Document:

ex10d50.htm

     

    Exhibit
10.50

     

    

     

    CPI
INTERNATIONAL, INC.

     

    PERFORMANCE
RESTRICTED STOCK UNIT AWARD AGREEMENT

     

    

     

    THIS
PERFORMANCE RESTRICTED STOCK UNIT AWARD AGREEMENT (the "Agreement") is made and
entered into as of the date of grant set forth on Exhibit A hereto
by and between CPI International, Inc., a Delaware corporation (the "Company"), and the individual
(the "Grantee") set
forth on Exhibit
A.

     

    A.           The
Grantee is an employee or consultant of the Company or a Subsidiary, and the
Company has determined that it is appropriate, desirable and in the best
interests of the Company to issue Restricted Stock Units (as defined below) to
the Grantee.

     

    B.           Accordingly,
pursuant to the CPI International, Inc. 2006 Equity and Performance Incentive
Plan (the "Plan"), the
Company is hereby issuing to the Grantee the number of Restricted Stock Units as
set forth on Exhibit
A hereto, and in all respects subject to the terms, definitions and
provisions of the Plan, which is incorporated herein by reference.

     

    C.           Unless
otherwise defined herein, capitalized terms used in this Agreement shall have
the meanings set forth in the Plan.

     

    NOW,
THEREFORE, in consideration of the mutual agreements contained herein, the
Grantee and the Company hereby agree as follows:

     

    1. Restricted Stock
Units.

     

    1.1 Issuance of Restricted Stock
Units.  In consideration of the Grantee's service as an
employee or consultant of the Company or a Subsidiary, the Company is hereby
issuing to the Grantee the number of Restricted Stock Units set forth on Exhibit
A.  Each "Restricted Stock Unit"
represents the contingent right to receive in the future one share of common
stock of the Company, $.01 par value ("Common Stock"), and is subject
to the conditions and restrictions on transferability set forth below and in the
Plan. The Restricted Stock Units will be credited to the Grantee in an unfunded
bookkeeping account established for the Grantee and will not be represented by
certificates.

     

    1.2 Restrictions on Transfer of
Restricted Stock Units. The Restricted Stock Units may not be sold,
assigned, transferred, conveyed, pledged, exchanged or otherwise encumbered or
disposed of (each, a "Transfer") by the Grantee,
except to the Company.  Any purported Transfer in violation of the
provisions of this Section 1.2 shall be
void AB INITIO, and the other party to any such purported transaction shall not
obtain any rights to or interest in the Restricted Stock Units.  In
addition, the Grantee may not Transfer Common Stock received upon the vesting of
Restricted Stock Units unless such shares of Common Stock are registered
pursuant to the Securities Act of 1933 (the "Securities Act") or are
transferred under Rule 144 promulgated under the Securities Act or unless the
Company and its counsel agree with the Grantee that such Transfer is not
required to be registered under the Securities Act.

     

    1.3 Vesting; Forfeiture of
Restricted Stock Units.

     

    1.3.1 Upon
vesting of a Restricted Stock Unit, such Restricted Stock Unit will be converted
into one share of Common Stock, and the Grantee will be issued one share of
Common Stock for each such Restricted Stock Unit that has vested, which shares
of Common Stock shall be free of any restrictions other than those imposed
pursuant to applicable securities laws.

     

    1.3.2 This
grant of Restricted Stock Units shall be broken up into two (2) tranches (each a
"Tranche") as follows:

     

    
      	
              1.3.2.1  

            	
              Tranche
      One shall consist of one-half of the Restricted Stock
    Units.

            

    

     

    
      	
              1.3.2.2  

            	
              Tranche
      Two shall consist of one-half of the Restricted Stock
    Units.

            

    

     

    1.3.3 Except as
provided in Section
1.3.7 or 1.3.8 below, the
Restricted Stock Units shall become vested on the first date on which both the
Time Vesting Condition (described below) and the Performance Condition
(described below) are satisfied with respect to such Restricted Stock
Units.

     

    1.3.4 Time Vesting
Condition.  The "Time Vesting Condition" shall
be satisfied with respect to twenty-five percent (25%) of the Restricted Stock
Units in each Tranche on the third (3rd) Trading Day (as defined below)
following the Company's issuance of its press release reporting first quarter
financial results in fiscal year 2010, but no later than the end of February
2010.  On the third (3rd) Trading Day following the Company's issuance
of its press release reporting first quarter financial results in each
subsequent fiscal year, and in no case later than the end of February of each
subsequent year, the Time Vesting Condition shall be satisfied with respect to
an additional 25% of the Restricted Stock Units in each Tranche, until the Time
Vesting Condition has become satisfied with respect to 100% of the Restricted
Stock Units in each Tranche.

     

    1.3.5 Performance
Conditions.  If the Average Stock Price (as defined below)
during any Applicable Trading Period (as defined below) equals or exceeds the
Price Threshold (as defined below) with respect to a Tranche, the "Performance Condition" shall
be deemed to be satisfied with respect to all of the Restricted Stock Units in
such Tranche on the third (3rd) Trading Day after the issuance of the Company's
next press release publicly reporting quarterly or annual financial results, but
no later than the end of the calendar month in which such press release would
otherwise customarily occur.

     

    1.3.6 Defined
Terms.

     

    
      	
              1.3.6.1  

            	
              "Applicable Trading
      Period" means a period of twenty consecutive Trading Days (as
      defined below) during the Performance Period (as defined
      below).

            

    

     

    
      	
              1.3.6.2  

            	
              "Average Stock Price"
      means the average, for any Applicable Trading Period, of (i) the last
      reported sales price of a Share for each Trading Day in the Applicable
      Trading Period, as reported on the principal national securities exchange
      on which the Shares are listed or admitted for trading or (ii) if the
      Shares are not listed or admitted for trading on any national securities
      exchange, the average of the highest bid and lowest asked prices for a
      Share in the domestic over-the-counter market as reported by Pink OTC
      Markets, Inc., or any similar organization for each Trading Day in the
      Applicable Trading Period. The Average Stock Price shall be appropriately
      adjusted to reflect any Share Adjustment Transaction (as defined below)
      which impacts an Applicable Trading
Period.

            

    

     

    
      	
              1.3.6.3  

            	
              "Performance Period"
      shall mean the period beginning on the twentieth (20th) day following the
      Date of Grant and ending on the third (3rd) Trading Day after the issuance
      of the press release publicly reporting first quarter financial results
      for fiscal year 2019, but in no case later than the end of February
      2019.

            

    

     

    
      	
              1.3.6.4  

            	
              "Price Threshold" shall
      mean, (i) with respect to Tranche One, $13.50; and (ii) with respect to
      Tranche Two, $16.00. Each Price Threshold shall be appropriately adjusted
      to reflect any Share Adjustment Transaction during the Performance
      Period.

            

    

     

    
      	
              1.3.6.5  

            	
              "Share Adjustment
      Transaction" shall mean (i) a stock dividend with respect to the
      Shares, (ii) the subdivision of the Shares (by stock split,
      reclassification or otherwise) into a larger number of shares, (iii) the
      combination (by reverse stock split or otherwise) of the Shares into a
      smaller number of shares or (iv) a transaction which has similar
      effect.

            

    

     

    
      	
              1.3.6.6  

            	
              "Trading Day" shall mean
      a day on which the principal national securities exchange on which the
      Shares are listed or admitted to trading is open for trading, or if the
      Shares are not listed or admitted to trading on any national securities
      exchange, any day other than a Saturday, Sunday, or other day on which
      commercial banking institutions in New York, New York are required or
      authorized by law to remain closed.

            

    

     

    1.3.7 In the
event that (i) a Change of Control occurs and the Shares are converted into the
right to receive cash, other securities or other property, or (ii) a Change of
Control occurs and the Shares remain outstanding but are no longer publicly
traded (or the Company is taken private by the Cypress Group or affiliates
thereof), then the Performance Conditions shall no longer be applicable and the
vesting of the Restricted Stock Units shall be subject to the Time Vesting
Condition only.  In addition, if, in connection with a merger,
consolidation, reorganization, recapitalization or similar transaction in which
the Company is not the surviving entity, (i) all obligations under this
Agreement are not fully assumed by the surviving or resulting entity, and (ii)
the Company fails to adjust the cash or property receivable upon vesting of the
Restricted Stock Units such that such cash or property has a fair market value
equal to the Fair Market Value of the Common Stock underlying the non-vested
portion of the Restricted Stock Units, then the Restricted Stock Units shall
become fully vested prior to the effectiveness of such transaction.

     

    1.3.8 Notwithstanding
the foregoing, in the event of termination of the Grantee's Continuous Status as
an Employee, Director or Consultant for any reason, the Restricted Stock Units
shall immediately cease vesting as of the date of termination and no further
vesting shall occur; provided, however, if such termination occurs as a result
of either death or Disability, the Time Vesting of the Restricted Stock Units
shall be partially accelerated as follows: upon the date of termination as a
result of either death or Disability, the 25% of each Tranche that is next
scheduled to satisfy the Time Vesting Condition will be deemed to have satisfied
the Time Vesting Condition; provided, for the avoidance of doubt, termination
due to death or Disability shall not affect whether or not the Performance
Conditions have been satisfied.  Any Restricted Stock Units that are
not vested on the date of termination shall be forfeited by the Grantee and
shall be cancelled.

     

    1.4 Tax Withholding
Obligations.  If the Company shall be required to withhold any
federal, provincial, state, local or foreign tax in connection with any issuance
or vesting of Restricted Stock Units or the issuance of Common Stock or other
securities or property pursuant to this Agreement, and the amounts available to
the Company for such withholding are insufficient, then the Grantee shall pay
the tax or make provisions that are satisfactory to the Company for the payment
thereof.  Provided the approval of the Committee is obtained, the
Grantee may elect to satisfy all or any part of any such withholding obligation
by surrendering to the Company a portion of the Common Stock issued upon the
vesting of Restricted Stock Units hereunder, and the Common Stock so surrendered
by the Grantee shall be credited against any such withholding obligation based
on the then Fair Market Value per share of such Common Stock on the date of such
surrender.

     

    2. Rights as a
Stockholder.  The Grantee will have no rights as a stockholder
with regard to any Restricted Stock Unit until it vests and converts into a
share of Common Stock.  However, in the event that the Company pays a
cash dividend with respect to its Common Stock, the Company will pay to the
Grantee a cash amount equal to the per-share cash dividend multiplied by the
number of unvested Restricted Stock Units held by the Grantee, at the same time
as dividends are paid on the Company's outstanding shares of Common
Stock.

     

    3. Adjustments.  In
the event of any merger, reorganization, consolidation, recapitalization, stock
dividend, stock split, reverse stock split, spin-off, distribution with respect
to the Common Stock (other than a cash dividend) or a similar transaction or
other change in corporate structure affecting the Common Stock, the Company
shall make equitable and proportionate adjustments to the number of Restricted
Stock Units as well as the type of securities or property to be delivered upon
vesting thereof.  All such adjustments and substitutions shall be made
by the Committee in its sole discretion.

     

    4. General.

     

    4.1 Governing
Law.  This Agreement shall be governed by and construed under
the laws of the state of Delaware applicable to agreements made and to be
performed entirely in Delaware, without regard to the conflicts of law
provisions of Delaware or any other jurisdiction.

     

    4.2 Notices.  Any
notice required or permitted under this Agreement shall be given in writing by
overnight courier or by postage prepaid, United States registered or certified
mail, return receipt requested, to the address set forth below or to such other
address for a party as that party may designate by ten (10) days advance written
notice to the other parties.  Notice shall be effective upon the
earlier of receipt or three (3) days after the date on which such notice is
deposited in the mails or with the overnight courier.

     

    
      	
              If
      to the Company:

            	
              CPI
      International, Inc.

            

    

     

    
      	
               
      

            	
              811
      Hansen Way

            

    

     

    
      	
               
      

            	
              Palo
      Alto, California 94303-1110

            

    

     

    
      	
               
      

            	
              Attention:
      Chief Financial Officer

            

    

     

    
      	
               
      

            	
              If
      to the Grantee, at the address set forth on Exhibit
      A.

            

    

     

    4.3 Community
Property.                                                      
Without prejudice to the actual rights of the spouses as between each other, for
all purposes of this Agreement, the Grantee shall be treated as agent and
attorney-in-fact for that interest held or claimed by his or her spouse with
respect to the Restricted Stock Units, and the parties hereto shall act in all
matters as if the Grantee was the sole owner of the Restricted Stock
Units.  This appointment is coupled with an interest and is
irrevocable.

     

    4.4 Modifications.  This
Agreement may be amended, altered or modified only by a writing signed by each
of the parties hereto.

     

    4.5 Additional
Documents.  Each party agrees to execute any and all further
documents and writings, and to perform such other actions, which may be or
become reasonably necessary or expedient to be made effective and carry out this
Agreement.

     

    4.6 No Third-Party
Benefits.  Except as otherwise expressly provided in this
Agreement, none of the provisions of this Agreement shall be for the benefit of,
or enforceable by, any third-party beneficiary.

     

    4.7 Successors and
Assigns.  Except as provided herein to the contrary, this
Agreement shall be binding upon and inure to the benefit of the parties, their
respective successors and permitted assigns.

     

    4.8 No
Assignment.  Except as otherwise provided in this Agreement,
the Grantee may not assign any of his, her or its rights under this Agreement
without the prior written consent of the Company, which consent may be withheld
in its sole discretion.  The Company shall be permitted to assign its
rights or obligations under this Agreement, but no such assignment shall release
the Company of any obligations pursuant to this Agreement.

     

    4.9 Severability.  The
validity, legality or enforceability of the remainder of this Agreement shall
not be affected even if one or more of the provisions of this Agreement shall be
held to be invalid, illegal or unenforceable in any respect.

     

    4.10 Equitable
Relief.  The Grantee acknowledges that, in the event of a
threatened or actual breach of any of the provisions of this Agreement, damages
alone will be an inadequate remedy, and such breach will cause the Company
great, immediate and irreparable injury and damage.  Accordingly, the
Grantee agrees that the Company shall be entitled to injunctive and other
equitable relief, and that such relief shall be in addition to, and not in lieu
of, any remedies it may have at law or under this Agreement.

     

    4.11 Arbitration.

     

    4.11.1  General.  Any
controversy, dispute, or claim between the parties to this Agreement, including
any claim arising out of, in connection with, or in relation to the formation,
interpretation, performance or breach of this Agreement shall be settled
exclusively by arbitration, before a single arbitrator, in accordance with this
Section 4.11 and the then
most applicable rules of the American Arbitration
Association.  Judgment upon any award rendered by the arbitrator may
be entered by any state or federal court having jurisdiction
thereof.  Such arbitration shall be administered by the American
Arbitration Association.  Arbitration shall be the exclusive remedy
for determining any such dispute, regardless of its
nature.  Notwithstanding the foregoing, either party may in an
appropriate matter apply to a court for provisional relief, including a
temporary restraining order or a preliminary injunction, on the ground that the
award to which the applicant may be entitled in arbitration may be rendered
ineffectual without provisional relief.  Unless mutually agreed by the
parties otherwise, any arbitration shall take place in the City of Palo Alto,
California.

     

    4.11.2  Selection of
Arbitrator.  In the event the parties are unable to agree upon
an arbitrator, the parties shall select a single arbitrator from a list of nine
arbitrators (which shall be retired judges or corporate or litigation attorneys
experienced in executive compensation and stock options) provided by the office
of the American Arbitration Association having jurisdiction over Palo Alto,
California.  If the parties are unable to agree upon an arbitrator
from the list so drawn, then the parties shall each strike names alternately
from the list, with the first to strike being determined by
lot.  After each party has used four (4) strikes, the remaining name
on the list shall be the arbitrator.  If such person is unable to
serve for any reason, then the parties shall repeat this process until an
arbitrator is selected.

     

    4.11.3  Applicability of
Arbitration; Remedial Authority.  This agreement to resolve any
disputes by binding arbitration shall extend to claims against any parent,
subsidiary or affiliate of each party, and, when acting within such capacity,
any officer, director, shareholder, employee or agent of each party, or of any
of the above, and shall apply as well to claims arising out of state and federal
statutes and local ordinances as well as to claims arising under the common
law.  In the event of a dispute subject to this paragraph the parties
shall be entitled to reasonable discovery subject to the discretion of the
arbitrator.  The remedial authority of the arbitrator (which shall
include the right to grant injunctive or other equitable relief) shall be the
same as, but no greater than, would be the remedial power of a court having
jurisdiction over the parties and their dispute.  The arbitrator
shall, upon an appropriate motion, dismiss any claim without an evidentiary
hearing if the party bringing the motion establishes that he or it would be
entitled to summary judgment if the matter had been pursued in court
litigation.  In the event of a conflict between the applicable rules
of the American Arbitration Association and these procedures, the provisions of
these procedures shall govern.

     

    4.11.4  Fees and
Costs.  Any filing or administrative fees shall be borne
initially by the party requesting arbitration.  The Company shall be
responsible for the costs and fees of the arbitration, unless the Grantee wishes
to contribute (up to 50%) of the costs and fees of the
arbitration.  Notwithstanding the foregoing, the prevailing party in
such arbitration, as determined by the arbitrator, and in any enforcement or
other court proceedings, shall be entitled, to the extent permitted by law, to
reimbursement from the other party for all of the prevailing party's costs
(including but not limited to the arbitrator's compensation), expenses, and
attorneys' fees.

     

    4.11.5  Award Final and
Binding.  The arbitrator shall render an award and written
opinion, and the award shall be final and binding upon the
parties.  If any of the provisions of this paragraph, or of this
Agreement, are determined to be unlawful or otherwise unenforceable, in whole or
in part, such determination shall not affect the validity of the remainder of
this Agreement, and this Agreement shall be reformed to the extent necessary to
carry out its provisions to the greatest extent possible and to insure that the
resolution of all conflicts between the parties, including those arising out of
statutory claims, shall be resolved by neutral, binding
arbitration.  If a court should find that the arbitration provisions
of this Agreement are not absolutely binding, then the parties intend any
arbitration decision and award to be fully admissible in evidence in any
subsequent action, given great weight by any finder of fact, and treated as
determinative to the maximum extent permitted by law.

     

    4.12 Headings.  The
section headings in this Agreement are inserted only as a matter of convenience,
and in no way define, limit, extend or interpret the scope of this Agreement or
of any particular section.

     

    4.13 Number and
Gender.  Throughout this Agreement, as the context may require,
(a) the masculine gender includes the feminine and the neuter gender includes
the masculine and the feminine; (b) the singular tense and number includes the
plural, and the plural tense and number includes the singular; (c) the past
tense includes the present, and the present tense includes the past; (d)
references to parties, sections, paragraphs and exhibits mean the parties,
sections, paragraphs and exhibits of and to this Agreement; and (e) periods of
days, weeks or months mean calendar days, weeks or months.

     

    4.14 Counterparts.                                This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

     

    4.15 Complete
Agreement.  This Agreement and the Plan constitute the parties'
entire agreement with respect to the subject matter hereof and supersede all
agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof.

     

    CPI
INTERNATIONAL, INC.

     

    By:___________________________________

     

    Its:___________________________________

     

    GRANTEE

     

    ______________________________________

    Name:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    DETAILS
OF PERFORMANCE RESTRICTED STOCK UNIT AWARD GRANT

     

    

     

    
      	
              Grantee
      Name:

            	 
      
	
              Date
      of Grant:

            	
              December
      5, 2008

            
	
              Number
      of Restricted Stock Units:

            	 
      

    

    

     

    Grantee
Address:                                           ____________________________________________

     

    ____________________________________________

     

    ____________________________________________exhibit10_1.htm

     

     

    
      

      

    

     

    Exhibit 10.1

     

    

      WAIVER,
CONSENT AND SECOND AMENDMENT TO

      AMENDED
AND RESTATED FIRST LIEN CREDIT AGREEMENT

      

      This WAIVER,
CONSENT AND SECOND AMENDMENT TO AMENDED AND RESTATED FIRST LIEN CREDIT AGREEMENT
(“Amendment”),
dated effective as of December 1, 2008 (the “Effective Date”), is
by and among Energy XXI Gulf Coast, Inc., a Delaware corporation (the “Borrower”), the
lenders party to the First Lien Credit Agreement described below (the “Lenders”), and The
Royal Bank of Scotland plc, as administrative agent for the Lenders (in such
capacity, the “Administrative
Agent”).

       

      RECITALS

       

      WHEREAS,
the Borrower, the Lenders, the Administrative Agent and certain other Persons
are parties to the Amended and Restated First Lien Credit Agreement, dated as of
June 8, 2007, as modified by the Consent Regarding Amended and Restated First
Lien Credit Agreement dated as of July 27, 2007, and as amended by that certain
First Amendment to Amended and Restated First Lien Credit Agreement, dated
effective as of November 19, 2007 (as so modified, and as amended, supplemented,
amended and restated or otherwise modified from time to time, the “First Lien Credit
Agreement”);

       

      WHEREAS,
the Borrower is party to a Hedging Agreement, dated as of June 7, 2007 (the
“Lehman Hedging
Agreement”), executed with Lehman Brothers Special Financing Inc. (the
“Lehman
Counterparty”), an Affiliate of a Lender at the time the Lehman Hedging
Agreement was executed;

       

      WHEREAS,
pursuant to the terms of the First Lien Credit Agreement, the Lehman Hedging
Agreement is a Loan Document and the obligations of the Borrower under the
Lehman Hedging Agreement are Obligations as defined in the First Lien Credit
Agreement;

       

      WHEREAS,
Lehman Brothers Holding Inc., a guarantor of the obligations of the Lehman
Counterparty under the Lehman Hedging Agreement (the “Lehman Guarantor”),
and certain of its Affiliates, filed a petition for bankruptcy with the U.S.
Bankruptcy Court on September 14, 2008;

       

      WHEREAS,
the Borrower believes that the declaration of bankruptcy by the Lehman Guarantor
constitutes an event of default under the Lehman Hedging Agreement with respect
to the Lehman Counterparty (such bankruptcy of the Lehman Guarantor, herein the
“Specified Lehman
Event”) and as a result thereof, the Borrower (a) has provided the Lehman
Counterparty with a notice of the Specified Lehman Event and has set an “Early
Termination Date” (as defined in the Lehman Hedging Agreement and used herein
with the same meaning) of October 2, 2008 (the “Lehman Hedge Termination
Date”), a copy of which is attached hereto as Exhibit A (the “Lehman Hedge Termination
Notice”) and (b) has provided the Lehman Counterparty a Statement of
Calculation and Payment dated as of October 3, 2008, a copy of which is attached
hereto as Exhibit B;

       

      WHEREAS,
pursuant to the terms of the Lehman Hedge Termination Notice and the terms of
the Lehman Hedging Agreement, on the Lehman Hedge Termination Date, all
outstanding transactions under the Lehman Hedging Agreement will be terminated
and the Borrower has calculated an amount of $7,524,078.25 (the “Calculated Termination
Payment Amount”) that it believes it will be obligated to pay to the
Lehman Hedge Counterparty as a termination payment in connection with such
termination of the Lehman Hedging Agreement;

       

      WHEREAS,
subsequent to the declaration of bankruptcy by the Lehman Guarantor, the Lehman
Counterparty filed a petition for bankruptcy with the U.S. Bankruptcy
Court;

       

      WHEREAS,
by its letter dated October 17, 2008 (a copy of which is attached hereto as
Exhibit C), the Borrower has informed the Administrative Agent that it had
attempted to pay the Calculated Termination Payment Amount to the Lehman
Counterparty and that the payment was not accepted and was returned to the
Borrower;

       

      WHEREAS,
the Borrower has advised the Administrative Agent that it intends to pay the
Calculated Termination Payment Amount only after the U.S. Bankruptcy Court has
approved a settlement agreement between the Lehman Counterparty and the Borrower
as to the appropriate amount of the termination payment under the Lehman Hedging
Agreement;

       

      WHEREAS,
such approval by the applicable U.S. Bankruptcy Court may occur after the date
that the Borrower is required to make the termination payment under the terms of
the Lehman Hedging Agreement;

       

      WHEREAS,
to the extent that the setting of an Early Termination Date for the Lehman
Hedging Agreement or the failure of the Borrower to timely make the requisite
termination payment in accordance with the terms and conditions of the Lehman
Hedging Agreement constitutes a Default or Event of Default arising under
Sections 6.17, 8.1.1(b), 8.1.4, 8.1.5 and 8.1.10 of the First Lien Credit
Agreement, the Borrower has requested that the Lenders waive such Default or
Event of Default; provided that (a) on
or prior to three (3) Business Days after the earlier to occur of (i) the
Borrower and the Lehman Counterparty have agreed to the requisite termination
payment due under the Lehman Hedging Agreement and such termination
payment is approved or confirmed by a court of competent jurisdiction, including
a U.S. Bankruptcy Court or (ii) the termination payment is otherwise established
by a court of competent jurisdiction, including a U.S. Bankruptcy Court (such
termination payment as so approved, confirmed or established, herein the “Termination Payment
Amount”), the Borrower shall have paid the Termination Payment Amount to
the Lehman Counterparty, and (b) the Borrower shall, if a court of competent
jurisdiction (including a U.S. Bankruptcy Court) determines that the Borrower
owes any additional amounts to the Lehman Counterparty under the Lehman Hedging
Agreement in excess of the Termination Payment Amount (the “Additional Hedging
Amounts”), promptly and timely pay such Additional Hedging Amounts as may
be directed by such court or otherwise required by applicable law (it being
understood, for sake of clarity, that any such determination by such court that
Additional Hedging Amounts in excess of $2,500,000 in the aggregate may
thereupon or thereafter result in a Default or Event of Default under, among
other provisions, Section 8.1.6 of the First Lien Credit Agreement in accordance
with the terms thereof, whether or not the condition in Section 2(a) above
has been satisfied);

       

      WHEREAS,
the undersigned Administrative Agent, Issuers and Lenders are willing to agree
to such waivers, on the terms and conditions set forth herein;

       

      WHEREAS,
the Borrower has advised the Administrative Agent, Issuers and Lenders that it
intends to undertake the following series of related
transactions:  (a) the transfer and assignment by the Borrower of its
99% limited partner interest in EXXI Texas LP to EXXI GOM, (b) the transfer and
assignment by the Borrower of its 100% member interest in EXXI Texas GP to EXXI
GOM, (c) the transfer and assignment by EXXI Texas GP of its 1% general partner
interest in EXXI Texas LP to EXXI GOM, (d) the conversion of EXXI Texas LP
(which at such point will be wholly owned by EXXI GOM) into a single member
limited liability company and a change of name of such entity to “Energy XXI
Onshore, LLC”, (e) the transfer and assignment by the Borrower of all of its
Louisiana oil and gas assets to Energy XXI Onshore, LLC, (f) the change of name
of Energy XXI Texas GP, LLC to “Energy XXI Texas Onshore, LLC”, and (g) the
transfer and assignment by Energy XXI Onshore, LLC of its Texas oil and gas
assets to Energy XXI Texas Onshore, LLC (collectively, the “Restructuring”);

       

      WHEREAS,
the Borrower has requested that the Administrative Agent, Issuers and Lenders
evidence their consent to the Restructuring, make certain modifications to the
First Lien Credit Agreement, and permit the Administrative Agent to enter into
certain amendments and other modifications to other Loan Documents more
particularly described below in order to permit the Borrower to effectuate the
Restructuring;

       

      WHEREAS,
the undersigned Administrative Agent, Issuers and Lenders are willing to agree
to such Restructuring and modifications and permit such amendments, on the terms
and conditions set forth herein; and

       

      WHEREAS,
the parties hereto desire to amend the First Lien Credit Agreement in certain
other respects as set forth herein.

       

      NOW THEREFORE,
in consideration of the premises and the mutual covenants, representations and
warranties contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      AGREEMENT

       

      Section
1. Definitions.  Capitalized
terms used herein but not defined herein shall have the meanings as given them
in the First Lien Credit Agreement, unless the context otherwise
requires.

       

      Section
2. Waiver.  Subject
to the other terms and conditions of this Amendment, the Administrative Agent,
the Issuers and the undersigned Lenders hereby waive, as of October 3, 2008, any
Default or Event of Default arising under Sections 6.17, 8.1.1(b), 8.1.4, 8.1.5
and 8.1.10 of the First Lien Credit Agreement as a result of the Borrower’s
setting of an Early Termination Date for the Lehman Hedging Agreement and the
Borrower’s failure to timely perform the Lehman Termination Obligation in
accordance with the terms and conditions of the Lehman Hedging Agreement; provided that (a) on
or prior to three (3) Business Days after the Termination Payment Amount is
approved, confirmed or otherwise established as described in the recitals above,
the Borrower shall have paid the Termination Payment Amount to the Lehman
Counterparty, and (b) the Borrower shall, if a court of competent jurisdiction
(including a U.S. Bankruptcy Court) determines that the Borrower owes any
Additional Hedging Amounts to the Lehman Counterparty under the Lehman Hedging
Agreement in excess of the Termination Payment Amount, promptly and timely pay
such Additional Hedging Amounts as may be directed by such court or otherwise
required by applicable law (it being understood, for sake of clarity, that any
such determination by such court that Additional Hedging Amounts in excess of
$2,500,000 in the aggregate may thereupon or thereafter result in a Default or
Event of Default under, among other provisions, Section 8.1.6 of the First Lien
Credit Agreement in accordance with the terms thereof, whether or not the
condition in Section
2(a) above has been satisfied).

       

      Section
3. Consent to
Restructuring.  The Administrative Agent, the Issuers and the
undersigned Lenders hereby consent and agree to the Restructuring; provided that, the
Borrower shall satisfy or cause to be satisfied the following
conditions:  (a) true and correct certified copies of the documents
and agreements evidencing or effectuating the Restructuring, in form and
substance reasonably satisfactory to the Administrative Agent, shall be
delivered to the Administrative Agent within 45 days after the consummation of
the Restructuring or such later date as acceptable to the Administrative Agent,
(b) after the consummation of the activities described in clauses (a), (b), (c),
(d) and (f) of the definition of “Restructuring”, EXXI GOM shall execute and
deliver to the Administrative Agent on behalf of the Secured Parties (and in
form and substance satisfactory to the Administrative Agent), a Security
Agreement, or an amendment or supplement to an existing Security Agreement, if
appropriate, pursuant to which all of the equity interests outstanding (after
giving effect to the Restructuring) in Energy XXI Texas Onshore, LLC and in
Energy XXI Onshore, LLC shall be pledged to the Administrative Agent on behalf
of the Secured Parties, and shall take such other actions as shall be reasonably
requested by the Administrative Agent or necessary, including the delivery of
all certificates evidencing such equity interests, to perfect, preserve,
protect, confirm or maintain the Liens created thereunder, in each case promptly
upon request therefor by the Administrative Agent, (c) each of the
Borrower, EXXI GOM, Energy XXI Texas Onshore, LLC and Energy XXI Onshore, LLC
and other relevant Obligors shall execute and deliver a ratification and
assumption (in form and substance reasonably satisfactory to the Administrative
Agent) of the relevant Guaranties, Security Agreements, Mortgages and other Loan
Documents as requested by the Administrative Agent (or otherwise to evidence or
provide notice of the Restructuring) promptly following such request, (d) within
20 Business Days after the consummation of the activities described in clause
(d) of the definition of “Restructuring” or such later date as acceptable to the
Administrative Agent, Energy XXI Onshore, LLC shall execute and deliver or cause
to be executed and delivered to the Administrative Agent, all agreements,
documents, instruments and other writings described in Section 5.1.2 of the
First Lien Credit Agreement with respect to such Obligor, (e) each of the
Borrower, EXXI GOM, Energy XXI Texas Onshore, LLC and Energy XXI Onshore, LLC
and other relevant Obligors shall execute and deliver a Mortgage or Mortgage
Supplement as reasonably requested by the Administrative Agent promptly
following such request, (f) the Borrower shall promptly deliver or cause to be
delivered to the Administrative Agent such opinions, if any, as reasonably
requested by the Administrative Agent in connection with the Restructuring (or
otherwise to evidence or provide notice of the Restructuring) in order to
perfect, confirm, ratify, protect, preserve or maintain the Liens or other
rights in the Collateral securing the Obligations, and (g) the Borrower shall
promptly deliver, file or record or cause to be delivered, filed or recorded,
any other financing statements, continuation statements, extension agreements,
modifications to mortgages and other Security Documents and Loan Documents
(including schedules and exhibits thereto), ratifications, documents,
instruments or agreements in form and substance reasonably satisfactory to the
Administrative Agent, which the Administrative Agent reasonably requests in
connection with the Restructuring (or otherwise to evidence or provide notice of
the Restructuring) for the purpose of perfecting, confirming, ratifying,
protecting, preserving or maintaining the Liens or other rights in the
Collateral securing the Obligations; provided, further that
notwithstanding anything herein to the contrary, it is understood and agreed
that the Restructuring will not cause or result in a disposition of any
Collateral free of any security interests under the Security Documents unless
the Administrative Agent shall have expressly and specifically released such
Collateral in writing.  Each Secured Party that is a party hereto
expressly authorizes and consents to the execution and delivery by the
Administrative Agent of any and all additional Loan Documents or amendments or
other modifications to existing Loan Documents specified in or required by this
Amendment or that may be deemed by the Administrative Agent (acting reasonably)
to be necessary or advisable in furtherance of the purposes of implementing the
Restructuring.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Section
4. Amendments to First Lien
Credit Agreement.  The First Lien Credit Agreement is hereby
amended as follows:

       

      (a) Section
1.1.

       

      (1) Section
1.1 of the First Lien Credit Agreement is hereby amended by adding the following
definition in the proper alphabetical order:

       

      “Impacted Lender”
means any Lender that (a) has not made available to the Administrative Agent
such Lender’s ratable portion of a requested borrowing or has not reimbursed an
Issuer for such Lender’s ratable portion of the amount of a payment made by such
Issuer under a Letter of Credit, in each case after the date due therefor in
accordance with Section 2.3 or 2.6.1, as applicable,
or has otherwise defaulted in its obligation to so fund or reimburse in
accordance with Section 2.3 or 2.6.1, as applicable;
(b) has notified the Borrower or the Administrative Agent that it does not
intend to comply with its obligations under Section 2.3 or 2.6.1; or (c) is, or
is a Subsidiary of a Person that is, the subject of a bankruptcy, insolvency or
similar proceeding.

       

      “Reference LIBO Rate”
means, as of any day, a rate of interest per annum equal to the quotient of (a)
the LIBO Rate (for a one-month Interest Period) on such day or, if such day is
not a Business Day, the immediately preceding Business Day, divided by
(b) one minus the LIBOR Reserve Percentage (expressed as a decimal)
applicable to such Interest Period on such day; provided that for the avoidance
of doubt, the Reference LIBO Rate for any day shall be based on the LIBO Rate
determined by the Administrative Agent at approximately 11:00 a.m. (London
time) on such day by reference to the British Bankers’ Association Interest
Settlement Rates for deposits in Dollars as set forth by the Bloomberg
Information Service or any successor thereto or any other service selected by
the Administrative Agent that has been nominated by the British Bankers’
Association as an authorized information vendor for the purpose of displaying
such rates (except that, to the
extent that such LIBO Rate is not ascertainable pursuant to the foregoing
provision of this definition, such LIBO Rate shall be the interest rate per
annum determined by the Administrative Agent to be the average of the rates per
annum at which deposits in Dollars (in an amount approximately equal to the
amount of the relevant Loans) are offered for a one month Interest Period to
major banks in the London interbank market in London, England by the
Administrative Agent at approximately 11:00 a.m. (London time) on such
day).

       

      “Second Amendment”
means that certain Waiver, Consent and Second Amendment to Amended and Restated
First Lien Credit Agreement dated effective as of December 1, 2008, by and among
the Borrower, the Lenders parties thereto, and the Administrative
Agent.

       

      (2) The
definition of Section 1.1 of the First Lien Credit Agreement is hereby amended
by amending and restating the definition of “Alternate Base Rate” as
follows:

       

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

       

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

       

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

       

      (c)           the
Reference LIBO Rate plus 1%.

       

      Any
change in the Alternate Base Rate due to a change in the Base Rate, the Federal
Funds Rate or the LIBO Rate (Reserve Adjusted) shall be effective from and
including the effective date of such change in the Base Rate, the Federal Funds
Rate or the LIBO Rate (Reserve Adjusted), respectively.”

       

      (b) Section
2.1.2.  Section 2.1.2 of the First Lien Credit Agreement is
hereby amended by inserting the following sentence at the end of such
Section:

       

      “Notwithstanding
anything herein to the contrary, no Issuer shall be obligated to issue, renew or
extend a Letter of Credit if any Lender is at such time an Impacted Lender
hereunder, unless such Issuer has entered into arrangements reasonably
satisfactory to such Issuer with the Borrower or such Lender to eliminate such
Issuer’s risk with respect to such Lender.”

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (c) Section
4.2.  Section 4.2 of the First Lien Credit Agreement is hereby
amended and restated in its entirety as follows:

       

      “SECTION
4.2                                Inability to Determine
Rates.  If the Administrative Agent or the Required Lenders
shall have determined that (a) Dollar deposits are not being offered to
banks in the London interbank eurodollar market for the applicable amount and
Interest Period of such LIBO Rate Loan; (b) adequate and reasonable means
do not exist for determining the LIBO Rate for any requested Interest Period
with respect to a proposed LIBO Rate Loan; or (c) the LIBO Rate or LIBO Rate
(Reserve Adjusted) for any requested Interest Period with respect to a proposed
LIBO Rate Loan does not adequately and fairly reflect the cost of funding such
LIBO Rate Loan, then the Administrative Agent will promptly so notify the
Borrower and each Lender.  Thereafter, until the Administrative Agent
(upon the instruction of the Required Lenders) revokes such notice, the
obligation of the Lenders to make or continue (or convert any Base Rate Loans
into) LIBO Rate Loans shall be suspended, and any pending Borrowing Request or
Continuation/Conversion Notice requesting the  making or continuation
of (or conversion of Base Rate Loans into) LIBO Rate Loans will be deemed to
have been converted into a Borrowing Request or Continuation/Conversion Notice
with respect to Base Rate Loans in the amount specified therein.”

       

      (d) Section
7.1.16(b).  Section 7.1.16(b) of the First Lien Credit
Agreement is hereby amended and restated in its entirety as
follows:

       

      “(b)           During
each period from July 1st to October 31st  of each calendar year, the
Borrower will not permit the aggregate Credit Exposures of all Lenders to exceed
an amount equal to (i) the lesser of the Loan Commitment Amount or the Borrowing
Base then in effect minus (ii)
$25,000,000 minus (iii) until
such time as the Borrower has paid in full the Termination Payment Amount (as
defined in the Second Amendment) and any additional amounts required to be paid
pursuant to the proviso of Section 2 of the Second Amendment, an amount equal to
the amount determined pursuant to Section 6(b) of the Second
Amendment.”

       

      Section
5. Covenants.  The
Borrower agrees to furnish the Administrative Agent (a) each written notice or
other communication received or delivered by the Borrower in connection with the
Lehman Hedging Agreement (including notices and communications (including orders
and findings) from or issued by any bankruptcy trustee or court), within three
(3) Business Days after the date that the Borrower receives or delivers such
written notice or other communication; and (b) within three (3) Business Days
after payment thereof, evidence satisfactory to the Administrative Agent that
the Borrower has paid to the Lehman Counterparty, the Termination Payment Amount
and any other amounts due under or in respect of the Lehman Hedging
Agreement.

       

      Section
6. Minimum
Availability.  Until such time as the Borrower has paid in full
the Termination Payment Amount and any additional amounts required to be paid
pursuant to the proviso of Section 2, the
Borrower will not permit the aggregate Credit Exposures of all Lenders to exceed
an amount equal to:

       

      (a) the
lesser of the Loan Commitment Amount or the Borrowing Base then in effect; minus

       

      (b) (i)  an
amount equal to (A) the Lehman Reserve Amount then in effect plus (B) the
aggregate Additional Hedging Amounts (if any) minus (C) any amounts
theretofore paid by the Borrower for application to the Borrower’s termination
payment due under the Lehman Hedging Agreement or the repayment of Additional
Hedging Amounts (and received and accepted the Lehman Counterparty in a manner
reasonably acceptable to the Administrative Agent); divided by (ii) one
less the
Aggregate Impacted Lender Percentage; minus

       

      (c) the
amount specified in Section 7.1.16(b)(ii) of the First Lien Credit Agreement
(after giving effect to this Amendment).

       

      As used
herein, (A) “Lehman
Reserve Amount” means, as the case may be, an amount equal to (x) if the
Termination Payment Amount has not yet been approved, confirmed or otherwise
established as described in the recitals above, the Calculated Termination
Payment Amount or (y) if the Termination Payment Amount has been approved,
confirmed or otherwise established as described in the recitals above, the
Termination Payment Amount; and (B) “Aggregate Impacted Lender
Percentage” means, at the time of determination, the sum of the
Percentages of all Impacted Lenders.

       

      Section
7. Conditions to
Effectiveness.  This Amendment shall be deemed effective
(subject to the conditions herein contained) as of the Effective Date when the
Administrative Agent shall have received counterparts hereof duly executed by
the Borrower, the Administrative Agent, the Issuers and the Required
Lenders.

       

      Section
8. Representations and
Warranties.  The Borrower hereby represents and warrants that
after giving effect hereto:

       

      (a) the
representations and warranties of the Obligors contained in the Loan Documents
(other than Section 6.17 of the First Lien Credit Agreement solely with respect
to the Lehman Hedging Agreement) are true and correct in all material respects
on and as of the Effective Date, other than those representations and warranties
that expressly relate solely to a specific earlier date, which shall remain
correct in all material respects as of such earlier date;

       

      (b) the
execution, delivery and performance by the Borrower and each other Obligor of
this Amendment has been duly authorized by all necessary corporate action
required on their part and this Amendment, along with the First Lien Credit
Agreement and other Loan Documents, constitutes the legal, valid and binding
obligation of each Obligor a party thereto enforceable against them in
accordance with its terms, except as its enforceability may be affected by the
effect of bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting the rights or remedies
of creditors generally;

       

      (c) neither
the execution, delivery and performance of this Amendment by the Borrower and
each other Obligor, the performance by them of the First Lien Credit Agreement
nor the consummation of the transactions contemplated hereby does or shall
contravene, result in a breach of, or violate (i) any provision of any Obligor’s
certificate or articles of incorporation or bylaws or other similar documents,
or agreements, (ii) any law or regulation, or any order or decree of any court
or government instrumentality, or (iii) any indenture, mortgage, deed of trust,
lease, agreement or other instrument to which any Obligor or any of its
Subsidiaries is a party or by which any Obligor or any of its Subsidiaries or
any of their property is bound, except in any such case to the extent such
conflict or breach has been waived by a written waiver document, a copy of which
has been delivered to Administrative Agent on or before the date
hereof;

       

      (d) no
Material Adverse Effect has occurred since December 31, 2007; and

       

      (e) no
Default or Event of Default or Borrowing Base Deficiency has occurred and is
continuing.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Section
9. Loan Document;
Ratification.

       

      (a) This
Amendment is a Loan Document.

       

      (b) The
Borrower and each other Obligor hereby ratifies, approves and confirms in every
respect all the terms, provisions, conditions and obligations of the First Lien
Credit Agreement and each of the other Loan Documents (other than the Lehman
Hedging Agreement), including without limitation all Mortgages, Security
Agreements, Guaranties and Control Agreements, to which it is a
party.

       

      Section
10. Costs And
Expenses.  As provided in Section 10.3 of the First Lien Credit
Agreement, the Borrower agrees to reimburse Administrative Agent for all fees,
costs, and expenses, including the reasonable fees, costs, and expenses of
counsel or other advisors for advice, assistance, or other representation, in
connection with this Amendment and any other agreements, documents, instruments,
releases, terminations or other collateral instruments delivered by the
Administrative Agent in connection with this Amendment.

       

      Section
11. GOVERNING
LAW.  THIS AMENDMENT SHALL BE DEEMED A CONTRACT AND INSTRUMENT
MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND THE
LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW.

       

      Section
12. Severability.  Any
provision of this Amendment that is prohibited or unenforceable in any
jurisdiction shall, as to such provision and such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Amendment or affecting the validity or
enforceability of such provision in any other jurisdiction.

       

      Section
13. Counterparts.  This
Amendment may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any party hereto may
execute this Amendment by signing one or more counterparts.  Any
signature hereto delivered by a party by facsimile or electronic transmission
shall be deemed to be an original signature hereto.

       

      Section
14. No
Waiver.  The express waivers set forth herein are limited to
the extent described herein and, except as expressly set forth in this
Amendment, the execution, delivery and effectiveness of this Amendment shall not
operate as a waiver of any default of the Borrower or any other Obligor or any
right, power or remedy of the Administrative Agent or the other Secured Parties
under any of the Loan Documents, nor constitute a waiver of (or consent to
departure from) any terms, provisions, covenants, warranties or agreements of
any of the Loan Documents.  The parties hereto reserve the right to
exercise any rights and remedies available to them in connection with any
present or future defaults with respect to the First Lien Credit Agreement or
any other provision of any Loan Document.

       

      Section
15. Successors and
Assigns.  This Amendment shall be binding upon the Borrower and
its successors and permitted assigns and shall inure, together with all rights
and remedies of each Lender Party hereunder, to the benefit of each Lender Party
and the respective successors, transferees and assigns.

       

      Section
16. Entire
Agreement.  THIS AMENDMENT, THE FIRST LIEN CREDIT AGREEMENT AND
THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT OF THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.

       

      THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.

       

      [Signature
Pages Follow]

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      IN WITNESS WHEREOF,
the parties hereto have caused this Amendment to be duly executed and delivered
by their respective duly authorized officers as of the Effective
Date.

       

      BORROWER:

       

      ENERGY
XXI GULF COAST, INC.

      

      

      By:                                                                           

      Name:  Rick
Fox

       

      Title:  Chief
Financial Officer

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      ADMINISTRATIVE AGENT,
ISSUERS AND LENDERS:

       

      THE ROYAL
BANK OF SCOTLAND plc, as Administrative Agent, Issuer and Lender

      

      

      By:                                                                           

      Name:

      Title:

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      BNP PARIBAS, as Issuer and
Lender

      

      

      By:                                                                           

      Name:

      Title:

      

      

      By:                                                                           

      Name:

      Title:

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      BMO
CAPITAL MARKETS FINANCING, INC., as Lender

      

      

      By:                                                                           

      Name:

      Title:

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      GUARANTY
BANK, FSB, as Lender

      

      

      

      By:                                                                           

      Name:

      Title:

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      AMEGY
BANK NATIONAL ASSOCIATION, as Lender

      

      

      

      By:                                                                           

      Name:

      Title:

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      THE BANK
OF NOVA SCOTIA, as Lender

      

      

      

      By:                                                                           

      Name:

      Title:

      

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      LEHMAN
COMMERCIAL PAPER INC., as Lender

      

      

      

      By:                                                                           

      Name:

      Title:

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      TORONTO
DOMINION (TEXAS) LLC, as Lender

      

      

      

      By:                                                                           

      Name:

      Title:

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      CAPITAL
ONE, NATIONAL ASSOCIATION, as Lender

      

      

      

      

      By:                                                                           

      Name:                      

      Title:

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      NATEXIS,
as Lender

      

      

      

      By:                                                                           

      Name:

      Title:

      

      By:                                                                           

      Name:

      Title:

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      ALLIED
IRISH BANKS p.l.c., as Lender

      

      

      

      By:                                                                           

      Name:

      Title:

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      CREDIT
SUISSE, as Lender

      

      

      

      By:                                                                           

      Name:

      Title:

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      UBS LOAN
FINANCE LLC, as Lender

      

      

      

      By:                                                                           

      Name:

      Title:

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      WHITNEY
NATIONAL BANK, as Lender

      

      

      

      By:                                                                           

      Name:

      Title:

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      ACKNOWLEDGED
AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN:

      

      ENERGY
XXI GOM, LLC

      

      

      

      By:                                                                           

      Name:  Rick
Fox

      Title:    Chief
Financial Officer

      

      ENERGY
XXI TEXAS GP, LLC

      

      

      By:                                                                           

      Name:  Rick
Fox

      Title:    Chief
Financial Officer

      

      ENERGY
XXI TEXAS, LP

      

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

      

      

      By:                                                                           

      Name:  Rick
Fox

      Title:    Chief
Financial Officer

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      ACKNOWLEDGED
AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN IN ITS CAPACITY AS GUARANTOR UNDER
ITS LIMITED RECOURSE GUARANTY AND GRANTOR UNDER ITS PLEDGE AGREEMENT AND
IRREVOCABLE PROXY DELIVERED IN CONNECTION WITH THE FIRST LIEN CREDIT
AGREEMENT:

      

      ENERGY
XXI USA, INC.

      

      

      By:

      Name:  Rick
Fox

      Title:    Chief
Financial Officer

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