidiary thereof of any Hazardous Material (including
        any
        losses, liabilities, damages, injuries, costs, expenses or claims asserted
        or
        arising under any Environmental Law), regardless of whether caused by, or
        within
        the control of, such Obligor or Subsidiary; or

       

      (g)
        each
        Lender’s Environmental Liability (the indemnification herein shall survive
        repayment of the Obligations and any transfer of the property of any Obligor
        or
        its Subsidiaries by foreclosure or by a deed in lieu of foreclosure for any
        Lender’s Environmental Liability, regardless of whether caused by, or within the
        control of, such Obligor or such Subsidiary);

       

      provided
        that the
        Borrower shall not be required to indemnify any Indemnified Party to the
        extent
        the applicable Indemnified Liability arises by reason of such Indemnified
        Party’s gross negligence or willful misconduct (as determined by a court of
        competent jurisdiction in a final and non-appealable judgment). Each Obligor
        and
        its successors and assigns hereby waive, release and agree not to make any
        claim
        or bring any cost recovery action against, any Indemnified Party under CERCLA
        or
        any state, provincial or foreign equivalent, or any similar law now existing
        or
        hereafter enacted, except for liabilities arising from an Indemnified Party’s
        gross negligence or willful misconduct (as determined by a court of competent
        jurisdiction in a final and non-appealable judgment). It is expressly understood
        and agreed that to the extent that any Indemnified Party is strictly liable
        under any Environmental Laws, each Obligor’s obligation to such Indemnified
        Party under this indemnity shall likewise be without regard to fault on the
        part
        of any Obligor with respect to the violation or condition that results in
        liability of an Indemnified Party. If and to the extent that the foregoing
        undertaking may be unenforceable for any reason, each Obligor agrees to make
        the
        maximum contribution to the payment and satisfaction of each of the Indemnified
        Liabilities that is permissible under applicable law. To the extent permitted
        by
        applicable law, the Obligors shall not assert, and hereby waive, any claim
        against any Indemnified Party, on any theory of liability, for special,
        indirect, consequential or punitive damages (as opposed to direct or actual
        damages) arising out of, in connection with, or as a result of, this Agreement
        or any agreement or instrument contemplated hereby, any Loan or Letter of
        Credit
        or the use of the proceeds thereof. NOTWITHSTANDING
        ANYTHING HEREIN TO THE CONTRARY, IT IS THE INTENTION OF THE PARTIES HERETO
        THAT
        EACH INDEMNIFIED PARTY BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER
        THAN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT), REGARDLESS OF WHETHER SUCH
        NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR
        TECHNICAL.

       

      SECTION
        10.5. Survival.
        The
        obligations of the Borrower under Sections
        4.3,
        4.4,
        4.5,
        4.6,
        10.3
        and
10.4,
        and the
        obligations of the Lenders under Section
        9.1,
        shall
        in each case survive any assignment from one Lender to another (in the case
        of
Sections
        10.3
        and
10.4),
        the
        occurrence of the Termination Date. The representations and warranties made
        by
        each Obligor in each Loan Document shall survive the execution and delivery
        of
        such Loan Document.

       

      SECTION
        10.6. Severability.
        Any
        provision of any Loan Document 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 such Loan Document or affecting the validity or
        enforceability of such provision in any other jurisdiction.

       

       


      
        
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      SECTION
        10.7. Headings.
        The
        various headings of each Loan Document are inserted for convenience only
        and
        shall not affect the meaning or interpretation of such Loan Document or any
        provisions thereof.

       

      SECTION
        10.8. Execution
        in Counterparts, Effectiveness, etc.
        This
        Agreement may be executed by the parties hereto in several counterparts,
        each of
        which shall be an original (whether such counterpart is originally executed
        or
        an electronic copy of an original and each party hereto expressly waives
        its
        rights to receive originally executed documents other than with respect to
        any
        Notes) and all of which shall constitute together but one and the same
        agreement. This Agreement shall become effective when counterparts hereof
        executed on behalf of the Borrower, the Administrative Agent and each Lender
        (or
        notice thereof satisfactory to the Administrative Agent), shall have been
        received by the Administrative Agent.

       

      SECTION
        10.9. Governing
        Law.
        EACH LOAN DOCUMENT (OTHER THAN THE LETTERS OF CREDIT, TO THE EXTENT SPECIFIED
        BELOW AND EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN A LOAN DOCUMENT) WILL
        EACH
        BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF
        THE
        STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE S 5-1401 AND 5-1402 OF THE
        GENERAL
        OBLIGATIONS LAW OF THE STATE OF NEW YORK). EACH LETTER OF CREDIT SHALL BE
        GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED
        IN
        SUCH LETTER OF CREDIT, OR IF NO LAWS OR RULES ARE DESIGNATED, THE INTERNATIONAL
        STANDBY PRACTICES (ISP98 INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NUMBER
        590 (THE “ISP
        RULES”))
        AND, AS TO MATTERS NOT GOVERNED BY THE ISP RULES, THE INTERNAL LAWS OF THE
        STATE
        OF NEW YORK. 

       

      SECTION
        10.10. Successors
        and Assigns.
        This
        Agreement shall be binding upon and shall inure to the benefit of the parties
        hereto and their respective successors and assigns; provided
        that,
        the Borrower may not assign or transfer its rights or obligations hereunder
        without the consent of all Lenders.

       

      SECTION
        10.11. Sale
        and Transfer of Credit Extensions; Participations in Credit Extensions;
        Notes.
        Each
        Lender may assign, or sell participations in, its Loans, Letters of Credit
        and
        Commitments to one or more other Persons in accordance with the terms set
        forth
        below.

       

      (a)
        Any
        Lender may, with the consent of the Administrative Agent (such consent not
        to be
        unreasonably withheld or delayed and shall not be required for an assignment
        to
        any other Lender, Agent or Affiliate thereof), assign to one or more Eligible
        Assignees all or a portion of its rights and obligations under this Agreement
        (including all or a portion of its Commitments or Loans at the time owing
        to
        it); provided
        that:

       


      
        
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      (i)
        the
        aggregate amount of the Commitments (which for this purpose includes Loans
        outstanding thereunder), principal outstanding balance of the Loans of the
        assigning Lender subject to each such assignment (determined as of the date
        the
        Lender Assignment Agreement with respect to such assignment is delivered
        to the
        Administrative Agent) shall not be less than $1,000,000, unless (A) the
        Administrative Agent and, so long as no Event of Default has occurred and
        is
        continuing, the Borrower otherwise consents (each such consent not to be
        unreasonably withheld or delayed); (B) such assignment is an assignment of
        the
        entire remaining amount of the assigning Lender’s Commitments and Loans at the
        time owing to it, (C) such assignment is an assignment to a Lender or an
        Affiliate of a Lender or an Approved Fund with respect to a Lender, (D) such
        assignment is an assignment during the Primary Syndication or (E) such
        assignment is to one or more Eligible Assignees managed by an Affiliate of
        such
        Eligible Assignee(s) and the aggregate amount of such assignments is not
        less
        than $1,000,000;

       

      (ii)
        each
        partial assignment shall be made as an assignment of a proportionate part
        of all
        the assigning Lender’s rights and obligations under this Agreement with respect
        to the Loans, and/or the Commitments assigned; and

       

      (iii)
        the
        parties to each assignment shall (A) electronically execute and deliver to
        the
        Administrative Agent a Lender Assignment Agreement via an electronic settlement
        system acceptable to the Administrative Agent or (B) with the consent of
        the
        Administrative Agent, manually execute and deliver to the Administrative
        Agent a
        Lender Assignment Agreement, together with, in either case, a processing
        and
        recordation fee of $3,500 (which fee may be waived or reduced in the sole
        discretion of the Administrative Agent) and if the Eligible Assignee is not
        a
        Lender, administrative details information with respect to such Eligible
        Assignee and applicable tax forms.

       

      (b)
        Subject to acceptance and recording thereof by the Administrative Agent pursuant
        to clause
        (c),
        from
        and after the effective date specified in each Lender Assignment Agreement,
        (i) the Eligible Assignee thereunder shall be a party hereto and, to the
        extent of the interest assigned by such Lender Assignment Agreement, have
        the
        rights and obligations of a Lender under this Agreement, and (ii) the
        assigning Lender thereunder shall, to the extent of the interest assigned
        by
        such Lender Assignment Agreement, subject to Section
        10.5,
        be
        released from its obligations under this Agreement (and, in the case of a
        Lender
        Assignment Agreement covering all of the assigning Lender’s rights and
        obligations under this Agreement, such Lender shall cease to be a party hereto,
        but shall continue to be entitled to the benefits of any provisions of this
        Agreement that by their terms survive the termination of this Agreement).
        If the
        consent of the Borrower to an assignment or to an Eligible Assignee is required
        hereunder (including a consent to an assignment that does not meet the minimum
        assignment thresholds specified in this Section), the Borrower shall be deemed
        to have given its consent ten days after the date notice thereof has been
        delivered by the assigning Lender (through the Administrative Agent) unless
        such
        consent is expressly refused by the Borrower prior to such tenth
        day.

       


      
        
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      (c)
        The
        Administrative Agent shall record each assignment made in accordance with
        this
        Section in the Register pursuant to clause
        (b)
        of
Section
        2.7
        and
        periodically give the Borrower notice of such assignments. The Register shall
        be
        available for inspection by the Borrower and any Lender, at any reasonable
        time
        and from time to time upon reasonable prior notice.

       

      (d)
        Any
        Lender may, without the consent of, or notice to, the Borrower or the
        Administrative Agent, sell participations to one or more banks or other entities
        (a “Participant”)
        in all
        or a portion of such Lender’s rights and/or obligations under this Agreement
        (including all or a portion of its Commitments and/or Loans owing to it);
        provided
        that
        (i) such Lender’s obligations under this Agreement shall remain unchanged,
        (ii) such Lender shall remain solely responsible to the other parties
        hereto for the performance of such obligations and (iii) the Borrower, the
        Administrative Agent and the other Lenders shall continue to deal solely
        and
        directly with such Lender in connection with such Lender’s rights and
        obligations under this Agreement. Any agreement or instrument pursuant to
        which
        a Lender sells such a participation shall provide that such Lender shall
        retain
        the sole right to enforce this Agreement and to approve any amendment,
        modification or waiver of any provision of this Agreement; provided
        that
        such agreement or instrument may provide that such Lender will not, without
        the
        consent of the Participant, agree to any amendment, modification or waiver
        with
        respect to any of the items set forth in clauses (a)
        through
(d)
        or
(f)
        of
Section 10.1,
        in each
        case except as otherwise specifically provided in a Loan Document. Subject
        to
clause (e),
        the
        Borrower agrees that each Participant shall be entitled to the benefits of
        Sections 4.3,
        4.4,
        4.5,
        4.6,
        7.1.1,
        10.3
        and
10.4
        to the
        same extent as if it were a Lender and had acquired its interest by assignment
        pursuant to clause (b).
        To the
        extent permitted by law, each Participant also shall be entitled to the benefits
        of Section 4.9
        as
        though it were a Lender, provided such Participant agrees to be subject to
        Section 4.8
        as
        though it were a Lender. Each Lender shall, as agent of the Borrower solely
        for
        the purpose of this Section, record in book entries maintained by such Lender
        the name and the amount of the participating interest of each Participant
        entitled to receive payments in respect of any participating interests sold
        pursuant to this Section.

       

      (e)
        A
        Participant shall not be entitled to receive any greater payment under
Sections 4.3,
        4.4,
        4.5,
        4.6,
        10.3
        and
10.4,
        as of
        the time of the sale of such participation, than the applicable Lender would
        have been entitled to receive with respect to the participation sold to such
        Participant, unless the sale of the participation to such Participant is
        made
        with the Borrower’s prior written consent. A Participant that would be a
        Non-U.S. Credit Party if it were a Lender shall not be entitled to the benefits
        of Section 4.6
        unless
        the Borrower is notified of the participation sold to such Participant and
        such
        Participant agrees, for the benefit of the Borrower, to comply with the
        requirements set forth in Section 4.6
        as
        though it were a Lender. In addition, if at the time of the sale of such
        participation, any greater Taxes subject to payment under Section
        4.6
        would
        apply to the Participant than applied to the applicable Lender, then such
        Participant shall not be entitled to any payment under Section 4.6
        with
        respect to the portion of such Taxes as exceeds the Taxes applicable to the
        Lender at the time of the sale of the participation unless the Participant’s
        request for the Borrower’s prior written consent for the Participation described
        in the first sentence of this clause states that such greater Taxes would
        be
        applicable to such Participant, it being understood that the Participant
        shall
        be entitled to additional payments under Section
        4.6
        to the
        extent such Lender selling the participation would be entitled to any payment
        resulting from a change in law occurring after the time the participation
        was
        sold.

       


      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          107

          
            

          

        

        
          
          

        

      


      (f)
        Any
        Lender may at any time pledge or assign a security interest in all or any
        portion of its rights under this Agreement to secure obligations of such
        Lender,
        including any pledge or assignment to secure obligations to a Federal Reserve
        Bank; provided
        that no
        such pledge or assignment of a security interest shall release a Lender from
        any
        of its obligations hereunder or substitute any such pledgee or assignee for
        such
        Lender as a party hereto.

       

      (g)
        Notwithstanding anything to the contrary contained herein, any Lender
        (“Granting
        Lender”)
        may
        grant to a special purpose funding vehicle (a “SPC”),
        identified as such in writing from time to time by the Granting Lender to
        the
        Administrative Agent and the Borrower, the option to provide to the Borrower
        all
        or any part of any Loan that such Granting Lender would otherwise be obligated
        to make to the Borrower pursuant to this Agreement; provided
        that (x)
        nothing herein shall constitute a commitment by any SPC to make any Loans
        and
        (y) if an SPC elects not to exercise such option or otherwise fails to
        provide all or any part of such Loan, the Granting Lender shall be obligated
        to
        make such Loan pursuant to the terms hereof.  The
        making of a Loan by an SPC hereunder shall utilize the Commitment of the
        Granting Lender to the same extent, and as if, such Loan were made by such
        Granting Lender. Each party hereto hereby agrees that no SPC shall be liable
        for
        any indemnity or similar payment obligation under this Agreement (all liability
        for which shall remain with the Granting Lender). In furtherance of the
        foregoing, each party hereto hereby agrees (which agreement shall survive
        the
        termination of this Agreement) that, prior to the date that is one year and
        one
        day after the payment in full of all outstanding commercial paper or other
        senior indebtedness of any SPC, it will not institute against, or join any
        other
        person in instituting against, such SPC any bankruptcy, reorganization,
        arrangement, insolvency or liquidation proceedings under the laws of the
        United
        States or any State thereof. In addition, notwithstanding anything to the
        contrary contained in this clause, any SPC may (i) with notice to, but without
        the prior written consent of, the Borrower or the Administrative Agent and
        without paying any processing fee therefor, assign all or a portion of its
        interests in any Loans to the Granting Lender or to any financial institutions
        (consented to by the Borrower, and the Administrative Agent) providing liquidity
        and/or credit support to or for the account of such SPC to support the funding
        or maintenance of Loans and (ii) disclose on a confidential basis any non-public
        information relating to its Loans to any rating agency, commercial paper
        dealer
        or provider of any surety, guarantee or credit or liquidity enhancement to
        such
        SPC. This Section may not be amended without the written consent of the SPC.
        The
        Borrower acknowledges and agrees, subject to the next sentence, that, to
        the
        fullest extent permitted under applicable law, each SPC, for purposes of
        Sections 4.3,
        4.4,
        4.5,
        4.6,
        4.8,
        4.9,
        10.3
        and
10.4,
        shall
        be considered a Lender. The Borrower shall not be required to pay any amount
        under Sections
        4.3,
        4.4,
        4.5,
        4.6,
        10.3
        and
10.4
        that is
        greater than the amount that it would have been required to pay had no grant
        been made by a Granting Lender to a SPC.

       

       


      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          108

          
            

          

        

        
          
          

        

      


      SECTION
        10.12. Other
        Transactions.
        Nothing
        contained herein shall preclude the Administrative Agent, any Issuer or any
        other Lender from engaging in any transaction, in addition to those contemplated
        by the Loan Documents, with the Borrower or any of its Affiliates in which
        the
        Borrower or such Affiliate is not restricted hereby from engaging with any
        other
        Person.

       

      SECTION
        10.13. Forum
        Selection and Consent to Jurisdiction.
        ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
        ANY LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
        (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, THE LENDERS,
        ANY ISSUER OR THE BORROWER IN CONNECTION HEREWITH OR THEREWITH MAY BE BROUGHT
        AND MAINTAINED IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES
        DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED
        THAT, ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY
        MAY
        BE BROUGHT, AT THE ADMINISTRATIVE AGENT’S OPTION, IN THE COURTS OF ANY
        JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER
        IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY CERTIFIED MAIL, RETURN
        RECEIPT
        REQUESTED, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK
        AT THE
        ADDRESS FOR NOTICES SPECIFIED IN SECTION
        10.2.
        THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
        PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO
        THE
        LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED
        TO
        ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
        FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY
        FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH
        SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION
        OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY
        IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW SUCH IMMUNITY IN
        RESPECT OF ITS OBLIGATIONS UNDER THE LOAN DOCUMENTS.

       

      SECTION
        10.14. Waiver
        of Jury Trial.
        THE ADMINISTRATIVE AGENT, EACH LENDER, EACH ISSUER AND THE BORROWER HEREBY
        KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TO THE FULLEST EXTENT PERMITTED
        BY LAW ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
        BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, EACH LOAN
        DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
        ORAL
        OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, SUCH LENDER, SUCH ISSUER
        OR
        THE BORROWER IN CONNECTION THEREWITH. THE BORROWER ACKNOWLEDGES AND AGREES
        THAT
        IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND
        EACH
        OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT
        THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT, EACH
        LENDER AND EACH ISSUER ENTERING INTO THE LOAN DOCUMENTS.

       

       


      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          109

          
            

          

        

        
          
          

        

      


      SECTION
        10.15. Confidentiality.
        (6)
        Subject to the provisions of clause
        (b)
        of this
        Section, each Lender agrees that it will follow its customary procedures
        in an
        effort not to disclose without the prior consent of the Borrower (other than
        to
        its employees, auditors, advisors or counsel or to another Lender if the
        Lender
        or such Lender’s holding or parent company in its sole discretion determines
        that any such party should have access to such information, provided such
        Persons shall be subject to the provisions of this Section to the same extent
        as
        such Lender) any information that is now or in the future furnished pursuant
        to
        this Agreement or any other Loan Document, provided
        that any
        Lender may disclose any such information (i) as has become generally available
        to the public other than by virtue of a breach of this clause by the respective
        Lender or any other Person to whom such Lender has provided such information
        as
        permitted by this Section, (ii) as may be required or appropriate in any
        report,
        statement or testimony submitted to any municipal, state, provincial or Federal
        regulatory body having or claiming to have jurisdiction over such Lender
        or to
        the Federal Reserve Board or the Federal Deposit Insurance Corporation or
        similar organizations (whether in the United States or elsewhere) or their
        successors, (iii) as may be required or appropriate in respect to any summons
        or
        subpoena or in connection with any litigation, (iv) in order to comply with
        any
        law, order, regulation or ruling applicable to such Lender, (v) to the
        Administrative Agent, (vi) to any pledgee referred to in clause
        (f)
        of
Section 10.11
        or any
        prospective or actual transferee or participant in connection with any
        contemplated transfer or participation of any of the Notes or Commitments
        or any
        interest therein by such Lender, provided
        that
        such prospective transferee agrees to be bound by the confidentiality provisions
        contained in this Section, (vii) to any direct or indirect contractual
        counterparty in swap agreements or such contractual counterparty’s professional
        advisor (so long as such contractual counterparty or professional advisor
        to
        such contractual counterparty agrees to be bound by the provisions of this
        Section) and (viii) to the National Association of Insurance Commissioners
        or
        any similar organization or any nationally recognized rating agency that
        requires access to information about a Lender’s investment portfolio in
        connection with ratings issued with respect to such Lender.

       

      (b)
        The
        Borrower hereby acknowledges and agrees that each Lender may share with any
        of
        its Affiliates, and such Affiliates may share with such Lender, any information
        related to the Borrower or any of its Subsidiaries, provided such Persons
        shall
        be subject to the provisions of this Section to the same extent as such
        Lender.

       

      Notwithstanding
        the foregoing paragraphs of this Section, any party to this Agreement (and
        each
        Affiliate, director, officer, employee, agent or representative of the foregoing
        or such Affiliate) may disclose to any and all persons, without limitation
        of
        any kind, the tax treatment and tax structure of the transactions contemplated
        herein and all materials of any kind (including opinions or other tax analyses)
        that are provided to such party relating to such tax treatment or tax structure.
        The foregoing language is not intended to waive any confidentiality obligations
        otherwise applicable under this Agreement except with respect to the information
        and materials specifically referenced in the preceding sentence. This
        authorization does not extend to disclosure of any other information, including
        (a) the identity of participants or potential participants in the transactions
        contemplated herein, (b) the existence or status of any negotiations, or
        (c) any
        financial, business, legal or personal information of or regarding a party
        or
        its affiliates, or of or regarding any participants or potential participants
        in
        the transactions contemplated herein (or any of their respective affiliates),
        in
        each case to the extent such other information is not related to the tax
        treatment or tax structure of the transactions contemplated herein.

       

       


      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          110

          
            

          

        

        
          
          

        

      


      SECTION
        10.16. Counsel
        Representation.
        THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS BEEN REPRESENTED BY COMPETENT
        COUNSEL IN THE NEGOTIATION OF THIS AGREEMENT, AND THAT ANY RULE OR CONSTRUCTION
        OF LAW ENABLING THE BORROWER TO ASSERT THAT ANY AMBIGUITIES OR INCONSISTENCIES
        IN THE DRAFTING OR PREPARATION OF THE TERMS OF THIS AGREEMENT SHOULD DIMINISH
        ANY RIGHTS OR REMEDIES OF THE ADMINISTRATIVE AGENT OR THE OTHER SECURED PARTIES
        ARE HEREBY WAIVED BY THE BORROWER.

       

      SECTION
        10.17. No
        Oral Agreements.
        THIS
        AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
        THE
        PARTIES 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.

       

      SECTION
        10.18. Maximum
        Interest.
        It is
        the intention of the parties hereto to conform strictly to applicable usury
        laws
        and, anything herein to the contrary notwithstanding, the Obligations of
        the
        Borrower to each Lender under this Agreement shall be subject to the limitation
        that payments of interest shall not be required to the extent that receipt
        thereof would be contrary to provisions of law applicable to such Lender
        limiting rates of interest that may be charged or collected by such Lender.
        Accordingly, if the transactions contemplated hereby would be usurious under
        applicable law (including the Federal and state laws of the United States
        of
        America, or of any other jurisdiction whose laws may be mandatorily applicable)
        with respect to a Lender, then, in that event, notwithstanding anything to
        the
        contrary in this Agreement, it is agreed as follows: (a) the provisions of
        this Section 10.18
        shall
        govern and control; (b) the aggregate of all consideration that constitutes
        interest under applicable law that is contracted for, charged or received
        under
        this Agreement, or under any other Loan
        Document or
        otherwise in connection with this Agreement by such Lender shall under no
        circumstances exceed the maximum amount of interest allowed by applicable
        law
        (such maximum lawful interest rate, if any, with respect to such Lender herein
        called the “Highest
        Lawful Rate”),
        and
        any excess shall be credited to the Borrower by such Lender (or, if such
        consideration shall have been paid in full, such excess promptly refunded
        to the
        Borrower); (c) all sums paid, or agreed to be paid, to such Lender for the
        use, forbearance and detention of the indebtedness of the Borrower to such
        Lender hereunder shall, to the extent permitted by applicable law, be amortized,
        prorated, allocated and spread throughout the full term of such indebtedness
        until payment in full so that the actual rate of interest is uniform throughout
        the full term thereof; and (d) if at any time the interest provided
        pursuant to Section
        3.2,
        together
        with any other fees and expenses payable pursuant to this Agreement and the
        other Loan Documents and deemed interest under applicable law, exceeds that
        amount that would have accrued at the Highest Lawful Rate, then the amount
        of
        interest and any such fees to accrue to such Lender pursuant to this Agreement
        shall be limited, notwithstanding anything to the contrary in this Agreement,
        to
        that amount that would have accrued at the Highest Lawful Rate, but any
        subsequent reductions, as applicable, shall not reduce the interest to accrue
        to
        such Lender pursuant to this Agreement below the Highest Lawful Rate until
        the
        total amount of interest accrued pursuant to this Agreement and such fees
        deemed
        to be interest equals the amount of interest that would have accrued to such
        Lender if a varying rate per annum equal to the interest provided pursuant
        to
Section
        3.2 had
        at
        all times been in effect, plus
        the
        amount of fees that would have been received but for the effect of this
Section 10.18.

       

       


      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          111

          
            

          

        

        
          
          

        

      


      SECTION
        10.19. Collateral
        Matters; Hedging Agreements.
        The
        benefit of the Security Documents and of the provisions of this Agreement
        relating to the Collateral shall also extend to and be available to those
        Lenders or their Affiliates that are counterparties to the Hedging Agreements
        with the Borrower on a pro rata basis in respect of any Hedging Obligations
        of
        the Borrower or any of its Subsidiaries that are in effect at such time as
        such
        Person (or its Affiliate) is a Lender, but only while such Person or its
        Affiliate is a Lender; provided that it is the intention of the parties hereto
        that repayment of the Hedging Obligations of the Borrower under any Hedging
        Agreement with any such Lender or Affiliate thereof from realization of any
        Collateral shall be subject to the terms of the Security Documents.

       

      SECTION
        10.20. Amendment
        and Restatement.
        This
        Agreement shall be deemed to restate and amend the Existing First Lien Credit
        Agreement in its entirety, and all of the terms and provisions hereof shall
        supersede the terms and conditions thereof. The parties hereto further agree
        that this Agreement and the Credit Extensions shall serve to extend, renew
        and
        continue, but not to extinguish or novate, the “Credit Extensions” under the
        Existing First Lien Credit Agreement and the corresponding promissory notes
        and
        to amend, restate and supersede, but not to extinguish or cause to be novated
        the Indebtedness under, the Existing First Lien Credit Agreement. The Borrower
        hereby agrees that, upon the effectiveness of this Agreement, the “Loans” made
        and outstanding under the Existing First Lien Credit Agreement and all accrued
        and unpaid interest thereon shall be deemed to be Loans outstanding under
        and
        payable by this Agreement and all “Letters of Credit” issued and outstanding
        under the Existing First Lien Credit Agreement shall be deemed to be issued
        and
        outstanding as Letters of Credit hereunder. 

       

      SECTION
        10.21. Assignment
        and Reallocation of Existing Loans, Etc.
        Each of
Société
        Générale,
        as a
“Lender” under the Existing First Lien Credit Agreement (the “Exiting
        Lender”),
        and
        the other Existing Lenders under the Existing First Lien Credit Agreement
        hereby
        sells, assigns, transfers and conveys to the Lenders hereto, and each of
        the
        Lenders hereto hereby purchases and accepts, so much of the aggregate
        commitments and outstanding loans of the Exiting Lender and such other Existing
        Lenders under the Existing First Lien Credit Agreement such that, immediately
        after giving effect to this Agreement (including any increase of the commitments
        effectuated hereby), (a) the Exiting Lender shall cease to be a “Lender” under
        the Existing Credit Agreement and the “Loan Documents” as defined therein and
        shall relinquish its rights (provided that it shall still be entitled to
        any
        rights of indemnification in respect of any circumstance or event or condition
        arising prior to the date hereof) and be released from its obligations under
        the
        Existing First Lien Credit Agreement and the other “Loan Documents” as defined
        therein, and (b) the Percentage of each Lender (including each Existing Lender
        who become Lenders hereunder) to this Agreement and the portion of the
        Commitment of each such Lender, shall be as set forth on Schedule
        II
        hereto.
        The foregoing assignments, transfers and conveyances are without recourse
        to any
        Existing Lender and without any warranties whatsoever by the Administrative
        Agent or any Existing Lender as to title, enforceability, collectibility,
        documentation or freedom from liens or encumbrances, in whole or in part,
        other
        than that the warranty of any such Existing Lender that it has not previously
        sold, transferred, conveyed or encumbered such interests. The Exiting Lender
        and
        the Lenders shall, if appropriate, make all appropriate adjustments in payments
        under the Existing First Lien Credit Agreement and the “Notes” and the other
“Loan Documents” thereunder for periods prior to the adjustment date among
        themselves.

       

       


      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          112

          
            

          

        

        
          
          

        

      


      SECTION
        10.22. Patriot
        Act.
        Each
        Lender hereby notifies the Borrower that pursuant to the requirements of
        the
        Patriot Act, it is required to obtain, verify and record information that
        identifies the Borrower, which information includes the name and address
        of the
        Borrower and other information that will allow such Lender to identify the
        Borrower in accordance with the Patriot Act.

       

      


      


       


      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          113

          
            

          

        

        
          
          

        

      



      IN
        WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
        by
        their respective officers thereunto duly authorized as of the day and year
        first
        above written.

       

      
        	 	
                ENERGY
                  XXI GULF COAST, INC.

              
	 	 	 
	 	 	 
	 	
                By:
                  

              	
                /s/
                  Rick Fox

              
	 	 	
                Name:
                  Rick Fox

              
	 	 	
                Title:
                  Chief Financial Officer

              


      


      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          114

          
            

          

        

        
          
          

        

      


      


      
        	 	
                THE
                  ROYAL
                  BANK OF SCOTLAND plc,

              
	 	
                as
                  the Administrative Agent, an Issuer and a Lender

              
	 	 	 
	 	 	 
	 	
                By:
                  

              	
                /s/
                  P.R. Ballard

              
	 	 	
                Name:
                  P. R. Ballard

              
	 	 	
                Title:
                  Managing Director

              


      

      



      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          115

          
            

          

        

        
          
          

        

      


      


      
        	 	
                BNP
                  PARIBAS, as the Syndication Agent, an Issuer and a
                  Lender

              
	 	 	 
	 	 	 
	 	
                By:
                  

              	
                /s/
                  Gabe Ellisor

              
	 	 	
                Name:
                  Gabe Ellisor

              
	 	 	
                Title:
                  Director

              
	 	 	 
	 	 	 
	 	
                By:
                  

              	
                /s/
                  Betsy Jocher

              
	 	 	
                Name:
                  Betsy Jocher

              
	 	 	
                Title:
                  Director

              


      


      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          116

          
            

          

        

        
          
          

        

      


      


      
        	 	
                BMO
                  CAPITAL MARKETS FINANCING, INC., f/k/a HARRIS NESBITT FINANCING,
                  INC., as
                  Lender and Co-Documentation Agent

              
	 	 	 
	 	 	 
	 	
                By:
                  

              	
                /s/
                  Mary Lou Allen

              
	 	 	
                Name:
                  Mary Lou Allen 

              
	 	 	
                Title:
                  Vice President

              


      


      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          117

          
            

          

        

        
          
          

        

      


      


      
        	 	
                GUARANTY
                  BANK, FSB, as Lender and Co-Documentation Agent

              
	 	 	 
	 	 	 
	 	
                By:
                  

              	
                /s/
                  Kelly Elmore, III

              
	 	 	
                Name:
                  Kelly Elmore, III

              
	 	 	
                Title:
                  Senior Vice President

              


      


      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          118

          
            

          

        

        
          
          

        

      


      


      
        	 	
                AMEGY
                  BANK NATIONAL ASSOCIATION, as Lender

              
	 	 	 
	 	 	 
	 	
                By:
                  

              	
                /s/
                  W. Bryan Chapman

              
	 	 	
                Name:
                  W. Bryan Chapman

              
	 	 	
                Title:
                  Senior Vice President

              


      


      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          119

          
            

          

        

        
          
          

        

      


      


      
        	 	
                THE
                  BANK OF NOVA SCOTIA, as Lender

              
	 	 	 
	 	 	 
	 	
                By:
                  

              	
                /s/
                  Richard Hawthorne

              
	 	 	
                Name:
                  Richard Hawthorne

              
	 	 	
                Title:
                  Director

              


      


      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          120

          
            

          

        

        
          
          

        

      


      


      
        	 	
                LEHMAN
                  COMMERCIAL PAPER INC., as Lender

              
	 	 	 
	 	 	 
	 	
                By:
                  

              	
                /s/
                  J. Robert Chambers

              
	 	 	
                Name:
                  J. Robert Chambers

              
	 	 	
                Title:
                  Authorized Signatory

              


      


      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          121

          
            

          

        

        
          
          

        

      


      


      
        	 	
                TORONTO
                  DOMINION (TEXAS) LLC, as Lender

              
	 	 	 
	 	 	 
	 	
                By:
                  

              	
                /s/
                  Jackie Barrett

              
	 	 	
                Name:
                  Jackie Barrett

              
	 	 	
                Title:
                  Authorized Agent

              


      


      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          122

          
            

          

        

        
          
          

        

      


      


      
        	 	
                CAPITAL
                  ONE, NATIONAL ASSOCIATION, as Lender

              
	 	 	 
	 	 	 
	 	
                By:
                  

              	
                /s/
                  Stan G. Weiser Jr

              
	 	 	
                Name:
                  Stan G. Weiser Jr. 

              
	 	 	
                Title:
                  Vice President

              


      


      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          123

          
            

          

        

        
          
          

        

      


      


      
        	 	
                NATIXIS,
                  as Lender

              
	 	 	 
	 	 	 
	 	
                By:
                  

              	
                /s/
                  Donovan Broussard

              
	 	 	
                Name:
                  Donovan Broussard 

              
	 	 	
                Title:
                  Managing Director

              
	 	 	 
	 	 	 
	 	
                By:
                  

              	
                /s/
                  Renaud d’Herbes

              
	 	 	
                Name:
                  Renaud d’Herbes

              
	 	 	
                Title:
                  Senior Managing Director

              


      

      


      


       


      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          124

          
            

          

        

        
          
          

        

      


      


      
        	 	
                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 GP, LLC

              
	 	 	 
	 	 	 
	 	
                By:
                  

              	
                /s/
                  Rick Fox

              
	 	 	
                Name:
                  Rick
                  Fox

              
	 	 	
                Title:
                  Chief Financial Officer

              
	 	 	 
	 	 	 
	 	
                ENERGY
                  XXI TEXAS, LP

              
	 	 	 
	 	
                By:
                  Energy XXI Texas GP, LLC, its General Partner

              
	 	 	 
	 	 	 
	 	
                By:
                  

              	
                /s/
                  Rick Fox

              
	 	 	
                Name:
                  Rick
                  Fox

              
	 	 	
                Title:
                  Chief Financial Officer

              
	 	 	 
	 	
                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

              


      

      



      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          125

          
            

          

        

        
          
          

        

      



      


      
        	 	
                ACKNOWLEDGED
                  AND AGREED WITH RESPECT TO SECTION 10.21 AS OF THE DATE FIRST ABOVE
                  WRITTEN:

              
	 	 	 
	 	 	 
	 	
                SOCIÉTÉ
                  GÉNÉRALE, as Exiting Lender

              
	 	 	 
	 	 	 
	 	
                By:
                  

              	
                /s/
                  Elena Robuuc

              
	 	 	
                Name:
                  Elena Robuuc

              
	 	 	
                Title:
                  Director

              


      

      


      



      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          126

          
            

          

        

        
          
          

        

      



      SCHEDULE
        I

       

      DISCLOSURE
        SCHEDULE TO CREDIT AGREEMENT

       

      


       

      
        	
                ITEM
                  5.1.6. 

              	
                Indebtedness
                  to be Repaid. 

              


      

       

      
        	
                ITEM
                  6.7. 

              	
                Litigation.

              


      

       

      
        	
                ITEM
                  6.8. 

              	
                Existing
                  Subsidiaries.

              


      

       

      
        	
                ITEM
                  6.11 

              	
                Employee
                  Benefit Plans.

              


      

       

      
        	
                ITEM
                  6.12. 

              	
                Environmental
                  Matters.

              


      

       

      
        	
                ITEM
                  6.15. 

              	
                Labor
                  Matters.

              


      

       

      
        	
                ITEM
                  6.19(a) 

              	
                Deposit
                  Accounts of Borrower and each
                  Subsidiary.

              


      

       

      
        	
                ITEM
                  6.19(b) 

              	
                Securities
                  Accounts of Borrower and each
                  Subsidiary.

              


      

       

      
        	
                ITEM
                  6.22. 

              	
                Location

              


      

       

      
        	
                ITEM
                  6.24. 

              	
                Gas
                  Imbalances

              


      

       

      
        	
                ITEM
                  6.25. 

              	
                Certain
                  Contracts

              


      

       

      
        	
                ITEM
                  7.2.2(c) 

              	
                Indebtedness
                  Existing as of the Effective Date.

              


      

       

      
        	
                CREDITOR

              	
                OUTSTANDING
                  PRINCIPAL AMOUNT

              
	 	 
	 	 
	 	 


      

      


       

      
        	
                ITEM
                  7.2.3(c) 

              	
                Ongoing
                  Liens.

              


      

       

      
        	
                ITEM
                  7.2.5(a) 

              	
                Ongoing
                  Investments.

              


      

       

      


       

      



      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          127

          
            

          

        

        
          
          

        

      



      SCHEDULE
        II

       

      PERCENTAGES;

      COMMITMENTS;

      LIBOR
        OFFICE;

      DOMESTIC
        OFFICE

       

      


       

      


       

      Notice
        Address of Borrower:

       

      Energy
        XXI Gulf Coast, Inc.

      c/o
        Corporation Trust Center

      1209
        Orange Street, Room 123

      Wilmington,
        DE 19801

       

      With
        a
        copy to:

       

      1021
        Main
        (One City Centre), Suite 2626

      Houston,
        Texas 77002

      Attention:
        West Griffin

      Telephone:
        (713) 659-2100

      Facsimile:
        (713) 659-2101

       

      


       

      
        	
                NAME
                  AND NOTICE ADDRESS

                OF
                  LENDERS

              	
                LIBO
                  OFFICE

              	
                DOMESTIC OFFICE

              
	
                 

                The
                  Royal Bank of Scotland plc

                101
                  Park Avenue

                New
                  York, NY 10178

                Attention:
                  Linda Supaswud or Matt Wilson

                Telephone:
                  (212) 250-1411 or (212) 401-1412

                Facsimile:
                  (212) 797-0406 or (212) 401-1478

                 

                With
                  a copy to:

                 

                600
                  Travis Street, Suite 6500

                Houston,
                  Texas 77002

                Attention:
                  Robert Poirrier

                Telephone:
                  (713) 221-2434

                Facsimile:
                  (713) 221-2428

              	
                 

                101
                  Park Avenue

                New
                  York, NY 10178

              	
                 

                101
                  Park Avenue

                New
                  York, NY 10178

              


      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	
                NAME
                  AND NOTICE ADDRESS

                OF
                  LENDERS

              	
                LIBO
                  OFFICE

              	
                DOMESTIC OFFICE

              
	
                 

                BNP
                  Paribas

                919
                  Third Avenue

                New
                  York, NY 10022

                Attention:
                  Cory Lantin

                Telephone:
                  (212) 471-6626

                Facsimile:
                  (212) 841-2683

                 

                With
                  a copy to:

                 

                1200
                  Smith Street, Suite 3000

                Houston,
                  Texas 77002

                Attention:
                  Gabe Ellisor

                Telephone:
                  (713) 982-1162

                Facsimile:
                  (713) 659-6915

              	
                 

                919
                  Third Avenue

                New
                  York, NY 10022

              	
                 

                919
                  Third Avenue

                New
                  York, NY 10022

              
	
                 

                Guaranty
                  Bank, FSB

                333
                  Clay, Suite 4400

                Houston,
                  Texas 77002

                Attention:
                  Kelly L. Elmore III

                Telephone:
                  (713) 890-8849

                Facsimile:
                  (713) 890-8868

              	
                 

                8333
                  Douglas Avenue

                Dallas,
                  TX 75225

              	
                 

                8333
                  Douglas Avenue

                Dallas,
                  TX 75225

              
	
                 

                BMO
                  Capital Markets

                Financing,
                  Inc.

                700
                  Louisiana, Suite 4400

                Houston,
                  TX 77002

                Attention:
                  Mary Lou Allen

                Telephone:
                  (713) 546-9761

                Facsimile:
                  (713) 223-4007

              	
                 

                115
                  S. LaSalle Street

                Chicago,
                  IL 60603

              	
                 

                115
                  S. LaSalle Street

                Chicago,
                  IL 60603

              
	
                 

                Amegy
                  Bank National Association

                4400
                  Post Oak Parkway, #404

                Houston,
                  Texas 77027

                Attention:
                  W. Bryan Chapman, Senior Vice President

                Telephone:
                  (713) 232-2026

                Facsimile:
                  (713) 561-0345

              	
                 

                4400
                  Post Oak Parkway

                #404

                Houston,
                  TX 77027

              	
                 

                4400
                  Post Oak Parkway

                #404

                Houston,
                  TX 77027

              


      

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      
 

      
        	
                NAME
                  AND NOTICE ADDRESS

                OF
                  LENDERS

              	
                LIBO
                  OFFICE

              	
                DOMESTIC OFFICE

              
	
                 

                The
                  Bank of Nova Scotia

                1100
                  Louisiana, Suite 3000

                Houston,
                  Texas 77002

                Attention:
                  Richard Hawthorne

                Telephone:
                  (713) 759-3432

                Facsimile:
                  (713) 752-2425

              	
                 

                101
                  Park Avenue

                6th
                  Floor

                New
                  York, NY 10178

              	
                 

                101
                  Park Avenue

                6th
                  Floor

                New
                  York, NY 10178

              
	
                 

                Lehman
                  Commercial Paper Inc.

                745
                  7th
                  Avenue, 5th
                  Floor

                New
                  York, New York 10019

                Attention:
                  Winnie Chin

                Telephone:
                  (212) 526-6560

                Facsimile:
                  (212) 520-0450

              	
                 

                745
                  7th
                  Avenue

                5th
                  Floor

                New
                  York, NY 10019

              	
                 

                745
                  7th
                  Avenue

                5th
                  Floor

                New
                  York, NY 10019

              
	
                 

                Toronto
                  Dominion (Texas) LLC

                31
                  West 52nd
                  Street, 20th
                  Floor

                New
                  York, New York 10019

                Attention:
                  Martin Snyder

                Telephone:
                  (713) 653-8211

                Facsimile:
                  (713) 652-2647

              	
                 

                31
                  West 52nd
                  Street

                20th
                  Floor

                New
                  York, NY 10019

              	
                 

                31
                  West 52nd
                  Street

                20th
                  Floor

                New
                  York, NY 10019

              
	
                 

                Capital
                  One, National Association

                313
                  Carondolet, 10th
                  Floor

                New
                  Orleans, LA 70130

                Attention:
                  Nancy Moragas

                Telephone:
                  (504) 533-2863

                Facsimile:
                  (504) 533-5594

                 

                (For
                  Operations)

                5718
                  Westheimer, 6th
                  Floor

                Energy
                  Banking Department

                Houston,
                  Texas 77057

                Attention:
                  Norma Jean Platt

                Telephone:
                  (713) 759-6316

                Facsimile:
                  (713) 650-0824

              	
                 

                5718
                  Westheimer

                6th
                  Floor

                Energy
                  Banking Dpt.

                Houston,
                  TX 77057

              	
                 

                5718
                  Westheimer

                6th
                  Floor

                Energy
                  Banking Dpt.

                Houston,
                  TX 77057

              


      

      


      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      
        	
                NAME
                  AND NOTICE ADDRESS

                OF
                  LENDERS

              	
                LIBO
                  OFFICE

              	
                DOMESTIC OFFICE

              
	
                 

                Natixis

                Houston
                  Energy Group

                333
                  Clay Street, Suite 4340

                Houston,
                  Texas 77002

                Attention:
                  Donovan Broussard

                Telephone:
                  (713) 759-0973 

                Facsimile:
                  (713) 571-6167

              	
                 

                333
                  Clay Street

                Suite
                  4340

                Houston,
                  TX 77002

              	
                 

                333
                  Clay Street, Suite 4340

                Houston,
                  TX 77002

              


      

      



      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          4

          
            

          

        

        
          
          

        

      


      Percentages;
        Commitments of Lenders:

       

      
        	 	 	 	 
	
                LENDER

              	
                PERCENTAGE*

              	
                BORROWING
                  BASE

                ALLOCATION

              	
                LOAN
                  COMMITMENT

              
	
                The
                  Royal Bank of Scotland plc

              	
                17.65%

              	
                $75,000,000.00

              	
                $123,529,411.76

              
	
                BNP
                  Paribas

              	
                17.65%

              	
                $75,000,000.00

              	
                $123,529,411.76

              
	
                Guaranty
                  Bank, FSB

              	
                17.41%

              	
                $74,000,000.00

              	
                $121,882,352.94

              
	
                BMO
                  Capital Markets Financing, Inc.

              	
                15.30%

              	
                $65,000,000.00

              	
                $107,058,823.53

              
	
                Amegy
                  Bank National Association

              	
                5.88%

              	
                $25,000,000.00

              	
                $41,176,470.59

              
	
                The
                  Bank of Nova Scotia

              	
                5.88%

              	
                $25,000,000.00

              	
                $41,176,470.59

              
	
                Lehman
                  Commercial Paper Inc.

              	
                5.88%

              	
                $25,000,000.00

              	
                $41,176,470.59

              
	
                Toronto
                  Dominion (Texas) LLC

              	
                5.88%

              	
                $25,000,000.00

              	
                $41,176,470.59

              
	
                Capital
                  One, National Association

              	
                4.94%

              	
                $21,000,000.00

              	
                $34,588,235.29

              
	
                Natixis

              	
                3.53%

              	
                $15,000,000.00

              	
                $24,705,882.35

              
	 	 	 	 
	
                Total:

              	
                100.00%

              	
                $425,000,000.00**

              	
                $700,000,000.00

              


      

      


      * Percentage
        is rounded to the second decimal for convenience purposes. The true percentage
        is calculated based on dividing the Borrowing Base Allocation by the total
        Borrowing Base Allocation.

      


      ** Based
        on
        an incurrence of $750,000,000 in PP Notes on the Closing Date after giving
        effect to the reduction in the initial Borrowing Base specified in Section
        2.8.1.

      



      
        
          Credit
            Agreement (First Lien)

          
          

        

        
          5

          
            

          

        

        
          
          

        

      



      SCHEDULE
        7.2.20

       

      REQUIRED
        HEDGING

       

      


      
        	
                 

                Month

              	
                 

                Oil
                  %

              	
                 

                Gas
                  %

              
	
                January

              	
                75%

              	
                55%

              
	
                February

              	
                75%

              	
                55%

              
	
                March

              	
                75%

              	
                55%

              
	
                April

              	
                75%

              	
                75%

              
	
                May

              	
                75%

              	
                75%

              
	
                June

              	
                75%

              	
                55%

              
	
                July

              	
                55%

              	
                55%

              
	
                August

              	
                55%

              	
                30%

              
	
                September

              	
                55%

              	
                30%

              
	
                October

              	
                55%

              	
                30%

              
	
                November

              	
                55%

              	
                30%

              
	
                December

              	
                55%

              	
                55%

              
	
                Average

              	
                65%

              	
                50%

              


      

      


      


      
        
          Credit
            Agreement (First Lien)