Document:

Unassociated Document

     

    
      Execution
Copy

       

      ENERGY
XXI GULF COAST, INC.,

      EACH
OF THE GUARANTORS PARTY HERETO

      and

      WELLS
FARGO BANK, NATIONAL ASSOCIATION, as Trustee

       

      ———————

       

      FIRST
SUPPLEMENTAL INDENTURE

      Dated
as of September 18, 2009

      TO

      INDENTURE

      Dated
as of June 8, 2007

       

      ———————

       

      10%
SENIOR NOTES DUE 2013

       

      FIRST
SUPPLEMENTAL INDENTURE dated as of September 18, 2009 (this “Supplemental
Indenture”), to the Indenture dated as of June 8, 2007 (the “Original
Indenture”) among Energy XXI Gulf Coast, Inc., a Delaware corporation (the
“Company”), each of the Guarantors party thereto and Well Fargo Bank, National
Association, as trustee (the “Trustee”).

       

      W I T N E
S S E T H

       

      WHEREAS,
the Company, the Guarantors and the Trustee have heretofore executed and
delivered the Original Indenture, and the Company has issued pursuant to the
Original Indenture its 10% Senior Notes due 2013 (the “Notes”);

       

      WHEREAS,
Section 9.02 of the Original Indenture provides that with the consent of the
Holders (as defined in the Original Indenture) of at least a majority in
aggregate principal amount of the then outstanding Notes voting as a single
class (including, without limitation, consents obtained in connection with a
tender offer or exchange offer for, or purchase of the Notes), the Guarantors
and the Trustee may amend or supplement the Original Indenture, subject to
certain limitations set forth in the Original Indenture;

       

      WHEREAS,
the Company has solicited the consents of the Holders of the Notes pursuant to
the confidential offering circular and consent solicitation statement dated
September 4, 2009 (as the same may be amended or supplemented from time to time,
the “Offering Circular”), and the related letter of transmittal and consent
dated September 4, 2009 (as the same may be amended or supplemented from time to
time, the “Letter of Transmittal” and, together with the Offering Circular, the
“Offering Documents”), to the proposed amendments to the Original Indenture upon
the terms and conditions set forth therein (the “Amendments”);

       

      WHEREAS,
the Company has received and delivered or caused to be delivered to the
satisfaction of the Trustee the consents of the Holders of at least a majority
in outstanding principal amount of the Notes to the Amendments in accordance
with the Offering Documents;

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      WHEREAS,
pursuant to Section 9.06 of the Original Indenture, the execution of this
Supplemental Indenture has been duly authorized by a resolution of the Board of
Directors of the Company;

       

      WHEREAS,
all conditions and requirements necessary to make this Supplemental Indenture a
valid, binding and legal instrument in accordance with its terms have been
performed and fulfilled by the parties hereto and the execution and delivery
thereof have been in all respects duly authorized by the parties hereto;
and

       

      WHEREAS,
the Amendments contained herein will become operative (the “Operative Date”)
upon the acceptance for exchange of at least a majority in outstanding principal
amount of the Notes that are validly tendered and not withdrawn on or prior to
the Expiration Date (as defined in the Offering Documents).

       

      NOW,
THEREFORE, in consideration of the premises and the covenants and agreements
contained herein, and for other good and valuable consideration the receipt of
which is hereby acknowledged, the Company and the Trustee hereby agree as
follows:

       

      ARTICLE
I

       

      Section
1.1    Definitions.

       

      Capitalized
terms used in this Supplemental Indenture and not otherwise defined herein shall
have the meanings assigned to such terms in the Original Indenture.

       

      ARTICLE
II

       

      Section
2.1    Amendment  of
Certain Definitions in Article 1 of the Original Indenture.

       

      (a) Section
1.01 of the Original Indenture is hereby amended by adding the following
definitions of terms, which shall read in their entirety as
follows:

       

      “Collateral” means all
property mortgaged under the Mortgages and any other assets or other right or
other property, whether now owned or hereafter acquired, upon which a Lien
securing the Obligations under the Second Lien Notes Indenture, the Second Lien
Notes or the Second Lien Notes Guarantees is granted or purported to be granted
under the Security Agreement or any other Collateral Agreement.

       

      “collateral agent” means the
party named as such in the Second Lien Notes Indenture until a successor
replaces it in accordance with the provisions of the Second Lien Notes Indenture
and thereafter means such successor.

       

      “Collateral Disposition” means
any sale, transfer or other disposition to the extent involving assets or other
rights or property that constitute Collateral under the Security
Documents.  The sale or issuance of Equity Interests in a Restricted
Subsidiary that owns Collateral such that it thereafter is no longer a
Restricted Subsidiary shall be deemed to be a Collateral Disposition of the
Collateral owned by such Restricted Subsidiary.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      “First Lien Agent” means the
Administrative Agent and any successor designated as such by the holders of
First Lien Claims.

       

      “First Lien Claims” means (1)
Indebtedness under the Credit Agreement permitted pursuant to clause (1) of the
definition of the term “Permitted Debt,” (2) First Lien Hedging Obligations, and
(3) all other Obligations under the documents relating to Indebtedness described
in clauses (1) and (2) above.

       

      “Intercreditor Agreement”
means the Intercreditor Agreement to be entered into concurrently with the
Second Lien Notes Indenture, among the First Lien Agent, the trustee under the
Second Lien Notes Indenture and the collateral agent, the Company, Energy XXI
(USA), Inc. and the Subsidiaries giving Second Lien Guarantees, as same may be
amended, supplemented, restated or replaced from time to time.

       

      “First Lien Hedging
Obligations” means all Hedging Obligations secured by any Collateral
under the documents that secure Obligations under the Credit
Agreement.

       

      “Mortgages” means the
mortgages, deeds of trust, deeds to secure Indebtedness or other similar
documents granting Liens on the Company’s and its Restricted Subsidiaries’ Oil
and Gas Assets to secure the Second Lien Notes and the Second Lien
Guarantees.

       

      “PIK Notes” means any Second
Lien Notes issued in partial payment of interest on Second Lien Notes of any
series.

       

      “PIK Payment” means any
increase in the principal amount of Second Lien Notes in partial payment of
interest on Second Lien Notes of any series.

       

      “Second Lien Agent” means the
collateral agent.

       

      “Second Lien Claims” means
(1) Indebtedness under the Second Lien Notes of any series, including any
issued or added to the principal amount thereof in payment of interest thereon,
and the Guarantees permitted pursuant to clause (3) of the definition of the
term Permitted Debt and (2) all other Obligations related to the Indebtedness
described in clause (1) above.

       

      “Second Lien Guarantees” means
any guarantee of the Company’s Payment Obligations under the Second Lien
Indenture and the Second Lien Notes.

       

      “Second Lien Notes Indenture”
means the indenture among the Company, the guarantors parties thereto and the
Second Lien Notes Trustee, relating to the Second Lien Notes.

       

      “Second Lien Notes” means the
Company’s 16% Second Lien Junior Secured Notes due 2014 of any series, including
any additional Second Lien Notes issued or added to the principal amount thereof
in payment of interest on any such series.

       

      “Second Lien Notes Trustee”
means the party named as such in the Second Lien Notes Indenture until a
successor replaces it in accordance with the provisions of the Second Lien Notes
Indenture and thereafter means such successor.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      “Secured Obligations” means
the First Lien Claims and Second Lien Claims.

       

      “Secured Parties” means the
holders of the First Lien Claims, the First Lien Agent, the holders of the
Second Lien Claims, the collateral agent, the Second Lien Notes Trustee and the
Holders of the Second Lien Notes.

       

      “Security Agreement” means one
or more Second Lien Security Agreements, dated as of the issue date of the
Second Lien Notes, made by the Company and certain Guarantors in favor of the
collateral agent for the benefit of the Holders of the Second Lien Notes, as
amended or supplemented from time to time in accordance with its
terms.

       

      “Security Documents” means any
one or more of the Intercreditor Agreement, the Security Agreement, each
Mortgage and any other security agreements, pledge agreements, mortgages, deeds
of trust or other grants or transfers for security executed and delivered by the
Company, the guarantors parties thereto or any other obligor under the Second
Lien Notes Indenture creating, or purporting to create, a Lien upon Collateral
in favor of the collateral agent for the benefit of the Holders of the Second
Lien Notes, in each case as amended, modified, renewed, restated or replaced, in
whole or part, from time to time, in accordance with its terms.

       

      “Specified Ratios” means,
collectively, (a) the Company’s Fixed Charge Coverage Ratio for the most
recently ended four full fiscal quarters for which internal financial statements
are available, (b) the Company’s Total Leverage Ratio (as defined in the Credit
Agreement as in effect on the issue date of the Second Lien Notes) as of the
most recent balance sheet date for which internal financial statements are
available, and (c) the ratio of the Company’s Total Debt to Proven Reserves (as
each such term is defined in the Credit Agreement as in effect on the issue date
of the Second Lien Notes).  For purposes of the calculations in clause
(c), (i) Total Debt will be as of the most recent balance sheet date for which
internal financial statements are available and (ii) Proven Reserves will be as
set forth in the Company’s year-end reserve report in accordance with the
definition of “ACNTA,” prepared by the Company and one or more of the Company’s
independent petroleum engineers as of the last date of the Company’s most recent
fiscal year, as adjusted for subsequent acquisitions, dispositions, discoveries,
extensions or revisions, if any, as provided for in the definition of
“ACNTA.”

       

      (b)    Section
1.01 of the Original Indenture is hereby amended by amending the following
definitions of terms, which shall read in their entirety as
follows.

       

      “Permitted Liens”
means:

       

      
        
          	
                	
                  (1) 

                	
                  Liens
      on any property or assets of the Company and any Guarantor securing
      Indebtedness and other obligations under Credit Facilities permitted under
      the indenture;

                

        

      

       

      
        
          	
                	
                  (2) 

                	
                  Liens
      on any property or assets of the Company and any Guarantor securing
      Indebtedness under the Second Lien Notes, the Second Lien Guarantees or
      other Obligations under the Second Lien Notes Indenture and the Security
      Documents;

                

        

      

       

      
        
          	
                	
                  (3) 

                	
                  Liens
      in favor of the Company or the
Guarantors;

                

        

      

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      
        
          	
                	
                  (4) 

                	
                  Liens
      on any property or assets of a Person existing at the time such Person is
      merged with or into or consolidated with the Company or any Restricted
      Subsidiary of the Company, provided that such
      Liens were in existence prior to the contemplation of such merger or
      consolidation and do not extend to any property or assets other than those
      of the Person merged into or consolidated with the Company or the
      Restricted Subsidiary;

                

        

      

       

      
        
          	
                	
                  (5) 

                	
                  Liens
      on any property or assets existing at the time of acquisition thereof by
      the Company or any Restricted Subsidiary of the Company, provided that such
      Liens were not incurred in connection with the contemplation of such
      acquisition;

                

        

      

       

      
        
          	
                	
                  (6) 

                	
                  Liens
      to secure the performance of statutory obligations, surety or appeal
      bonds, performance bonds or other obligations of a like nature incurred in
      the ordinary course of
business;

                

        

      

       

      
        
          	
                	
                  (7) 

                	
                  Liens
      existing on the Issue Date;

                

        

      

       

      
        
          	
                	
                  (8) 

                	
                  Liens
      arising from Uniform Commercial Code financing statement filings regarding
      operating leases entered into by the Company and its Restricted
      Subsidiaries in the ordinary course of
business;

                

        

      

       

      
        
          	
                	
                  (9) 

                	
                  Liens
      securing Permitted Refinancing Indebtedness incurred to refinance
      Indebtedness that was previously so secured, provided that any such
      Lien is limited to all or part of the same property or assets (plus
      improvements, accessions, proceeds or dividends or distributions in
      respect thereof) that secured (or, under the written arrangements under
      which the original Lien arose, could secure) the Indebtedness being
      refinanced or is in respect of property that is the security for a
      Permitted Lien hereunder;

                

        

      

       

      
        
          	
                	
                  (10) 

                	
                  Liens
      securing Hedging Obligations of the Company or any of its Restricted
      Subsidiaries;

                

        

      

       

      
        
          	
                	
                  (11) 

                	
                  Liens
      securing Indebtedness incurred (a) in connection with the acquisition by
      the Company or any Restricted Subsidiary of assets used in the Oil and Gas
      Business (including the office buildings and other real property used by
      the Company or such Restricted Subsidiary in conducting its operations);
      provided that (i)
      such Liens attach only to the assets acquired with the proceeds of such
      Indebtedness; (ii) such Indebtedness is not in excess of the purchase
      price of such fixed assets; and (iii) such Indebtedness is permitted to be
      incurred Section 4.09 or (b) pursuant to clause (13) of the definition of
      “Permitted Debt”;

                

        

      

       

      
        
          	
                	
                  (12) 

                	
                  any
      Lien incurred in the ordinary course of business incidental to the conduct
      of the business of the Company or the Restricted Subsidiaries or the
      ownership of their property (including (a) easements, rights of way and
      similar encumbrances, (b) rights or title of lessors under leases (other
      than Capital Lease Obligations), (c) rights of collecting banks having
      rights of setoff, revocation, refund or chargeback with respect to money
      or instruments of the Company or the Restricted Subsidiaries on deposit
      with or in the possession of such banks, (d) Liens imposed by law,
      including Liens under workers’ compensation or similar legislation and
      mechanics’, carriers’, warehousemen’s, materialmen’s, suppliers’ and
      vendors’ Liens, and (e) Liens incurred to secure performance of
      obligations with respect to statutory or regulatory requirements,
      performance or return-of-money bonds, surety bonds or other obligations of
      a like nature and incurred in a manner consistent with industry
      practice;

                

        

      

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      
        
          	
                	
                  (13) 

                	
                  Liens
      for taxes, assessments and governmental charges not yet due or the
      validity of which are being contested in good faith by appropriate
      proceedings, promptly instituted and diligently conducted, and for which
      adequate reserves have been established to the extent required by GAAP as
      in effect at such time;

                

        

      

       

      
        
          	
                	
                  (14) 

                	
                  Capital
      Lease Obligations not to exceed $10.0 million in aggregate principal
      amount; and

                

        

      

       

      
        
          	
                	
                  (15) 

                	
                  Liens
      incurred in the ordinary course of business of the Company or any
      Restricted Subsidiary of the Company with respect to obligations that do
      not exceed $10.0 million at any one time
  outstanding.

                

        

      

       

      Notwithstanding
the foregoing, the aggregate principal amount of the Indebtedness secured by the
Permitted Liens shall not exceed the sum of (1) the aggregate principal amount
of the Second Lien Notes, (2) the aggregate principal amount of Indebtedness
available to be borrowed under the Credit Facilities at the time such
Indebtedness was incurred, (3) Hedging Obligations, (4) Indebtedness incurred
pursuant to clause (13) of the definition of Permitted Debt set forth in Section
4.09 of this Indenture for the purposes set forth therein and (5) Capital Lease
Obligations not to exceed $10.0 million in aggregate principal
amount.

       

      Section
2.2 Amendment
of Certain Provisions in Article 4 of the Original Indenture.

       

      
        	
              	
                (a)

              	
                Section
      4.08 (Dividend and Other
      Payment Restrictions Affecting Subsidiaries) of the Original
      Indenture is hereby amended to read in its entirety as
      follows:

              

      

       

      Section
4.08.  Dividend and
Other Payment Restrictions Affecting Subsidiaries.

       

      The
Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:

       

      
        
          	
                	
                  (1) 

                	
                  pay
      dividends or make any other distributions on its Capital Stock to the
      Company or any of its Restricted Subsidiaries, or pay any Indebtedness or
      other obligations owed to the Company or any of its Restricted
      Subsidiaries;

                

        

      

       

      
        
          	
                	
                  (2) 

                	
                  make
      loans or advances to the Company or any of its Restricted Subsidiaries;
      or

                

        

      

       

      
        
          	
                	
                  (3) 

                	
                  transfer
      any of its properties or assets to the Company or any of its Restricted
      Subsidiaries.

                

        

      

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      However,
the preceding restrictions will not apply to encumbrances or restrictions
existing under or by reason of:

       

      
        
          	
                	
                  (1) 

                	
                  agreements
      governing Existing Indebtedness and Credit Facilities (including
      agreements related to First Lien Claims under the Credit Facilities) as in
      effect on the date of the indenture and any amendments, modifications,
      restatements, renewals, increases, supplements, refundings, replacements
      or refinancings of those agreements, provided that the
      amendments, modifications, restatements, renewals, increases, supplements,
      refundings, replacement or refinancings are not materially more
      restrictive, taken as a whole, with respect to such dividend and other
      payment restrictions than those contained in those agreements on the date
      of the indenture;

                

        

      

       

      
        
          	
                	
                  (2) 

                	
                  (a)
      this Indenture, the Notes and the Guarantees, and (b) the Second Lien
      Notes Indenture, the Second Lien Notes and the Second Lien Guarantees, the
      Intercreditor Agreement and the other Security
  Documents;

                

        

      

       

      
        
          	
                	
                  (3) 

                	
                  applicable
      law;

                

        

      

       

      
        
          	
                	
                  (4) 

                	
                  any
      instrument governing Indebtedness or Capital Stock of a Person acquired by
      the Company or any of its Restricted Subsidiaries as in effect at the time
      of such acquisition, which encumbrance or restriction is not applicable to
      any Person, or the properties or assets of any Person, other than the
      Person, or the property or assets of the Person, so acquired, provided that, in the
      case of Indebtedness, such Indebtedness was permitted by the terms of this
      Indenture to be incurred;

                

        

      

       

      
        
          	
                	
                  (5) 

                	
                  customary
      non-assignment provisions in leases entered into in the ordinary course of
      business and consistent with past
practices;

                

        

      

       

      
        
          	
                	
                  (6) 

                	
                  purchase
      money obligations for property acquired in the ordinary course of business
      that impose restrictions on that property of the nature described in
      clause (3) of the preceding
paragraph;

                

        

      

       

      
        
          	
                	
                  (7) 

                	
                  any
      agreement for the sale or other disposition of a Restricted Subsidiary of
      the Company that restricts distributions by that Restricted Subsidiary
      pending its sale or other
disposition;

                

        

      

       

      
        
          	
                	
                  (8) 

                	
                  Permitted
      Refinancing Indebtedness, provided that the
      restrictions contained in the agreements governing such Permitted
      Refinancing Indebtedness are not materially more restrictive, taken as a
      whole, than those contained in the agreements governing the Indebtedness
      being refinanced;

                

        

      

       

      
        
          	
                	
                  (9) 

                	
                  agreements
      governing other Indebtedness of the Company and one or more Restricted
      Subsidiaries permitted under this Indenture, provided that the
      restrictions in the agreements governing such Indebtedness are not
      materially more restrictive, taken as a whole, than those in this
      Indenture;

                

        

      

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      
        
          	
                	
                  (10) 

                	
                  Liens
      securing Indebtedness otherwise permitted to be incurred under the
      provisions of Section 4.12 that limit the right of the debtor to dispose
      of the assets subject to such
Liens;

                

        

      

       

      
        
          	
                	
                  (11) 

                	
                  provisions
      with respect to the disposition or distribution of assets or property in
      joint venture agreements, asset sale agreements, stock sale agreements,
      agreements respecting Permitted Business Investments and other similar
      agreements entered into in the ordinary course of business;
      and

                

        

      

       

      
        
          	
                	
                  (12) 

                	
                  restrictions
      on cash or other deposits or net worth imposed by customers under
      contracts entered into in the ordinary course of
  business.

                

        

      

       

      
        	
              	
                (b)

              	
                Section
      4.09 (Incurrence of
      Indebtedness and Issuance of Preferred Stock) of the Original
      Indenture is hereby amended to read in its entirety as
      follows:

              

      

       

      Section
4.09.  Incurrence of
Indebtedness and Issuance of Preferred Stock.

       

      (a)           The
Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, “incur”)
any Indebtedness (including Acquired Debt), neither the Company nor any
Guarantor (other than Parent) will issue any Disqualified Stock, and the Company
will not permit any of its other Restricted Subsidiaries to issue any shares of
preferred stock; provided,
however, that the Company and any Guarantor (other than Parent) may incur
Indebtedness (including Acquired Debt) or issue Disqualified Stock, if the Fixed
Charge Coverage Ratio for the Company’s most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock is issued would have been at least 2.5 to 1.0, determined on
a pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred or Disqualified
Stock had been issued, as the case may be, at the beginning of such four-quarter
period.

       

      (b)           The
provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of
the following items of Indebtedness (collectively, “Permitted
Debt”):

       

      
        
          	
                	
                  (1) 

                	
                  the
      incurrence by the Company or any Guarantor of additional Indebtedness
      (including letters of credit) under one or more Credit Facilities in an
      aggregate principal amount at any one time outstanding under this clause
      (1) (with letters of credit being deemed to have a principal amount equal
      to the maximum potential liability of the Company and its Subsidiaries
      thereunder) not to exceed an amount equal to the greater of (a) $400.0
      million, less the aggregate amount of all Net Proceeds of Asset Sales
      applied by the Company or any of its Restricted Subsidiaries since the
      Issue Date to repay any revolving credit Indebtedness under any Credit
      Facilities and effect a corresponding commitment reduction thereunder
      pursuant to Section 4.10 hereof and (b) 30% of ACNTA as of the date of
      such incurrence;

                

        

      

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      
        
          	
                	
                  (2) 

                	
                  the
      incurrence by the Company or any of its Restricted Subsidiaries of the
      Existing Indebtedness;

                

        

      

       

      
        
          	
                	
                  (3) 

                	
                  the
      incurrence by the Company and the Guarantors of Indebtedness represented
      by (a) the Notes and the related Guarantees to be issued on the Issue Date
      and any Exchange Notes and the related Guarantees; and (b) any series of
      the Second Lien Notes, and any PIK Notes or PIK Payment on any series of
      Second Lien Notes and the related Second Lien
  Guarantees;

                

        

      

       

      
        
          	
                	
                  (4) 

                	
                  the
      incurrence by the Company or any of its Restricted Subsidiaries of
      Indebtedness represented by Capital Lease Obligations, mortgage financings
      or purchase money obligations, in each case, incurred for the purpose of
      financing all or any part of the purchase price or cost of construction or
      improvement of property, plant or equipment used in the business of the
      Company or such Restricted Subsidiary, in an aggregate principal amount,
      including all Permitted Refinancing Indebtedness incurred to refund,
      refinance or replace any Indebtedness incurred pursuant to this clause
      (4), not to exceed the greater of $10.0 million at any time
      outstanding;

                

        

      

       

      
        
          	
                	
                  (5) 

                	
                  the
      incurrence by the Company or any of its Restricted Subsidiaries of
      Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
      which are used to refund, refinance or replace Indebtedness (other than
      intercompany Indebtedness) that was permitted by this Indenture to be
      incurred under Section 4.09(a) hereof or clauses (2), (3), (12) or (13) of
      this Section 4.09(b) or this clause
(5);

                

        

      

       

      
        
          	
                	
                  (6) 

                	
                  the
      incurrence by the Company or any of its Restricted Subsidiaries of
      intercompany Indebtedness between or among the Company and any of its
      Restricted Subsidiaries; provided, however,
      that:

                

        

      

       

      
        	
                 
      

              	
                (A)

              	
                if
      the Company is the obligor on such Indebtedness and a Guarantor is not the
      obligee, such Indebtedness must be expressly subordinated to the prior
      payment in full in cash of all Obligations then due with respect to the
      Notes, or if a Guarantor is the obligor on such Indebtedness and neither
      the Company nor another Guarantor is the obligee, such Indebtedness must
      be expressly subordinated to the prior payment in full in cash of all
      Obligations with respect to the Guarantee of such Guarantor;
      and

              

      

       

      
        	
                 
      

              	
                (B)

              	
                any
      subsequent issuance or transfer of Equity Interests that results in any
      such Indebtedness being held by a Person other than the Company or a
      Restricted Subsidiary of the Company and (ii) any sale or other transfer
      of any such Indebtedness to a Person that is neither the Company nor a
      Restricted Subsidiary of the Company will be deemed, in each case, to
      constitute an incurrence of such Indebtedness by the Company or such
      Restricted Subsidiary, as the case may be, that was not permitted by this
      clause (6);

              

      

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      
        
          	
                	
                  (7) 

                	
                  the
      incurrence by the Company or any of its Restricted Subsidiaries of Hedging
      Obligations;

                

        

      

       

      
        
          	
                	
                  (8) 

                	
                  the
      guarantee by the Company or any of the Guarantors of Indebtedness of the
      Company or any Guarantor that was permitted to be incurred by another
      provision of this Section
4.09;

                

        

      

       

      
        
          	
                	
                  (9) 

                	
                  the
      incurrence by the Company or any of its Restricted Subsidiaries of
      obligations relating to net gas balancing positions arising in the
      ordinary course of business and consistent with past
    practice;

                

        

      

       

      
        
          	
                	
                  (10) 

                	
                  the
      incurrence by the Company’s Unrestricted Subsidiaries of Non-Recourse
      Debt, provided,
      however, that if any such Indebtedness ceases to be Non-Recourse
      Debt of an Unrestricted Subsidiary, such event will be deemed to
      constitute an incurrence of Indebtedness by a Restricted Subsidiary of the
      Company that was not permitted by this clause
  (10);

                

        

      

       

      
        
          	
                	
                  (11) 

                	
                  the
      incurrence by the Company or any of its Restricted Subsidiaries of
      Indebtedness in respect of bid, performance, surety and similar bonds
      issued for the account of the Company and any of its Restricted
      Subsidiaries in the ordinary course of business, including guarantees and
      obligations of the Company and any of its Restricted Subsidiaries with
      respect to letters of credit supporting such obligations (in each other
      than an obligation for money
borrowed);

                

        

      

       

      
        
          	
                	
                  (12) 

                	
                  Indebtedness
      of a Restricted Subsidiary incurred and outstanding on the date on which
      such Restricted Subsidiary was acquired by, or merged into, the Company or
      any Restricted Subsidiary (other than Indebtedness Incurred (a) to provide
      all or any portion of the funds utilized to consummate the transaction or
      series of related transactions pursuant to which such Restricted
      Subsidiary became a Restricted Subsidiary or was otherwise acquired by the
      Company or (b) otherwise in connection with, or in contemplation of, such
      acquisition); provided,
      however, that at the time such Restricted Subsidiary is acquired by
      the Company, the Company would have been able in Incur $1.00 of additional
      Indebtedness pursuant to Section 4.09(a) after giving effect to the
      incurrence of such Indebtedness pursuant to this clause
    (12);

                

        

      

       

      
        
          	
                	
                  (13) 

                	
                  Indebtedness
      (including secured Indebtedness) of the Company or any of its Restricted
      Subsidiaries incurred (a) to provide all or any portion of the funds
      utilized to consummate a transaction pursuant to which assets are acquired
      or another Person becomes a Restricted Subsidiary or is otherwise acquired
      by the Company or (b) in connection with, or in contemplation of, such
      acquisition; provided,
      however, that after giving effect to such transaction on a pro
      forma basis, (i) the Specified Ratios would have been more favorable than
      those immediately prior to such transaction (solely for purposes of the
      calculation of the Fixed Charge Coverage Ratio pursuant to this clause
      (13), excluding from Fixed Charges any Fixed Charges relating to unsecured
      Indebtedness) and (ii) there shall be no Ratings Decline Event (as defined
      in the Second Lien Notes
Indenture);

                

        

      

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      
        
          	
                	
                  (14) 

                	
                  the
      incurrence by the Company or any of its Restricted Subsidiaries of
      Indebtedness arising from agreements of the Company or any of its
      Restricted Subsidiaries providing for indemnification, adjustment of
      purchase price or similar obligations, in each case, incurred or assumed
      in connection with the disposition of any business, assets or Capital
      Stock of a Subsidiary, provided that the
      maximum aggregate liability in respect of all such Indebtedness shall at
      no time exceed the gross proceeds actually received by the Company and its
      Restricted Subsidiaries in connection with such disposition;
      and

                

        

      

       

      
        
          	
                	
                  (15) 

                	
                  the
      incurrence by the Company or any of its Restricted Subsidiaries of
      additional Indebtedness in an aggregate principal amount (or accreted
      value, as applicable) at any time outstanding, not to exceed $25.0
      million.

                

        

      

       

      For
purposes of determining compliance with this Section 4.09, in the event that an
item of Indebtedness (including Acquired Debt) meets the criteria of more than
one of the categories of Permitted Debt described in clauses (1) through (15) of
this Section 4.09, or is entitled to be incurred pursuant to Section 4.09(a),
the Company will be permitted to classify (or later classify or reclassify in
whole or in part in its sole discretion) such item of Indebtedness in any manner
that complies with this covenant.

       

      The
amount of Indebtedness issued at a price that is less than the principal amount
thereof will be equal to the amount of the liability in respect thereof
determined in accordance with GAAP.  Indebtedness of any Person
existing at the time such Person becomes a Restricted Subsidiary shall be deemed
to have been incurred by the Company and the Restricted Subsidiary at the time
such Person becomes a Restricted Subsidiary.  The accrual of interest,
the accretion or amortization of original issue discount, the payment of
interest on any Indebtedness in the form of additional Indebtedness with the
same terms (including, without limitation, any PIK Notes or PIK Payments), and
the payment of dividends on Disqualified Stock in the form of additional shares
of the same class of Disqualified Stock will not be deemed to be an incurrence
of Indebtedness or an issuance of Disqualified Stock for purposes of this
covenant; provided, in each such case, that the amount thereof is included in
Fixed Charges of the Company as accrued.

       

      
        	
              	
                (c)

              	
                Section
      4.10 (Asset
      Sales) of the Original Indenture is hereby amended to read in its
      entirety as follows:

              

      

       

      Section
4.10.  Asset
Sales.

       

      (a)           The
Company will not, and will not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale (including a Collateral Disposition)
unless:

       

      
        
          	
                	
                  (1) 

                	
                  the
      Fair Market Value is determined by the Company’s Board of Directors and
      evidenced by a resolution of the Board of Directors set forth in an
      Officers’ Certificate delivered to the
trustee;

                

        

      

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      
        
          	
                	
                  (2) 

                	
                  the
      Company (or the Restricted Subsidiary, as the case may be) receives
      consideration at the time of the Asset Sale at least equal to the Fair
      Market Value of the assets or Equity Interests issued or sold or otherwise
      disposed of;

                

        

      

       

      
        
          	
                	
                  (3) 

                	
                  at
      least 75% of the consideration received by the company or such restricted
      subsidiary from all asset sales since the issue date, in the aggregate, is
      in the form of cash; and

                

        

      

       

      
        
          	
                	
                  (4) 

                	
                  in
      the case of a Collateral Disposition, the Second Lien Agent is granted a
      perfected Lien (subject only to Permitted Collateral Liens) in all assets
      or property received by the Company or any Restricted Subsidiary as
      consideration therefor (or, with respect to cash, the portion of such cash
      that constitutes Net Proceeds) as additional Collateral under the Security
      Documents to secure the Second Lien Obligations, and, in the case of cash
      constituting Net Proceeds, such cash must be deposited into a segregated
      account under the control of the First Lien Agent and the Collateral Agent
      that includes only proceeds from the Collateral Disposition and interest
      earned thereon (a “Collateral Disposition
      Proceeds Account”), which proceeds shall be subject to release from
      the Collateral Disposition Proceeds Account for the uses described below
      in this covenant as provided for in the Security
  Documents.

                

        

      

       

      Except
with respect to a Collateral Disposition, for purposes of this provision, each
of the following will be deemed to be cash:

       

      
        
          	
                	
                  (1) 

                	
                  any
      liabilities, as shown on the Company’s or such Restricted Subsidiary’s
      most recent balance sheet, of the Company or any Restricted Subsidiary
      (other than contingent liabilities and liabilities that are by their terms
      subordinated to the notes or any Guarantee) that are assumed by the
      transferee of any such assets pursuant to a customary novation agreement
      that releases the Company or such Restricted Subsidiary from further
      liability; and

                

        

      

       

      
        
          	
                	
                  (2) 

                	
                  any
      securities, notes or other obligations received by the Company or any such
      Restricted Subsidiary from such transferee that are converted within 90
      days by the Company or such Restricted Subsidiary into cash, to the extent
      of the cash received in that
conversion.

                

        

      

       

      (b)           Within
360 days after the receipt of any Net Proceeds from an Asset Sale, the Company
or any such Restricted Subsidiary may apply those Net Proceeds at its option to
any combination of the following:

       

      
        
          	
                	
                  (1) 

                	
                  to
      repay, redeem or repurchase Indebtedness constituting First Lien Claims
      under a Credit Facility and other pari passu Indebtedness
      secured by a Lien permitted under the Second Lien Notes Indenture; provided that if such
      Indebtedness is revolving credit Indebtedness, to correspondingly reduce
      commitments with respect thereto as specified in Section 4.09
      hereof;

                

        

      

       

      
        
          	
                	
                  (2) 

                	
                  to
      acquire all or substantially all of the properties or assets of one or
      more other Persons primarily engaged in the Oil and Gas Business, and, for
      this purpose, a division or line of business of a Person shall be treated
      as a separate Person so long as such properties and assets are acquired by
      the Company or a Restricted
Subsidiary;

                

        

      

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      
        
          	
                	
                  (3) 

                	
                  to
      acquire a majority of the Voting Stock of one or more other Persons
      primarily engaged in the Oil and Gas Business, if after giving effect to
      any such acquisition of Voting Stock, such Person is or becomes a
      Restricted Subsidiary;

                

        

      

       

      
        
          	
                	
                  (4) 

                	
                  to
      make one or more capital expenditures;
or

                

        

      

       

      
        
          	
                	
                  (5) 

                	
                  to
      acquire other long-term assets that are used or useful in the Oil and Gas
      Business;

                

        

      

       

      provided, that if the Net
Proceeds are from a Collateral Disposition, the property, assets, Voting Stock
or capital expenditures referred to in clauses (2), (3), (4) and (5) shall be of
a type substantially similar to such items constituting Collateral.

       

      Pending
the final application of any Net Proceeds (other than Net Proceeds held in the
Collateral Disposition Proceeds Account), the Company or any such Restricted
Subsidiary may temporarily reduce revolving credit borrowings or otherwise
invest the Net Proceeds in any manner that is not prohibited by this
Indenture.

       

      (c)           Any
Net Proceeds from Asset Sales that are not applied or invested as provided in
Section 4.10(b) hereof will constitute “Excess Proceeds.” On the 361st day after
the Asset Sale (or, at the Company’s option, any earlier date), if the aggregate
amount of Excess Proceeds (including Net Proceeds held in the Collateral
Disposition Proceeds Account) then exceeds $15.0 million, the Company will make
an Asset Sale Offer to all Holders of notes, and all holders of other
Indebtedness that is pari
passu with the Notes containing provisions similar to those set forth in
this Indenture with respect to offers to purchase or redeem with the proceeds of
sales of assets, to purchase the maximum principal amount of Notes and such
other pari passu
Indebtedness that may be purchased out of the Excess Proceeds.  The
offer price in any Asset Sale Offer will be equal to 100% of principal amount
plus accrued and unpaid interest, if any, to the date of settlement, subject to
the right of Holders of record on the relevant record date to receive interest
due on an interest payment date that is on or prior to the date of settlement,
and will be payable in cash.

       

      If any
Excess Proceeds remain after consummation of an Asset Sale Offer, the Company
may use those Excess Proceeds for any purpose not otherwise prohibited by this
Indenture.  If the aggregate principal amount of Notes and other
Indebtedness ranking pari
passu with the Notes tendered into such Asset Sale Offer exceeds the
amount of Excess Proceeds, the trustee will select the Notes and such other
pari passu Indebtedness
to be purchased on a pro rata basis.  Upon completion of each Asset
Sale Offer, the amount of Excess Proceeds will be reset at zero.

       

      
        	
              	
                (d)

              	
                Section
      4.12 (Liens) of
      the Original Indenture is hereby amended to read in its entirety as
      follows:

              

      

       

      Section
4.12.  Liens.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      The
Company will not and will not permit any of its Restricted Subsidiaries to,
create, incur, assume or otherwise cause or suffer to exist or become effective
any Lien of any kind securing Indebtedness or Attributable Indebtedness on any
of their respective assets or properties, except for Permitted
Liens.

       

      ARTICLE
III

       

      Section
3.1 Effectiveness
of Amendments to Original Indenture.

       

      This
Supplemental Indenture shall be effective upon its signing by the parties hereto
and the Amendments shall not be operative until the Operative Date. In case of
conflict between the terms and conditions contained in the Notes and those
contained in the Original Indenture, as modified by this Supplemental Indenture,
the provisions of the Original Indenture, as modified by this Supplemental
Indenture, shall control.

       

      Section
3.2 Continuing
Effect of Original Indenture.

       

      Except as
expressly provided herein, all of the terms, provisions and conditions of the
Original Indenture and the Notes shall remain in full force and
effect.

       

      Section
3.3 Construction
of Supplemental Indenture.

       

      This
Supplemental Indenture is executed as and shall constitute an indenture
supplemental to the Original Indenture with respect to the Notes and shall be
construed in connection with and as part of the Original Indenture for all
purposes with respect to the Notes, and every Holder of Notes heretofore or
hereafter authenticated and delivered under the Original Indenture shall be
bound by the Original Indenture as amended by this Supplemental Indenture. THE
LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS
SUPPLEMENTAL INDENTURE.

       

      Section
3.4 Trust
Indenture Act Controls.

       

      If any
provision of this Supplemental Indenture limits, qualifies or conflicts with
another provision that is required to be included in this Supplemental Indenture
or the Original Indenture by the Trust Indenture Act of 1939, as amended, as in
force at the date that this Supplemental Indenture is executed, the provisions
required by said Act shall control.

       

      Section
3.5 Trustee
Disclaimer.

       

      The
recitals contained in this Supplemental Indenture shall be taken as the
statements of the Company and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Supplemental Indenture.

       

      Section
3.6 Counterparts.

       

      The
parties may sign any number of copies of this Supplemental Indenture. Each
signed copy (including facsimile copies) shall be an original, but all of them
together represent the same agreement.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      Section
3.7 Severability.

       

      In case
any provision in this Supplemental Indenture shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      IN
WITNESS WHEREOF, the parties have caused this Supplemental Indenture to be duly
executed as of the date first written above.

       

       

      
        
          	 	

                  ENERGY
      XXI GULF COAST, INC.

                	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/
      Rick Fox 	 
	 	 	Name:   
      Rick
      Fox 	 
	 	 	Title:     
      Chief
      Financial Officer 	 
	 	 	 	 

        

      

      
         

        
          
            	 	

                    

                      ENERGY
      XXI (BERMUDA) LIMITED

                    

                  	 
	 	 	 	 
	 	 	 	 
	
                     

                  	
                    By:
      

                  	/s/ D.
      West Griffin 	 
	 	 	Name:   
      D.
      West Griffin 	 
	 	 	Title:     
      Chief
      Financial Officer 	 
	 	 	 	 

          

        

        
          
             

            
              
                	 	

                        

                          

                            ENERGY
      XXI ONSHORE, LLC

                          

                        

                      	 
	 	 	 	 
	 	 	 	 
	
                         

                      	
                        By:
      

                      	/s/
      Rick Fox 	 
	 	 	Name:   
      Rick
      Fox 	 
	 	 	Title:     
      Chief
      Financial Officer 	 
	 	 	 	 

              

            

            
              
                 

                
                  
                    	 	

                            

                              

                                

                                  ENERGY
      XXI TEXAS ONSHORE, LLC

                                

                              

                            

                          	 
	 	 	 	 
	 	 	 	 
	
                             

                          	
                            By:
      

                          	/s/
      Rick Fox 	 
	 	 	Name:   
      Rick
      Fox 	 
	 	 	Title:     
      Chief
      Financial Officer 	 
	 	 	 	 

                  

                

                
                  
                     

                    
                      
                        	 	

                                

                                  

                                    

                                      

                                        ENERGY
      XXI GOM, LLC

                                      

                                    

                                  

                                

                              	 
	 	 	 	 
	 	 	 	 
	
                                 

                              	
                                By:
      

                              	/s/
      Rick Fox 	 
	 	 	Name:   
      Rick
      Fox 	 
	 	 	Title:     
      Chief
      Financial Officer 	 
	 	 	 	 

                      

                    

                     

                    
                      
                        
                        

                      

                      
                        
                        

                        
                          

                        

                      

                      
                        
                        

                      

                    

                    
                      
                         

                        
                          
                            	 	

                                    

                                      

                                        

                                          

                                            

                                              WELLS
      FARGO BANK, NATIONAL ASSOCIATION, 

                                                as
      Trustee,

                                              

                                            

                                          

                                        

                                      

                                    

                                  	 
	 	 	 	 
	 	 	 	 
	
                                     

                                  	
                                    By:
      

                                  	/s/
      Patrick T. Giordano 	 
	 	 	Name:     Patrick
      T. Giordano	 
	 	 	Title:       Vice
      PresidentUnassociated Document

     

    
      ENERGY
XXI GULF COAST, INC.

       

      Series
B 16% Second Lien Junior Secured Notes due 2014

       

      Common
Stock

       

      NOTE AND COMMON STOCK
PURCHASE AGREEMENT

       

      NOTE AND
COMMON STOCK PURCHASE AGREEMENT (the “Agreement”) by and among Energy XXI Gulf
Coast, Inc., a Delaware corporation (the “Company”), Energy XXI (Bermuda)
Limited, a Bermuda company and the ultimate parent of the Company (“Parent”),
Energy XXI USA, Inc., a Delaware corporation (“Intermediate Holdco”) and the
other guarantors under the indenture referred to below (the “Subsidiary
Guarantors” and, together with Parent and Intermediate Holdco, the “Guarantors”)
and the Purchasers listed on the signature page hereto (the
“Purchasers”).  The Company and the Guarantors shall be referred to
herein as the “Company Parties”.

       

      WHEREAS:

       

      (A)    The
Company proposes to issue and sell (i) $60,000,000 in aggregate principal amount
of its Series B 16% Second Lien Junior Secured Notes due 2014 (the “Notes”), and
(ii) 13,224,720 shares of common stock of Parent (the “Shares” and, together
with the Notes, the “Securities”).  The Securities will be offered and
sold to the Purchasers in a transaction (the “Offering”) exempt from the
registration requirements of the Securities Act of 1933, as amended, and the
rules and regulations of the Securities and Exchange Commission (the
“Commission”) thereunder (collectively, the “Securities Act”) in a private
placement without being registered under the Securities Act in reliance upon
Section 4(2) thereof and/or Regulation D thereunder (“Regulation
D”).

       

      (B)    Prior to
or concurrently with the closing of the Offering, (i) the Company Parties will
enter into an amendment to the Amended and Restated First Lien Credit Agreement
with the Lenders party thereto and The Royal Bank of Scotland plc, as
Administrative Agent (the “Agent”) of the Lenders (such credit agreement, such
amendment and all related loan documents, collectively, the “Credit Agreement”)
and (ii) the Agent and the Required Lenders (as defined in the Credit Agreement)
will enter into an Intercreditor Agreement with the Trustee (as defined below)
on mutually satisfactory terms (the “Intercreditor Agreement”).

       

      (C)    The Notes
will be issued pursuant to an indenture (the “Indenture”), to be entered into
between the Company, Parent, the other Guarantors and Wilmington Trust Company,
as trustee (the “Trustee”).  Pursuant to the Indenture, the
Guarantors, other than Intermediate Holdco. shall fully and unconditionally
guarantee, and Intermediate Holdco will guarantee to the extent provided in the
CIM (as defined below), to each holder of the Notes and the Trustee, the payment
and performance of the Company’s obligations under the Indenture and the Notes
(each such guarantee being referred to herein as a “Guarantee”).

       

      (D)    Holders
of the Securities will be entitled to the benefits of a registration rights
agreement (the “Registration Rights Agreement”) to be entered into among the
Company Parties and the Purchasers pursuant to which the Company Parties will
agree, among other things to (i) file a registration statement (the
“Registration Statement”) with the Commission for a registered offer (the
“Exchange Offer”) to exchange any and all of the Notes for a like aggregate
principal amount of notes that are identical in all material respects to the
Notes (the “Exchange Notes”) except that the Exchange Notes will not contain
terms with respect to transfer restrictions or liquidated damages, (ii) use
their reasonable best efforts to cause the Registration Statement to be declared
effective under the Securities Act and (iii) use their reasonable best efforts
to consummate the Exchange Offer, in each case, within the timeframe, and
subject to the provisions contained therein.

       

      (E)    This
Agreement, the Credit Agreement, the Intercreditor Agreement, the Indenture, the
security and collateral documents listed on Annex D hereto and the Registration
Rights Agreement are referred to herein collectively as the “Transaction
Documents,” and the transactions contemplated hereby and thereby are referred to
herein collectively as the “Transactions.” This Agreement, the Registration
Rights Agreement and the Indenture are referred herein collectively as the
“Purchase Documents.”

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (F)    The
Company has prepared a confidential information memorandum relating to the
Offering, dated the date hereof relating to the Offering (including annexes,
exhibits and schedules thereto and documents incorporated by reference therein,
the “CIM”).

       

      NOW,
THEREFORE, each of the Company Parties hereby agrees and, the Purchasers hereby
severally agree as follows:

       

      
        
          	
                	
                  1. 

                	
                  PURCHASE AND SALE OF
      SECURITIES.

                

        

      

       

      (a)   Purchase and Sale of
Securities.

       

      (i)    Closing.  Subject
to the satisfaction (or waiver) of the conditions set forth in Sections 5 and 6, at the closing of
the Offering (the “Closing”), the Company shall issue and sell to the several
Purchasers, and the Purchasers severally agree to purchase from the Company on
the Closing Date (as defined below), the principal amount of Notes and the
Shares (free and clear of all liens and encumbrances) set forth in Schedule I hereto;
provided,
however, that if the number of Shares to be issued to a Purchaser pursuant to
Schedule I
would result in such Purchaser (together with its affiliates) owning 10% or more
of the outstanding shares of common stock of Parent, such Purchaser will instead
receive a reduced number of Shares (such reduction made pro rata with any of its
affiliates also purchasing Notes) such that it will own the greatest number of
shares (rounded down to the nearest whole share) that it (together with its
affiliates) can own at the Closing and still remain below ownership of 10% of
the outstanding common stock of the Parent. The Closing shall occur at the
offices of Vinson & Elkins LLP, First City Tower, 1001 Fannin Street, Suite
2500, Houston, Texas 77002-6760.

       

      (ii)    Determination of Closing
Date.  The date and time of the Closing (the “Closing Date”) shall be 10:00
a.m., New York City time, on October 2, 2009 (or such later date as is mutually
agreed to by the Company and the Purchasers); provided, however, that if
the Closing has not taken place on such Closing Date because of a failure to
satisfy one or more of the conditions specified in Section 5 or Section 6 hereof,
“Closing Date” shall mean 10:00 a.m., New York City time, on the first day that
is not a Saturday, a Sunday or other day on which commercial banks in New York,
New York are required or authorized by law to remain closed (a “Business Day”)
following the satisfaction (or waiver) of all such conditions after notification
by the Company to the Purchasers of the satisfaction (or waiver) of such
conditions (but in no event later than October 15, 2009 without the consent of
each of the Purchasers).

       

      (iii)    Purchase
Price.  The purchase price for the Securities to be purchased
by the several Purchasers at the Closing (in the aggregate, the “Purchase
Price”) shall be as set forth on Schedule I hereto and
the payment of the Purchase Price shall be made by the Purchasers by wire
transfer of immediately available funds in accordance with the instructions
provided in Schedule
II hereto

       

      
        
          	
                	
                  2. 

                	
                  PURCHASERS’
      REPRESENTATIONS AND
WARRANTIES.

                

        

      

       

      Each
Purchaser represents and warrants, severally and not jointly, that:

       

      (a)    No Public Sale or
Distribution.  The Purchaser is acquiring the Securities for
its own account and not with a view towards, or for resale in connection with,
the public sale or distribution thereof in a manner that would violate the
Securities Act; provided, however, that by making the
representations herein, the Purchaser does not agree to hold any of the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the Securities Act and, with
respect to the Notes, subject to the terms of the Notes and the
Indenture.  The Purchaser is acquiring the Securities hereunder in the
ordinary course of its business.  The Purchaser does not presently
have any agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities.  As used in this Agreement, “Person”
means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      (b)    Purchaser
Status.  Each of the Purchasers acknowledges that it is one of
the following:

       

      (i)    an
institutional “accredited investor” as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D; or

       

      (ii)    a
“qualified institutional buyer” as defined in Rule 144A(a)(1) under the
Securities Act.

       

      Such
Purchaser also acknowledges that it has the knowledge and experience in
financial and business matters as are necessary in order to evaluate the merits
and risks of an investment in the Securities.  Such Purchaser
understands that the acquisition of the Securities is a speculative investment
and involves substantial risks and the Purchaser could lose its entire
investment in the Securities.

       

      (c)    Reliance on
Exemptions.  The Purchaser understands that the Securities are
being offered and sold in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and the Purchasers’
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Purchasers set forth herein in order to determine the
availability of such exemptions and the eligibility of the Purchasers to acquire
the Securities.

       

      (d)    Information.  The
Purchaser and its advisors, if any, have (i) had access to the Company SEC
Documents (as defined below) and (ii) been afforded the opportunity to ask
questions of the Company.  The Purchaser understands that its
investment in the Securities involves a high degree of risk and is able to bear
the economic risk of such investment.  The Purchaser has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of its investment in the Securities and has
sought such accounting, legal and tax advice as it has considered necessary to
make an informed investment decision with respect to its acquisition of the
Securities.

       

      (e)    No Governmental
Review.  The Purchaser understands that no United States agency
or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability
of the investment in the Securities nor have such authorities passed upon or
endorsed the merits of the offering of the Securities.

       

      (f)    Transfer or
Resale.  The Purchaser understands that: (i) the Securities
have not been and will not be registered under the Securities Act or any state
securities laws; and (ii) the Purchaser agrees that if it decides to offer, sell
or otherwise transfer any of the Securities, such Securities may be offered,
sold or otherwise transferred only: (A) pursuant to an effective registration
statement under the Securities Act; (B) to the Company; (C) outside the United
States in accordance with Regulation S under the Securities Act and in
compliance with local laws; or (D) within the United States (1) in accordance
with the exemption from registration under the Securities Act and in compliance
with any applicable state securities laws, or (2) in a transaction that does not
require registration under the Securities Act or applicable state securities
laws.

       

      (g)    Legends.  The
Purchaser understands that upon the original issuance thereof, and until such
time as the same is no longer required under applicable requirements of the
Securities Act or applicable state securities laws, (A) the certificates or
other instruments representing the Notes and all certificates or other
instruments issued in exchange therefor or in substitution thereof, shall bear
the legend(s) set forth in the Indenture, and that the Company will make a
notation on its records and give instructions to the Trustee in order to
implement the restrictions on transfer of the Notes, set forth and described
therein, and (B) the Share certificates shall bear the legend set forth
below:

       

      “THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR ANY STATE OR NON-U.S. SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
UNITED STATES ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      

      THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A
“QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT (“RULE 144A”)), OR (B) IT IS AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN
THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
SECURITIES ACT, AND (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) WHICH IS
SIX MONTHS (OR SUCH SHORTER PERIOD AS MAY BE PRESCRIBED BY RULE 144 (OR ANY
SUCCESSOR PROVISION THEREOF) UNDER THE SECURITIES ACT) AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY, ONLY (A) TO THE COMPANY
OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF
SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT
IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND THE SECURITIES LAWS OF ANY
OTHER JURISDICTION, INCLUDING ANY STATE OF THE UNITED STATES, SUBJECT TO THE
COMPANY'S AND THE TRUSTEE'S, OR TRANSFER AGENT'S, AS APPLICABLE, RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
REASONABLY SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.”;

      

      and that
the Parent will make a notation on its records and give instructions to the
transfer agent for its Shares in order to implement the restrictions on transfer
of the Shares set forth and described herein.

       

      (h)    Validity;
Enforcement.  The Purchaser has all necessary power and
authority to execute and deliver this Agreement and the Registration Rights
Agreement and to perform its obligations hereunder and thereunder; this
Agreement and the Registration Rights Agreement have been duly authorized by the
Purchaser, and, when executed and delivered by the Purchaser, will constitute a
valid and binding agreement of the Purchaser, enforceable against the Purchaser
in accordance with its terms, except as such enforceability may be limited by
general principles of equity or by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      (i)    Residency.  For
purposes of U.S. securities laws, the Purchaser is a resident of the
jurisdiction specified with respect to such Purchaser on Annex A
hereto.

       

      (j)    Suitability and Reliance on
Own Advisors.  The Purchaser has carefully considered, and has,
to the extent the Purchaser deems necessary, discussed with the Purchaser’s own
professional legal, tax and financial advisers the suitability of an investment
in the Securities for the Purchaser’s particular tax and financial situation,
and the Purchaser has determined that the Securities are a suitable investment
for the Purchaser.  Such Purchaser has not relied upon the Company
Parties or its advisers for legal or tax advice.

       

      
        
          	
                	
                  3. 

                	
                  REPRESENTATIONS AND
      WARRANTIES OF THE COMPANY
PARTIES.

                

        

      

       

      In
addition to the other representations, warranties and agreements contained in
the Agreement, each of the Company Parties hereby represents, warrants and
agrees with, the Purchasers as follows:

       

      (a)    SEC Filings and the
Sarbanes-Oxley Act.  

       

      (i)    The
Company Parties have filed with or furnished to the Commission all reports,
schedules, forms, statements, prospectuses, registration statements and other
documents required to be filed or furnished by the Company Parties since June
30, 2007 (collectively, together with any exhibits and schedules thereto and
other information incorporated therein, the “Company SEC
Documents”).

       

      (ii)    As of its
filing date (and as of the date of any amendment), each Company SEC Document
complied, and each Company SEC Document filed subsequent to the date hereof will
comply, in all material respects with the applicable requirements of the
Securities Act and the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission (collectively, the “Exchange Act”), as
the case may be.

       

      (iii)    As of its
filing date (or, if amended or superseded by a filing prior to the date hereof,
on the date of such filing), each Company SEC Document filed pursuant to the
Exchange Act, and the CIM (together with the Company SEC Documents, the “Company
Documents”) did not, and each Company SEC Document filed subsequent to the date
hereof will not, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.

       

      (b)    The Transaction
Documents.  Each of the Company Parties has all necessary power
and authority to execute and deliver the Transaction Documents to which it is a
party and to perform its respective obligations thereunder; each of the
Transaction Documents has been duly authorized by the Company Parties, as the
case may be, and, when executed and delivered by the Company Parties, as the
case may be, will constitute a valid and binding agreement of the Company
Parties, as the case may be, enforceable against the Company Parties, as the
case may be, in accordance with its terms, except as such enforceability may be
limited by general principles of equity or by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies; and the Indenture, when executed and delivered by the Company Parties
will meet the requirements for qualification under the Trust Indenture Act of
1939, as amended, and the rules and regulations of the Commission thereunder
(collectively, the “Trust Indenture Act”).

       

      (c)    The
Securities.  The Company has all necessary power and authority
to execute, issue and deliver the Securities; the Securities have been duly
authorized for issuance and sale by the Company, the Notes will be in the form
contemplated by the Indenture and, when the Notes are executed, authenticated
and issued in accordance with the terms of the Indenture and delivered to and
paid for by the Purchasers pursuant to this Agreement, will constitute valid and
binding obligations of the Company, entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by general principles of equity or by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies; and the Shares, when issued in accordance with
the terms of this Agreement, will be fully paid and non-assessable and will not
have been issued in violation of any pre-emptive or similar rights.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      (d)    The
Guarantees.  Each of the Guarantors has all necessary power and
authority to execute, issue and deliver its respective Guarantee; the Guarantees
have been duly authorized for issuance and sale by each of the Guarantors, will
be in the form contemplated by the Indenture and, when executed and the
Guarantees issued in accordance with the terms of the Indenture, will constitute
valid and binding obligations of each of the Guarantors, entitled to the
benefits of the Indenture, enforceable against each of the Guarantors in
accordance with their terms, except as such enforceability may be limited by
general principles of equity or by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.

       

      (e)    The Exchange Notes and
Related Guarantees.  Each of the Company Parties has all
necessary power and authority to execute, issue and deliver the Exchange Notes
and the related Guarantees to which they are a party; the Exchange Notes and the
related Guarantees have been duly authorized for issuance and sale by the
Company Parties, as the case may be, will be in the form contemplated by the
Indenture and, when executed, authenticated and issued in accordance with the
terms of the Indenture and delivered to and exchanged for the Notes and the
related Guarantees, as the case may be, will constitute valid and binding
obligations of the Company Parties, as the case may be, entitled to the benefits
of the Indenture, enforceable against the Company Parties, as the case may be,
in accordance with their terms.

       

      (f)    No Material Adverse
Change.  Except as otherwise disclosed in the CIM, and for the
period from and after the date of the CIM through the Closing Date: (i) since
June 30, 2009, there has been no material adverse change, or any development
that could reasonably be expected to result in a material adverse change, in the
condition, financial or otherwise, or in the earnings, business or operations,
whether or not arising from transactions in the ordinary course of business, of
the Company and its subsidiaries, considered as one entity or Parent and its
subsidiaries (any such change is called a “Material Adverse Change”); (ii)
Parent, Intermediate Holdco or the Company and its subsidiaries, considered as
one entity, have not incurred any material liability or obligation (including
any off-balance sheet obligation), indirect, direct or contingent, not in the
ordinary course of business nor entered into any material transaction or
agreement not in the ordinary course of business; and (iii) there has been no
dividend or distribution of any kind declared, paid or made by the Company,
Intermediate Holdco, or Parent, except for dividends paid to the Company or
other subsidiaries, any of the Company’s subsidiaries on any class of capital
stock or repurchase or redemption by the Company or Parent or any of its
subsidiaries of any class of capital stock.

       

      (g)    Going Concern of
Company.  On the Closing Date, after giving effect to the
offering and sale of the Securities and the application of the proceeds thereof
as described in the CIM, and the other transactions contemplated thereby, (i)
the fair value and present fair saleable value of the assets of the Company and
its subsidiaries on a going concern basis will exceed the sum of its stated
liabilities and identified contingent liabilities; and (ii) each of the Company
and its subsidiaries will not be (a) left with unreasonably small capital with
which to carry on its business as it is proposed to be conducted, (b) unable to
pay its debts (contingent or otherwise) as they mature or (c) otherwise
insolvent.  In computing the amount of such contingent liabilities at
any time, such liabilities will be computed at the amount that, in the light of
all the facts and circumstances existing at such time, represent the amount that
can reasonably be expected to become an actual or matured
liability.

       

      (h)    Independent
Accountants.  UHY, LLP, who have expressed their opinion with
respect to the financial statements of the Parent (which includes the related
notes thereto) included in the Parent’s Form 10-K for the year ended June 30,
2009 are (i) independent public or certified public accountants as required by
the Exchange Act, (ii) in compliance with the applicable requirements relating
to the qualification of accountants under Rule 2-01 of Regulation S-X and (iii)
a registered public accounting firm as defined by the Public Company Accounting
Oversight Board whose registration has not been suspended or revoked and who has
not requested such registration to be withdrawn.

       

      (i)    Preparation of the Financial
Statements.  The financial statements contained in the CIM,
present fairly in all material respects the consolidated financial position of
the Parent and its subsidiaries as of and at the dates indicated and the results
of each of their respective operations and cash flows for the periods
specified.  All such financial statements have been prepared in
conformity in all material respects with generally accepted accounting
principles (“GAAP”) applied on a consistent basis throughout the periods
involved, except as otherwise stated in the CIM.  The financial data
set forth in the CIM, and the financial data set forth or to be set forth in the
CIM will as of its date, fairly present the information set forth therein on a
basis consistent with that of the audited and unaudited financial statements
contained in the CIM.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      (j)    Incorporation and Good
Standing of the Company Parties.  Each of the Company Parties
has been duly incorporated or organized and is validly existing as a
corporation, partnership or limited liability company, as applicable, in good
standing under the laws of the jurisdiction of its incorporation or organization
and has the power and authority (corporate or other) to own, lease and operate
its properties and to conduct its business as described in the CIM as of its
date, and to enter into and perform its obligations under each of the
Transaction Documents to which it is a party.  Each of the Company
Parties is duly qualified as a foreign corporation, partnership or limited
liability company, as applicable, to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business, except where
the failure to be so qualified would not, individually or in the aggregate, have
a material adverse effect on the financial position, stockholders’ equity,
results of operations or business of the Company or Parent (a “Material Adverse
Effect”).  All of the issued and outstanding capital stock or other
equity or ownership interest of each of the Subsidiary Guarantors has been duly
authorized and validly issued, is fully paid and nonassessable and is owned by
the Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, charge, encumbrance or adverse claim, except
as disclosed in the CIM.  Parent does not, directly or indirectly, own
any securities of any entity other than Energy XXI (US Holdings) Limited,
Intermediate Holdco, the Company and each of their subsidiaries.  The
Company does not own or control, and as of the Closing Date, the Company will
not own or control, directly or indirectly, any corporation, association or
other entity other than the subsidiaries listed on Annex B hereto, nor
does the Company hold any equity or debt securities or other interests in any
other entity, other than as set forth in Annex B
hereto.

       

      (k)    Capitalization and Other
Capital Stock Matters.  The capitalization of the Company and
its subsidiaries presented on a consolidated basis in the CIM under the caption
“Capitalization” under the column “Actual” is a fair summary of such
capitalization in all material respects.  All the outstanding shares
of capital stock in the Company have been duly authorized and validly issued,
are fully paid and nonassessable and were not issued in violation of any
preemptive or subscription rights.  There are no options, calls,
warrants or convertible or exchangeable securities, or conversion, preemptive,
subscription or other rights, or agreements, arrangements or commitments, in any
such case, obligating or which may obligate the Company to issue, sell,
purchase, return or redeem any shares of its capital stock or securities
convertible into or exchangeable for any shares of its capital stock, other than
as described in the CIM.  There are no shares of any capital stock of
the Company reserved for issuance, other than as described in the
CIM.  There are no capital appreciation rights, phantom stock plans,
securities with participation rights or features, or similar obligations and
commitments of the Company, other than as described in the CIM.  There
are no capital contributions with respect to the Company that are owed or that
have been called which have not been capitalized.

       

      (l)    Non-Contravention of
Existing Instruments; No Further Authorizations or Approvals
Required.  None of the Company Parties (i) is in violation of
its charter or by laws, (ii) is in default (or, with the giving of notice or
lapse of time, would be in default or constitute a default) (“Default”) under
any indenture, mortgage, loan or credit agreement, note, contract, franchise,
lease or other instrument to which any of the Company Parties is a party or by
which it or any of them may be bound, or to which any of the property or assets
of the Company Parties is subject (each, an “Existing Instrument”), or (iii) is
in violation of any law, administrative regulation or administrative or court
decree applicable to any of the Company Parties except with respect to clauses
(ii) and (iii) of this sentence, for such Defaults or violations as would not,
individually or in the aggregate, result in a Material Adverse
Effect.  The Company Parties’ execution, delivery and performance of
the Transaction Documents to which they are a party and the consummation of the
Transactions, including the issuance and sale of the Securities, (x) will not
result in any violation of the provisions of the charter or bylaws of any of the
Company Parties, (y) will not conflict with or constitute a breach of, or
Default or a Debt Repayment Triggering Event (as defined below) under, or result
in the creation or imposition of any security interest, mortgage, pledge, lien,
charge, encumbrance or adverse claim upon any property or assets of any of the
Company Parties pursuant to, or require the consent of any other party to any
Existing Instrument or any other third party and (z) will not result in any
violation of any law, administrative regulation or administrative or court
decree applicable to any of the Company Parties except with respect to clauses
(y) and (z) of this sentence, for such conflicts, breaches, Defaults, Debt
Repayment Triggering Events or violations as would not, individually or in the
aggregate, result in a Material Adverse Effect.  As used herein, a
“Debt Repayment Triggering Event” means any event or condition that gives, or
with the giving of notice or lapse of time would give, the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such
holder’s behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company Parties.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      (m)    Regulatory
Approval.  No consent, approval, authorization or other order
of, or registration or filing with, any court or other governmental or
regulatory authority or agency, is required for each of the Company Parties’
execution, delivery and performance of the Transaction Documents to which it is
a party and consummation of the Transactions, except (i) with respect to the
transactions contemplated by the Registration Rights Agreement or the filing of
a Current Report on Form 8-K with the Commission as may be required under the
Securities Act and the Exchange Act, as the case may be, (ii) as required by the
state securities or “blue sky” laws, and (iii) for such consents, approvals,
authorizations, orders, filings or registrations that have been obtained or made
and are in full force and effect except as would not have a Material Adverse
Effect.

       

      (n)    No Material Actions or
Proceedings.  Except as otherwise disclosed in the CIM, there
are no legal or governmental actions, suits or proceedings pending or, to the
best of the Company’s knowledge, (i) threatened against or affecting any of the
Company Parties, (ii) which has as the subject thereof any officer or director
of, or property owned or leased by, the Company Parties, or (iii) relating to
environmental or discrimination matters, where in any such case (A) any such
action, suit or proceeding, if so determined adversely, would reasonably be
expected to result in a Material Adverse Effect or adversely affect the
consummation of the Transactions or (B) any such action, suit or proceeding is
or would be material in the context of the offer and sale of
Securities.  No material labor dispute with the employees of any of
the Company Parties, or with the employees of any principal supplier of the
Company Parties, exists or, to the best of the Company’s knowledge, is
threatened or imminent.

       

      (o)    All Necessary Permits,
etc.  Except as otherwise disclosed in the CIM, each of the
Company Parties possesses such valid and current certificates, authorizations or
permits issued by the appropriate state, federal or other applicable regulatory
agencies or bodies and such valid licenses or other rights to use all databases,
geological data, geophysical data, engineering data, seismic data, maps and
other technical information, in each case, necessary to conduct their respective
businesses, and neither the Company nor any Guarantor has received, or has any
reason to believe that it has received or will receive, any notice of
proceedings relating to the revocation or modification of, or non-compliance
with, any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
result in a Material Adverse Effect.

       

      (p)    Title to
Properties.  Each of the Company Parties has (i) generally
satisfactory title to its oil and gas properties, title investigations having
been carried out by the Company Parties in accordance with the practice in the
oil and gas industry in the areas in which the Company Parties operate except
as, in each case, would not result in a Material Adverse Effect, (ii) good and
marketable title to all other real property owned by it to the extent necessary
to carry on its business and (iii) good and marketable title to all personal
property owned by it, in each case free and clear of all liens, encumbrances and
defects except such as are described in the CIM or such as do not materially
affect the value of the properties of the Company Parties, considered as one
enterprise, and do not interfere with the use made and proposed to be made of
such properties, by the Company Parties, considered as one enterprise; and all
of the leases and subleases material to the business of the Company Parties,
considered as one enterprise, and under which the Company Parties hold
properties described in the CIM, are in full force and effect, and none of the
Company Parties has any notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of any of the Company Parties under any
of the leases or subleases mentioned above, or affecting or questioning the
rights of any of the Company Parties to the continued possession of the leased
or subleased premises under any such lease or sublease.

       

      (q)    Gas Imbalances;
Prepayments.  On a net basis there are no gas imbalances,
take-or-pay or other prepayments that would require the Parent 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 one-half bcf of gas (on an mcf equivalent basis) in the aggregate,
other than as disclosed in the CIM or as would not result in a Material Adverse
Effect.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      (r)    Tax Law
Compliance.  Except as disclosed in the CIM, the Company
Parties have duly filed all necessary tax returns and have paid all taxes that
have become due and payable except such taxes that are being contested in good
faith and by appropriate proceedings and for which adequate reserves have been
recorded in accordance with GAAP.  The Company has made adequate
charges, accruals and reserves in the applicable financial statements referred
to in Section
3(i) above in respect of all taxes for all periods as to which the tax
liability of the Company or any of its subsidiaries has not been finally
determined, other than as disclosed in the CIM or as would not result in a
Material Adverse Effect.  There are no liens for taxes (except for
statutory liens for taxes that have not become due) on the assets of the Company
or any of its subsidiaries

       

      (s)    Compliance with
Environmental Laws.  Except as described in the CIM or as would
not, singly or in the aggregate, result in a Material Adverse Effect, (i)
neither the Company nor any of its subsidiaries is in violation of any federal,
state or local statute, law, rule, regulation, ordinance, code, policy or rule
of common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or judgment,
relating to pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, “Hazardous Materials”) or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, “Environmental
Laws”), (ii) the Company Parties have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in compliance with
their requirements, (iii) there are no pending or threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings relating to
any Environmental Law against any of the Company Parties, and (iv) there are no
events or circumstances that might reasonably be expected to form the basis of
an order for clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting any of the
Company Parties relating to Hazardous Materials or any Environmental
Laws.

       

      (t)    Compliance with
Laws.  The Company has not been advised, and has no reason to
believe, that it and each of the Guarantors are not conducting business in
compliance with all applicable laws, rules and regulations of the jurisdictions
in which it is conducting business, except where failure to be so in compliance
would not result in a Material Adverse Effect.

       

      (u)    Company Parties Not an
“Investment Company”.  Neither the Company nor any Guarantor
is, and after receipt of payment for the Securities, will be, an “investment
company” within the meaning of Investment Company Act of 1940, as amended, and
the rules and regulations of the Commission thereunder.

       

      (v)    Brokers.  Except
for Breakpoint Assets, there is no broker, finder or other party that is
entitled to receive from the Company any brokerage or finder’s fee or other fee
or commission in connection with the negotiations leading to this Agreement or
consummation of the Transactions.

       

      (w)    No Registration Required
Under the Securities Act.  Assuming the accuracy of the
representations and warranties of the Purchasers contained in this Agreement and
the compliance of such parties with the agreements set forth herein, it is not
necessary, in connection with the issuance and sale of the Securities, in the
manner contemplated by the Transaction Documents and the CIM, to register the
Securities under the Securities Act or to qualify the Indenture under the Trust
Indenture Act.

       

      (x)    QIBs and Accredited
Investors.  The Company will not offer or sell any of the
Securities to any person whom it reasonably believes is not (i) a “qualified
institutional buyer” as defined in Rule 144A (“QIBs”) or (ii) an institutional
“accredited investor” (as defined in clauses (1), (2), (3) and (7) of Rule
501(a) of Regulation D).

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      (y)    Purchasers; Compliance With
Rule 502(d).  The Company will exercise reasonable care to
ensure that the Purchasers are not “underwriters” within the meaning of Section
2(a)(11) of the Securities Act and, without limiting the foregoing, that such
purchases will comply with Rule 502(d) under the Securities Act.

       

      (z)    No General
Solicitation.  None of the Company Parties or, to the knowledge
of the Company, any person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with a
Company Party (an “Affiliate”) have engaged, or will engage, directly or
indirectly in any form of “general solicitation” or “general advertising” in
connection with the offering of the Securities (as those terms are used in
Regulation D) or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act.  None of the Company Parties have
entered, or will enter, into any arrangement or agreement with respect to the
distribution of the Securities, except for this Agreement, the Indenture and the
Registration Rights Agreement, and the Company agrees not to enter into any such
arrangement or agreement.

       

      (aa)    No Offer and Sale Within Six
Months.  None of the Company Parties nor any of their
respective Affiliates have sold or issued any security of the same or similar
class or series as any of the Securities that would be required to be integrated
with any of the Securities in a manner that would require registration under the
Securities Act during the six-month period preceding the earlier of the date of
this Agreement and the Closing Date, including any sales pursuant to Rule 144A,
Regulation D or Regulation S.  None of Parent, Intermediate Holdco,
the Company nor any of its Affiliates have any intention of making, and will not
make, an offer or sale of any securities that would be required to be integrated
with the Securities in a manner that would require registration under the
Securities Act, for a period of six months after the date of this Agreement,
except for the offering of Securities as contemplated by this Agreement and the
Registration Rights Agreement.  As used in this paragraph, the terms
“offer” and “sale” have the meanings specified in Section 2(a)(3) of the
Securities Act.

       

      (bb)    Margin
Regulation.  No part of the proceeds from the sale of the
Securities hereunder will be used, directly or indirectly, for the purpose of
buying or carrying any margin stock within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System (12 CFR 221), or for the
purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of Regulation X of said
Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220).  The Company is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any margin stock.  As
used in this Section, the terms “margin stock” and “purpose of buying or
carrying” shall have the meanings assigned to them in said Regulation
U.

       

      
        
          	
                	
                  4. 

                	
                  COVENANTS.

                

        

      

       

      (a)    Reasonable Best
Efforts.  Each party shall use its reasonable best efforts to
timely satisfy each of the conditions to be satisfied by it as provided in Sections 5 and 6 of this
Agreement.

       

      (b)    Form
D.  The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to comply with any applicable
state securities and “Blue Sky” laws in connection with the sale of the
Securities.

       

      (c)    Use of
Proceeds.  The net proceeds from the sale of the Securities
will be used by the Company in the manner described in the CIM under the caption
titled “Use of Proceeds.”

       

      (d)    Fees and
Expenses.  Except as otherwise set forth in the work letter
agreement between the Company and MSD Capital, L.P. dated as of June 30, 2009,
as such may be amended from time to time (the “Work Letter”), each party to this
Agreement shall bear its own expenses in connection with the sale of the
Securities to the Purchasers.

       

      (e)    Publicity.  The
Purchasers agree that they will not issue any press release or otherwise make
any public statement, filing or other communication regarding the offering or
the business, operations or financial condition of Parent or the Company without
the prior consent of the Company, except to the extent required by law or legal
process, in which case such Purchaser shall provide the Company with prior
notice of such disclosure.  Parent and the Company agree that they
will not publicly disclose the names of the Purchasers or include the names of
the Purchasers, without the prior consent of the Purchasers, in any press
release or other public statement, filing or other communication, except (a) in
any registration statement in which such Purchaser is identified as a selling
securityholder, or (b) to the extent required by law or legal process (including
but not limited to by the filing of one or more Form D’s with the Commission
regarding the Offering), in which case the Purchasers shall be given reasonable
advance notice of the anticipated disclosure and a reasonable opportunity to
seek confidential treatment of, or to contest, such anticipated
disclosure.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      (f)    Withholding
Taxes.  The Purchasers shall deliver to the Company a properly
completed and duly executed applicable Internal Revenue Service Form W-8 or W-9,
as applicable.  The Purchasers will provide replacement forms on the
obsolescence of such forms or inaccuracy of any information
thereon.

       

      (g)    Ratings.  The
Company will cause the Notes to be rated by one or both of Moody’s Investors
Service, Inc. and/or Standard & Poor’s Rating Services (together, the
“Ratings Agencies”) within six months of the Closing Date; provided, that in the
event at least one of the Ratings Agencies shall not have issued its rating with
respect to the Notes by the end of such period due to a failure by the Company
to use its best efforts to cause such a rating, including by delaying its
response(s) to any request for information or similar requests by one or both of
the Ratings Agencies, then the cash component of the interest on the Notes shall
be increased by 50 basis points during the period commencing on the date that is
six months from the Closing Date until the date on which at least one of the
Ratings Agencies shall have issued its rating with respect to the
Notes.

       

      
        
          	
                	
                  5. 

                	
                  CONDITIONS TO THE
      COMPANY’S OBLIGATION TO
SELL.

                

        

      

       

      The
obligation of the Company hereunder to issue and sell the Securities to the
Purchasers at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Company’s sole benefit and may be waived by the Company
at any time in its sole discretion by providing the Purchasers with prior
written notice thereof.

       

      (a)    The
representations and warranties of the Purchaser shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date, which shall be true and correct as of such date), and the
Purchaser shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Purchaser at or prior to the
Closing Date.

       

      (b)    No
injunction, restraining order or order of any nature by a governmental authority
shall have been issued as of the Closing Date that would prevent or materially
interfere with the consummation of the Offering or any of the transactions
contemplated thereby; and no stop order suspending the qualification or
exemption from qualification of any of the Securities in any jurisdiction shall
have been issued and no proceeding for that purpose shall have been commenced
or, to the knowledge of the Purchasers after reasonable inquiry, be pending or
contemplated as of the Closing Date.

       

      (c)    At least
$50.0 million in aggregate principal amount of Notes shall have been sold by the
Company to the Purchasers.

       

      (d)    No action
shall have been taken and no statute, rule, regulation or order shall have been
enacted, adopted or issued by any federal, state or foreign governmental or
regulatory authority of competent jurisdiction that would, as of the Closing
Date, render impossible the issuance or sale of the Securities; and no
injunction or order of any federal, state or foreign court shall have been
issued that would, as of the Closing Date, prevent the issuance or sale of the
Securities.

       

      (e)    The offer
by the Company to exchange a minimum of $312 million principal amount of its
existing Senior Notes for new Series A 16% Second Lien Notes and related
solicitation of consents to amend certain terms of the indenture governing the
Senior Notes (the “Exchange Offer and Consent Solicitation”) shall have been
simultaneously consummated in accordance with the terms described in the
CIM.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      (f)    Any
amendment to the Credit Agreement necessary for the purpose of allowing the
Transactions shall have been duly executed and delivered by all parties thereto
prior to the date of this Agreement and shall be in full force and
effect.

       

      
        
          	
                	
                  6. 

                	
                  CONDITIONS TO THE
      PURCHASERS’ OBLIGATION TO
PURCHASE.

                

        

      

       

      The
several obligations of the Purchasers hereunder to purchase the Securities at
the Closing are subject to the satisfaction, at or before the Closing Date, of
each of the following conditions, provided that these
conditions are for the Purchasers’ sole respective benefit and may be waived by
the Purchasers at any time in their sole discretion (each with respect to itself
only) by providing the Company with prior written notice thereof:

       

      (a)    Each of
the Company Parties and the Trustee shall have duly executed and delivered, or
caused to be delivered, to the Purchasers (i) each of the Transaction Documents
to which it is a party and (ii) the Securities being purchased by the Purchasers
at the Closing pursuant to this Agreement, in each case in form and substance
satisfactory to the Purchasers or their agents.  The Intercreditor
Agreement shall have been duly executed and delivered by all parties
thereto.  Any amendment to the Credit Agreement necessary for the
purpose of allowing the Transactions shall have been duly executed and delivered
by all parties thereto prior to the date of this Agreement and shall be in full
force and effect.

       

      (b)    The
Transactions shall have been consummated in accordance with their terms and in
accordance with the applicable Transaction Documents and as described in the
CIM.

       

      (c)    The
Exchange Offer and Consent Solicitation shall have been simultaneously
consummated in accordance with the terms described in the CIM.

       

      (d)    Parent
shall, concurrently with the Exchange Offer and Consent Solicitation, contribute
and/or cause its subsidiaries to contribute, as equity all of the aggregate
$126.0 million face amount of Senior Notes held by Parent and/or its
subsidiaries to the Company which will immediately upon receipt cancel all of
such Senior Notes.

       

      (e)    On the
Closing Date, the Purchasers shall have received the opinions of Vinson &
Elkins LLP, counsel for Parent and the Company, Appleby Global, Bermuda counsel
for Parent, Looper, Reed & McGraw, P.C., counsel for Parent and the Company,
and Phelps Dunbar LLP, counsel for Parent and the Company and in each case dated
as of the Closing Date, substantially to the effect set forth on Annexes C-1, C-2, C-3 and C-4,
respectively.

       

      (f)    The
Company Parties shall have each delivered to the Purchasers a certificate
evidencing qualification by such entity as a foreign corporation and good
standing issued by the Secretaries of State (or comparable office) of each of
the jurisdictions in which the Company Parties operate as of a date within 30
days prior to the Closing Date.

       

      (g)    The
Company Parties shall have delivered to the Purchasers a certificate, executed
by the Secretary of each of the Company Parties, and dated as of the Closing
Date, as to (i) the resolutions consistent with Sections 3(b),
3(c),
3(d) and 3(e) as adopted by
Board of Directors of each such entity in a form reasonably acceptable to the
Purchasers, and (ii) the memorandum of association, the certificate of
incorporation and bylaws, or other organizational documents of each such
entity.

       

      (h)    The
representations and warranties of the Company Parties contained herein shall be
true and correct as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date), and the Company shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
the Purchase Documents to be performed, satisfied or complied with by the
Company Parties, as applicable, at or prior to the Closing Date.  The
Purchasers shall have received certificates, executed by an authorized officer
of each of the Parent and the Company, dated as of the Closing Date, to the
foregoing effect.  The statements of the Company Parties and their
respective officers made in any certificates delivered pursuant to this
Agreement may be made only in their official, rather than individual capacity,
and shall be true and correct on and as of the Closing Date.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      (i)    No action
shall have been taken and no statute, rule, regulation or order shall have been
enacted, adopted or issued by any federal, state or foreign governmental or
regulatory authority of competent jurisdiction that would, as of the Closing
Date, render impossible the issuance or sale of the Securities; and no
injunction or order of any federal, state or foreign court shall have been
issued that would, as of the Closing Date, prevent the issuance or sale of the
Securities.

       

      (j)    No
Material Adverse Change shall have occurred with respect to Parent, Intermediate
Holdco and/or the Company and its subsidiaries on a consolidated basis since
June 30, 2009.

       

      
        
          	
                	
                  7. 

                	
                  TERMINATION.

                

        

      

       

      This
Agreement and the obligations of the Company Parties and the Purchasers set out
herein shall terminate upon the date of the earliest to occur of the following
(such earliest date being the “Termination Date”):

       

      (a)    In the
event that the Closing shall not have occurred due to the failure of the Company
Parties or the Purchasers to satisfy the conditions set forth in Sections 5 and 6 above (and the
nonbreaching party’s failure to waive such unsatisfied condition(s)), the
nonbreaching party shall have the option to terminate this Agreement with
respect to such breaching party at the close of business on October 15, 2009,
unless extended in writing by mutual consent of the Company and each of the
Purchasers; and

       

      (b)    The
commencement of a voluntary or involuntary case or proceeding by or against
Parent or any of its subsidiaries under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the consent by any
of them to the entry of a decree or order for relief in respect of any of them
in an involuntary case or proceeding under any such law or to the commencement
of any bankruptcy or insolvency case or  proceeding against any of
them, or the filing by any of them of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State law, or the
consent to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar official of any of such companies or of any substantial part of their
respective properties, or the making by any of them of an assignment for the
benefit of creditors, or the admission in writing of any of their inability to
pay their debts generally as they become due, or the taking of corporate action
by any of such companies in furtherance of any such action.

       

      
        
          	
                	
                  8. 

                	
                  INDEMNIFICATION.

                

        

      

       

      (a)    In
consideration of the Purchasers’ execution and delivery of the Purchase
Documents and the issuance of the Notes under the Indenture and the issuance of
the Shares, and acquiring the Securities hereunder and in addition to all of the
other obligations of the Company Parties under this Agreement, the Company
Parties, jointly and severally, shall defend, protect, indemnify and hold
harmless the Purchasers and the Purchasers’ stockholders, partners, members,
officers, directors, employees and direct or indirect investors and any of the
foregoing Persons’ agents or other representatives, including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement (each, an “Indemnitee” and collectively, the “Indemnitees”), as
incurred, from and against any and all actions, causes of action, suits, claims,
losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to (i)
any misrepresentation or breach of any representation or warranty made by the
Company in the Purchase Documents or any other certificate, instrument or
document contemplated hereby or thereby, (ii) any untrue statement or alleged
untrue statement of a material fact contained in the CIM (or any amendment or
supplement thereto) or any omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or (iii) any
breach of any covenant, agreement or obligation of a Company Party contained in
the Purchase Documents or any other certificate, instrument or document
contemplated hereby or thereby.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      (b)    Promptly
after receipt by an Indemnitee under this Section 8 of notice
of any claim or the commencement of any action or proceeding (including any
governmental investigation), such Indemnitee will, if a claim for
indemnification in respect thereof is to be made against the Company Parties,
notify the Company in writing of the commencement thereof; but the omission to
so notify will not relieve the Company Parties from any liability which they may
have to any Indemnitee to the extent they are not materially prejudiced as a
result thereof.  In case any such action or proceeding is brought
against any Indemnitee, and it notifies the Company of the commencement thereof,
the Company will be entitled to participate therein, and to the extent that it
may elect, by written notice delivered to such Indemnitee promptly after
receiving the aforesaid notice from such Indemnitee, to assume the defense
thereof, with counsel reasonably satisfactory to such Indemnitee; provided, however, that if the
defendants (including any impleaded parties) in any such action include both the
Indemnitee and the Company or another Company Party and the Indemnitee shall
have reasonably concluded that there may be legal defenses available to it
and/or other Indemnitees which are different from or additional to those
available to the Company Parties, the Indemnitee or Indemnitees shall have the
right to select separate counsel to defend such action on behalf of such
Indemnitee or Indemnitees.  Upon receipt of notice from the Company to
such Indemnitee of its election to so appoint counsel to defend such action and
approval by the Indemnitee of such counsel, the Company Parties will not be
liable to such Indemnitee under this Section 8 for any
legal or other expenses subsequently incurred by such Indemnitee in connection
with the defense thereof unless: (i) the Indemnitee shall have employed separate
counsel in accordance with the proviso to the preceding sentence (it being
understood, however, that the Company Parties shall not be liable for the
expense of more than one separate counsel (in addition to any local counsel),
approved by the Indemnitee representing the Indemnitees who are parties to such
action); (ii) the Company shall not have employed counsel reasonably
satisfactory to the Indemnitee to represent the Indemnitee within a reasonable
time after notice or commencement of the action; (iii) the Company has
authorized the employment of counsel for the Indemnitee at the expense of the
Company; or (iv) the use of counsel chosen by the Company to represent the
Indemnitee would present such counsel with a conflict of interest.

       

      (c)    The
Company Parties will not without the prior written consent of the Indemnitees,
settle or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
Indemnitees are actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of each
Indemnitee from all liability arising out of such claim, action, suit or
proceeding and does not include an admission of guilt of, or failure to act by,
the Indemnitee, or include any injunctive relief against any
Indemnitee.  Neither the Company nor any other Company Party shall be
liable for any settlement, compromise or the consent to the entry of judgment in
connection with any such action effected without its written consent, but if
settled with its written consent or if there be a final judgment for the
plaintiff in any such action other than a judgment entered with the consent of
such Indemnitee, then the Company Parties shall indemnify and hold harmless any
Indemnitee from and against any loss or liability by reason of such settlement
or judgment.

       

      (d)    Each
Indemnitee shall furnish such information regarding itself or the claim in
question as the Company may reasonably request in writing and as shall be
reasonably required in connection with the defense of such claim and litigation
arising therefrom.

       

      (e)    In order
to provide for contribution in circumstances in which the indemnification
provided for in this Section 8 is for any
reason held to be unavailable from the indemnifying Company Party, or is
insufficient to hold harmless an Indemnitee under this Section 8, each
Company Party shall contribute to the amount paid or payable by such Indemnitee
as a result of such aggregate losses (i) in such proportion as is appropriate to
reflect the relative benefits received by each Company Party, on the one hand,
and each Indemnitee, on the other hand, in connection with the Transactions, or
(ii) if such allocation is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of each Indemnitee, on the one
hand, and each Company Party, on the other hand, in connection with the
statements or omissions that resulted in such losses, as well as any other
relevant equitable considerations. The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company Party or such
Purchaser and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission or alleged
statement or omission.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      (f)    Notwithstanding
anything to the contrary herein, the provisions of this Section 8 are
intended solely for the benefit of the Indemnitees and not for the benefit of,
nor may any provision hereby be enforced by, any other Person; provided that
Indemnitees are expressly made third party beneficiaries of this Section
8.

       

      (g)    The
obligations of the Company Parties shall survive and continue to be in full
force and effect notwithstanding the termination of this Agreement for a period
of two years from the Termination Date.

       

      
        
          	
                	
                  9. 

                	
                  MISCELLANEOUS.

                

        

      

       

      (a)    Notices.  Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with an overnight courier service, in
each case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:

       

      If to the
Company:

       

      Energy
XXI Gulf Coast, Inc.

      Suite
2626

      1021
Main

      Houston,
Texas 77002

      Facsimile:
713-351-3300

      Attn:
David West Griffin, Director

       

      Copy
to:

       

      Vinson
& Elkins LLP

      First
City Tower

      1001
Fannin Street

      Suite
2500

      Houston,
Texas 77002-6760

      Facsimile:
713-758-2346

      Attn: T.
Mark Kelly, Esq.

       

      and if to
the Purchasers, to the applicable address and facsimile number set forth on
Annex A hereto,
or to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party prior to the effectiveness of such change.  Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by
the sender’s facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided by an
overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance
with clause
(A), (B)
or (C) above,
respectively.

       

      (b)    Governing Law; Jurisdiction;
Jury Trial.  This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.  Any legal
suit, action or proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby shall be instituted in the federal courts of
the United States of America located in the Borough of Manhattan in the City of
New York or the courts of the State of New York in each case located in the
Borough of Manhattan in the City of New York.  Each party hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is
improper.  Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.  Each party hereby irrevocably waives
any right it may have, and agrees not to request, a jury trial for the
adjudication of any dispute hereunder or in connection with or arising out of
this Agreement or any transaction contemplated hereby.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      (c)    Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns; provided that no party shall
assign any of its rights or obligations hereunder to any party other than an
Affiliate without the prior written consent of the other party.

       

      (d)    Survival.  The
representations and warranties of the parties hereto contained in Sections 2 and 3, respectively, and
the agreements and covenants set forth in Sections 4 and 8
shall survive the Closing.  The agreements and covenants set forth in
Section 8 shall
survive for a period of two years from the Closing Date (or, if this Agreement
is terminated prior to Closing, two years from the Termination
Date).

       

      (e)    Headings.  The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.

       

      (f)    Severability.  If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction.  It is hereby stipulated and declared to be the intention
of the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.

       

      (g)    Entire
Agreement.  This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof, other than the Work Letter and any commitment letter
between a Purchaser and a Company Party relating to the
Transactions.

       

      (h)    Amendment.  This
Agreement may not be amended or modified unless in writing by all of the parties
hereto, and no condition herein (express or implied) may be waived unless waived
in writing by each party whom the condition is meant to benefit.  The
failure by any party to exercise any right or remedy under this Agreement or
otherwise, or delay by a party in exercising such right or remedy, shall not
operate as a waiver thereof.  Any amendment to this Agreement made in
conformity with the provisions of this Section 8(h) shall be
binding on the Purchasers and all holders of the Securities purchased under this
Agreement, as applicable.

       

      (i)    Counterparts.  This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided, that a
facsimile signature shall be considered due execution and shall be binding upon
the signatory thereto with the same force and effect as if the signature were an
original, not a facsimile signature.

       

      (j)    Further
Assurances.  Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

       

      (k)    No Third Party
Beneficiaries.  Except as otherwise set forth in this
Agreement, this Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person.

       

      (l)    Remedies. Any Person
having any rights under any provision of this Agreement shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
such rights specifically (without posting a bond or other security or proving
actual damages), to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law.

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      [SIGNATURE
PAGE FOLLOWS]

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      

      IN
WITNESS WHEREOF, the parties hereto have caused their respective signature page
to this Note and Common Stock Purchase Agreement to be duly executed as of
September 18, 2009.

      
        	 
      	 
      	 
      
	 
      	
                ENERGY
      XXI GULF COAST, INC.

              
	
                `

              	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	/s/ Steve
      Nelson 
	 
      	
                Name:  Steve
      Nelson

                Title:  VP
      Operations

              
	 
      	 
      
	 	 
	 
      	
                ENERGY
      XXI USA, INC.

              
	 
      	 
      
	 
      	 
      
	 
      	By: 	
                /s/
      Steve Nelson

              
	 
      	
                Name:
      Steve Nelson

                Title:
      VP Operations

              
	 
      	 
      
	 
      	 
      	 
      
	 
      	
                ENERGY
      XXI (BERMUDA) LIMITED.

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	/s/
      D. West Griffin  
	 
      	
                Name:
      D. West Griffin

                Title:
      Chief Financial Officer

              
	 
      	 
      
	 
      	 
      	 
      
	 
      	
                ENERGY
      XXI TEXAS ONSHORE, LLC

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	/s/
      Steve
      Nelson  
	 
      	
                Name:
      Steve Nelson

                Title:
      VP Operations

              
	 
      	 
      
	 
      	 
      	 
      
	 
      	
                ENERGY
      XXI ONSHORE, LLC

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	/s/ Steve
      Nelson  
	 
      	
                Name:
      Steve
      Nelson

                Title:
      VP Operations

              
	 
      	 
      
	 
      	 
      	 
      
	 
      	
                ENERGY
      XXI GOM, LLC

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	/s/ Steve
      Nelson  
	 
      	
                Name:
      Steve
      Nelson

                Title:
      VP Operations

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  LATIGO
      PARTNERS, L.P.,

                
	 
      	
                  SEG
      LATIGO ADVISORS, L.P.,

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      David Ford

                
	 
      	 
      	
                  Name:
      David Ford

                  Title:
      Partner

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  590
      Madison Avenue, 9th Fl.

                  New
      York, NY 10022

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  212-754-1616

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  212-826-5280

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	
                  MOUNT
      KELLETT MASTER FUND II, LP

                
	 
      	 
      
	 
      	
                  By:  Mount
      Kellett Capital Partners GP LLC

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Stuart D. Freedman

                
	 
      	 
      	
                  Name:  Stuart
      D. Freedman

                  Title:  Authorized
      Signatory

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  623
      5th Avenue

                  New
      York, NY 10022

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  212-588-6100

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  212-588-6180

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  MSD
      ENERGY INVESTMENTS, L.P.

                
	 
      	 
      
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Marc Lisker

                
	 
      	 
      	
                  Name:
      Marc Lisker

                  Title:
      General Counsel

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  645
      Fifth Avenue, 21st Floor

                  New
      York, NY 10022

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  212-303-1650

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  212-303-1772

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	
                  SENATOR
      GLOBAL OPPORTUNITY FUND LP

                
	 
      	 
      
	 
      	
                  By
      Senator GP LLC, its General Partner

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Edward Larmann

                
	 
      	 
      	
                  Name:
      Edward Larmann

                  Title:
      Chief Financial Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  Senator
      Investment Group LP

                  1330
      Avenue of the Americas, 26th Floor

                  New
      York, NY 10019

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  212-376-4305

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  212-376-4301

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	
                  SENATOR
      GLOBAL OPPORTUNITY INTERMEDIATE FUND LP

                
	 
      	 
      
	 
      	
                  By
      Senator GP LLC, its general partner

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Edward Larmann

                
	 
      	 
      	
                  Name:
      Edward Larmann

                  Title:
      Chief Financial Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  Senator
      Investment Group LP

                  1330
      Avenue of the Americas, 26th Floor

                  New
      York, NY 10019

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  212-376-4305

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  212-376-4301

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  SOF
      INVESTMENTS, L.P.

                
	 
      	 
      
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Marc Lisker

                
	 
      	 
      	
                  Name:
      Marc Lisker

                  Title:
      General Counsel

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  645
      Fifth Avenue, 21st Floor

                  New
      York, NY 10022

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  212-303-1650

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  212-303-1772

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  FAIRFAX
      COUNTY RETIREMENT SYSTEM

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA  90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  VERMONT
      STATE EMPLOYEES RETIREMENT

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  VIRGINIA
      RETIREMENT SYSTEM

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  UNIVERSITY
      OF PENNSYLVANIA

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  UBS
      LWC INSTITUTIONAL SICAU ALPHA CHOICE

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  UBS
      ALPHA CHOICE FUND LIMITED

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  TEXAS
      COUNTY & DISTRICT RETIREMENT

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  POST
      TRADITIONAL HIGH YIELD FUND LP

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  TIMKEN
      COMPANY COLLECTIVE INVESTMENT TRUST FOR RETIREMENT

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  TACOMA
      EMPLOYEES RETIREMENT SYSTEM

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  STICHT
      BEDRIPENS METALEKTRO

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  STATE
      OF NEW JERSEY

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  SMS
      ALLIANZGI-FONDS DREDOLE DENTUS US HY

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  QWEST
      PENSION TRUST

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  PMT
      STICHTING PENSIOENFONDS VOOR DE MET

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  OHIO
      PUBLIC EMPLOYEES RETIREMENT SYSTEM

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  NATION
      TELECOM COOP ASSN

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  NATIONAL
      RAILROAD

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  W.M.
      KECK FOUNDATION

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  IKANO
      FUND MANAGEMENT

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  POST
      HIGH YIELD PLUS MASTER FUND

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  INVESTERINGSFORENINGEN
      GUDME RAASCHOU

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 
      	
                  PURCHASER

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  GERVENE
      REKEN BEROEPSVERVOER

                
	 
      	 
      
	 
      	
                  By:
      Post Advisory Group as Investment Manager

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Allen Schweitzer

                
	 
      	 
      	
                  Name:
      Allen Schweitzer

                  Title:
      Chief Investment Officer

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  Address:

                	
                  11755
      Wilshire Blvd., Ste. 1400

                  Los
      Angeles, CA 90025

                
	 
      	 
      	 
      
	 
      	
                  Telephone:

                	
                  310-996-9600

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                  310-996-9688

                

        

        

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Annex
A

       

      Registration
Information

       

      Legal
Name of
Purchaser:  __________________________________________________________

       

      Aggregate
principal amount of Notes to be purchased by
you:  $______________

      (if
special denominations required, please note)

       

      Aggregate
amount of Shares to be acquired by you:  [______ Shares per each $1
million principal amount of Notes]

       

      Address
of
Purchaser:  _______________________________________________________________

       

      
        	 
      	
                Attention:

              	
                _________________________

              
	
                Telephone
      Number:

              	 
      	 
      
	
                Fax
      Number:

              	 	 

      

       

      Purchaser
Status (Check the appropriate box):

       

       

       ̈           “Accredited
Investor” as defined in Rule 501(a)(1)(2)(3) or (7) of Regulation D of the
Securities Act

       

       

       ̈           “Qualified
Institutional Buyer” as defined in Rule 144(a)(1) of the Securities
Act

       

       

      Nominee
(Name in which the Notes are to be registered, if different than name of
Purchaser): ___________________________

       

      
        	
                Tax
      I.D. Number:

              	
                                                                                     

              

      

      (If
Acquired in the name of a nominee, the taxpayer I.D. number of such
nominee)

       

      Person to
Receive Copies of Purchase Documents:

       

      
         

        
          	
                  Name:

                	
                                                                                       

                

        

        
          
            
              	
                      Telephone
      Number:

                    	
                                                                                           

                    

            

            
              
                
                  	
                          
                            Email:

                          

                        	
                                                                                               

                        

                

                
                  
                    
                    

                  

                

              

            

          

        

      

      Operations
Contacts

       

      
        
           

          
            	
                    Primary:

                  	
                                                                                         

                  

          

          
            
              
                	
                        Telephone
      Number:

                      	
                                                                                             

                      

              

              
                
                  
                    	
                            
                              Email:

                            

                          	
                                                                                                 

                          

                  

                  
                    
                      
                      

                    

                  

                

              

            

          

        

        
          
            
              
                	
                        Secondary:

                      	
                                                                                             

                      

              

              
                
                  
                    	
                            Telephone
      Number:

                          	
                                                                                                 

                          

                  

                  
                    
                      
                        	
                                
                                  Email:

                                

                              	
                                                                                                     

                              

                      

                      
                        
                          
                          

                        

                      

                    

                  

                

              

            

          

        

      

      Mail
Payment Notices (if different than mailing address):

       

      
        	 
      	
                __________________________________

              
	 
      	
                   Attention:________________________

              
	
                Telephone
      Number:

              	 
      
	 	 
	
                Fax
      Number:

              	
                
                   

                

              
	
                State
      of Principal Place of Business: 

              	
                __________________________________ 

              
	
                Custodian
      Information:

              	
                __________________________________ 
      

              
	
                Name:

              	 
      
	
                DTC
      Participant No.: 

              	 

      

       

      
        
          
          

        

        
          Annex
A-1

          
            

          

        

        
          
          

        

      

       

      
        	
                Physical
      Delivery Instructions:

              	 
      
	 
      	
                __________________________________

              
	 
      	
                Attention:__________________________

                __________________________________

              
	
                Telephone
      Number:

              	
                
                   

                

              
	 	
                __________________________________ 

              
	
                Fax
      Number:

              	
                __________________________________

              

      

       

      Tax
Withholding Form Attached (indicate
type):  _________________________________________________

       

      
        
          
          

        

        
          Annex
A-2

          
            

          

        

        
          
          

        

      

      

      Annex
B

       

      List of Subsidiaries and
other interests of the Parent

       

      Energy
XXI (US Holdings) Limited

       

      Energy
XXI, Inc.

       

      Energy
XXI USA, Inc.

       

      Energy
XXI Gulf Coast, Inc.

       

      Energy
XXI Services, Inc.

       

      Energy
XXI Texas Onshore, LLC

       

      Energy
XXI Onshore, LLC

       

      Energy
XXI GOM, LLC

       

      
        
          
          

        

        
          Annex
B-1

          
            

          

        

        
          
          

        

      

       

      Rider A

       

      Annex
C-1

       

      Vinson
& Elkins LLP

       

      1.    Each of
the Company and the Guarantors (other than the Parent, as to which we do not
express an opinion) has been duly incorporated or formed and is validly existing
in good standing as a corporation or limited liability company under the laws of
the state of Delaware with the requisite corporate or limited liability company
power and authority, as the case may be, to own or lease its properties and to
conduct its business as described in the CIM in each case in all material
respects.

       

      2.    Each of
the Company and the Guarantors (other than the Parent, as to which we do not
express an opinion) has the requisite corporate or limited liability company
power and authority to issue, sell and deliver the Notes, in accordance with and
upon the terms and conditions set forth in, and to otherwise perform its
respective obligations under, the Purchase Agreement, the Registration Rights
Agreement and the Indenture (collectively the “Purchase
Documents”).

       

      3.    Each of
the Purchase Documents has been duly and validly authorized, executed and
delivered by each of the Company and the Guarantors (other than the Parent, as
to which we do not express an opinion).

       

      4.    The
Indenture, assuming the due authorization, execution and delivery thereof by the
Parent and the Trustee, is a valid and legally binding agreement of each of the
Company and the Guarantors, enforceable against each of the Company and the
Guarantors in accordance with its terms; provided that the enforceability
thereof may be limited by applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or similar laws from time to time in effect
affecting creditors’ rights and remedies generally and by general principles of
equity (regardless of whether such principles are considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair
dealing.

       

      5.    The
Notes, when executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Purchasers pursuant to the
Purchase Agreement, will constitute legal, valid, binding and enforceable
obligations of the Company entitled to the benefits of the Indenture; provided
that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or similar laws from
time to time in effect affecting creditors’ rights and remedies generally and by
general principles of equity (regardless of whether such principles are
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.

       

      6.    When the
Indenture has been duly and validly authorized, executed and delivered by each
of the Guarantors (assuming due and valid authorization, execution and delivery
by the Parent under the laws of Bermuda, as to which we do not express an
opinion)  and the Notes have been duly and validly issued in
accordance with the provisions of the Indenture and delivered to and paid for by
the Purchasers under the Purchase Agreement, the Guarantees will constitute,
legal, valid, binding and enforceable obligations of the Guarantors entitled to
the benefits of the Indenture; provided that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or similar laws from time to time in effect affecting
creditors’ rights and remedies generally and by general principles of equity
(regardless of whether such principles are considered in a proceeding in equity
or at law) and an implied covenant of good faith and fair dealing.

       

      7.    The Notes
and the related Guarantees have been duly authorized by each of the Company and
the Guarantors (other than the Parent, as to which we do not express an
opinion), as the case may be.

       

      8.    The
execution and delivery of the Purchase Documents by the Company and the
Guarantors, the performance by the Company and the Guarantors of their
respective obligations thereunder, including the issuance and sale of the
Securities and the Guarantees, (i) will not result in any violation of the
provisions of the charter, by-laws or equivalent constituent documents of the
Company or any Guarantor (other than the Parent, as to which we do not express
an opinion); (ii) will not constitute a breach of, or default or a Debt
Repayment Triggering Event under, or result in the creation or imposition of any
security interest, mortgage, pledge, lien, charge, encumbrance or adverse claim
upon any property or assets of Parent, the Company or any Guarantor, pursuant to
any material Existing Instrument listed or identified on the annexed schedule
furnished to us by the Company, and which the Company has represented lists all
material agreements and instruments to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of its
subsidiaries is subject; (iii) will not result in any violation of any federal
or New York law or, to the best knowledge of such counsel any federal or New
York administrative regulation or administrative or court decree, applicable to
Parent, the Company or any of the subsidiaries of the Company; and (v) will not
require any consent, approval, authorization or other order of, or registration
(provided no opinion is given with respect to federal or state securities laws),
or filing with, any court or other federal or New York governmental or
regulatory authority or agency, except (i) with respect to the transaction
contemplated by the Registration Rights Agreement and may be required under the
Securities Act and the Exchange Act, (ii) as required by federal or state
securities or “blue sky” laws, and (iii) for such consents, approvals,
authorizations, orders, filings or registrations which have been obtained or
made.

       

      
        
          
          

        

        
          Annex
C-1

          
            

          

        

        
          
          

        

      

      
         

        Rider A

         

      

      9.    Assuming
the accuracy of the representations and warranties of Parent, the Company and
the Purchasers contained in the Purchase Agreement and the compliance of such
parties with the agreements set forth therein, it is not necessary, in
connection with the issuance and sale of the Securities to the Purchasers, in
the manner contemplated by Purchase Documents, to register the initial sale of
the Securities under the Securities Act or to qualify the Indenture under the
Trust Indenture Act, it being understood no opinion is given with respect to
subsequent resales of the Securities.

       

      10.    The
Company is not, and after giving effect to the receipt of payment for the Notes
and the application thereof as described in “Use of Proceeds” in the
Confidential Offering Memorandum will not be, an “investment company” as such
term is defined in the Investment Company Act of 1940, as amended.

       

      
        
          
          

        

        
          Annex
C-1

          
            

          

        

        
          
          

        

      

       

      Annex
C-2

       

      

      Appleby
Global

       

      1.    The
Parent has been duly formed and is validly existing in good standing as an
exempted company (as defined in the Companies Act 1981 (Bermuda)) under the laws
of Bermuda with the requisite exempted company power and authority to own or
lease its properties and to conduct its business in all material
respects.

       

      2.    The
Parent has the requisite exempted company power and authority to issue, sell and
deliver the Securities, in accordance with and upon the terms and conditions set
forth in Purchase Agreement, the Registration Rights Agreement and the Indenture
(collectively the “Purchase Documents”).

       

      3.    Each of
the Purchase Documents have been duly and validly authorized, executed and
delivered by the Parent.

       

      4.    The
Guarantee of the Parent has been duly authorized by the Parent.

       

      5.    The
Shares have been duly authorized by the Parent and, upon the issuance thereof
and payment therefor in accordance with the terms of the Purchase Agreement,
will be validly issued, fully paid and non-assessable.

       

      6.    The
execution and delivery of the Purchase Documents by the Parent, the performance
by the Parent of its obligations thereunder, including the issuance and sale of
the Shares and the Guarantee of the Parent, will not result in any violation of
the provisions of the charter, by-laws or equivalent constituent documents of
the Parent.

       

      
        
          
          

        

        
          Annex
D-1

          
            

          

        

        
          
          

        

      

       

      Annex
C-3

       

      

      Looper,
Reed & McGraw P.C.

      

      [To
come]

       

       

      
        
          
          

        

        
          Annex
D-2

          
            

          

        

        
          
          

        

      

       

      Annex
C-4

       

      Phelps
Dunbar LLP

       

      [To
come]

       

       

      
        
          
          

        

        
          Annex
D-3

          
            

          

        

        
          
          

        

      

       

      Annex
D

       

      Security and Collateral
Documents

       

      Mortgages:

      
        	
                1. 
        

              	
                Second
      Lien Mortgage, Deed of Trust, Assignment, Security agreement, Financing
      Statement and Fixture Filing, dated as of August __, 2009, from Energy XXI
      Texas Onshore, LLC, a Delaware limited liability company, as mortgagor and
      debtor, to [_____________], of [____________________], as trustee, and
      Wilmington Trust Company, as collateral
agent

              

      

      

      
        	
                2. 
        

              	
                Second
      Lien Mortgage, Deed of Trust, Assignment, Security agreement, Financing
      Statement and Fixture Filing, dated as of September __, 2009, from Energy
      XXI Onshore, LLC, a Delaware limited liability company, as mortgagor and
      debtor, to Wilmington Trust Company, as collateral
  agent

              

      

      

      
        	
                3. 
        

              	
                Second
      Lien Mortgage, Deed of Trust, Assignment, Security agreement, Financing
      Statement and Fixture Filing, dated as of September __, 2009, from Energy
      XXI GOM, LLC, a Delaware limited liability company, as mortgagor and
      debtor, to Wilmington Trust Company, as collateral
  agent

              

      

      

      
        	
                4.  
       

              	
                Second
      Lien Mortgage, Deed of Trust, Assignment, Security agreement, Financing
      Statement and Fixture Filing, dated as of August __, 2009, from Energy XXI
      GOM, LLC, a Delaware limited liability company, as mortgagor and debtor,
      to [_____________], of [____________________], as trustee, and Wilmington
      Trust Company, as collateral agent

              

      

      

      Pledges1:

      
        	
                1.  
       

              	
                Second
      Lien Pledge and Security Agreement and Irrevocable Proxy, dated as of
      September __, 2009, made by Energy XXI GOM, LLC, a Delaware limited
      liability company, in favor of Wilmington Trust Company, as Indenture
      Trustee for the Secured Parties

              

      

      

      
        	
                2.  
       

              	
                Second
      Lien Pledge and Security Agreement and Irrevocable Proxy, dated as of
      September __, 2009, made by Energy XXI, Inc., a Delaware corporation, in
      favor of Wilmington Trust Company, as Indenture Trustee for the Secured
      Parties

              

      

      

      
        	
                3. 
        

              	
                Second
      Lien Pledge and Security Agreement and Irrevocable Proxy, dated as of
      September __, 2009, made by Energy XXI USA, Inc., a Delaware corporation,
      in favor of Wilmington Trust Company, as Indenture Trustee for the Secured
      Parties

              

      

      

      
        	
                4. 
        

              	
                Second
      Lien Pledge and Security Agreement and Irrevocable Proxy, dated as of
      September __, 2009, made by Energy XXI Gulf Coast, Inc., a Delaware
      corporation, in favor of Wilmington Trust Company, as Indenture Trustee
      for the Secured Parties

              

      

      

      
        	
                5. 
        

              	
                Second
      Lien Pledge and Security Agreement and Irrevocable Proxy, dated as of
      September __, 2009, made by Marlin Energy Offshore, L.L.C., a Delaware
      limited liability company, in favor of Wilmington Trust Company, as
      Indenture Trustee for the Secured
Parties

              

      

      

      
        	
                6.  
       

              	
                Second
      Lien Pledge and Security Agreement and Irrevocable Proxy, dated as of
      September __, 2009, made by Marlin Texas GP, L.L.C., a Delaware limited
      liability company, in favor of Wilmington Trust Company, as Indenture
      Trustee for the Secured Parties

              

      

      

      
        	
                7. 
        

              	
                Second
      Lien Pledge and Security Agreement and Irrevocable Proxy, dated as of
      September __, 2009, made by Marlin Texas L.P., a Delaware limited
      partnership, in favor of Wilmington Trust Company, as Indenture Trustee
      for the Secured Parties

              

      

      
         

        ___________________________

        
          
            1 Assumes
same entities as in 2007 – to be updated as necessary.

          

           

        

      

      
        
          
          

        

        
          Annex
D-4

          
            

          

        

        
          
          

        

      

       

      
        	
                8. 
        

              	
                Second
      Lien Pledge and Security Agreement and Irrevocable Proxy, dated as of
      September __, 2009, made by Energy XXI Texas LP, a Delaware limited
      partnership, in favor of Wilmington Trust Company, as Indenture Trustee
      for the Secured Parties

              

      

      

      
        	
                9. 
        

              	
                Second
      Lien Pledge and Security Agreement and Irrevocable Proxy, dated as of
      September __, 2009, made by Energy XXI Texas GP, LLC, a Delaware limited
      liability company, in favor of Wilmington Trust Company, as Indenture
      Trustee for the Secured Parties

              

      

       

      
        
          
          

        

        
          Annex
D-5

          
            

          

        

        
          
          

        

      

       

      Schedule
I

       

      Purchasers

       

      
        
          	
                  Purchaser

                	
                  Second Lien Notes
      Purchased

                	
                  Shares
      Purchased

                
	 
      	 
      	 
      
	
                  Fairfax
      County Retirement System

                	
                  $145,000

                	
                  31,960

                
	
                  Gervene
      Reken Beroepsvervoer

                	
                  $320,000

                	
                  70,532

                
	
                  Ikano
      Fund Management

                	
                  $290,000

                	
                  63,919

                
	
                  Investeringsforeningen
      Gudme Raaschou

                	
                  $640,000

                	
                  141,064

                
	
                  Latigo
      Partners, LP/SEG Latigo Advisors, LP

                	
                  $6,300,000

                	
                  1,388,596

                
	
                  Mount
      Kallett Master Fund II, LP

                	
                  $10,300,000

                	
                  2,270,244

                
	
                  MSD
      Energy Investments, L.P.

                	
                  $10,000,000

                	
                  2,204,120

                
	
                  Nation
      Telecom Coop Assn

                	
                  $175,000

                	
                  38,572

                
	
                  National
      Railroad

                	
                  $700,000

                	
                  154,288

                
	
                  Ohio
      Public Employees Retirement System

                	
                  $480,000

                	
                  105,798

                
	
                  PMT
      Stichting Pensianfonds Voor De Met

                	
                  $1,230,000

                	
                  271,107

                
	
                  Post
      High Yield Plus Master Fund

                	
                  $130,000

                	
                  28,654

                
	
                  Post
      Traditional High Yield Fund L.P.

                	
                  $560,000

                	
                  123,431

                
	
                  Qwest
      Pension Trust

                	
                  $425,000

                	
                  93,675

                
	
                  Senator
      Global Opportunity Fund LP

                	
                  $2,496,000

                	
                  550,148

                
	
                  Senator
      Global Opportunity Intermediate Fund L.P.

                	
                  $2,304,000

                	
                  507,829

                
	
                  SMS
      Allianzgi-Fonds Dredola Rentus US HY

                	
                  $190,000

                	
                  41,878

                
	
                  SOF
      Investments, L.P.

                	
                  $18,800,000

                	
                  4,143,746

                
	
                  State
      of New Jersey

                	
                  $600,000

                	
                  132,247

                
	
                  Sticht
      Bedripens Metalektro

                	
                  $1,055,000

                	
                  232,535

                
	
                  Tacoma
      Employees Retirement System

                	
                  $190,000

                	
                  41,878

                
	
                  Texas
      County & District Retirement

                	
                  $975,000

                	
                  214,902

                
	
                  Timken
      Company Collective Investment Trust for Retirement

                	
                  $270,000

                	
                  59,511

                
	
                  UBS
      Alpha Choice Fund Limited

                	
                  $105,000

                	
                  23,143

                
	
                  UBS
      LUX Institution/SICAV Alpha Choice

                	
                  $95,000

                	
                  20,939

                
	
                  University
      of Pennsylvania

                	
                  $110,000

                	
                  24,245

                
	
                  Vermont
      State Employees Retirement

                	
                  $320,000

                	
                  70,532

                
	
                  Virginia
      Retirement System

                	
                  $700,000

                	
                  154,288

                
	
                  W.M.
      Keck Foundation

                	
                  $95,000

                	
                  20,939

                
	 
      	 
      	 
      
	
                  TOTAL

                	
                  $60,000,000

                	
                  13,224,720

                

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Schedule
II

       

      Wire Transfer
Instructions

       

      Guaranty
Bank

      1300
Mopac

      Austin,
Texas 78746

       

      ABA: 314970664

      Account
Number:  3804623571

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00163-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00163-of-00352.parquet"}]]